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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Kefi Gold And Copper Plc | LSE:KEFI | London | Ordinary Share | GB00BD8GP619 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Metal Mining Services | 0 | -7.9M | -0.0011 | -4.55 | 0 |
From Dec 2021 to Dec 2024
TIDMKEFI
RNS Number : 9093A
Kefi Gold and Copper PLC
28 September 2022
28 September 2022
KEFI Gold and Copper plc
("KEFI", or the "Company", or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
KEFI Gold and Copper plc (AIM: KEFI), the gold exploration and development company with projects in the Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to announce its unaudited interim results for the six months ended 30 June 2022.
The interim results for the Group encompass the activities of KEFI Minerals (Ethiopia) Ltd ("KME") and Tulu Kapi Gold Mines Share Company ("TKGM") in Ethiopia, and Gold & Minerals Ltd ("G&M") in Saudi Arabia.
The Tulu Kapi Gold Project ("Tulu Kapi") is under TKGM (planned to be c.70% owned by KEFI). The Hawiah Copper-Gold Project ("Hawiah"), the Jibal Qutman Gold Project ("Jibal Qutman") and other Saudi projects are under G&M (planned to be c.30% owned by KEFI). Both TKGM and G&M are technically and financially supported by KEFI so that each operating company can build a local organisation that is suitable to manage long term production activities, further exploration activities and exploit future development opportunities.
Executive Chairman's Statement
Overview
The improvement in the local working environment in both Ethiopia (security) and Saudi Arabia (regulatory) since late 2021 has allowed KEFI to make rapid progress during the period in both jurisdictions. KEFI now has a much-improved position as an early-mover in both countries and with a more balanced portfolio of advancing projects.
The Company now has three advanced projects in two countries which places it in a lower risk position than in prior years. KEFI has also de-risked its balance sheet by raising GBP8 million of equity in April 2022 to repay all outstanding liabilities and reinforce the momentum of its projects.
Tulu Kapi Gold Project, Ethiopia
No other mining project of this scale in Ethiopia has been brought to Tulu Kapi's stage of advancement in recent years and it will be the first industrial scale mine development in the country in over 30 years. It has taken some years to complete an extensive technical re-design of the project, overhaul financial policies by the Ethiopian authorities which hindered mining project finance and the patient and cautious traversing by the Company of recent well-publicised events within the country. The project has imposed many demands on a regulatory system which the Ethiopian Government continues to upgrade, determined to build a modern minerals sector.
During the first half of 2022 TKGM continued its project launch preparations and has regularly formally advised the Ethiopian Ministry of Mines of its progress and of the tasks outstanding to ensure joint collaborative focus. The focus has been maintained on full project launch later this year, pre-conditioned on the security situation being independently assessed as project-ready and the few remaining regulatory administrative tasks being completed.
In collaboration with the regulatory agencies at all four levels of the Ethiopian Government, notable progress during the period included:
-- triggered detailed engineering - minimising procurement and construction time; -- undertaking regular security monitoring;
-- initial community youth employment programmes being established which support the project, such as those covering road maintenance and expansion of revegetation nurseries;
-- the Ministry of Mines has now audited and endorsed the historical project costs incurred up to 2020 of c.US$80 million and can now report this to the Ethiopian central bank; and
-- the central bank has now permitted that both development banks be allowed to lend on the same terms and formal ratification is awaited from the Government of remaining detail.
On the 30 June 2022 the TKGM project finance syndicate signed a funding 'Umbrella Agreement'. The Umbrella Agreement sets out the role and contribution of each finance syndicate member in relation to the Tulu Kapi Gold Project and, whilst reflecting the conditionality of the plan and intended flexibility within the syndicate, it sets out a full funding package, covering historical and budgeted future expenditure.
Tulu Kapi District Exploration
KEFI remains keen to re-commence its exploration of the additional prospects it has successfully identified within the Tulu Kapi district exploration area from within which the mining licence was duly excised because of the successful discovery of the Tulu Kapi deposit. Whilst most historical drilling was naturally of the Tulu Kapi deposit, there was significant work done on many further prospects which await follow-up.
Whilst awaiting regulatory permission to re-activate the Company's Ethiopian exploration, which is critical for long term planning for all stakeholders in the community as well as the Company, the exploration focus has been successfully switched to Saudi Arabia.
G&M, Saudi Arabia
G&M, rapidly becoming a leading explorer/developer/producer in the fast-emerging Saudi minerals sector, has built the largest exploration team in the country and has two major projects advancing towards development, one in Preliminary Feasibility Study stage and one in Definitive Feasibility Study stage. This has coincided with the Saudi Government's widely publicised recent initiatives to welcome international expertise and fast-track the development of its mining sector. G&M is focused on the development of the Hawiah Copper-Gold Project, with an existing JORC resource of 24.9Mt at 0.9% copper, 0.85% zinc, 0.62 g/t gold and 9.81 g/t silver, and Jibal Qutman, where the initially contemplated development project has been enlarged and is now seen as a + 500,000 oz production plan for extraction over 10 years based on a conventional open pit/CIL (Carbon-in-Leach process).
