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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Emmerson Plc | LSE:EML | London | Ordinary Share | IM00BDHDTX83 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.20 | -7.69% | 2.40 | 2.30 | 2.50 | 2.65 | 2.40 | 2.60 | 2,947,059 | 10:10:36 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Crude Petroleum & Natural Gs | 0 | -3.2M | -0.0031 | -7.74 | 24.64M |
From Apr 2022 to Apr 2024
TIDMEML
RNS Number : 0260W
Emmerson PLC
13 April 2023
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
13 April 2023
Emmerson PLC ("Emmerson" or the "Company")
2022 Financial Results and Q1 Update
Emmerson, the Moroccan-focused potash development company, is pleased to announce its 2022 audited results as well as an update for Q1 2023, as it moves towards construction at the Khemisset Potash Project ("Khemisset" or the "Project").
Highlights:
-- Environmental permit for Khemisset - continued positive discussions to establish optimum water management routes ahead of final approval. Enhanced designs incorporated in 2022 include:
o Sourcing water from Khemisset waste water treatment plant rather than reservoirs; and
o Selection of dry stacking for tailings, a more environmentally robust solution
-- Significant progress during 2022 and Q1 2023 on pre-construction technical workstreams including basic engineering, which are now largely complete
-- Syndicate of leading international and Moroccan banks appointed during Q1 2023 as initial mandated lead arrangers to co-ordinate and fund debt financing facilities for the development of Khemisset
-- Potash prices remain well above long term averages and long-term outlook remains attractive
Graham Clarke, CEO, commented:
" A significant amount of work was completed during 2022 and in the first quarter of 2023, and we move closer to obtaining the environmental approval for our project.
Our efforts to finalise the remaining outstanding items with the relevant authorities in Morocco ahead of the granting of our Environmental Impact Assessment continue to be rewarded with constructive meetings and encouragement from the various agencies involved. I had hoped to be in position to provide a definitive update on this process however the finer technical details of the water management proposals, in particular our use of recycled water from the Khemisset waste water treatment plant, and our brines and dry tailings solutions, are awaiting final approvals from the environmental and water agencies.
It remains our absolute priority to finalise this as quickly as possible in conjunction with the Moroccan authorities with the objective of moving into construction this year.
The Company achieved a key milestone during the period in the form of the appointment of a syndicate of international and Moroccan banks to act as mandated lead arrangers, to co-ordinate and fund debt financing facilities for Khemisset. This is a huge step for Emmerson, and one that provides a clear and tangible route for us to deliver on the requisite financing for this large and strategically important asset.
Securing quality and experienced institutions including ING Bank, Banque Centrale Populaire and Bank of Africa (Groupe BMCE), together with UK Export Finance, which will lead an Export Credit Agency tranche of US$230 million, is a significant endorsement of the Project and its future earnings potential. I believe that this is also a clear signal to the market and our various stakeholders in Morocco, that ours is a project with the commercial clout and operational robustness to merit being fast-tracked into production. "
**S**
For further information, please visit www.emmersonplc.com , follow us on Twitter (@emmerson_plc), or contact:
Emmerson PLC +44 (0) 20 7236 Graham Clarke / Jim Wynn / Charles Vaughan 1177 Liberum Capital Limited (Nominated Advisor and Joint Broker) +44 (0)20 3100 Scott Mathieson / Kane Collings / William King 2000 Shard Capital LLP (Joint Broker) +44 (0)20 7186 Damon Heath / Isabella Pierre 9927 St Brides Partners (Financial PR/IR) +44 (0)20 7236 Susie Geliher / Isabelle Morris 1177
Notes to Editors
Emmerson is focused on advancing the Khemisset project ("Khemisset" or the "Project") in Morocco into a low cost, high margin supplier of potash, and the first primary producer on the African continent. With an initial 19-year life of mine, the development of Khemisset is expected to deliver long-term investment and financial contributions to Morocco including the creation of permanent employment, taxation, and a plethora of ancillary benefits. As a UK-Moroccan partnership, the Company is committed to bringing in significant international investment over the life of the mine.
Morocco is widely recognised as one of the leading phosphate producers globally, ranking second in the world in terms of tonnes produced annually, and the development of this mine is set to consolidate its position as the most important fertiliser producer in Africa. The Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24% K2O, with significant exploration potential, and is perfectly located to support the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. The need to feed the world's rapidly increasing population is driving demand for potash and Khemisset is well placed to benefit from the opportunities this presents. The Feasibility Study released in June 2020 indicated the Project has the potential to be among the lowest capital cost development stage potash projects in the world and also, as a result of its location, one of the highest margin projects. This delivered outstanding economics, including a post-tax NPV8 of approximately US$1.4 billion using industry expert Argus' price forecasts, and the spot price for granular MOP fertiliser has since risen, further enhancing the valuations.
CHAIRMAN'S STATEMENT
It gives me great pleasure to present the 2022 Annual Report for Emmerson PLC ("Emmerson" or "the Company") as we continue towards construction at our Khemisset Potash Project in Morocco. Our activities during the period have laid the foundations, both from an operational and corporate perspective, to move this long-life and low capex potash mine into construction in the near term.
It is hard to overstate the importance of potash in the context of the global food security crisis. Potash is primarily used as a fertiliser, improving yields and enhancing the resilience of crops to drought. Used in combination with phosphates and nitrogen, fertiliser increases crop yields, enabling food production to keep up with a constantly rising population on diminishing available farmland.
In 2022, amongst its many other negative consequences, the war in Ukraine brought about significant disruption to the supply of potash, as nearly 40% of the world's production comes from Russia and Belarus.
