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Share Name Share Symbol Market Type Share ISIN Share Description
Ironveld Plc LSE:IRON London Ordinary Share GB0030426455 ORD 0.1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 0.655 0.65 0.66 0.655 0.655 0.655 2,400,341 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 0.0 -1.0 -0.2 - 9

Ironveld PLC Final Results for the year ended 30 June 2020

29/12/2020 7:00am

UK Regulatory (RNS & others)


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TIDMIRON

RNS Number : 8819J

Ironveld PLC

29 December 2020

Ironveld Plc

("Ironveld" or the "Company")

Final Results for the year ended 30 June 2020

Ironveld plc, the owner of a High Purity Iron ("HPI"), Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa (the "Project") announces its final results for the 12 months ended 30 June 2020 ("the Period").

Operational and Financial Highlights

-- Strategic Review launched in July 2019 resulted in announcement of Option Agreement and intended strategic partnership with Inclusive Investment Group ("IIG") in March 2020 for up to US$3.2 million;

-- The Company and IIG worked together for eight months to secure a complete project financing package, which included a conditional offer of finance from a South African development institution, but agreed post period end in November 2020 that the Option Agreement would lapse;

-- Placing and Broker Option to raise gross proceeds of GBP1,150,000 completed post period end in December 2020; and

-- Appointment of Martin Eales as CEO in December 2019, with Peter Cox being appointed Technical Director.

Outlook

-- The Company continues to engage with a range of parties with a view to an alternative funding transaction or strategic partnership and expects to conclude this in 2021.

Martin Eales, CEO, said:

"The year to June 2020 was dominated by the Strategic Review process and led to the announcement of the intended strategic partnership with IIG in March 2020. Whilst, ultimately, the parties agreed to allow IIG's Option to lapse in November 2020 discussions continue with IIG and other parties with a view to concluding a strategic or project financing transaction.

"The recently completed placing gives us a strengthened financial base from which to negotiate an alternative project funding transaction and we are focused on delivering this in 2021. We thank all our shareholders for their continued support in Ironveld."

For further information, please contact:

 
Ironveld plc                              c/o Blytheweigh 
 Giles Clarke, Chairman                    +44 20 7138 3204 
 Martin Eales, Chief Executive Officer 
finnCap (Nomad and Broker) 
 Christopher Raggett / Charlie Beeson     +44 20 7220 0500 
Turner Pope (Joint Broker) 
 Andrew Thacker                           +44 20 3657 0050 
Blytheweigh 
 Tim Blythe / Megan Ray                   +44 20 7138 3204 
 

NOTES TO EDITORS

Ironveld (IRON.LN) is the owner of Mining Rights over approximately 28 kilometres of outcropping Bushveld magnetite with a SAMREC compliant ore resource of some 56 million tons of ore grading 1,12% V2O5, 68,6% Fe2O3 and 14,7% TiO2.

The Definitive Feasibility Study published in April 2014 confirms the project's viability to deliver a Vanadium slag product for which the company has an offtake agreement as well a High Purity Iron product which commands a premium in the market place and Titanium slag containing commercial grades of titanium.

Ironveld is an AIM traded company. For further information on Ironveld please refer to www.ironveld.com .

CHAIRMAN'S STATEMENT

During the Period, we continued to undertake various activities focused on realising the value of the Company's assets.

In July 2019, we announced that finnCap had been engaged to lead a review of the strategic alternatives for Ironveld's mining assets (the "Strategic Review"). These assets include unfettered rights to 56.4 million tonnes of magnetite ore, which the JORC compliant mineral resources demonstrates holds 1.4 billion pounds weight of Vanadium - equivalent to four times annual global Vanadium demand; 27 million tons of High Purity Iron in situ; and 8.3 million tonnes of titanium.

In December 2019 we announced the appointment of Martin Eales as the new Chief Executive Officer of the Company, with Peter Cox moving to the position of Technical Director.

The Strategic Review led to a number of engagements with parties potentially interested in making an offer to fund all or part of the development of Ironveld's mining assets and led to the announcement in March 2020 that the Company and Inclusive Investment Group ("IIG") had signed a conditional Option Agreement envisaging an investment in the Company by IIG of US$3.2 million (approximately GBP2.7 million). The Option Agreement was extended in June 2020 and September 2020, with IIG advancing a total of US$650,000 in bridge funding to the Company, before ultimately lapsing post period end in November 2020.

During the period of the Option Agreement the Company and IIG worked hard to deliver a complete project funding solution, including IIG obtaining a conditional offer of project finance from a South African funding institution, and the parties remain in discussions about a possible future partnership.

Following the announcement of the agreed lapse of the IIG Option Agreement the Company announced a conditional share placing at 0.30 pence per share to raise gross proceeds of GBP1,150,000, whilst at the same time capitalising various loans and accrued salary/fees owed to IIG, Directors and other lenders. The net proceeds of the placing have been used to strengthen the Company's financial position and cover its overheads whilst it seeks to conclude an alternative development funding transaction.

We remain committed to operating responsibly, working closely with stakeholders and local communities at grassroots level to improve standards of living. We continue to support our 'Keep a Girl in School' initiative working alongside our local partners, The Imbumba Foundation and the Nelson Mandela Foundation, to provide hygiene support to approximately 600 female students at school in the local area. Additionally we plan a new scheme in 2021 which will provide facilities and support to children with maths and science homework outside of school. We were delighted to note that Ironveld's first sponsored graduate mining engineer from the local community, Tebogo Mahoai (2018), completed his mine officials training program and obtained his blasting licence during the period.

Financial

The Group recorded a loss before tax of GBP1.0m (2019: GBP0.6m) and had cash balances of GBP0.03m (2019: GBP0.6m) at the end of the period. The Company does not plan to pay a dividend for the year ended 30 June 2020.

Going concern

Following approval of the share placing on 14 December 2020 and further rationalisation of the Company's cost base in both South Africa and the UK, the Group's present financial resources and existing facilities are considered sufficient to enable it to operate until the first half of 2022, by which time, the Board of Directors anticipates to have secured an alternative transaction focused on delivering value from the Group's principal assets.

Outlook

Ironveld's Board remains committed to delivering value to our shareholders. Following the recent lapse of the Option Agreement with IIG the Company has re-engaged in discussions with a number of parties which the Board expects to lead to an alternative transaction.

We would like to thank all of our shareholders for their continuing support for both the Company and the project and we look forward to providing further updates in the near future.

Giles Clarke

Chairman

CONSOLIDATED INCOME STATEMENT

 
                                      Note          Year      Year 
                                              ended 2020     ended 
                                                  GBP000      2019 
                                                            GBP000 
 
 Administrative expenses                           (695)     (629) 
                                            ------------  -------- 
 
 Operating loss                       4            (695)     (629) 
 
 Other gains and losses               6            (326)         - 
 Investment revenues                  7                4         6 
 Finance costs                        8              (2)       (2) 
                                            ------------  -------- 
 Loss before tax                                 (1,019)     (625) 
 
 Tax                                  9                -         - 
                                            ------------  -------- 
 
 Loss for the year                               (1,019)     (625) 
                                            ============  ======== 
 
 Attributable to: 
 Owners of the Company                           (1,017)     (624) 
 Non-controlling interests                           (2)       (1) 
                                            ------------  -------- 
                                                 (1,019)     (625) 
                                            ============  ======== 
 
 Loss per share- Basic and diluted    10         (0.16p)   (0.10p) 
                                            ============  ======== 
 
 