Exploration teams are also mobilising to the recently awarded exploration projects, namely the Jabal Hillit and Qunnah 'Al Qassim' exploration licences (straddling the prospective Ad Dawadimi and Afif terranes in the eastern portion of the Arabian Shield in Saudi Arabia), and the Jadib Al Qahtanah exploration licence, 45km east of the Mahad Ad Dahab mine, the principal historic Saudi gold and silver mine.
Going forward the Company's Saudi assets are expected to have shorter approval, financing and development schedules given there is no need to resettle communities, less restrictive security protocols and established capital markets and funding options.
Hawiah
Hawiah was discovered in September 2019 and now ranks in the:
-- top three base metal projects in Saudi Arabia; and -- top 15% VMS projects worldwide.
A three-year 42,000m drilling programme has delineated a Mineral Resource of 24.9 million tonnes at 0.90% copper, 0.85% zinc, 0.62g/t gold and 9.8g/t silver.
Work at the Hawiah Project (including its adjacent recently granted Al Godeyer exploration licences) continued during the first half of 2022, focusing on providing inputs across all required fronts for the updated Mineral Resource Estimate and Hawiah Preliminary Feasibility Study ("PFS"), also scheduled for completion by end of 2022.
The ongoing drilling at Hawiah is expected to yield increased resources and its mineral resources, in gold-equivalent terms, are already approximately those of Tulu Kapi and Jibal Qutman combined before any further resource uplift.
Jibal Qutman
G&M has received formal notification from the Saudi Arabian Ministry of Industry and Mineral Resources ("MIM") that land access issues which halted the mine development application in 2016 are now resolved, clearing the way for the re-issuance of exploration licences ("ELs") as a precursor to the granting of the Jibal Qutman mining licence. Two of the three ELs have already been received post period end. The DFS is being prepared on production of c. 500,000 oz over 10 years as compared with the original Preliminary Economic Assessmen based on c. 200,000 oz.
Additional Licences
G&M's exploration areas are being expanded in Saudi Arabia where the newly overhauled regulatory regime is speeding up progress. Two further exploration licences have now been awarded to G&M on an initial five-year term, bringing the total number of exploration licence issued to nine covering a total area of 634km (2) .
Summary
The first half of 2022 was one of considerable progress for the Company and its projects, progress that has continued post period end. We are on track to achieve the following milestones in Q4 2022: in Ethiopia for financial close and the launch of construction of our Tulu Kapi Gold Project and in Saudi Arabia our larger Hawiah Copper-Gold Project to deliver its PFS. We are also expecting progress to continue at Jibal Qutman in Saudi Arabia, where the DFS, mining licence and financing work is being fast-tracked ahead of planned launch in 2023. Finally, we have been granted two new promising gold exploration licenses to add to our portfolio.
KEFI is now better positioned than it has ever been with the improvement in the local working environment in both Ethiopia and Saudi Arabia allowing us to focus on our goals. The successful launch of Tulu Kapi and then Jibal Qutman within the following six months or so, should see first gold pour for both at the end of 2024. These two projects, plus the Hawiah project lined up for sequential construction schedules is intended to lead to combined production of c.400,000 oz gold or gold-equivalent per annum by 2026. This ignores upside from exploration results adding to the resource position at the end of 2021. In addition, we have exciting earlier-stage exploration projects which can be addressed concurrently.
We are at the beginning of an exciting chapter for both our joint-venture partnerships.
Executive Chairman
Harry Anagnostaras-Adams
28 September 2022
Finance Director's Review
During the period under review KEFI has de-risked its balance sheet by raising GBP8 million in equity funding to repay all outstanding liabilities as at the end of the last financial year and provide additional working capital for its projects.
In June 2022, an umbrella financing agreement and its associated documentation for the Tulu Kapi project was signed by all project participants. This agreement has successfully guided activities since and is now leading to the syndicate commitment of the full project finance package at the end of October 2022, with planned escalation of activities and unconditional financial commitments as the remaining conditions precedent are satisfied over subsequent weeks - which is normal practice for a transaction of this nature. In parallel, the recent grant of two of the three exploration licences for the Jibal Qutman in Saudi Arabia has led us to upscale the DFS-completion and financing sequence in Saudi. We want these two gold projects in production by the end of 2024.
KEFI has funded all its past activities with approximately GBP72 million equity capital raised at then prevailing share market prices. This avoided the superimposing of debt-repayment risk onto the risks of exploration, permitting and other challenges that always exist during the early phases of project exploration and development in frontier markets. We do, however, avail ourselves of unsecured advances from time to time as arranged by our Corporate Broker to provide working capital pending the achievement of a short-term business milestone.
We also continue our conservative accounting policy of writing off most expenditure - 100% of expenditure in Saudi Arabia and much of Ethiopia. KEFI's carrying value of the investment in KME, which holds the Company's share of Tulu Kapi, is only GBP14.3 million as at 31 December 2021.