As a result, the price of potash jumped almost fourfold, and fertilisers became unaffordable for many farmers. Many took the decision to sit out planting cycles, or reduce fertiliser usage rates, in order to avoid potential losses. The inevitable consequence of this is that basic foodstuffs like cereals and rice have become less plentiful and more expensive. During the rest of the year prices did fall back from their peaks as natural demand waned, ending the year at more acceptable levels for farmers, albeit still much higher than historic averages.
But this volatility in such an important basic commodity highlights the need to develop new potash basins that diversify the supply into politically safer and geographically convenient locations.
Our Khemisset project benefits from a number of advantages. Located just 181km from the port of Casablanca, it is far closer to the markets of South America, Europe, and above all Africa, than many of the large established potash production markets, such as Canada. Morocco itself is politically stable, with an established legal and commercial system. Moreover, under the vision of King Mohammed VI, Morocco recently introduced a new investment charter, intended to promote foreign investment in strategic projects with substantial incentives schemes. The Kingdom has good road and rail infrastructure, abundant renewable energy and excellent ports.
Morocco is also a major fertiliser hub already. It is the second largest phosphate producer in the world, built on its possession of 70% of the global reserves. It also uses its phosphates to make NPK fertilisers, by blending with imported nitrogen and potash. Developing an in-country source of potash would further enhance its efficiency and self-reliance significantly.
The food security crisis is essentially about the availability and affordability of basic nutrition. If the cost of weekly shopping has already become problematic for low-income families in Europe and North America, the consequences in the developing world are far more serious still, where higher food prices can lead to malnutrition and social unrest. These are major challenges that the world needs to take very seriously.
For many years, potash was seen by investors as an unglamorous commodity, compared with, for example precious metals, and, more recently, those minerals deemed necessary for energy transition or green technology (lithium, cobalt, copper etc). As a result, the sector suffered from underinvestment, with few new sources brought online in the last 10 years.
Even before the recent supply chain issues, this was short sighted. With a growing population, whose dietary preferences are moving towards land-intensive foods such as meat, and increasing pressure on land availability for cultivation, demand for potash and fertilisers will continue to grow steadily year-on-year.
As transportation prices have also risen, the location of sources of potash production has become more important. The Canadian potash region of Saskatchewan is ideally placed to serve the US and Canadian markets, but the cost of shipping makes it expensive for South America or Africa. Russia and Belarus will find buyers among their allies and neutral countries, mainly in Asia, and China will prioritise its own users.
Developing a project of such strategic importance will bring a wide range of benefits to the Kingdom. At the national level, as well as enhancing the country's status and influence as a fertiliser producer, the project will bring in significant export revenues and taxation payments. Thousands of new jobs (direct and indirect) will be created In the Khemisset region, which has relatively high unemployment, particularly among the growing youth population. Local suppliers and contractors will continue to be selected wherever possible, building on the core team in country and the appointment in January 2022 of Reminex, the engineering arm of the Moroccan mining company, Managem Group. A further indication of our commitment to maximising Moroccan participation and suppliers was the appointment of two large Moroccan banks to the syndicate for the project finance debt.
As a company, our primary objective is simple: to bring the Khemisset project into production as swiftly and efficiently as possible. As we have noted before, it is a large project and nationally strategic for Morocco. Its mine life will likely span into several decades, underpinning the economic benefits to the Kingdom and cementing Morocco's place as a premier producer of fertiliser products.
The entire Emmerson team, both in Morocco and the UK, is passionate about the project. We are determined to make Khemisset the first African potash mine since the 1970s and to unlock the inherent value of the project for the citizens of Khemisset, the Kingdom of Morocco, and our shareholders.
James Kelly
Chairman
12 April 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
Against a backdrop of considerable upheaval in potash markets, as well as the capital markets more recently, the Khemisset potash project in Morocco represents a compelling investment opportunity, which will bring benefits both locally and nationally within Morocco, developing an important new source of potash at a time when food security is a global concern.
All of our activities during 2022 were focused on bringing Khemisset into production as quickly and efficiently as possible. This is a simple objective but there are many steps to take on the way, and hurdles to cross. These include the finalisation of the basic engineering and design work, obtaining the environmental and other approvals, the raising of finance, working with potential offtake partners, and putting together the necessary teams to execute construction.
Environmental approvals
Obtaining the environmental approval is clearly on the critical path for the Company, and it would be impossible to deny that it has already taken longer than had been hoped, or expected.
A considerable amount of work has gone into our submissions and interactions with the Moroccan authorities on this issue, starting in 2020 when the first Environmental and Social Impact Study ("ESIA") was submitted. Over the course of the next two years, a further two revised versions of the ESIA have been completed, incorporating important improvements, some in response to queries and feedback from the authorities, others the result of initiative from our own team and consultants.
An example of the innovative work we have undertaken is the switching of the source of water from the Ouljet Essoltane Dam to the Khemisset waste water treatment plant, which will save 2,000,000m(3) per annum of fresh water draw. The collective impact of these changes is a substantially improved, more robust process with an even more limited environmental and social footprint.
In January 2023, we reported that the environmental discussions were now focused on water issues. Morocco has suffered from periods of drought in recent years, and so ensuring sources of water remain free of contamination is a key concern. In our recent reports, which incorporate the improvements we have made, and in numerous discussions, we have sought to demonstrate the robustness of our proposals, supported by evidence and explanations which the Company believes should address the concerns of the authorities.
The Moroccan authorities fully appreciate the importance of the project to the Kingdom and are working through these proposals with us to achieve solutions acceptable to all parties, whilst protecting the water supply. We continue to work with the relevant technical departments to ensure all risks are understood and properly mitigated.
Technical work at Khemisset in 2022
At the start of 2022, we appointed two engineering firms, Barr Engineering of the US, and Reminex SA of Morocco, to lead basic engineering workstreams for the processing plant, and the balance of the Khemisset potash project scope , respectively. This work is nearing its completion with only the final reports and designs outstanding, and has covered all key aspects of the project in relation to the process facility, surface infrastructure and mine access.