There is no difference between the results as disclosed above and the results on a historical cost basis. The income statement has been prepared on the basis that all operations are continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
                                                     Year      Year 
                                                    ended     ended 
                                                     2020      2019 
                                                   GBP000    GBP000 
 
 Loss for the period                              (1,019)     (625) 
 
 Exchange difference on translation of foreign 
  operations                                      (3,654)       211 
                                                 --------  -------- 
 
 Total comprehensive income for the year          (4,673)     (414) 
                                                 ========  ======== 
 
 
 Attributable to: 
 Owners of the Company                            (4,061)     (448) 
 Non-controlling interests                          (612)        34 
                                                 --------  -------- 
                                                  (4,673)     (414) 
                                                 ========  ======== 
 
 
 

CONSOLIDATED BALANCE SHEET

 
                                  Note       2020       2019 
                                           GBP000     GBP000 
 Non-current assets 
 Intangible assets                12       23,574     27,423 
 Property, plant and equipment    13            2          5 
 Investments                      14            -        390 
 Other receivables                15            2          - 
                                        ---------  --------- 
                                           23,578     27,818 
                                        ---------  --------- 
 
 Current assets 
 Trade and other receivables      15           76        156 
 Cash and cash equivalents                     28        566 
                                        ---------  --------- 
                                              104        722 
                                        ---------  --------- 
 Total assets                              23,682     28,540 
                                        =========  ========= 
 
 Current liabilities 
 Trade and other payables         16        (805)      (610) 
 Borrowings                       17        (210)          - 
                                        ---------  --------- 
                                          (1,015)      (610) 
                                        ---------  --------- 
 
 Non-current liabilities 
 Deferred tax liabilities         18      (4,384)    (5,243) 
                                        ---------  --------- 
 
 Total liabilities                        (5,399)    (5,853) 
                                        ---------  --------- 
 
 Net assets                                18,283     22,687 
                                        =========  ========= 
 
 Equity 
 Share capital                    20        9,774      9,774 
 Share premium                    21       19,691     19,691 
 Other reserve                    21          189          - 
 Retained earnings                21     (14,480)   (10,499) 
                                        ---------  --------- 
 
 Equity attributable to owners 
  of the Company                           15,174     18,966 
 
 Non-controlling interests        24        3,109      3,721 
                                        ---------  --------- 
 
 Total equity                              18,283     22,687 
                                        =========  ========= 
 
 

These financial statements were approved by the Board and authorised for issue on 28 December 2020

Signed on behalf of the Board

M Eales

   Director                                      Company Registration No: 04095614 

PARENT COMPANY BALANCE SHEET

 
                                Note      2020      2019 
                                        GBP000    GBP000 
 
 Non-current assets 
 Investments                    14      24,654    24,074 
                                      --------  -------- 
 
 Current assets 
 Trade and other receivables    15          30        25 
 Cash and cash equivalents                  15       523 
                                      --------  -------- 
                                            45       548 
                                      --------  -------- 
 Total assets                           24,699    24,622 
                                      ========  ======== 
 
 Current liabilities 
 Trade and other payables       16       (219)      (70) 
 Borrowings                     17       (210)         - 
                                      --------  -------- 
 
 Total liabilities                       (429)      (70) 
                                      --------  -------- 
 
 Net assets                             24,270    24,552 
                                      ========  ======== 
 
 
 Equity 
 Share capital                  20       9,774     9,774 
 Share premium                  21      19,691    19,691 
 Other reserve                  21         189         - 
 Retained earnings              21     (5,384)   (4,913) 
                                      --------  -------- 
 
 Total equity                           24,270    24,552 
                                      ========  ======== 
 (Attributable to owners of 
  the Company) 
 
 

The loss for the financial year dealt with in the financial statements of the parent Company was GBP551,000 (2019 - loss GBP382,000).

These financial statements were approved by the Board and authorised for issue on 28 December 2020.

Signed on behalf of the Board

M Eales

   Director                                                        Company Registration No: 04095614 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Equity attributable to owners of the Company:

 
                                 Share      Share      Other    Retained 
                               Capital    Premium    Reserve    Earnings     Total 
                                GBP000     GBP000     GBP000      GBP000    GBP000 
 
 At 1 July 2018                  8,903     19,161          -    (10,056)    18,008 
 
 Exchange difference on 
  translation of foreign 
  operations                         -          -          -         176       176 
 
 Issue of share capital            871        530          -           -     1,401 
 
 Credit for equity-settled 
  share based payments               -          -          -           5         5 
 
 Loss for the year                   -          -          -       (624)     (624) 
                             ---------  ---------  ---------  ----------  -------- 
 
 At 30 June 2019                 9,774     19,691          -    (10,499)    18,966 
                             =========  =========  =========  ==========  ======== 
 
 Exchange difference on 
  translation of foreign 
  operations                         -          -          -     (3,044)   (3,044) 
 
 Issue of share option               -          -        189           -       189 
 
 Credit for equity-settled 
  share based payments               -          -          -          80        80 
 
 Loss for the year                   -          -          -     (1,017)   (1,017) 
                             ---------  ---------  ---------  ----------  -------- 
 
 At 30 June 2020                 9,774     19,691        189    (14,480)    15,174 
                             =========  =========  =========  ==========  ======== 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

Total equity:

 
                                            Owners 
                                            of the   Non-controlling     Total 
                                           Company          Interest    Equity 
                                            GBP000            GBP000    GBP000 
 
 At 1 July 2018                             18,008             3,687    21,695 
 
 Exchange difference on translation of 
  foreign operations                           176                35       211 
 
 Issue of share capital                      1,401                 -     1,401 
 
 Credit for equity-settled share based 
  payments                                       5                 -         5 
 
 Loss for the year                           (624)               (1)     (625) 
                                         ---------  ----------------  -------- 
 
 At 30 June 2019                            18,966             3,721    22,687 
                                         =========  ================  ======== 
 
 Exchange difference on translation of 
  foreign operations                       (3,044)             (610)   (3,654) 
 
 Issue of share option                         189                 -       189 
 
 Credit for equity-settled share based 
  payments                                      80                 -        80 
 
 Loss for the year                         (1,017)               (2)   (1,019) 
                                         ---------  ----------------  -------- 
 
 At 30 June 2020                            15,174             3,109    18,283 
                                         =========  ================  ======== 
 

COMPANY STATEMENT OF CHANGES IN EQUITY

Equity attributable to the equity holders of the Company:

 
                                 Share      Share      Other    Retained     Total 
                               Capital    Premium    Reserve    Earnings    Equity 
                                GBP000     GBP000     GBP000      GBP000    GBP000 
 
 At 1 July 2018                  8,903     19,161          -     (4,536)    23,528 
 
 Credit for equity-settled 
  share based payments               -          -          -           5         5 
 
 Issue of share capital            871        530          -           -     1,401 
 
 Loss for the year                   -          -          -       (382)     (382) 
                             ---------  ---------  ---------  ----------  -------- 
 
 At 30 June 2019                 9,774     19,691          -     (4,913)    24,552 
                             =========  =========  =========  ==========  ======== 
 
 Credit for equity-settled 
  share based payments               -          -          -          80        80 
 
 Issue of share option               -          -        189           -       189 
 
 Loss for the year                   -          -          -       (551)     (551) 
                             ---------  ---------  ---------  ----------  -------- 
 
 At 30 June 2020                 9,774     19,691        189     (5,384)    24,270 
                             =========  =========  =========  ==========  ======== 
 
 

CONSOLIDATED CASH FLOW STATEMENT

 
                                              Year      Year 
                                             ended     ended 
                                              2020      2019 
                                    Note    GBP000    GBP000 
 