Measuring the Company's underlying assets on an NPV basis, has resulted in the indicative NPV of its three main assets of GBP306 Million(1). The basis for these estimates is consensus long-term price forecasts and other explanations provided in the footnotes below. KEFI's planned beneficial interest in the underlying valuation of our Saudi Arabia projects (carried at Nil in our accounts) is now approaching that of the Ethiopian Tulu Kapi Gold Project ($140 million being 73% of $193 million).
(1) The NPV calculations are based on Long term analysts' consensus forecasts is sourced from CIBC Global Mining Group Analyst Consensus Long Term Commodity Price Forecasts 6 September 2022 as applied to our inhouse modelling: The Metal prices are US$1, 650 /ounce for gold, $ 7,898 /tonne for copper, $ 2,508 /tonne for zinc and $2 1.4 /ounce for silver; and 8% discount rate applied against net cash flow to equity, after debt service and after tax. KEFI NPV is based on a c.70% planned interest in Tulu Kapi open pit and underground and 30% interest in Hawiah and Jibal Qutman open pit and underground where applicable. Significant updates are expected for all projects as resources and feasibility studies are updated.
The balance sheet at full closing of all project funding for the different projects will start to scale-up as we will then capitalise the development expenditures
John Leach
Finance Director
28 September 2022
Quarterly Webinar
The Company will host its next quarterly investor webinar in London in late October 2022, the details of which will be announced in due course.
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
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Enquiries: KEFI Gold and Copper plc
Harry Anagnostaras-Adams (Managing Director) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance LLP (Nominated
Adviser) +44 (0) 20 3470 0470
Jeff Keating, Adam Cowl
Tavira Securities Limited (Lead Broker) +44 (0) 20 7100 5100
Oliver Stansfield, Jonathan Evans
WH Ireland Limited (Joint Broker) +44 (0) 20 7220 1666
Katy Mitchell, Andrew de Andrade
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
Condensed interim consolidated statements of comprehensive income
(unaudited) (All amounts in GBP thousands unless otherwise stated)
Six months Six months
ended ended
30 June 30 June
2022 2021
Notes Unaudited Unaudited
----------- -----------
Revenue - -
Exploration expenses - (21)
----------- -----------
Gross loss - (21)
Administration expenses (1,282) (1,191)
Share-based payments (182) (484)
Share of loss from jointly controlled
entity 11 (898) (618)
Impairment/(Reversal) in jointly controlled
entity 11 (332) 567
Gain from dilution of equity interest
in joint venture 11 286 -
Operating loss (2,408) (1,747)
Foreign exchange (loss)/gain (16) (57)
Finance expense (470) (419)
----------- -----------
Loss before tax (2,894) (2,223)
Tax - -
----------- -----------
Loss for the period (2,894) (2,223)
=========== ===========
Loss for the period (2,894) (2,223)
Other comprehensive loss:
Exchange differences on translating - -
foreign operations
----------- -----------
Total comprehensive loss for the period (2,894) (2,223)
=========== ===========
Basic loss per share (pence) 4 (0.09) (0.10)
The notes are an integral part of these unaudited condensed interim consolidated financial statements.
Condensed interim consolidated statements of financial position
(unaudited) (All amounts in GBP thousands unless otherwise stated)
Unaudited Audited
Notes 30 June 31 Dec
2022 2021
--------- ---------
ASSETS
Non-current assets
Property, plant and equipment 58 63
Intangible assets 6 29,679 28,361
Investments in JV - -
29,737 28,424
--------- ---------
Current assets
Financial assets at fair value - -
through OCI
Trade and other receivables 5 361 291
Cash and cash equivalents 2,313 394
--------- ---------
2,674 685
--------- ---------
Total assets 32,411 29,109
========= =========
EQUITY AND LIABILITIES
Issued capital and reserves attributable
to owners of the parent
Share capital 7 3,939 2,567
Deferred Shares 7 23,328 23,328
Share premium 7 43,187 35,884
Share options reserve 8 3,772 1,891
Accumulated losses (45,415) (42,731)
--------- ---------
28,811 20,939
Non-controlling interest 1,450 1,379
========= =========
Total equity 30,261 22,318
Current liabilities
Trade and other payables 9 2,150 5,556
Loans and borrowings 10 - 1,235
--------- =========
2,150 6,791
--------- =========
Total liabilities 2,150 6,791
--------- ---------
Total equity and liabilities 32,411 29,109
========= =========
The notes are an integral part of these unaudited condensed interim consolidated financial statements.
On 28 September 2022, the Board of Directors of KEFI Gold and Copper Plc authorised these unaudited condensed interim financial statements for issue.