In addition to adding a much higher level of detail to the design, the basic engineering has enabled some outstanding optimisations, in particular with regard to the potential environmental impact, which have resulted in a significant reduction of risk to fresh water supplies.
An options study was completed with regard to the relative merits of wet slurry versus dry stacking of salt tailings. After due analysis, the dry stacking method was selected, primarily due to its environmental robustness, as it essentially removes any realistic risk of saline fluid outflow in the event of an extreme rainfall event. This dry stacking development route is fully supported by our technical team and consultants, as it raises the environmental standard of the tailings storage solution with minimal cost impact to the overall operation.
Furthermore, following its experience executing a similar project in southern Morocco, our basic engineering partner Reminex developed an operational water supply solution that utilises water from the local Khemisset waste water treatment plant, rather than the previous solution of drawing water from upstream of the Ouljet Essoltane Dam. This solution offers Capex and Opex benefits, as well as significant operational, environment and social benefits which are strongly supported by the relevant Moroccan administrations.
In addition, a review of the layout of the surface infrastructure and the alignment of the declines has resulted in a smaller surface footprint requiring less land and an adjustment of the exact location of the surface facilities to simplify access and ensure a more socially responsible use of available land parcels.
Other essential work that has been completed since the start of 2022 includes a traffic study by the Moroccan engineering firm Novec S.A. to select the location and design of the new highway intersection. The same consultant was engaged to work on a logistics model for ultimate transportation of final products to clients.
A drilling campaign was undertaken in the year to provide geotechnical input to help select the optimal locations for the declines and process plant. This will be supplemented by a further campaign in 2023 to provide the detailed data for the optimised location of the decline and surface infrastructure, as well as providing information for the deep well injection proposals, all as input to detailed engineering before construction.
A substantial modelling exercise has been undertaken by a global ventilation expert to facilitate the definition and development of the mine ventilation strategy and this has also fed into the finalisation of mine access design along with the data from the drilling program. Cutting trials using core samples have been completed by a global mining organisation enabling finalisation of capable mining equipment selection.
The Company also signed agreements with L'Office National de l'Electricité et de l'Eau Potable ("ONEE") to approve the design of powerlines and secure capacity in the grid for the project.
Subject to the approval of the environmental proposals, the next phase with regard to the technical work will be to update the 2020 Feasibility Study to reflect all design changes, including an updated mine plan and set of financial estimates, which will also incorporate some of the cost inflation that has been seen in the intervening period. An updated Bankable Feasibility Study ("BFS") will then be completed, which will be reviewed by the technical and due diligence teams of the banks and other financiers of the project, ahead of the conclusion of the fundraise for construction ("Financial Close").
The timing of Financial Close will clearly depend above all on the environmental approval, and on that basis is unlikely to be sooner than Q4 2023.
Financing
In spite of difficult conditions in the capital markets, we have had positive discussions with a number of potential investors in the Khemisset project, who recognise the economic robustness of the financials, as well as the strategic arguments for potash as a long-term investment.
Most investors wish to await the award of the environmental approval before committing resources, and some also wish to see the updated BFS.
In the meantime, we have been able to rely on the continued support of our strategic investor, Global Sustainable Minerals Ltd ("GSM"), who in September 2022 together with their partners Gold Quay Capital ("GQC") renewed their commitment to invest up to US$40 million in the project, subject to appropriate shareholder and regulatory approvals. Having already invested US$5.8 million in 2021, GSM invested a further US$6.0 million in new equity as part of these renewals, underlining their commitment to the project.
In February 2023, we were delighted to announce the appointment of a syndicate of leading international and Moroccan banks as initial mandated lead arrangers ("MLAs") to co-ordinate and fund dual-tranche debt financing facilities. The four MLAs selected were ING Bank, Banque Centrale Populaire, Bank of Africa (Groupe BMCE) and one further international European bank.
Based on current discussions, the facility proposed would be a US$310 million dual-tranche project financing split between an Export Credit Agency ("ECA") covered tranche led by UK Export Finance US$230 million, and a commercial tranche of US$80 million.
This facility is subject to the normal project finance due diligence process (incorporating financial, legal and technical aspects) which will be undertaken following receipt of the environmental approval. However, it clearly demonstrates the attractiveness of the project to a group of significant international and Moroccan banks.
In November 2022, we also announced that we had signed Memoranda of Understanding ("MoUs") for potash and salt with Keytrade AG (for 250k potash) and Hexagon AG (for 250k potash and 500k salt pa) being approximately two thirds of the project's potash production.
These MoUs, although non-binding, set out the key terms for subsequent formal bankable offtake agreements, and include the understanding that the offtake terms will be "take-or-pay", a key element of the process to reach financial close
Corporate
In February 2022, I was pleased to announce the appointment of Jim Wynn as the Group's first CFO. We are delighted to have someone of Jim's experience to help us build our team and work to pull together the financing packages for the project.
In January 2023, we were also pleased to announce the appointment of Liberum Capital as Nominated Advisor to the Group, having been broker since February 2022. Liberum is a well-respected mid-tier stockbroker with a strong mining franchise, and we consider it to be an excellent fit, particularly as it matches our ambition for the project.