 Net cash used in operating 
  activities                        22       (397)     (420) 
                                          --------  -------- 
 
 Investing activities 
 Purchases of property, plant 
  and equipment                                  -       (4) 
 Purchase of exploration and 
  evaluation assets                          (555)   (1,202) 
 Contributions to exploration 
  and evaluation assets                          -       268 
 Interest received                               4         6 
                                          --------  -------- 
 
 Net cash used in investing 
  activities                                 (551)     (932) 
                                          --------  -------- 
 
 Financing activities 
 Proceeds on issue of equity 
  (net of costs)                                 -     1,401 
 Proceeds on issue of share                    189         - 
  options and warrants 
 Proceeds from new loans                       210         - 
                                          --------  -------- 
 
 Net cash generated by financing 
  activities                                   399     1,401 
                                          --------  -------- 
 
 Net (decrease)/increase in 
  cash and cash equivalents                  (549)        49 
 
 Cash and cash equivalents at 
  beginning 
  of year                           22         566       517 
 
 Effects of foreign exchange 
  rates                                         11       517 
                                          --------  -------- 
 
 Cash and cash equivalents at 
  end of yea                        22          28       566 
                                          ========  ======== 
 

COMPANY CASH FLOW STATEMENT

 
                                                 Year      Year 
                                                ended     ended 
                                                 2020      2019 
                                       Note    GBP000    GBP000 
 
 Net cash from operating activities    22       (350)     (381) 
                                             --------  -------- 
 
 Investing activities 
 Payments to acquire investments                (557)     (961) 
                                             --------  -------- 
 
 Net cash used in investing 
  activities                                    (557)     (961) 
                                             --------  -------- 
 
 Financing activities 
 Proceeds on issue of equity 
  (net of costs)                                    -     1,401 
 Proceeds on issue of share                       189         - 
  options and warrants 
 Proceeds from new loans                          210         - 
                                             --------  -------- 
 
 Net cash generated by financing 
  activities                                      399     1,401 
                                             --------  -------- 
 
 Net (decrease)/increase in 
  cash and cash equivalents                     (508)        59 
 
 Cash and cash equivalents 
  at beginning of year                 22         523       464 
                                             --------  -------- 
 
 Cash and cash equivalents 
  at end of year                       22          15       523 
                                             ========  ======== 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. General information

Ironveld Plc is a public company incorporated and domiciled in the United Kingdom under the Companies Act 2006 whose shares are listed on the Alternative Investment Market of the London Stock Exchange. The address of the registered office is given on page 2. The nature of the Group's operations and its principal activities are set out in note 3 and in the Directors report on page 5.

Adoption of new and revised Standards

In the current year, the Group has applied a number of new or amended standard for the first time which are mandatory for accounting periods commencing on or after 1 January 2019. None of the standards adopted had a material impact on the financial statements. The significant new and amended standards adopted were as follows:-

IFRS 16 - Leases

Annual Improvements to IFRSs 2015-2017 Cycle

At the date of authorisation of these financial statements, the following accounting standards, amendments to existing standards and interpretations are not yet effective and have not been adopted early by the Group.

IFRS 17 - Insurance contracts

Amendments to references to the conceptual Framework in IFRS Standards

Annual Improvements to IFRSs 2018-2020 Cycle.

The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group and Company's results or equity.

2.1 Significant accounting policies

The financial statements are based on the following policies which have been consistently applied:

Basis of preparation

The financial statements of the Group and Parent Company have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Companies Act 2006.

Under section 408 of the Companies Act 2006 the Parent Company is exempt from the requirement to present its own profit and loss account.

The financial statements have been prepared on the historical cost basis. The financial statements are presented in pounds sterling because that is considered to be the currency of the primary economic environment.

The principal accounting policies are set out below:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by the Company (its subsidiaries) made up to the year-end. Control is achieved where the Company has power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control and ceases when the Company loses control of the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 Significant accounting policies (continued)

Basis of consolidation (continued)

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders are initially measured at their proportionate share of the fair value of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying value of the non-controlling interests is the amount of initial recognition plus the non-controlling interests' share of the subsequent changes in equity.

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

Business combinations

Acquisitions of subsidiaries are accounted for using acquisition accounting. The consideration for each acquisition is measured at the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control in the acquiree. Acquisition-related costs are recognised in the income statement as incurred.

Exploration and evaluation

Costs incurred prior to acquiring the rights to explore are charged directly to the income statement.

Licence acquisition costs and all other costs incurred after the rights to explore an area have been obtained, such as the direct costs of exploration and appraisal (including geological, drilling, trenching, sampling, technical feasibility and commercial viability activities) are accumulated and capitalised as intangible exploration and evaluation ("E&E") assets, pending determination. Amounts charged to project partners in respect of costs previously capitalised are deducted as contributions received in determining the accumulated cost of E&E assets.

E&E assets are not amortised prior to the conclusion of the appraisal activities. At completion of appraisal activities, if financial and technical feasibility is demonstrated and commercial reserves are discovered then, following development sanctions, the carrying value of the relevant E&E asset will be reclassified as a development and production asset in intangible assets after the carrying value has been assessed for impairment and, where appropriate adjusted. If after completion of the appraisal of the area it is not possible to determine technical and commercial feasibility or if the legal rights have expired or if the Group decide to not continue activities in the area, then the cost of unsuccessful exploration and evaluation are written off to the income statement in the relevant period.

The Group's definition of commercial reserves for such purposes is proved and probable reserves on an entitlement basis. Proved and probable reserves are the estimated quantities of minerals which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from the known reserves and which are considered to be commercially producible.

Such reserves are considered commercially producible if management has the intention of developing and producing them and such intention is based upon:

- a reasonable expectation that there is a market for substantially all of the expected production;

   -         a reasonable assessment of the future economics of such production; 

- evidence that the necessary production, transmission and transportation facilities are available or can be made available; and

   -         agreement of appropriate funding; and 
   -         the making of the final investment decision. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 Significant accounting policies (continued)

Exploration and evaluation (continued)

On an annual basis a review for impairment indicators is performed. If an indicator of impairment exists an impairment review is performed. The recoverable amount is then considered to be the higher of the fair value less costs of sale or its value in use. Any identified impairment is written off to the income statement in the period identified.

Development and production assets

Development and production assets, classified within property, plant and equipment, are accumulated generally on a field basis and represents the cost of developing the commercial reserves discovered and bringing them into production, together with the E&E expenditure incurred in finding the commercial reserves transferred from intangible assets.

Depreciation of producing assets

The net book values of producing assets are depreciated generally on the field basis using the unit or production method by reference to the ratio of production in the period and the related commercial reserves of the field, taking into account the future development expenditure necessary to bring those reserves to production.

Research and development

Research expenditure is recognised as an expense in the period in which it is incurred.

An internally-generated asset arising from any development is recognised only if all of the following conditions are met:

             -         an asset is created that can be identified; 
             -         it is probable that the asset created will generate future economic benefits; and 
             -         the development cost of the asset can be measured reliably. 

Non-current assets held for sale

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and the fair value less costs to sell.

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the asset and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after sale.

Revenue

Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer. The Group reported no revenue for the year.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 Significant accounting policies (continued)

Taxation

The tax expense represents the sum of the tax payable and deferred tax.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the calculation of the taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised on all appropriate taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible timing differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date.

Deferred tax is calculated at the tax rates that are expected to be applicable in the period when the liability or asset is realised and is based on tax laws and rates substantially enacted at the balance sheet date. Deferred tax is charged in the income statement except where it relates to items charged/credited in other comprehensive income, in which case the tax is also dealt with in other comprehensive income.

