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KRPZ Kropz Plc

1.25
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Kropz Plc LSE:KRPZ London Ordinary Share GB00BZ1HLP69 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% 1.25 1.00 1.50 1.50 1.25 1.50 36,119 08:00:05
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Chem,fertlizer Minrl Mng,nec 0 -66.64M -0.0719 -0.17 11.58M

Kropz PLC Interim Results for the Period ended 30 June 2019 (7067N)

26/09/2019 7:01am

UK Regulatory


Kropz (LSE:KRPZ)
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TIDMKRPZ

RNS Number : 7067N

Kropz PLC

26 September 2019

26 September 2019

Kropz plc

("Kropz" or the "Company")

Interim Results for the Period ended 30 June 2019

Kropz plc (AIM: KRPZ), an emerging African explorer and developer of plant nutrient feed minerals, announces its results for the six months ended 30 June 2019.

The full financial report is available online at the Company's website www.kropz.com.

Key financial indicators

-- Impairment in the value of property, plant, equipment, mine development costs and exploration assets at Kropz Elandsfontein (Pty) Ltd ("Elandsfontein") of US$49 million;

   --      Cash at 30 June 2019 of US$17 million (as at 31 December 2018 US$30 million); and 

-- Trade and other payables at 30 June 2019 of US$3 million (as at 31 December 2018 US$12 million).

Key corporate and operational developments during the period

Corporate

On 1 February 2019, the Company issued 1,357,080 new ordinary shares of GBP0.001 each in the capital of the Company at a price of 40 pence per share for a total consideration of GBP542,832 (equivalent to approximately US$710,000) and 1,116,544 warrants at an exercise price of 40 pence per warrant to certain advisers in lieu of cash fees arising from their involvement with the Company's admission to AIM on 30 November 2018 and the acquisition of Cominco Resources Limited ("Cominco"). The new ordinary shares were admitted to trading on AIM on 6 February 2019.

On 19 February 2019, the Company applied the provisions of section 176 of the BVI Business Companies Act 2004 to compulsorily redeem any outstanding ordinary shares of Cominco held by the remaining Cominco shareholders. Pursuant to the compulsory redemption, Kropz acquired the remaining 482,927 Cominco shares for which a further 803,315 ordinary shares were issued at a price of 40 pence per share for a total consideration of GBP321,326 (equivalent to approximately US$419,000). The new ordinary shares were admitted to trading on AIM on 22 February 2019. Following the compulsory redemption, the Company holds 100% of the issued share capital of Cominco.

Elandsfontein

During the period under review, Elandsfontein continued to work with Mintek, South Africa, and Eriez, USA, to undertake confirmatory pilot scale and other processing test work ("Test Work") to confirm the final processing design at Elandsfontein. DRA Mineral Projects ("DRA") was appointed to complete the engineering design.

Indications at 30 June 2019 were that the commissioning of the Elandsfontein plant was expected to be delayed at an anticipated additional cost of approximately US$20 million (inclusive of working capital costs, debt repayments and capital expenditure).

Hinda

The completed DRA Option Study has confirmed the potential to export circa 1.8Mtpa phosphate rock from the Hinda project out of the port of Pointe-Noire, as well as the potential viability of both the starter and optimised projects.

The Port Authority at Pointe-Noire have agreed to allocate a port site of increased dimensions to the Hinda project.

The ratification process for the signed Hinda Mining Investment Agreement ("MIA") has been advanced to the level of the Republic of Congo ("RoC") Supreme Court.

Aflao

A second phase of Mobile Metal Iron sampling was initiated in April 2019 at Aflao in Ghana. Samples were taken from the most prospective target area on a 100m by 500m grid. The samples were sent to SGS in Toronto for multi element analyses.

Key corporate and operational developments post period end

Corporate

On 27 June 2019, Kropz announced that it had raised US$4.34 million (GBP3.41 million), before expenses, by way of a placing of 19,364,659 ordinary shares of 0.1 pence each at a price of 17.6 per ordinary share, increasing the issued share capital to 283,406,307 ordinary shares. The net proceeds of the placing will be used to provide additional working capital and more specifically to further advance the programme of works being carried out at its Hinda and Aflao projects. The placing shares were issued and admitted to trading on AIM on 3 July 2019.