Graham Clarke
Chief Executive Officer
12 April 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31 DECEMBER 2022
Hot Features
Premium
2022 2021
Note US$'000 US$'000
Continuing Operations
Administrative expenses 3 (2,581) (2,349)
Share-based payment expense 12 (256) (33)
Net foreign exchange loss (356) (388)
Operating loss (3,193) (2,770)
Finance cost - (7)
Loss before tax (3,193) (2,777)
Income tax 5 (5) -
-------- --------
Loss for the year attributable to equity owners (3,198) (2,777)
-------- --------
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange loss on translating foreign operations (45) (693)
Total comprehensive loss attributable to equity owners (3,243) (3,470)
-------- --------
Earnings per share (cents)
Basic and diluted 6 (0.34) (0.33)
The notes that follow are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT
31 DECEMBER 2022
2022 2021
Note US$'000 US$'000
Non-current assets
Intangible assets 7 18,607 13,555
Property, plant and equipment 43 41
Total non-current assets 18,650 13,596
Current assets
Trade and other receivables 8 1,181 771
Cash and cash equivalents 6,670 10,032
--------- ---------
Total current assets 7,851 10,803
Total assets 26,501 24,399
--------- ---------
Current liabilities
Trade and other payables 9 (1,032) (1,835)
Total current liabilities (1,032) (1,835)
Net assets 25,469 22,564
--------- ---------
Shareholders equity attributable to equity owners
Share capital 11 34,733 28,774
Share-based payment reserve 12 2,470 2,048
Reverse acquisition reserve 2,234 2,198
Retained earnings (13,636) (10,278)
Translation reserve (332) (178)
--------- ---------
Total equity 25,469 22,564
--------- ---------
These financial statements were approved by the Board on 12 April 2023 and signed on their behalf by
Graham Clarke
Director
The notes that follow are an integral part of these consolidated financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 DECEMBER 2022
US$'000 Share Capital Share-based Reverse Retained Translation Total equity
payment reserve Acquisition earnings reserve
reserve
Balance at 1
January 2021 15,755 1,499 2,198 (7,508) 515 12,459
------------- ---------------- ---------------- ---------------- ---------------- ------------
Loss for the year - - - (2,777) - (2,777)
Other
comprehensive
income:
FX loss
translating
foreign
operations - - - - (693) (693)
------------- ---------------- ---------------- ---------------- ---------------- ------------
Total
comprehensive
loss - - - (2,777) (693) (3,470)
Issue of share
options 90 (104) - - - (14)
Transfer - (7) - 7 - -
Issue of shares
and warrants 14,345 660 - - - 15,005
Share issue costs (1,416) - - - - (1,416)
------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 31
December 2021 28,774 2,048 2,198 (10,278) (178) 22,564
------------- ---------------- ---------------- ---------------- ---------------- ------------
Change in
functional
currency 219 65 36 (211) (109) -
------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 1
January 2022 28,993 2,113 2,234 (10,489) (287) 22,564
------------- ---------------- ---------------- ---------------- ---------------- ------------
Loss for the year - - - (3,198) - (3,198)
Other
comprehensive
income:
FX loss
translating
foreign
operations - - - - (45) (45)
------------- ---------------- ---------------- ---------------- ---------------- ------------
Total
comprehensive
loss - - - (3,198) (45) (3,243)
Fair value of
share options - 256 - - - 256
Shares issued to
settle
obligations 25 - - - - 25
Shares issued for
cash 6,106 - - - - 6,106
Cost of issuing
shares - cash (267) - - - - (267)
Cost of issuing
shares -
warrants (283) 283 - - - -
Options/warrants
exercised for
cash 28 - - - - 28
Options exercised
cashless 131 (131) - - - -
Transfer for
options expired
in 2021 - (51) - 51 - -
Balance at 31
December 2022 34,733 2,470 2,234 (13,636) (332) 25,469
------------- ---------------- ---------------- ---------------- ---------------- ------------
The notes that follow are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER 2022
Notes 2022 2021
US$ '000 US$ '000
Cash flows from operating activities
Loss before tax (3,193) (2,777)
Adjustments
Foreign exchange (205) (448)
Taxation 5 (5) -
Share-based payment - fair value of options 12 256 33
Directors' remuneration settled in shares 12 25 -
Depreciation (2) 5
Changes in working capital
Increase in trade and other receivables (410) (351)
(Decrease)/increase in trade and other payables (803) 1,182
Net cash flows used in operating activities (4,337) (2,356)
-------- --------
Cash flows from investing activities
Exploration expenditure 7 (5,052) (2,671)
Purchase of property, plant and equipment - (30)
Net cash flow used in investing activities (5,052) (2,701)
-------- --------
Cash flows from financing activities
Proceeds from issuing shares 11 6,106 14,958
Cost of issuing shares 11 (267) (1,416)
Proceeds from exercise of share options and warrants 12 28 -
-------- --------
Net cash flow generated from financing activities 5,867 13,542
-------- --------
(Decrease)/increase in cash and cash equivalents (3,522) 8,485
-------- --------
Cash and cash equivalents at beginning of year 10,032 1,563
Foreign exchange on cash and cash equivalents 160 (16)
-------- --------
Cash and cash equivalents at end of year 6,670 10,032
-------- --------
Significant non-cash transactions in respect of share issues are disclosed within note 11.
The notes that follow are an integral part of these consolidated financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER 2022
1. General information
Emmerson PLC (the "Company") is a company incorporated and domiciled in the Isle of Man, whose shares were admitted to the Standard Listing segment of the Main market of the London Stock Exchange on 15 February 2017. On 27 April 2021, the Ordinary Shares of the Company were admitted to trading on AIM and the listing of the Company's ordinary shares on the Official List and their trading on the Main Market were cancelled.
The principal activity of the Group is the exploration, development and exploitation of the Khemisset potash project in Morocco.
2. Basis of preparation
2.1. General
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the United Kingdom (UK) in force at the reporting date, and their interpretations issued by the International Accounting Standards Board ("IASB"). The financial statements have been prepared under the historical cost convention except for the revaluation of certain financial instruments that are measured at fair value.