Leases

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. All of the Groups leases has a lease term of 12 months or less.

Property, plant and equipment

Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful life, as follows:

Plant and machinery 10% - 25% straight line basis or reducing balance basis

Foreign currencies

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in the income statement in the period in which they arise.

When presenting the consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at the exchange rates prevailing at the balance sheet date. Income and expense items are translated at average exchange rates for the period, unless exchange rates have fluctuated significantly in which case the rates at the date of the transactions are used. Exchange differences arising are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests where appropriate).

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated using the closing rate.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 Significant accounting policies (continued)

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Other receivables

Other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method except for short-term receivables when recognition of interest would be immaterial. The Group recognises appropriate allowances for expected credit losses in the income statement based on a historical credit loss experience, adjusted for factors that are specific to the debtors and general economic conditions.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Financial liability and equity

Interest bearing bank and other loans and bank overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are initially recognised at fair value and are subsequently amortised using the effective interest method. Fair value is estimated from available market data and reference to other instruments considered to be substantially the same.

Trade and other payables

Trade payables and other financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

The Group's activities expose it primarily to the financial risks of changes in interest rates on borrowings and foreign exchange risk.

Investments

Investments in subsidiaries are stated at cost less any provision for the permanent diminution in value.

Share-based payments

The Group issues equity-settled share-based payments to certain employees and other parties. Equity settled share-based payments are measured at fair value at the date of grant. In respect of employee related share based payments, the fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. In respect of other share based payments, the fair value is determined at the date of grant and recognised when the associated goods or services are received.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 Significant accounting policies (continued)

Operating segments

The Group considers itself to have one operating segment in the year and further information is provided in note 3.

Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group has adequate resources to continue in operating existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further details are provided in the note 2.2 and in the Strategic Report on pages 3 to 4. The financial statements therefore do not include the adjustments that would result if the Group and Company were unable to continue as a going concern.

2.2 Critical accounting estimates and judgements

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Fair value of acquisition

On acquisition of a subsidiary, the Company is required to estimate the fair value of the assets and liabilities acquired and the consideration paid. The estimate in respect of exploration and evaluation assets is affected by many factors including the future viability of commercial reserves which have been based on the judgement of Directors supported by third party technical reports.

Going concern

As announced on 12 November 2020, the Company and IIG agreed that the Option Agreement originally announced on 30 March would be allowed to lapse on 30 November 2020. On 26 November 2020, alongside the announcement of a share placing to raise up to GBP1,150,000, the Company agreed that the majority of the bridging funds provided by IIG (US$650,000 plus interest) would be capitalised at a price of 0.42 pence per share alongside a cash repayment of approximately GBP112,000.

Discussions with alternative financial and development funding institutions to secure the project funding required continue.

Following shareholder approval of the of the share placing on 14 December 2020, the Group's present financial facilities are considered sufficient to enable the Company to operate at present levels until the first half of 2022, by which time, the Board of Directors anticipates to have secured the further finance to develop the Project.

Whilst the impact of the global COVID-19 pandemic including the associated travel restrictions has hampered the Company's attempts to secure project development funding to some extent, as the Group is presently not currently undertaking any operations at the project then no significant impact is anticipated over the next 12 months.

Therefore, whilst the existing resources are not sufficient to develop the mining asset, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being twelve months from the date of the approval of the financial statements. The Group is committed to developing its Project and is actively engaged with interested parties. For this reason, the Board continues to adopt the going concern basis in the preparation of these financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.2 Critical accounting estimates and judgements (continued)

Exploration and evaluation assets

The Group has adopted a policy of capitalising the costs of exploration and evaluation and carrying the amount without impairment assessment until impairment indicators exist (as permitted by IFRS 6). The Directors consider that the Group remains in the exploration and evaluation phase and therefore, under IFRS 6, the Directors have to make judgements as to whether any indicators of impairment exist and the future activities of the Group. No such indicators of impairment were identified and therefore, in accordance with IFRS 6, no impairment review has been carried out. The Directors remain committed to development of the asset.

Investment impairment indicators

The Company balance sheet includes an investment in subsidiary companies of GBP24,654,000 which is underpinned and reflects the underlying subsidiary exploration and evaluation assets discussed above. As no indicators of impairment have been identified in the exploration and evaluation asset then subsequently no indicators or impairment in the investment in subsidiary have been identified and as is consistent with the exploration and evaluation assets, no impairment review has been carried out in the period.

Deferred tax assets

The Directors must judge whether the future profitability of the Group is likely in making the decision whether or not to recognise a deferred tax asset in respect of taxation losses. No deferred tax assets have been recognised in the year.

3. Business and geographical segments

Information reported to the Group Directors for the purposes of resource allocation and assessment of segment performance is focused on the activity of each segment and its geographical location. The Directors consider that there is only one business segment, which is the activity of prospecting, exploration and mining based in South Africa.

4. Operating loss

 
                                                              Year ended      Year 
                                                                    2020     ended 
                                                                  GBP000      2019 
                                                                            GBP000 
 
 Operating loss for the year is shown after charging: 
 
 Depreciation on tangible assets                                       2         3 
 Short term lease payments under operating leases                     26        53 
 Impairment of receivables                                             -         - 
 Share based payment charge                                           80         - 
                                                             ===========  ======== 
 
 
 Auditors' remuneration 
 
 Fees payable to the auditors for the audit of the 
  Company's accounts                                                  37        37 
 
 Fees payable to the Company's auditors and its associates 
  for other services:- 
 The audit of the Company's subsidiaries                              13        14 
 Tax compliance services                                               7         7 
 Other assurance services                                             10        12 
 Other non-audit services                                              3         3 
                                                             ===========  ======== 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. Staff costs

Group

 
                                                             Year ended      Year 
                                                                   2020     ended 
                                                                 GBP000      2019 
                                                                           GBP000 
 
 Wages and salaries                                                 350       438 
 Social security costs                                               28        15 
 Pension costs                                                        8         - 
 Share based payments                                                80         5 
 Directors other fees                                               305       382 
                                                           ------------  -------- 
                                                                    771       840 
                                                           ============  ======== 
 
 The average monthly number of employees, including         2020 Number      2019 
  Directors, during the period was as follows:                             Number 
 
 Administration and management                                       12        20 
                                                           ============  ======== 
 
                                                                   2020      2019 
                                                                 GBP000    GBP000 
 
 Directors remuneration and other fees                              594       517 
                                                           ============  ======== 
 
 The aggregate remuneration and fees paid to the highest 
  paid Director was                                                 185       251 
                                                           ============  ======== 
 
 

Further details of the Directors' remuneration are given in the Directors' Remuneration Report on pages 10 and 11.