John Leach
Finance Director
Condensed interim consolidated statement of changes in equity
(unaudited) (All amounts in GBP thousands unless otherwise stated)
Attributable to the equity holders of parent
Share Deferred Share Share Accumulated Total NCI Total
capital shares premium options losses equity
and
warrants
reserve
At 1 January 2021
Audited 2,138 23,328 33,118 1,273 (37,824) 22,033 1,204 23,237
Loss for the
period - - - - (2,223) (2,223) - (2,223)
Other - - - - - - - -
comprehensive
income
=============== ========= =============== ========= ================== ============== ======== ===============
Total
Comprehensive
Income - - - - (2,223) (2,223) - (2,223)
Recognition of
share-based
payments - - - 484 - 484 - 484
Cancellation &
Expiry
of
options/warrants - - - (192) 192 - - -
Issue of share
capital
and warrants 15 - 83 - - 98 - 98
Share issue costs - - - - - - - -
Non-controlling
interest - - - - (112) (112) 112 -
At 30 June 2021
Unaudited 2,153 23,328 33,201 1,565 (39,967) 20,280 1,316 21,596
Loss for the year - - - - (2,701) (2,701) - (2,701)
Other - - - - - - - -
comprehensive
income
=============== ========= =============== ========= ================== ============== ======== ===============
Total
Comprehensive
Income - - - - (2,701) (2,701) - (2,701)
Recognition of
share-based
payments - - - 326 - 326 - 326
Expired warrants - - - - - - - -
Issue of share
capital
and warrants 414 2,902 - - 3,316 - 3,316
Share issue costs - - (219) - - (219) - (219)
Non-controlling
interest - - - - (63) (63) 63 -
At 1 January 2022
Audited 2,567 23,328 35,884 1,891 (42,731) 20,939 1,379 22,318
Loss for the
period - - - - (2,894) (2,894) - (2,894)
Other - - - - - - - -
comprehensive
income
=============== ========= =============== ========= ================== ============== ======== ===============
Total
Comprehensive
Income - - - - (2,894) (2,894) - (2,894)
Recognition of
share
based payments - - - 184 - 184 - 184
Cancellation &
Expiry
of
options/warrants - - - (281) 281 - - -
Issue of share
capital
and warrants 1,372 - 7,747 1978 - 11,097 11,097
Share issue costs - - (444) - - (444) - (444)
Non-controlling
interest - - - - (71) (71) 71 -
=============== ========= =============== ========= ================== ============== ======== ===============
At 30 June 2022
Unaudited 3,939 23,328 43,187 3,772 (45,415) 28,811 1,450 30,261
=============== ========= =============== ========= ================== ============== ======== ===============
The following describes the nature and purpose of each reserve within owner's equity:
Reserve Description and purpose
Share capital amount subscribed for share capital at nominal value.
Deferred shares under the restructuring of share capital, ordinary shares of in the capital of
the Company
were sub-divided into deferred share.
Share premium amount subscribed for share capital in excess of nominal value, net of issue
costs.
Share options and warrants reserve reserve for share options and warrants granted but not exercised or lapsed.
Foreign exchange reserve cumulative foreign exchange net gains and losses recognized on consolidation.
Accumulated losses cumulative net gains and losses recognized in the statement of comprehensive
income, excluding
foreign exchange gains within other comprehensive income.
NCI (Non-controlling interest) the portion of equity ownership in a subsidiary not attributable to the parent
company.
The notes are an integral part of these unaudited condensed interim consolidated financial statements.
Condensed interim consolidated statements of cash flows
(unaudited) (All amounts in GBP thousands unless otherwise stated)
Notes Six months Six months
ended ended
30 June 30 June
2022 2021
----------- -----------
Cash flows from operating activities
Loss before tax (2,894) (2,223)
Adjustments for:
Share-based benefits 183 484
Fair value loss to derivative financial - -
asset
Gain from dilution of equity interest
in joint venture 11 286 -
Share of loss in joint venture 898 618
Impairment/(Reversal of impairment)
loss in joint venture 332 (567)
Depreciation 9 7
Finance expense 470 390
Foreign exchange gains/(losses) on financing
activities (66) 200
Foreign exchange (losses)/gains on operating
activities (16) 11
----------- -----------
Cash outflows from operating activities
before working capital changes (798) (1,080)
Interest paid - -
Changes in working capital:
Trade and other receivables (70) 50
Trade and other payables (1,141) 135
Net cash used in operating activities (2,009) (895)
----------- -----------
Cash flows from investing activities
Purchases of plant and equipment (4) (74)
Proceeds from repayment of financial
asset - 54
Project evaluation costs 6 (2,041) (1,408)
Advances to joint venture (1,167) (251)
=========== ===========
Net cash used in investing activities (3,212) (1,679)
----------- -----------
Cash flows from financing activities
Proceeds from issue of share capital 7 8,000 345
Listing and issue costs 7 (444) -
Financing transaction costs paid (193) -
Repayment short-term working capital
bridging finance 10.2 (1,140) -
Proceeds short-term working capital
bridging finance 900 1,873
----------- -----------
Net cash from financing activities 7,123 2,218
----------- -----------
Net increase in cash and cash equivalents 1,902 (356)
Cash and cash equivalents:
At beginning of period 394 1,315
Exchange differences 17 (11)
=========== ===========
At end of period 2,313 948
=========== ===========
The notes are an integral part of these unaudited condensed interim consolidated financial statements.
Notes to the condensed interim consolidated financial statements
For the six months to 30 June 2022 (unaudited) and 2021
(All amounts in GBP thousands unless otherwise stated)
1. Incorporation and principal activities
Country of incorporation
The Company was incorporated in United Kingdom as a public limited company on 24 October 2006. Its registered office is at 27/28 Eastcastle Street, London W1W 8DH.