2.2. Functional and presentational currency
The financial information of the Group is presented in US dollars. The functional currency of the Company Emmerson PLC changed on 1 January 2022 from GBP to US$ reflecting the stage in development of activities whereby the cost base of the Group changed from GBP to US$. The effect of a change in functional currency is accounted for prospectively. All items were translated into the new functional currency using the exchange rate at the date of the change.
The individual financial statements of each of the Company's wholly-owned subsidiaries are prepared in the currency of the primary economic environment in which they operate (functional currency).
2.3. Change in Presentation Currency
The Group presented its results in US dollars for the first time for the year to 31 December 2021 having previously reported in GBP. This change should help to provide a clearer understanding of the Group's financial position as the future corporate development activity is likely to be US focused.
In order to satisfy the requirements of IAS 21 with respect to a change in presentation currency, the statutory financial information as previously reported in the Group's Annual Reports have been restated from UK Sterling into US Dollars using the procedures outlined below:
-- Assets and liabilities were translated to US Dollars at the closing rates of exchange at each respective balance sheet date.
-- Share capital, share premium and other reserves were translated at the historic rates prevailing at the dates of transactions.
-- Income and expenses were translated to US Dollars at an average rate at each of the respective reporting years. This has been deemed to be a reasonable approximation.
-- Differences resulting from the retranslation were taken to reserves. -- All exchange rates used were extracted from the Group's underlying financial records.
2.4. Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the Company, Moroccan Salts Limited and Moroccan Salts Limited's subsidiaries (the "MSL Group") following the business combination which took place on 4 June 2018.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
-- The contractual arrangement with the other vote holders of the investee; -- Rights arising from other contractual arrangements; and -- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the Group Financial Statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.
All the Group's companies have 31 December as their year-end. Consolidated financial statements are prepared using uniform accounting policies for like transactions.
2.5. Going concern
The financial statements have been prepared on a going concern basis. The Group has not yet earned revenues and is in the pre-construction phase of its business. The operations of the Group are currently financed from funds raised from shareholders and strategic investors. In common with many pre-production entities, the Group will need to raise further funds in order to progress the Group from the feasibility phase into construction and eventually into production of revenues.
The Group had cash and cash equivalents of US$5.0 million at 31 March 2023 and the Directors are of the view this is sufficient to fund the Group's non-discretionary expenditure and maintain good title to the exploration licences over the next 12 months from the date of approval of these financial statements. The Company will continue to work on advancing the Khemisset project and to commence construction as soon as practicable, however the timing of these activities will be dependent on availability of funds.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.
2.6. Changes in accounting policies
Standards, interpretations and amendments to published standards effective from 1 January 2022
There were no new standards or interpretations effective and adopted for the first time for the year beginning on or after 1 January 2022 that had a significant effect on the Group's or Company's financial statements. These include:
-- Amendments to IAS 16: Property, Plant and Equipment -- Amendments to IFRS 3: Business Combinations - Reference to the Conceptual Framework -- Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets -- Annual Improvements to IFRS Standards 2018-2020 Cycle
Standards, interpretations and amendments to published standards not yet effective
The Group has not early applied the following new and amendments to IFRSs that have been issued but are not yet effective:
-- IFRS 17 Insurance Contracts - effective 1 January 2023
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) - effective 1 January 2023
-- Definition of Accounting Estimate (Amendments to IAS 8) effective 1 January 2023
-- Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction - Amendments to IAS 12 Income Taxes - effective 1 January 2023
-- Initial Application of IFRS 17 and IFRS 9 - Comparative Information (Amendments to IFRS 17) - effective 1 January 2023
-- Classification of liabilities as current or non-current (Amendments to IAS 1) - effective 1 January 2024
-- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) - effective 1 January 2024 -- Non-current Liabilities with Covenants (Amendments to IAS 1) - effective 1 January 2024
The Directors anticipate that the application of all new and amendments to IFRSs will have no material impact on the future results of the Group or Company in the foreseeable future.
2.7. Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.
The Directors are of the opinion that the Group is engaged in a single segment of business being the exploration and development of potash in one geographical area, being Morocco.
2.8. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another.
(a) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income ("OCI"), or fair value through profit and loss.
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest ("SPPI")' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
-- Financial assets at amortised cost (debt instruments)
-- Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
-- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
-- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:
-- The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
-- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate ("EIR") method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group's financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:
-- The rights to receive cash flows from the asset have expired; or
-- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Group recognises an allowance for expected credit losses ("ECLs") for all debt instruments not held at fair value through the profit and loss. 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.
(b) 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.
-- Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings and 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. This category generally applies to trade and other payables.
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.
(c) Financial liabilities
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.
2.9. Taxation
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, determined using tax rates that are expected to apply when the related deferred tax asset or liability is realised or settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
2.10. Intangible assets - exploration and evaluation expenditure
Exploration expenditure comprises all costs which are directly attributable to the exploration of a project area.
When it has been established that a mineral deposit has development potential, all costs (direct and applicable overheads) incurred in connection with the exploration and development of the mineral deposits are capitalised until either production commences, or the project is not considered economically viable.
In the event of production commencing, capitalised costs in respect of the asset are transferred into Tangible Fixed Assets, and are depreciated over the expected life of the mineral reserves on a unit of production basis. Other pre-trading expenses are written off as incurred. For the purposes of impairment testing, intangible assets are allocated to specific projects with each licence reviewed annually. Where a project is abandoned or is considered to be of no further interest, the related costs are written off.
Intangible assets are not subject to amortisation and are tested annually for impairment. The recoverability of all exploration costs, licenses and mineral resources is dependent on the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production, or proceeds from the disposition thereof.
2.11. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions.
2.12. Foreign currencies
Assets and liabilities in foreign currencies are translated into US$ at the rates of exchange ruling at the Statement of Financial Position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result.