Company

 
                                                        Year ended      Year 
                                                              2020     ended 
                                                            GBP000      2019 
                                                                      GBP000 
 
 Wages and salaries - Directors                                202       135 
 Social security costs                                          26        12 
 Share based payments                                           80         - 
 Pension costs                                                   7         - 
                                                      ------------  -------- 
                                                               315       147 
                                                      ============  ======== 
 
 
 The average monthly number of employees, including    2020 Number      2019 
  Directors, during the period was as follows:                        Number 
 
 Directors                                                       5         5 
                                                      ============  ======== 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6. Other gains and losses

 
                                   Year ended        Year 
                                         2020       ended 
                                       GBP000        2019 
                                                   GBP000 
 
 Impairment of other investments          326           - 
                                  ===========    ======== 
 
 

7. Investment revenues

 
                                   Year ended      Year 
                                         2020     ended 
                                       GBP000      2019 
                                                 GBP000 
 
 Interest on financial deposits             4         6 
                                  ===========  ======== 
 
 

8. Finance costs

 
                                      Year ended      Year 
                                            2020     ended 
                                          GBP000      2019 
                                                    GBP000 
 
 Loan interest and similar charges             2         2 
                                     ===========  ======== 
 
 

9. Tax

 
                                                        Year ended      Year 
                                                              2020     ended 
                                                            GBP000      2019 
                                                                      GBP000 
 
 a) Tax charge for the period 
 
 Corporation tax: 
 Current period                                                  -         - 
 Deferred tax (note 18)                                          -         - 
                                                       -----------  -------- 
                                                                 -         - 
                                                       -----------  -------- 
 
 b) Factors affecting the tax charge for the period 
 
 Loss on ordinary activities for the period before 
  taxation                                                 (1,019)     (625) 
                                                       ===========  ======== 
 
 Loss on ordinary activities for the period before 
  taxation multiplied by 
  effective rate of corporation tax in the UK of 19% 
  (2019 - 19%)                                               (194)     (119) 
 
 Effects of: 
 Unused tax losses not recognised                              194       119 
                                                       -----------  -------- 
 
 Tax expense for the period                                      -         - 
                                                       ===========  ======== 
 
 
 

c) Factors that may affect future tax charges - The Group has estimated unutilised tax losses amounting to GBP5,194,000 (2019 - GBP4,235,000) the values of which are not recognised in the balance sheet. The losses represent a potential deferred taxation asset of GBP1,123,000 (2019 - GBP831,000) which would be recoverable should the Group make sufficient suitable taxable profits in the future.

In addition, the Group has pooled exploration costs incurred of GBP7,445,000 (2019 - GBP8,082,000) which are expected to be deductible against future trading profits of the Group.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10. (Loss)/earnings per share

 
                                                      2020      2019 
                                                    GBP000    GBP000 
 
 Loss attributable to the owners of the Company    (1,019)     (625) 
                                                  ========  ======== 
 
 Loss per share - Basic and diluted 
  Continuing operations                            (0.16p)   (0.10p) 
                                                  ========  ======== 
 
 

The calculation of basic earnings per share is based on 654,990,841 (2019 - 602,782,339) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Where the Group reports a loss for the current period, then in accordance with IAS 33, the share options are not considered dilutive. Details of such instruments which could potentially dilute basic earnings per share in the future are included in note 20.

11. Loss attributable to owners of the parent Company

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company is not presented as part of these accounts. The parent Company's loss for the financial year amounted to GBP551,000 (2019 - GBP382,000).

12. Intangible assets

 
                                                         Exploration 
                                                      and evaluation 
                                                              assets 
                                                              GBP000 
 Group 
 Cost: 
 At 1 July 2018                                               26,218 
 Additions                                                     1,225 
 Contributions received                                        (268) 
 Exchange differences                                            248 
                                                    ---------------- 
 
 At 30 June 2019                                              27,423 
                                                    ---------------- 
 
 Additions                                                       645 
 Exchange differences                                        (4,494) 
                                                    ---------------- 
 
 At 30 June 2020                                              23,574 
                                                    ================ 
 
 Amortisation: 
 
 At 1 July 2018, 30 June 2019 and at 30 June 2020                  - 
                                                    ================ 
 
 Net book value at 30 June 2020                               23,574 
                                                    ================ 
 
 Net book value at 30 June 2019                               27,423 
                                                    ================ 
 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. Intangible assets (continued)

The Group's exploration and evaluation assets all relate to South Africa.

In respect of the exploration and evaluation assets which remain in the appraisal phase, the Group has performed a review for impairment indicators, as required by IFRS 6 and in the absence of such indicators no impairment review was carried out. During the period contributions of GBPNil (2019 - GBP268,000) were received from the project partner in respect of the mineral ore testing.

13. Property, plant and equipment

 
                                            Plant 
                                    and machinery 
                                           GBP000 
 Group 
 Cost: 
 At 1 July 2019                                41 
 Exchange differences                         (7) 
                                  --------------- 
 
 At 30 June 2020                               34 
                                  --------------- 
 
 Depreciation: 
 At 1 July 2019                                36 
 Charge for the period                          2 
 Exchange differences                         (6) 
                                  --------------- 
 
 At 30 June 2020                               32 
                                  --------------- 
 
 Net book value at 30 June 2020                 2 
                                  =============== 
 
 Net book value at 30 June 2019                 5 
                                  =============== 
 
 
                                            Plant 
                                    and machinery 
                                           GBP000 
 Cost: 
 At 1 July 2018                                37 
 Additions                                      4 
                                  --------------- 
 
 At 30 June 2019                               41 
                                  --------------- 
 
 Depreciation: 
 At 1 July 2018                                33 
 Charge for the period                          3 
                                  --------------- 
 
 At 30 June 2019                               36 
                                  --------------- 
 
 Net book value at 30 June 2019                 5 
                                  =============== 
 
 Net book value at 30 June 2018                 4 
                                  =============== 
 
 

All non-current assets in 2020 and 2019 were located in South Africa.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. Investments

Group - Loans to other entities

 
                              2020      2019 
                            GBP000    GBP000 
 Cost: 
 At 1 July                     390       386 
 Exchange differences         (64)         4 
                          --------  -------- 
 
 At 30 June                    326       390 
                          --------  -------- 
 
 Impairment: 
 At 1 July                       -         - 
 Recognised in the year        326         - 
                          --------  -------- 
 
 At 30 June                    326         - 
                          --------  -------- 
 
 Book value at 30 June           -       390 
                          ========  ======== 
 
 

The investment represented the Rand 7million refundable deposit to Siyanda Smelting and Refining Proprietary Limited which the Group paid in exchange for a period of exclusivity to conclude a potential acquisition of the company. The deposit is interest free and becomes refundable should the acquisition not proceed. The investment was considered to be fully impaired as at 30 June 2020 whilst the Directors pursued other alternatives and GBP326,000 was charged to the income statement.

Company - Subsidiary undertakings

 
                                     Loans    Equity     Total 
                                    GBP000    GBP000    GBP000 
 Cost: 
 At 1 July 2018                      2,762    20,329    23,091 
 Additions                             978         5       983 
                                  --------  --------  -------- 
 
 At 30 June 2019                     3,740    20,334    24,074 
                                  --------  --------  -------- 
 
 Additions                             580         -       580 
                                  --------  --------  -------- 
 
 At 30 June 2020                     4,320    20,334    24,654 
                                  --------  --------  -------- 
 
 Net book value at 30 June 2020      4,320    20,334    24,654 
                                  ========  ========  ======== 
 
 Net book value at 30 June 2019      3,740    20,334    24,074 
                                  ========  ========  ======== 
 
 

The loans represent loans to Ironveld Holdings (Propriety) Limited of GBP4,215,000 which incur interest at a rate not exceeding the base lending rate applicable in England and Wales. Under the initial terms of the loan, GBP2,500,000 is repayable 31 December 2019 with the remainder due 31 December 2020 however further agreement in the year has extended the loan period when project finance is agreed. Also included in loans are working capital loans to Ironveld Mauritius Limited of GBP105,000 which are interest free.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. Investments (continued)

The Company has investments in the following principal subsidiaries. To avoid a statement of excessive length, details of the investments which are not significant have been omitted:

                                                                                            Proportion of                              Nature of 

Name of company Shares voting rights business

and shares held

Subsidiary undertakings

Ironveld Mauritius Limited Ordinary *100% Holding Company

   Ironveld Holdings (Proprietary) Limited        Ordinary                100% Holding Company 

Ironveld Mining (Proprietary) Limited Ordinary 100% Mining and exploration

Ironveld Middelburg (Proprietary) Limited Ordinary 100% Ore processing and smelting

Ironveld Smelting (Proprietary) Limited Ordinary 74% Ore processing and smelting

   HW Iron (Proprietary) Limited                      Ordinary                  68% Prospecting and mining 

Lapon Mining (Proprietary) Limited Ordinary 74% Prospecting and mining

Luge Prospecting and

   Mining (Proprietary) Limited                        Ordinary                  74% Prospecting and mining 

* Held directly by Ironveld Plc all other holdings are indirect.