Principal activities
The principal activities of the Group for the period are:
-- To explore for mineral deposits of precious and base metals and other minerals that appear capable of commercial exploitation, including topographical, geological, geochemical and geophysical studies and exploratory drilling.
-- To evaluate mineral deposits determining the technical feasibility and commercial viability of development, including the determination of the volume and grade of the deposit, examination of extraction methods, infrastructure requirements and market and finance studies.
-- To develop, operate mineral deposits and market the metals produced. 2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these condensed interim consolidated financial statements are set out below. These policies have been applied consistently throughout the period presented in these condensed interim consolidated financial statements unless otherwise stated.
Basis of preparation and consolidation
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became International Financial Reporting Standards ("IFRS") as adopted by the United Kingdom ("UK-adopted IFRS"), with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted IFRS in its consolidated financial statements from 1 January 2021. There was no impact on the Group from this transition, nor any changes in accounting policy. These condensed consolidated financial statements have been prepared in accordance with UK-adopted IFRS.
These condensed interim consolidated financial statements ('the statements") are unaudited and include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the financial statements of the Company and the Group for the year ended 31 December 2021. These statements do not include all of the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the financial statements and other information set out in the Company's 31 December 2021 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements.
Going concern
The financial report has been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The annual financial statements of Kefi Gold and Copper Plc for the year ended 31 December 2021 were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The Independent Auditors' Report on the Group's 2021 Annual Report was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The Independent Auditors' Report contained a material uncertainty related to going concern.
2. Summary of significant accounting policies (continued)
Going concern continued
We draw attention to the financial statements, which indicate that the Group incurred a net loss of GBP2,894,000 (2021: loss of GBP2,223,000) during the period ended 30 June 2022 and, as of that date, the Group's current assets exceeded its current liabilities. As stated in this note events or conditions, along with other matters as set forth in this note, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern.
The assessment of the Group's ability to continue as a going concern involves judgment regarding future funding available for the development of the Tulu Kapi Gold project, exploration of the Saudi Arabia exploration properties and for working capital requirements. In considering the Group's ability to continue as a Going Concern, management have considered funds on hand at the date of approval of the financial statements, planned expenditures covering a period of at least 12 months from the date of approving these financial statements and the Group's strategic objectives as part of this assessment.
As at the date of approval of the financial statements, the Group expects to be able to obtain bridging short-term financing to fund activities until financial close of the Tulu Kapi project. The Group has previously been successful in arranging such funding when required and. expects to be able to continue to do so. Financing will also be required to continue the development of the Tulu Kapi Gold Project through to production.
The Group's ability to continue as a going concern is contingent on raising additional capital and/or the successful exploration and subsequent exploitation of its areas of interest through sale or development. If sufficient additional capital is not raised, the going concern basis of accounting may not be appropriate, and the Group may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report.
Notwithstanding this because of historical and ongoing proactive discussions with stakeholders, the Board has a reasonable expectation that the Group will be able to raise further funds in order to meet its obligations. Subject to the above, the Directors have concluded that it is appropriate to prepare the financial statements on a going concern basis.
3. Operating segments
The Group has only one distinct operating segment, being that of mineral exploration. The Group's exploration activities are located in Ethiopia, Saudi Arabia through the jointly controlled entity and its administration and management is based in Cyprus.
Unaudited Six months ended 30 June Cyprus Ethiopia Saudi Total
2022 Arabia
GBP'000 GBP'000 GBP'000 GBP'000
=============== ============= ======== =================
Operating loss (Excluding loss
from jointly controlled entity) (1,129) (48) - (1,177)
Other finance costs (470) - - (470)
Foreign exchange profit 365 (382) - (17)
Share of loss from jointly controlled
entity - - (898) (898)
Reversal of impairment loss in
joint venture - - (332) (332)
=============== ============= ======== =================
Loss before tax (1,234) (430) (1,230) (2,894)
=============== ============= ========
Tax -
-----------------
Loss for the period (2,894)
=================
Total assets 1,949 30,462 - 32,411
=============== ============= ======== =================
Total liabilities (957) (1,193) - (2,150)
=============== ============= ======== =================
Depreciation of property, plant
and equipment - (9) - (9)
=============== ============= ======== =================
3. Operating segments
Unaudited Six months ended 30 June Cyprus Ethiopia Saudi Total
2021 Arabia
GBP'000 GBP'000 GBP'000 GBP'000
======== ========= ======== ========
Operating loss (Excluding loss
from jointly controlled entity) (1,660) (36) - (1,696)
Other finance costs (419) - - (419)
Foreign exchange profit (204) 147 - (57)
Share of loss from jointly controlled
entity - - (618) (618)
Reversal of impairment loss in
joint venture - - 567 567
======== ========= ======== ========
Loss before tax (2,283) 111 (51) (2,223)
======== ========= ========
Tax -
--------
Loss for the period (2,223)
========
Total assets 828 26,801 - 27,629
======== ========= ======== ========
Total liabilities (5,372) (578) (80) (6,030)
======== ========= ======== ========
Depreciation of property, plant
and equipment - (7) - (7)
======== ========= ======== ========
4. Loss per share
The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the parent is based on the following data:
Six months ended Six months
30 June 2022 ended 30
June 2021
Unaudited Unaudited
GBP'000 GBP'000
Net loss attributable to equity shareholders (2,894) (2,223)
Net loss for basic and diluted loss
attributable to equity shareholders (2,894) (2,223)
Weighted average number of ordinary
shares for basic loss per share (000's) 3,206,359 2,145,425
Weighted average number of ordinary
shares for diluted loss per share (000's) 3,851,590 2,283,973
Loss per share:
Basic loss per share (pence) (0.09) (0.10)
The effect of share options and warrants on the loss per share is anti-dilutive.