On consolidation of a foreign operation, assets and liabilities are translated at the closing rate at the date of the Statement of Financial Position, with the exception of Intangible Assets, which have been translated at cost using the average exchange rate. Income and expenses for each Statement of Comprehensive Income presented are translated at average exchange rates. All resulting exchange differences are recognised in other comprehensive income and accumulated in equity.
2.13. Share-based payment arrangements
The Group operates equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of employee services received in exchange for the grant of share options are recognised as an expense. The total expense to be apportioned over the vesting period 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; and -- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. 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 Group revises its estimate of the number of options that are expected to vest.
The Group recognises the impact of the revision of original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
When options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
The fair value of goods or services received in exchange for shares is recognised as an expense and included within administrative expenses.
2.14. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed below:
a) Recoverability of intangible assets
The Group tests annually for impairment or more frequently if there are indications that the intangible assets might be impaired.
Determining whether the intangible assets are impaired requires an estimation of the value in use of the cash generating units to which the intangible assets belong. Where impairment indicators are present, the Group is required to evaluate the future cash flows expected to arise from the cash-generating unit and the suitable discount rate in order to calculate the present value.
The carrying value of Group's exploration and evaluation intangible assets at 31 December 2022 was US$18.6 million (2021: US$13.6 million), which relates to the Khemisset project.
The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment:
-- The Group's right to explore in an area has expired, or will expire in the near future without renewal;
-- No further exploration or evaluation is planned or budgeted for;
-- A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; or
-- Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.
The Board has reviewed the project for indicators of impairment, and is satisfied that the prospects of deriving economic value are likely to be considerably in excess of the carrying value of the asset in the accounts.
In arriving at this conclusion, the Directors considered the ongoing commitment to the project, the economic metrics of the project as set out in the 2020 Feasibility Study, and the increase in potash prices over the last 12 months.
Following their assessment, the Directors concluded that no impairment charge was necessary for the year ended 31 December 2022.
b) Share-based payments
The Group has made awards of options on its unissued share capital to certain Directors and employees as part of their remuneration package.
The valuation of these options involved making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and interest rates. These assumptions are described in more detail in note 12.
There was a charge to the Statement of Comprehensive Income during the year in relation to share based payments of US$256k (2021: US$33k).
c) Valuation of warrants
The Group issued 50 million warrants to investors in the year. The fair value assigned to the warrants involved making a number of critical estimates relating to price volatility, future dividend yields and interest rates. The valuation of the warrants was US$283k. These assumptions are described in more detail in note 12.
d) Going concern
In their assessment of going concern, the Directors have prepared cash flow forecast showing the Group's non-discretionary expenditure obligations, as well as discretionary activities. The discretionary activities relate largely to the project work at Khemisset, which are either uncommitted in nature, or are the subject of contracts which include clauses allowing the Company to suspend activities without penalty.
The Group has sufficient cash reserves to cover non-discretionary expenditure beyond the Going Concern horizon of at least 12 months from the date of this report, and accordingly the Board believe the Going Concern basis to be appropriate for the preparation of the 2022 Financial Statements.
3. Expenses by nature
2022 2021
US$'000 US$'000
Project costs - 7
Directors' fees (note 4) 601 635
Travel and accommodation 99 59
Auditor's remuneration 48 25
Employment costs 627 455
Professional and consultancy
fees 715 414
Other costs 491 754
Administrative expenses 2,581 2,349
------------------------------- -------- --------
4. Directors' remuneration
Details of Directors' remuneration during the year are as follows:
2022 2021
US$'000 US$'000
Graham Clarke 348 401
James Kelly (appointed 22
March 2021) 117 65
Rupert Joy (appointed 12 July
2021) 55 19
Hayden Locke 35 33
Robert Wrixon 46 50
Edward McDermott (resigned
12 July 2021) - 51
Mark Connelly (resigned 12
July 2021) - 16
Total 601 635
-------------------------------- -------- --------
Graham Clarke, Hayden Locke and Robert Wrixon also received fees for consultancy services which are disclosed within note 14. In addition, certain Directors received share options and shares as part of their remuneration (see note 12).
5. Income tax
2022 2021
US$'000 US$'000
Current tax:
Tax (5) -
Total taxation charge (5) -
-------- --------
Reconciliation of income tax
2022 2021
US$'000 US$'000
Loss before tax (3,193) (2,777)
-------- --------
Loss before tax multiplied by domestic tax
rates applicable to losses in the respective
countries (531) (464)
Effects of:
IFRS consolidation adjustments (195) -
Disallowed expenditures 21 -
Tax losses used up (28) -
Foreign tax attributes - (33)
Minimum tax charges (5) -
Losses on which no deferred tax is recognised 733 497
-------- --------
Total taxation charge (5) -
-------- --------
The weighted average applicable tax rate was 16.6% (2021: 16.7%). Emmerson PLC is registered for taxation in the United Kingdom, where the corporation tax rate was 19%. Morocco has a 20% tax rate applicable to mining companies, including Emmerson's Moroccan subsidiaries, while the British Virgin Islands have a tax rate of 0%.
A deferred tax asset has not been recognised in respect of deductible temporary differences relating to certain losses carried forward at the year end, as there is insufficient evidence that taxable profits will be available in the foreseeable future against which the deductible temporary difference can be utilised.
The unrecognised deferred tax asset for the Group was approximately US$1,806k (2021: US$1,456k). The unrecognised deferred tax asset relating to Moroccan tax losses amounted to approximately US$109k (2021: US$144k).
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
2022 2021
Loss from continuing operations for the year attributable to the equity holders of the
Company
(US$'000) (3,198) (2,777)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted earnings
per
share 939,716,598 822,875,086
Basic and diluted loss per share 0.34 cents 0.33 cents
------------------------------------------------------------------------------------------ ------------ ------------
The potential number of shares which could be issued following the exercise of options and warrants currently outstanding amounts to 230,804,714 (see note 12). Dilutive earnings per share equals basic earnings per share as, due to the losses incurred, there is no dilutive effect from the existing share options and warrants.