All subsidiary undertakings are incorporated and domiciled in South Africa, other than Ironveld Mauritius Limited, which is incorporated and domiciled in Mauritius.

Further details of non-wholly owned subsidiaries of the Group are provided in note 24.

15. Trade and other receivables

 
                                          Group              Company 
                                       2020      2019      2020      2019 
                                     GBP000    GBP000    GBP000    GBP000 
 
 Other receivables                       58       138        16        11 
 Amounts owed by related parties          2         -         -         - 
 Prepayments and accrued income          18        18        14        14 
                                   --------  --------  --------  -------- 
                                         78       156        30        25 
 Due within 12 months                  (76)     (156)      (30)      (25) 
                                   --------  --------  --------  -------- 
 
 Due after more than 12 months            2         -         -         - 
                                   ========  ========  ========  ======== 
 

Amounts owed by related parties represent expenses paid on behalf of the non-controlling interest shareholders by the company and are expected to be recovered in more than 12 months. The amounts are unsecured and interest free.

Credit risk

The Group's principal financial assets are bank balances, cash balances, and other receivables. The Group's credit risk is primarily attributable to its other receivables of which GBP27,000 (2019 - GBP109,000) is due from a third party financial institution and further information is provided in note 19. The remaining receivable relates to recoverable VAT. The amounts presented in the balance sheet are net of allowances for doubtful receivables.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

16. Trade and other payables

 
                                             Group              Company 
                                          2020      2019      2020      2019 
                                        GBP000    GBP000    GBP000    GBP000 
 
 Trade payables                             48         8        48         8 
 Taxation and social security costs         13        18        13        14 
 Other payables                              6        10         5         5 
 Accruals and deferred income              738       574       153        43 
                                      --------  --------  --------  -------- 
                                           805       610       219        70 
 Due within 12 months                    (805)     (610)     (219)      (70) 
                                      --------  --------  --------  -------- 
 
 Due after more than 12 months               -         -         -         - 
                                      ========  ========  ========  ======== 
 

17. Borrowings

 
                                        Group              Company 
                                     2020      2019      2020      2019 
                                   GBP000    GBP000    GBP000    GBP000 
 
 Other loans                          210         -       210         - 
                                 ========  ========  ========  ======== 
 
 Due within 12 months               (210)         -     (210)         - 
                                 --------  --------  --------  -------- 
 
 Due after more than 12 months          -         -         -         - 
                                 ========  ========  ========  ======== 
 
 
 
 

Further details on loans is provided in note 19.

18. Deferred tax

 
                               Group 
                            2020      2019 
                          GBP000    GBP000 
 
 Balance at 1 July         5,243     5,194 
 
 Exchange differences      (859)      (49) 
                        --------  -------- 
 
 Balance at 30 June        4,384     5,243 
                        ========  ======== 
 

The Group has unrelieved tax losses carried forward which represent a deferred tax asset of GBP1,122,000 (2019 - GBP831,000). This asset is not recognised in these financial statements.

The deferred tax liability is made up as follows:

 
                                 Group 
                              2020      2019 
                            GBP000    GBP000 
 
 Fair value adjustments      4,384     5,243 
                          ========  ======== 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19. Financial instruments

The Group's policies as regards derivatives and financial instruments are set out in the accounting policies in note 2. The Group does not trade in financial instruments.

Capital risk management

The Group manages its capital to ensure that they will be able to continue as a going concern whilst maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall strategy remains unchanged from 2019.

The capital structure of the Group consist of cash and cash equivalents and equity attributable to equity holders of the parent Company.

The Group is not subject to any externally imposed capital requirements.

Interest rate risk profile

The Group is exposed to interest rate risk because the Group borrows funds for working capital at fixed and variable rates. The Group exposure to interest rates on financial assets and liabilities are detailed in the liquidity risk management section of this note.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of the transactions concluded is spread where possible.

Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by assessing required reserves and banking facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Details of additional undrawn bank facilities that the Group has at its disposal to manage liquidity are set out below.

Financial facilities

The Group did not have any secured bank loan or overdraft facilities during the current or comparative period.

Financial assets

The Group has no financial assets, other than short-term receivables and cash deposits of GBP28,000 (2019 - GBP566,000). The cash deposits attract variable rates of interest. At the year end the effective rate was 0.8% (2019 - 0.7%). The cash deposits held were as follows:-

 
                                                 2020      2019 
                                               GBP000    GBP000 
 
 Sterling - United Kingdom banks                   10       518 
 USD - United Kingdom banks                         4         2 
 South African Rand - United Kingdom banks          1         5 
 South African Rand - South African banks          13        41 
                                             --------  -------- 
                                                   28       566 
                                             ========  ======== 
 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19. Financial instruments (continued)

Financial liabilities

Other loans

Other loans represents the Group's interest bearing financial liabilities. The others loans are due to a consortium of high net worth investors and existing shareholders with whom facilities of GBP260,000 were agreed on 3 February 2020. The loans mature six months after draw down and attract a fixed interest rate of 8% per annum. The Company issued 26,000,000 share warrants with a subscription price of 1p per share to the lenders, pro rata to the amount of each loan. These warrants have a two year life and the lenders may use the outstanding balances under the loan facilities to exercise the warrants.

At 30 June 2020, GBP210,000 had been drawn against this facility and therefore GBP50,000 remained undrawn.

On 11 June 2020, the Company arranged a bridging loan facility with Inclusive Investment Group Propriety Limited ("IIG") of ZAR 3,700,000 (approximately GBP170,000). At 30 June 2020 no amount had been drawn under this facility. On 3 September 2020, a further extension of these facilities of ZAR 3,300,000 (approximately GBP154,000) was agreed.

On 30 March 2020, the Company arranged a potential US$1 million facility with IIG which could be drawn down if IIG completed its share subscription under the outstanding option agreement and therefore no amounts were available to draw on this facility at the year-end and the facility lapsed on 30 November 2020.