Elandsfontein

As announced on 12 September 2019 in an Elandsfontein update, the Test Work has indicated that a reverse flotation modification to the current circuit will produce a saleable product at lower grade than originally targeted. As a direct consequence of the prevailing depressed phosphate rock prices, an alternate process modification is being considered to deliver the required process efficiencies at viable economic returns. Further Test Work will be required to at least the end of 2019 to confirm this.

As a result of the above delay in recommissioning and current depressed phosphate rock prices, an impairment of US$ 49 million was made to the carrying value of property, plant, equipment, mine development costs and exploration assets in Elandsfontein.

The appeal against Elandsfontein's existing and valid integrated water use licence was set to be heard by the Water Tribunal on 11 September 2019, however the appellant requested that this be postponed. At the date of this report no date has been fixed for the hearing.

Hinda

On the Hinda project, four engineering companies have been approached, all of whom have expressed interest in participating in the tender process for the updated definitive feasibility study for the optimised project.

An amended Environmental Social Impact Assessment will be required in the RoC as a result of the addition of a gas pipeline and the inclusion of a dryer on site.

Aflao

Radiometric and drone surveys were also completed within the Aflao license area, with the results of all three stages of survey work being reviewed and compiled.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) no 596/2014.

For further information visit www.kropz.com or contact:

 
 Kropz Plc 
                          +44 (0) 1892 516 
 Ian Harebottle (CEO)      232 
 
 Grant Thornton UK       Nominated Adviser 
  LLP 
 Richard Tonthat         +44 (0) 20 7383 
  Samantha Harrison       5100 
 
 Hannam & Partners       Joint Broker 
 Andrew Chubb             +44 (0)20 7907 
  Ernest Bell              8500 
 
 Mirabaud Securities     Joint Broker 
  Ltd 
 Rory Scott              +44 (0)20 3167 7220 
  Edward Haig-Thomas      +44 (0)20 3167 7222 
 
 Tavistock               Financial PR & IR 
                          (UK) 
 Emily Moss              +44 (0) 207 920 
  Jos Simson              3150 
  Oliver Lamb             kropz@tavistock.co.uk 
 
 Russell & Associates    PR (South Africa) 
 Charmane Russell        +27 (0)11 880 3924 
  James Duncan            charmane@rair.co.za 
 

About Kropz plc

Kropz is an emerging African explorer and developer of plant nutrient feed minerals with phosphate projects in South Africa and the RoC and an exploration asset in Ghana. The vision of the Group is to become a leading independent phosphate rock producer and to develop into an integrated, mine-to-market plant nutrient company focusing on sub-Saharan Africa.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

 
                                                      30 June   31 December 
                                                         2019          2018 
                                                    Unaudited       Audited 
                                           Notes      US$'000       US$'000 
 Non-current assets 
  Property, plant, equipment and mine 
  development                                6         56,284       101,826 
 Exploration assets                         7          38,398        40,772 
 Other financial assets                                 1,661         1,623 
                                                  -----------  ------------ 
                                                       96,343       144,221 
                                                  -----------  ------------ 
 Current assets 
 Inventories                                              880           861 
 Amounts due from a director               17              28            33 
 Trade and other receivables                            1,135           331 
 Cash and cash equivalents                             16,561        30,457 
                                                  -----------  ------------ 
                                                       18,604        31,682 
                                                  -----------  ------------ 
 
   TOTAL ASSETS                                       114,947       175,903 
                                                  -----------  ------------ 
 
   Current liabilities 
 Trade and other payables                               3,156        11,956 
 Other financial liabilities               11             530           518 
 Current taxation                                          51             - 
                                                  -----------  ------------ 
                                                        3,737        12,474 
                                                  -----------  ------------ 
 Non-current liabilities 
 Shareholder loans                         10          14,779        14,386 
 Other financial liabilities               11          29,537        29,551 
 Tax payable                                              246            66 
 Provisions                                             4,024         3,931 
                                                  -----------  ------------ 
                                                       48,586        47,934 
                                                  -----------  ------------ 
 