7. Intangible assets
The intangible assets consist of capitalised exploration and evaluation expenditure in respect of the Company's potash interests in Morocco (the Khemisset project).
2022 2021
US$'000 US$'000
Cost:
At the beginning of the year 13,555 11,132
Additions 5,052 2,671
Effects of changes in foreign
exchange rates - (248)
Total 18,607 13,555
-------------------------------- -------- --------
Intangible assets are reviewed at each reporting date to determine whether there is objective evidence of impairment. See note 2.14 detailing the Company's judgement in this area.
8. Trade and other receivables
2022 2021
US$'000 US$'000
Other receivables 1,097 551
Prepayments 84 220
Total 1,181 771
-------------------- -------- --------
Other receivables include recoverable VAT and other taxes.
9. Trade and other payables
2022 2021
US$'000 US$'000
Other payables 635 934
Accruals 397 901
Total 1,032 1,835
----------------- -------- --------
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. Other payables consist of supplier invoices for administration expenses. Included within Accruals are engineering costs of US$65k and bonus accruals of US$43k.
10. Financial instruments
Categories of financial instruments
2022 2021
US$'000 US$'000
Financial assets measured at amortised
cost
Other receivables 1,097 551
Cash and cash equivalents 6,670 10,032
---------------------------------------------- --------- ---------
7,767 10,583
---------------------------------------------- --------- ---------
Financial liabilities measured at amortised
cost
---------------------------------------------- --------- ---------
Other payables 635 934
---------------------------------------------- --------- ---------
Financial risk management objectives and policies
The Company is exposed through its operations to credit risk and liquidity risk. In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout this financial information.
General objectives, policies and processes
The Directors have overall responsibility for the determination of the Company's risk management objectives and policies. Further details regarding these policies are set out below:
Capital management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the Group consists of issued capital, reserves and retained earnings. The Directors reviews the capital structure on a semi-annual basis. As a part of this review, the Directors consider the cost of capital, the risks associated with each class of capital and overall capital structure risk management through the new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.
The management's strategy remained unchanged from 2021.
Market price risk
The development and success of any project of the Group will be primarily dependent on the future price of potash. Potash prices are subject to significant fluctuation and are affected by a number of factors which are beyond the control of the Company. Future production from the Khemisset Project is dependent on potash prices that are adequate to make the project economic. Potash prices were volatile during 2022, although by 2023 had returned closer to longer term expected levels at US$400-500 per tonne MOP.
Credit risk
The Company's credit risk arises from cash and cash equivalents with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.
Liquidity risk
Liquidity risk arises from the Directors' management of working capital. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.
The Directors' policy is to ensure that the Company will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, the Directors seek to maintain a cash balance sufficient to meet expected requirements.
The Directors have prepared cash flow projections on a monthly basis through to 31 December 2024. At the end of the period under review, these projections indicated that the Group is expected to have sufficient liquid resources to continue in operational existence and meet its obligations under all reasonably expected circumstances.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised monetary assets and liabilities and net investments in foreign operations. The consolidated accounts use US$ as a presentational currency, and from 1 January 2022, Emmerson PLC (the parent company) determined that US$ was the appropriate functional. The Group's Moroccan entities use MAD as their functional currency.
Net current assets denominated in MAD at the year-end amounted to US$1.1 million and net liability of US$0.44 million respectively.
At 31 December 2022, had the exchange rate between the US$ and MAD increased or decreased by 5% with all other variables held constant, the increase or decrease respectively in net assets would amount to approximately US$0.03k.
The Group does not hedge against foreign exchange movements.
11. Share capital
The Ordinary Shares issued by the Company have no par value and are fully paid. Each Ordinary Share carries one vote on a poll vote. The Company does not have a limited amount of authorised capital.
Number of shares US$'000
As at 31 December 2021 915,062,661 28,774
----------------------------------------------- ----------------- --------
Adjustment for change in functional
currency 1 Jan 2022 - 219
Shares issued for cash 90,902,780 6,106
Less cash cost of share issue - (267)
Less warrants issued as cost of equity - (283)
Shares issued part of Directors' remuneration
(note 12) 284,777 25
Share options exercised in year for
cash 400,000 16
Share options exercised in year cashless 7,509,673 131
Warrants exercised in year for cash 333,333 12
As at 31 December 2022 1,014,493,224 34,733
----------------------------------------------- ----------------- --------
12. Share-based payments
The following is a summary of the share options and warrants outstanding as at 31 December 2022:
Date of Expiry date Vesting date Exercise No of Share price Risk Free Volatility Option
grant Price Options at grant rate Value
------------ ------------ ------------ ------------ ----------- ----------- ----------- ---------- -----------