5. Trade and other receivables
30 June 31 Dec
2022 2021
Unaudited Audited
GBP'000 GBP'000
Other receivables 74 36
VAT 287 255
361 291
========== ========
6. Intangible assets
Total exploration
and project
evaluation
costs
GBP '000
===================
Cost
At 1 January 2021 (Audited) 28,627
Additions 1,318
-------------------
At 30 June 2022 (Unaudited) 29,945
===================
Accumulated Impairment
At 1 January 2022 (Audited) (266)
At 30 June 2022 (Unaudited) (266)
===================
Net Book Value at 30 June
2022 (Unaudited) 29,679
===================
Net Book Value at 31 December
2021 (Audited) 28,361
===================
7. Share capital
Number Share Deferred Share
of shares Capital shares premium Total
000's GBP'000 GBP'000 GBP'000 GBP'000
Issued and fully paid
========== ======== ========= ======== =========
At 1 January 2022 (Audited) 2,567,305 2,567 23,328 35,884 61,779
Share Equity Placement 17
January 2022 371,818 372 - 2,725 3,097
Share Equity Placement 25
April 2022 550,000 550 - 3,850 4,400
Share Equity Placement 18
May 2022 450,000 450 - 3,150 3,600
Share issue costs - - - (444) (444)
Warrants: fair value split
of warrants issued to shareholders. - - - (1,663) (1,663)
Broker warrants: issue costs (315) (315)
At 30 June 2022 (Unaudited) 3,939,123 3,939 23,328 43,187 70,454
========== ======== ========= ======== =========
Issued capital
During April 2021, the Company issued 15,000,000 new ordinary shares of 0.1p each in the capital of the Company at a price of 0.65p per share. Company received notice from a warrant holder to exercise warrants over a total of 15,000,000 new Ordinary Shares.
On the 13 January 2022 the Company admitted 371,817,944 new ordinary shares of the Company at a placing price of 0.8 pence per Ordinary Share.
The Company raised GBP8.0 million through the issue of 1,000,000,000 new Ordinary Shares at a placing price of 0.8 pence per Ordinary Share. These new Ordinary Shares were admitted in two tranches, 550,000,000 on 25 April 2022 and 450,000,000 on 18 May 2022, following shareholder approval of the conditional placement at a General Meeting of the Company.
8. Share Based Payments 8.1. Warrants
8.1.1. Shareholder Warrants
The Company issued 393,096,865 short term warrants to subscribe for new ordinary shares of 0.1p each at 1.6p per share in accordance with the January 2022 share placement and as approved by shareholders. The Warrants will become exercisable if, during a two-year period following the date of Second Admission, the Warrant Trigger Event occurs. If the Warrant Trigger Event occurs then (i) the holders of the Warrants must exercise the Warrants within 30 days from the occurrence of the Warrant Trigger Event; and (ii) the Warrants will expire following the end of the 30 day period referenced above if not exercised. If the Warrant Trigger Event has not occurred within two years following the date of Second Admission, then the Warrants shall lapse and will no longer be capable of being exercised.
The Company issued 500,000,000 shareholders warrants to subscribe for new ordinary shares of 0.1p each at 1.6p per share in accordance with the April 2022 and May 2022 share placement and as approved by shareholders on 17 May 2022. the Company granted one warrant per two Placing Shares at an exercise price of 1.6 pence (the "Placing Warrants") exercisable for a period of two years from Admission of the Conditional Placing Shares. The Company has elected that the Placing Warrants will become exercisable if, during a two-year period following the date of Admission of the Conditional Placing Shares, the on-market share closing price of the Ordinary Shares for five consecutive days reaches or exceeds 2.4 pence (being a 50% premium on the Placing Warrant exercise price) (the "Warrant Trigger Event"). If the Warrant Trigger Event occurs then: (i) the holders of the Placing Warrants must exercise the Placing Warrants within 30 days from the occurrence of the Warrant Trigger Event; and (ii) the Placing Warrants will expire following the end of the 30-day period referenced above if not exercised. If the Warrant Trigger Event has not occurred within two years following the date of Admission of the Conditional Placing Shares, then the Placing Warrants shall lapse and will no longer be capable of being exercised.
The Company performed a fair value split by fair valuing the warrants using Black Scholes and assumed that this value is the residual share amount
8. Share Based Payments (continued)
8.1.2. Broker Warrants
During May 2022, the Company issued 75,000,000 broker warrants to subscribe for new ordinary shares of 0.1p each at 0.8p per share to Tavira Securities Limited pursuant to the Placing Agreement. The warrants expire within three years of the date of Second Admission.