   TOTAL LIABILITIES                                   52,323        60,408 
                                                  -----------  ------------ 
 
 NET ASSETS                                            62,624       115,495 
                                                  -----------  ------------ 
 
 Shareholders' equity 
 Share capital                              8             363           335 
 Share premium                              8         143,127       142,026 
 Merger reserve                                      (20,523)      (20,523) 
 Accumulated losses                                  (46,819)       (6,255) 
 Foreign exchange translation reserve                   (180)       (1,226) 
                                                  -----------  ------------ 
 
   Total equity attributable to the 
   owners of the Company                               75,968       114,357 
 Non-controlling interests                           (13,344)         1,138 
                                                  -----------  ------------ 
                                                       62,624       115,495 
                                                  -----------  ------------ 
 

The accompanying notes form part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHSED 30 JUNE 2019

 
                                                                           Six months 
                                                                                ended        Period from 
                                                                              30 June         10 January 
                                                                                          to 31 December 
                                                                                 2019               2018 
                                                                            Unaudited            Audited 
                                                                   Notes      US$'000            US$'000 
 
 Revenue                                                                            -                  - 
 Other income                                                                       3                  2 
 
 Operating expenses                                                           (4,475)            (5,674) 
                                                                          -----------  ----------------- 
 
 Operating loss                                                               (4,472)            (5,672) 
 
 Finance income                                                    12             882                382 
 Finance expense                                                   13         (2,186)            (2,321) 
 Impairment losses                                                 14        (48,900)                  - 
                                                                          -----------  ----------------- 
 
 Loss before taxation                                                        (54,676)            (7,611) 
                                                                          -----------  ----------------- 
 
 Taxation                                                          15           (246)               (66) 
 
 Loss after taxation                                                         (54,922)            (7,677) 
                                                                          -----------  ----------------- 
 
 Loss attributable to: 
 Owners of the Company                                                       (40,573)            (6,255) 
 Non-controlling interests                                                   (14,349)            (1,422) 
                                                                          -----------  ----------------- 
                                                                             (54,922)            (7,677) 
                                                                          -----------  ----------------- 
 
 Loss for the period                                                         (54,922)            (7,677) 
 
 Other comprehensive income: 
 Items that may be subsequently reclassified 
  to profit or loss 
 
   *    Exchange differences on translation of parent company 
        financial statements from functional to presentation 
        currency                                                                   70              (956) 
 
   *    Exchange differences on translating foreign 
        operations                                                              1,268              (270) 
                                                                          -----------  ----------------- 
 Total comprehensive loss                                                    (53,584)            (8,903) 
                                                                          -----------  ----------------- 
 
 Attributable to: 
 Owners of the Company                                                       (39,527)            (7,481) 
 Non-controlling interests                                                   (14,057)            (1,422) 
                                                                          -----------  ----------------- 
                                                                             (53,584)            (8,903) 
                                                                          -----------  ----------------- 
 
 Earnings per share attributable to 
  owners of the Company: 
 Basic and diluted (US cents)                                      16         (15.39)            (25.45) 
                                                                          -----------  ----------------- 
 
 

The accompanying notes form part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 30 JUNE 2019

 
                                                         Foreign 
                                                        currency                      Total 
                        Share     Share     Merger   translation   Retained    attributable   Non-controlling      Total 
                      capital   premium    reserve       reserve   earnings       to owners          interest     equity 
                      US$'000   US$'000    US$'000       US$'000    US$'000         US$'000           US$'000    US$'000 
 
   Balance at 10 
   January 2018             -         -          -             -          -               -                 -          - 
 Total 
  comprehensive 
  loss for the 
  period                    -         -          -       (1,226)    (6,255)         (7,481)           (1,422)    (8,903) 
 