Currency exposures

The Group undertakes transactions denominated in foreign currencies and is consequently exposed to fluctuations in exchange rates. The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities were as follows:-

 
                                  Assets   Liabilities 
                                  GBP000        GBP000 
 As at 30 June 2020 
 
 British Pound Sterling (GBP)         31           417 
 USD ($)                               1            21 
 South African Rand (R)               56           564 
                                --------  ------------ 
                                      88         1,002 
                                ========  ============ 
 
 
                                  Assets   Liabilities 
                                  GBP000        GBP000 
 As at 30 June 2019 
 
 British Pound Sterling (GBP)        528            70 
 USD ($)                               2            13 
 South African Rand (R)              564           527 
                                --------  ------------ 
                                   1,094           610 
                                ========  ============ 
 

Financial commitments and guarantee

Rehabilitation guarantees of GBP1,340,000 (R 24,278,412) have been issued to the Department of Mineral Resources for three subsidiaries, HW Iron Proprietary Limited, Lapon Mining Proprietary Limited and Luge Prospecting and Mining Company Proprietary Limited in order to comply with Section 41 of the Mineral and Petroleum Resources Development Act, 2002 (Act 28 of 2002). Under this agreement the Group will pay deposits to a third party financial institution to be held pending discharge of any potential claim on this guarantee. At 30 June 2020 GBP27,000 (R 577,000) (2019 - GBP109,000 (R 1,962,000)) had been deposited in respect of this agreement and is included in other receivables. As no significant activity had taken place on the Group's mineral resources then R 1,500,000 was withdrawn from the bond in the year. This receivable represents a concentration of credit risk and the Group is exposed to currency risk on these amounts. As the project has not yet commenced then no liability is considered to have arisen under this guarantee at the reporting date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. Share capital

Group and Company

 
                                                        2020      2019 
                                                      GBP000    GBP000 
 Allotted, called up and fully paid 
 654,990,841 (2019 - 654,990,841) ordinary shares 
  of 1p each                                           6,550     6,550 
 322,447,158 (2019 - 322,447,158) deferred shares 
  of 1p each                                           3,224     3,224 
                                                    --------  -------- 
                                                       9,774     9,774 
                                                    ========  ======== 
 

As announced on 26 November 2020 and subsequently approved on 14 December 2020, the Company agreed to carry out a subdivision of the existing ordinary shares whereby each existing ordinary share of 1 pence each will be subdivided into one New Ordinary share of 0.1 pence each and nine deferred shares of 0.1 pence each to enable the placing at 0.30 pence per share to become unconditional. The New Ordinary shares will continue to carry the same rights as attached to the existing ordinary shares, save for the reduction in nominal value.

Unlike ordinary shares, the deferred shares have no voting rights, no dividend rights and on a return of capital or winding up are entitled to a return of amounts credited as paid. The deferred shares are not transferrable and beneficial interests in the deferred shares can be transferred to such persons as the Directors may determine as custodian for no consideration without sanction of the holder. For this reason the deferred shares are excluded from any Earnings per share calculations.

Share options

The Company has a share option scheme for certain employees and former employees of the Group. The share options in issue during the year were as follows:

 
 Date             Exercise     As at       Granted     Exercised     Lapsed/      As at 30 
  granted           price      1 July      in year      in year     Cancelled     June 2020 
                                2019         No.          No.          No.           No. 
                                No. 
 21 May 2010        10p      1,600,000             -           -   (1,600,000)             - 
 16 August 
  2012               1p      5,949,558             -           -             -     5,949,558 
 14 November 
  2012               1p      6,663,505             -           -             -     6,663,505 
 16 April 2013       1p      1,033,334             -           -             -     1,033,334 
 7 November 
  2013               1p      2,086,667             -           -             -     2,086,667 
 1 May 2014          1p        200,000             -           -             -       200,000 
 1 October 
  2015               1p      2,500,000             -           -             -     2,500,000 
 27 January 
  2016               1p        445,545             -           -             -       445,545 
 10 January 
  2020               1p              -    27,400,000           -             -    27,400,000 
 30 March 2020     0.42p             -   440,176,070           -             -   440,176,070 
                            ==========  ============  ==========  ============  ============ 
 

The exercise period of the options is as follows:

Date

   granted                      Expiry date                 Exercise period 
   16 August 2012          16 August 2022 
   14 November 2012     14 November 2022      The options are exercisable 1/3 on the first anniversary 

16 April 2013 16 April 2023 of grant, 1/3 on the second anniversary of grant and the

   7 November 2013       7 November 2023       final 1/3 on the third anniversary of grant 
   1 May 2014                1 May 2024 
   1 October 2015          1 October 2025 
   27 January 2016         27 January 2026 

10 January 2020 9 January 2030 1/2 on grant and the remaining 1/2 one year after the grant date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. Share capital (continued)

Of the options granted on 1 October 2015, 1,000,000 are exercisable following first commercial production from the proposed 15 MW smelter.

The Group recognised a share based payment expense of GBP80,000 (2019 - GBP5,000) in the year. No options were exercised in the year.

The aggregate of the estimated fair value of the employee related share options granted in the period amounted to GBP108,000 (2019 - GBPNil). The inputs to the Black Scholes Model were as follows:-

Weighted average share price (pence) 0.75

Weighted average share price (pence) 1.00

Expected volatility 82%

Weighted average period to exercise 5 years

Risk free rate 0.7%

Expected volatility was determined by calculating the historical volatility of the Group's share price over the three years prior to the grant date. The expected period to exercise is based on management's best estimate.

Share options (continued)

On 30 March 2020, the Company announced that it had entered in a share Option Agreement with IIG pursuant to which IIG could subscribe for 440,176,070 new Ordinary shares in the capital of the Company at a price of 0.42 pence per share. The option agreement was issued in exchange for US$250,000.

The Option agreement had an initial expiry date of 17 June 2020 but in order to bring the timetable for the potential Option exercise in line with the proposed project financing application, the Company entered into an extension of the Agreement to 30 September 2020. In consideration of this extension IIG agreed to provide the Company with a bridging funding facility of up to ZAR3.7 million (approximately GBP170,000) which was intended to provide the Company with the requisite funds to continue in operations until such time as the funding application is reviewed.

Further to the above, on 3 September 2020, the exercise period Option Agreement was once again extended to 30 November 2020 in exchange for further bridging funding of ZAR 3.3 million (approximately GBP150,000). The option lapsed on 30 November 2020.

Share warrants

Pursuant to the loan facilities agreement, dated 3 February 2020 for GBP260,000 and referred to in note 19, the Company issued share warrants to the lenders over 26,000,000 shares at 1 pence per share. The warrants had a two years life and the lender was able to use the outstanding balances under the loan facilities to exercise the warrants. Following the approval of the conditional placing on 14 December 2020 and the repayment of the associated loans, these share warrants lapsed.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21. Reserves

 
                                                      Other      Share    Retained 
                                                    reserve    premium    earnings 
                                                     GBP000    account      GBP000 
                                                                GBP000 
 Group 
 
 At 1 July 2019                                           -     19,691    (10,499) 
 Loss for the year                                        -          -     (1,017) 
 Exchange difference on translation of foreign 
  operations                                              -          -     (3,044) 
 Issue of share options and warrants                    189                      - 
 Credit for equity settled share based payments           -          -          80 
                                                  ---------  ---------  ---------- 
 
 At 30 June 2020                                        189     19,691    (14,480) 
                                                  =========  =========  ========== 
 

Other reserves represent the equity component of share options and share warrants issued in the year.

The balance classified as share premium is the premium on the issue of the Group's equity share capital, comprising 1p ordinary shares and 1p deferred shares less any costs of issuing the shares.

Retained earnings is made up of cumulative profits and losses to date, share based payments, adjustments arising from changes in non-controlling interests and exchange differences on translation of foreign operations.

 
                                                      Other      Share    Retained 
                                                    reserve    premium    earnings 
                                                     GBP000    account      GBP000 
                                                                GBP000 
 Company 
 
 At 1 July 2019                                           -     19,691     (4,913) 
 Loss for the period                                      -          -       (551) 
 Issue of share options and warrants                    189          -           - 
 Credit for equity settled share based payments           -          -          80 
                                                  ---------  ---------  ---------- 
 
 At 30 June 2020                                        189     19,691     (5,384) 
                                                  =========  =========  ========== 
 
 

Other reserves represent the equity component of share options and share warrants issued in the year.