Details of warrants outstanding as at 30 June 2022:
Grant date Expiry date Exercise price Unaudited Number of warrants*
000's
19 Sep 2018 20 Sep 2023 2.5p 2,000
02 Aug 2019 02 Aug 2022 2.5p 19,500
06 Jan 2020 06 Jan 2023 1.25p 7,450
29 May 2020 29 May 2023 0.65p 5,000
20 Nov 2020 20 Nov 2023 1.60p 11,175
13 Jan 2022 13 Jan 2024 1.60p 393,097
18 May 2022 17 May 2024 1.60p 500,000
18 May 2022 17 May 2025 0.80p 75,000
==============================
1,013,222
==============================
The estimated fair values of the warrants were calculated using the Black Scholes option pricing model. The inputs into the model and the results are as follows:
Date Closing Exercise Expected Expected Risk Expected Discount Estimated
share price price volatility life free dividend factor fair
at issue rate yield value
date
-------- ------------- --------- ------------ --------- ------- ---------- --------- ----------
13 Jan
2022 0.77p 1.60p 89.37% 2yrs 0.835% Nil 0% 0.22p
------------- --------- ------------ --------- ------- ---------- --------- ----------
18 May
2022 0.71p 1.60p 81.079% 2yrs 1.459% Nil 0% 0.16p
------------- --------- ------------ --------- ------- ---------- --------- ----------
18 May
2022 0.71p 0.80p 99.72% 3yrs 1.475% Nil 0% 0.42p
------------- --------- ------------ --------- ------- ---------- --------- ----------
Weighted average Unaudited
ex. price Number of
warrants*
000's
----------------- ----------
Outstanding warrants at 1 January 2022 1,87p 45,125
- granted 1,54p 968,097
- cancelled/expired/forfeited - -
- exercised
Outstanding warrants at 30 June 2022 1.55p 1,013,222
==========
These warrants were issued to advisers and shareholders of the Group.
8. Share Based Payments (continued) 8.2. Share options reserve
Details of share options outstanding as at 30 June 2022:
Grant Expiry date Exercise price Unaudited
date Number of shares*
000's
---------------------- ------------------- ------------------- -------------------------------------------
05-Aug-16 05-Aug-22 10.20p 883
22-Mar-17 21-Mar-23 7.50p 6,750
01-Feb-18 31-Jan-24 4.50p 9,600
17-Mar-21 16-Mar-25 2.55p 92,249
-------------------------------------------
109,482
===========================================
30 June 31 Dec
2022 2021
Unaudited Audited
======================= ==================
Opening amount 1,891 1,273
Warrants issued costs 1,978 -
Share options charges relating to
employees 55 148
Share options issued to directors
and key management (Note 12.1) 129 662
Forfeited options (124) -
Exercised warrants - -
Expired warrants - -
Expired options (157) (192)
----------------------- ------------------
Closing Amount 3,772 1,891
======================= ==================
Weighted Unaudited
average ex. Number of
price shares*
000's
============= ==========
Outstanding options at 1 January 2022 3.21p 127,610
- granted - -
- forfeited 2.90p (13,863)
- cancelled/expired 7.37p (4,265)
----------
Outstanding options at 30 June 2022 2.91p 109,482
==========
The Company has not issued share options to directors, employees and advisers to the Group during the period.
The option agreements contain provisions adjusting the exercise price in certain circumstances including the allotment of fully paid Ordinary shares by way of a capitalisation of the Company's reserves, a subdivision or consolidation of the Ordinary shares, a reduction of share capital and offers or invitations (whether by way of rights issue or otherwise) to the holders of Ordinary shares.
The estimated fair values of the options were calculated using the Black Scholes option pricing model.
9. Trade and other payables
30 June 31 Dec
2022 2021
Unaudited Audited
GBP'000 GBP'000
=========== =========
Accruals and other payables 964 2,499
Other loans 112 97
Payable to joint venture partner (Note
11 and Note 12.3) - 285
Payable to Key Management and Shareholder
(Note 12.3) 1,074 2,675
2,150 5,556
=========== =========
10. Loans and Borrowings
10.1. Short-Term Working Capital Bridging Finance
Currency Interest Maturity Repayment
----------- ---------------- ----------- ----------------
Unsecured working capital bridging finance GBP See Table below On Demand See Table below
The Group has the option to access working capital from certain existing stakeholders. This unsecured working capital bridging finance is short -- term debt which is unsecured and ranked below other loans. Bridging Finance facilities bear a fixed interest rate and were set off in shares by the lenders participation in the Company placements. In the event the Group was unable to pay this finance it would be repaid after other debt securities have been paid, if any.