04-Jun-18 04-Jun-23 04-Jun-18 GBP0.0300 4,250,000 GBP0.0225 1.30% 34% GBP0.0098
04-Jun-18 04-Jun-23 04-Dec-18 GBP0.0300 4,250,000 GBP0.0225 1.30% 34% GBP0.0098
04-Jun-18 04-Jun-23 04-Jun-19 GBP0.0300 12,250,000 GBP0.0225 1.30% 34% GBP0.0098
04-Jun-18 04-Jun-23 04-Dec-19 GBP0.0300 4,250,000 GBP0.0225 1.30% 34% GBP0.0098
26-Mar-19 24-Mar-24 26-Mar-20 GBP0.0350 6,900,000 GBP0.0400 2.10% 68% GBP0.0242
07-Aug-19 05-Aug-24 07-Aug-19 GBP0.0500 1,500,000 GBP0.0375 2.10% 58% GBP0.0192
01-Aug-20 31-Jul-25 01-Aug-20 GBP0.0010 18,750,000 GBP0.0435 1.10% 71% GBP0.0070
01-Aug-20 31-Jul-25 01-Aug-21 GBP0.0010 20,583,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-22 GBP0.0010 7,333,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-23 GBP0.0010 3,333,334 GBP0.0435 1.10% 71% GBP0.0219
21-Jul-22 20-Jul-27 02-Jul-24 GBP0.0700 1,500,000 GBP0.0700 2.05% 55% GBP0.0342
21-Jul-22 20-Jul-32 02-Jul-24 GBP0.0700 4,513,000 GBP0.0700 2.05% 55% GBP0.0457
21-Jul-22 20-Jul-32 15-Mar-23 GBP0.0700 1,000,000 GBP0.0700 2.05% 55% GBP0.0457
21-Jul-22 20-Jul-32 15-Mar-23 GBP0.1000 1,500,000 GBP0.0700 2.05% 55% GBP0.0410
21-Jul-22 20-Jul-32 15-Mar-23 GBP0.1500 1,333,333 GBP0.0700 2.05% 55% GBP0.0352
21-Jul-22 20-Jul-32 15-Mar-24 GBP0.0700 1,000,000 GBP0.0700 2.05% 55% GBP0.0457
21-Jul-22 20-Jul-32 15-Mar-24 GBP0.1000 1,500,000 GBP0.0700 2.05% 55% GBP0.0410
21-Jul-22 20-Jul-32 15-Mar-24 GBP0.1500 1,333,333 GBP0.0700 2.05% 55% GBP0.0352
21-Jul-22 20-Jul-32 15-Mar-25 GBP0.1500 1,333,334 GBP0.0700 2.05% 55% GBP0.0352
98,413,000
-----------
Date of Expiry date Vesting date Exercise No of Share price Risk Free Volatility Warrant
grant Price Warrants at grant rate Value
------------ ------------ ------------ ------------ ----------- ----------- ----------- ---------- -----------
9-Nov-21 9-Nov-22 9-Nov-21 GBP0.0830 82,391,714 GBP0.0565 0.8% 57% GBP0.0058
26-Sep-22 26-Sep-23 26-Sep-23 GBP0.0820 50,000,000 GBP0.0550 1.3% 34% GBP0.0053
132,391,714
-----------
Total outstanding at 31 December 2022 230,804,714
===========
T he weighted average remaining contractual life of the options and warrants at year-end was 1.73 years.
Share options Warrants Total
-------------------------- ------------- ------------ ------------
At 1 January 2021 101,900,000 10,666,666 112,566,666
Issued in year - 82,391,714 82,391,714
Exercised in year - (10,000,000) (10,000,000)
Expired/cancelled in year (5,000,000) (333,333) (5,333,333)
------------- ------------ ------------
At 31 December 2021 96,900,000 82,725,047 179,625,047
------------- ------------ ------------
Issued in year 15,013,000 50,000,000 65,013,000
Exercised in year (13,500,000) (333,333) (13,833,333)
Expired/cancelled in year - - -
------------- ------------ ------------
At 31 December 2022 98,413,000 132,391,714 230,804,714
------------- ------------ ------------
The options and warrants issued were valued using the Black-Scholes valuation method and the assumptions used are detailed above. The expected future volatility has been determined by reference to the historical volatility.
The Group operates equity-settled, share-based compensation plans, under which the entity receives services from Directors and employees as consideration for equity instruments (options) of the Group.
During 2022, James Kelly and Rupert Joy received 218,406 and 66,371 shares respectively at a VWAP of 7.1 pence (total value US$25k) as part of their contractual remuneration.
The total share-based payment recognised in the Statement of Changes in Equity during the year was a US$256k (2021: US$33k), in respect of the fair value of employee share options. The 2021 figure included credits of US$14k in respect of cancelled and unvested share options in the year.
There were 53,763,000 (2021: 65,763,000) options at the year-end held by current Directors and employees at year end. Vesting of the options is subject to the option holder providing continuous service during the vesting period and there are no other performance conditions attached to the options.
Share options Number issued Expiry Graham Clarke (Director) 19,321,000 2 to 9 years Hayden Locke (Director) 10,000,000 2 years Robert Wrixon (Director) 11,000,000 1 to 2 years Jim Wynn (PDMR) 9,000,000 9 years Other employees 4,442,000 2 to 9 years -------------------------- -------------- ------------- Total 53,763,000 -------------------------- -------------- -------------
13. Future rental payments
The commitments arising from operating leases are largely rental payments for buildings. The future minimum lease payments (payables) under non-cancellable operating leases are:
2022 2021
US$'000 US$'000
Within one year 23 20
More than one year - -
-------------------- -------- --------
As at end of year 23 20
--------------------- -------- --------
14. Related party transactions
Directors' consultancy fees
Hayden Locke is a Director of the Company and is a Director of Benson Capital Limited, which provides consulting services to the Company. During the year, Benson Capital Limited received total fees of US$95k (2021: US$244k). The amount outstanding as at the year-end is US$9K (2021: US$ nil).
Robert Wrixon is a Director of the Company and also provides consulting services to the Company. During the year, Robert Wrixon received fees of US$71K (2021: US$116k). The amount outstanding as at the year-end is US$ nil (2021: US$ nil).
Graham Clarke is a Director of the Company and is a Director of GCUK Consulting Limited, which provided consulting services to the Company to the value of US$99k during 2021.
Details of Directors' remuneration during the year are given in note 4.
There are no other related party transactions.
15. Ultimate controlling party
The Directors consider that there is no controlling or ultimate controlling party of the Company.
16. Events after the reporting date
There were no material events that took place after the reporting date.
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END
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