The balance classified as share premium is the premium on the issue of the Group's equity share capital, comprising 1p ordinary shares and 1p deferred shares less any costs of issuing the shares.

Retained earnings is made up of cumulative profits and losses to date, share based payments, adjustments arising from changes in non-controlling interests and exchange differences on translation of foreign operations.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22. Cash generated from operations

 
                                                        2020      2019 
                                                      GBP000    GBP000 
 Group 
 
 Operating loss                                        (695)     (629) 
 Depreciation on property, plant and equipment             2         3 
 Share based payment charge                               80         - 
                                                    --------  -------- 
 
 Operating cash flows before movements in working 
  capital                                              (613)     (626) 
 
 Movement in receivables                                  61        22 
 Movement in payables                                    155       185 
                                                    --------  -------- 
 
 Cash used in operations                               (397)     (419) 
 Interest paid                                             -       (1) 
                                                    --------  -------- 
 
 Net cash used in operations                           (397)     (420) 
                                                    ========  ======== 
 

Cash and cash equivalents

 
                              2020      2019 
                            GBP000    GBP000 
 
 Cash and bank balances         28       566 
                          ========  ======== 
 
 
 
                                                        2020      2019 
                                                      GBP000    GBP000 
 Company 
 
 Operating loss                                        (571)     (404) 
 Share based payment charge                               80         - 
                                                    --------  -------- 
 
 Operating cash flows before movements in working 
  capital                                              (491)     (404) 
 
 Movement in receivables                                 (6)        13 
 Movement in payables                                    147        10 
                                                    --------  -------- 
 
 Net cash used in operations                           (350)     (381) 
                                                    ========  ======== 
 
 

Cash and cash equivalents

 
                              2020      2019 
                            GBP000    GBP000 
 
 Cash and bank balances         15       523 
                          ========  ======== 
 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23. Related party transactions

Group

During the year the Group incurred GBP185,000 (2019 - GBP251,000) for consultancy services to Goldline Global Consulting (Pty) Limited, a company in which P Cox is materially interested. At 30 June 2020, GBP392,000 (2019 - GBP365,000) remained unpaid in accruals. Following the year end the accrued fees were settled by the issue of shares in the Company.

During the year the Group incurred GBP120,000 (2019 - GBP131,000) for consultancy services to Novem Consulting, a private company in which V von Ketelhodt is materially interested. At 30 June 2020, GBP171,000 (2019 - GBP145,000) remained unpaid in accruals. Following the year end the accrued fees were settled by the issue of shares in the Company.

Group and Company

The key management personnel of the Group are the Directors. Directors' remuneration is disclosed in Note 5.

During the year the Company paid GBP48,000 (2019 - GBP48,000) for accounting services to Westleigh Investments Limited, a company in which G Clarke and N Harrison are materially interested. During the year the Company paid GBPNil (2019 - GBP20,000) for consultancy services to Merlin Partnership LLP, a company in which G Clarke is materially interested.

Included in other loans is a short term loan due to G Clarke of GBP10,000 (2019- GBPNil). The loan attracts interest at 8% per annum and was repaid after the year-end by the issue of 3,333,333 shares and the interest waived.

Further Directors' remuneration of GBP96,805 (2019 - GBPNil) was unpaid at the year-end and is included in accruals. Following the year end GBP60,000 of the accrued fees were settled by the issue of shares in the Company.

24. Non-controlling interest

 
                                    2020      2019 
                                  GBP000    GBP000 
 
 At 1 July                         3,721     3,687 
 
 Exchange adjustments              (610)        35 
 Share of loss for the period        (2)       (1) 
                                --------  -------- 
 
 At 30 June                        3,109     3,721 
                                ========  ======== 
 

The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests:

 
                                 Proportion of        Profit/(loss)         Accumulated 
                                  voting rights        allocated to        non-controlling 
                                 and shares held      non-controlling         interests 
                                                         interests 
                                  2020     (2019)       2020      2019       2020      2019 
                                                      GBP000    GBP000     GBP000    GBP000 
 
 HW Iron (Proprietary) 
  Limited                          32%      (32%)          -         -        989     1,184 
 Lapon Mining (Proprietary) 
  Limited                          26%      (26%)          -         -      2,124     2,540 
 Other non-controlling 
  interests                                              (2)       (1)        (4)       (3) 
                                                   ---------  --------  ---------  -------- 
 
                                                         (2)       (1)      3,109     3,721 
                                                   =========  ========  =========  ======== 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24. Non-controlling interest (continued)

Summarised financial information in respect of each of the Group's subsidiaries that have material non-controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations. The accounts of the subsidiaries have been translated from their presentational currency of South African Rand (R) using the R: GBP exchange rate prevailing at 30 June 2020 of 21.4676 (2019 - 17.9497).

HW Iron (Proprietary) Limited

 
                                                           2020      2019 
                                                         GBP000    GBP000 
 
 Non-current assets                                       6,261     7,261 
 Current assets                                               3         - 
 Current liabilities                                    (1,970)   (2,122) 
 Non-current liabilities                                (1,205)   (1,441) 
                                                       --------  -------- 
                                                          3,090     3,698 
                                                       ========  ======== 
 
 Equity attributable to owners of the Company             2,101     2,514 
 Non-controlling interest                                   989     1,184 
                                                       ========  ======== 
 
 Revenue                                                      -         - 
 Expenses                                                   (1)         - 
                                                       --------  -------- 
 
 Loss for the year                                          (1)         - 
                                                       ========  ======== 
 
 Attributable to the owners of the Company                  (1)         - 
 Attributable to the non-controlling interests                -         - 
                                                       ========  ======== 
 
 Net cash outflow from operating activities                   -         - 
 Net cash outflow from investing activities               (157)     (188) 
 Net cash inflow from financing activities                  157       188 
                                                       --------  -------- 
 
 Net cash inflow                                              -         - 
                                                       ========  ======== 
 
 Net cash flow - Attributable to the non-controlling          -         - 
  interests 
                                                       ========  ======== 
 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24. Non-controlling interest (continued)

Lapon Mining (Proprietary) Limited

 
                                                           2020      2019 
                                                         GBP000    GBP000 
 
 Non-current assets                                      12,992    15,300 
 Current assets                                               2         - 
 Current liabilities                                    (1,647)   (1,728) 
 Non-current liabilities                                (3,179)   (3,802) 
                                                       --------  -------- 
                                                          8,168     9,770 
                                                       ========  ======== 
 
 Equity attributable to owners of the Company             6,044     7,230 
 Non-controlling interest                                 2,124     2,540 
                                                       ========  ======== 
 
 Revenue                                                      -         - 
 Expenses                                                   (1)       (1) 
                                                       --------  -------- 
 
 Loss for the year                                          (1)       (1) 
                                                       ========  ======== 
 
 Attributable to the owners of the Company                  (1)       (1) 
 Attributable to the non-controlling interests                -         - 
                                                       ========  ======== 
 
 Net cash outflow from operating activities                 (1)       (1) 
 Net cash outflow from investing activities               (153)     (183) 
 Net cash inflow from financing activities                  153       184 
                                                       --------  -------- 
 
 Net cash inflow                                            (1)         - 
                                                       ========  ======== 
 
 Net cash flow - Attributable to the non-controlling          -         - 
  interests 
                                                       ========  ======== 
 
 

25. Financial commitments

At the year end the Group had no financial commitments under operating leases (2019 - GBPNil).

26. Control

The Directors consider that there is no overall controlling party.

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