Unsecured Balance 1 Drawdown Transaction Interest Repayment Repayment(2) Period
working Jan 2022 Amount Costs Shares(1) Cash Ended
capital Audited Unaudited Unaudited Unaudited Unaudited Unaudited 30 June
bridging 2022
finance Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Repayable
in cash in
less than
a year 1,235 900 - 236 (1,231) (1,140) -
10.2. Reconciliation of liabilities arising from financing activities
Cash Flows
Balance Inflow (Outflow)(2) Finance Shares(1) Balance
1 Jan Costs 30 June
2022 2022
Audited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unsecured
working
capital
bridging
finance
============================= =========== ============= =========== ================ ===========
Short term
loans 1,235 900 (1,140) 236 (1,231) -
=========== =============
1,235 900 (1,140) 236 (1,231) -
============================= =========== ============= =========== ================ ===========
(1)The lenders agreed to set off their short term loans owed by Company against amounts owed by the lenders as a result of their participation in the Company share placements during the year.
(2)The lenders and the Company entered into a net settlement agreement of GBP 1,136,000 to offset amounts owed between the parties.
11. Joint venture agreements
KEFI is the operating partner with a 30% shareholding in G&M with ARTAR holding the other 70%. KEFI provides G&M with technical advice and assistance, including personnel to manage and supervise all exploration and technical studies. ARTAR provides administrative advice and assistance to ensure that G&M remains in compliance with all governmental and other procedures. G&M has five Directors, of whom two are nominated by KEFI However, decisions about the relevant activities of G&M require the unanimous consent of the five directors. G&M is treated as a jointly controlled entity and has been equity accounted and has reconciled its share in G&M's losses .
During 2022, the Company has diluted its interest in the Saudi joint-venture company Gold and Minerals from 31.21% to 30%% by not contributing its full pro rata share of expenses to G&M. Given that the carrying value of the G&M assets in the Company accounts at the date of dilution was nil because the Company's has a policy of expensing all the costs related to G&M to date. By diluting its interest to G&M to 30% the Company was released from this liability. This resulted in a gain of GBP285,897. In accordance with the group's accounting policy gain of GBP285,897 was reported in the profit or loss during the six-month period ended 30 June 2021.
A loss of GBP1,230,000 was recognized by the Group for the period ended 30 June 2022 (2021: GBP618,000) representing the Group's share of losses for the period. As at 30 June 2022, KEFI owed ARTAR an amount of GBPnil (2021: GBP80,000).
Period
Ended
30 June
2022
Unaudited
==========
Opening Balance -
Cash advanced during the period 1,167
FX Gain on advances made to G&M 63
Share of loss in joint venture (898)
Additional impairment loss (332)
==========
Closing Balance -
==========
12. Related party transactions
The following transactions were carried out with related parties:
12.1. Compensation of key management personnel
The total remuneration of the Directors and other key management personnel was as follows:
Six months Six months
ended ended 30
30 June June 2021
2022
Unaudited Unaudited
GBP'000 GBP'000
========== ==========
Directors' fees 265 240
Directors' other benefits 20 17
Share-based benefits to directors 96 211
Directors bonus - -
Key management fees 84 491
Key management other benefits - 6
Share-based benefits to key management 33 137
Key management bonus paid in shares - -
========== ==========
498 1,102
========== ==========
Share-based benefits
The Company has issued share options to directors and key management. On 27 March 2014 , the Board approved a new share option scheme ("the Scheme") for directors, senior managers and employees. The Scheme formalised the existing policy that options may be granted over ordinary shares representing up to a maximum of 10 per cent of the Group's issued share capital.
12. Related party transactions (continued)
12.2. Transactions with shareholders and related parties
Transaction Transaction
to period to period
end end
30 June 30 June
2022 2021
Unaudited Unaudited
Name Nature of transactions Relationship GBP'000 GBP'000
=========== ===========
Receiving of management
Winchombe Venture and other professional Key Management
Limited services and Shareholder - 377
Receiving of management
and other professional Key Management
GPR Dehler services and Shareholder 84 -
Receiving of management
Nanancito Limited/Mr. and other professional
Nicoletto services Shareholder 97 257
=========== ===========
181 634
=========== ===========
12.3. Payable to related parties
The Group 30 June 30 Dec
2022 2021
Unaudited Audited
Name Nature of transactions Relationship GBP'000 GBP'000
========= =======
Abdul Rahman Saad Al-Rashid
& Sons Company Limited Jointly controlled
("ARTAR") Finance entity partner - 285
Winchombe Ventures Key Management
Limited Fees for services and Shareholder - 834
Key Management
GPR Dehler Fees for services and Shareholder 34 -
Nanancito Limited Fees for services Shareholder 941 1,350
Key Management
Directors Fees for services and Shareholder 99 491
1,074 2,960
========= =======
13. Capital commitments
30 June 2022 31 Dec 2021
Unaudited Audited
(1)GBP'000 GBP'000
============= ============
Tulu Kapi Project costs(1) 487 452
Saudi Arabia Exploration costs committed to field work
that has been recommenced 1,551 732
============= ============
(1)Once the Company and its partners in Tulu Kapi Gold Mine Share Company Limited start development
at the Tulu Kapi Gold Project (the "Project") the Company will have project capital commitments.
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END
IR DDLFLLKLXBBV
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September 28, 2022 02:02 ET (06:02 GMT)
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