 Issue of shares          335   143,297     14,878             -          -         158,510                 -    158,510 
 Costs of issuing 
  shares                    -   (1,271)          -             -          -         (1,271)                 -    (1,271) 
 Adjustments 
  on acquisition 
  of subsidiaries           -         -   (35,401)             -          -        (35,401)             2,560   (32,841) 
 Transactions 
  with owners             335   142,026   (20,523)             -          -         121,838             2,560    124,398 
                   ----------  --------  ---------  ------------  ---------  --------------  ----------------  --------- 
 Balance at 31 
  December 2018           335   142,026   (20,523)       (1,226)    (6,255)         114,357             1,138    115,495 
                   ----------  --------  ---------  ------------  ---------  --------------  ----------------  --------- 
 
   Total 
   comprehensive 
   profit / 
   (loss) 
   for the period           -         -          -         1,046   (40,573)        (39,527)          (14,057)   (53,584) 
 
 Issue of shares           28     1,101          -             -          -           1,129                 -      1,129 
 Acquisition 
  of 
  non-controlling 
  interests                 -         -          -             -          9               9             (425)      (416) 
 Share based 
  payment charges           -         -          -             -          -               -                 -          - 
 Transactions 
  with owners              28     1,101          -             -          9           1,138             (425)        713 
                   ----------  --------  ---------  ------------  ---------  --------------  ----------------  --------- 
 Balance at 30 
  June 2019               363   143,127   (20,523)         (180)   (46,819)          75,968          (13,344)     62,624 
                   ----------  --------  ---------  ------------  ---------  --------------  ----------------  --------- 
 
 
 CONDENSED CONSOLIDATED STATEMENT OF CASH 
  FLOWS FOR THE SIX MONTHSED 30 JUNE 2019 
 
                                                                   Period from 
                                                    Six months      10 January 
                                                         ended              to 
                                                       30 June     31 December 
                                                          2019            2018 
                                                     Unaudited         Audited 
                                                       US$'000         US$'000 
 Cash flows from operating activities 
 Loss before taxation                                 (54,676)         (7,611) 
 Adjustments for: 
 Depreciation of property, plant and equipment             463             457 
 Impairment losses                                      48,900               - 
 Finance income                                          (214)            (55) 
 Finance costs                                           2,186             771 
 Fair value gains on game animals                            -              32 
 Operating cash flows before working capital 
  changes                                              (3,341)         (6,406) 
 Increase in trade and other receivables                 (814)           (240) 
 Decrease in inventories                                     1               - 
 (Decrease) / increase in payables                     (8,386)           1,989 
 Decrease in amounts due from / (to) related 
  parties                                                    5            (47) 
 Increase in provisions                                      -             534 
 Foreign currency exchange differences                      24         (2,611) 
                                                   -----------  -------------- 
                                                      (12,511)         (6,781) 
 Income taxes paid                                        (17)               - 
 Net cash flows used in operating activities          (12,528)         (6,781) 
                                                   -----------  -------------- 
 Cash flows used in investing activities 
 Purchase of property, plant and equipment                 (5)           (505) 
 Exploration and evaluation expenditure                   (49)               - 
 Decrease in loans receivable                                -             293 
 Acquisition of subsidiaries, net of cash 
  acquired                                                   -             303 
 Finance income received                                   214              54 
 Net cash flows from investing activities                  160             145 
                                                   -----------  -------------- 
 
   Cash flows from financing activities 
 Finance costs paid                                    (2,186)           (771) 
 Shareholder loan received                                   -             696 
 Other financial liabilities                             (708)             867 
 Issue of ordinary share capital net of share 
  issue costs                                              710          36,364 
 Net cash flows (used by) / from financing 
  activities                                           (2,184)          37,156 
                                                   -----------  -------------- 
 
   Net (decrease) / increase in cash and cash 
   equivalents                                        (14,552)          30,520 
 Cash and cash equivalents at beginning of 
  the period                                            30,457               - 
 Foreign currency exchange gains / (losses) 
  on cash                                                  656            (63) 
 Cash and cash equivalents at end of the period         16,561          30,457 
                                                   -----------  -------------- 
 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHSED 30 JUNE 2019

   1.       General information 

Kropz plc (the "Company") and its subsidiaries (together, the "Group") is an emerging African explorer and developer of plant nutrient feed phosphate projects in South Africa and the Republic of Congo (" RoC") and exploration assets in Ghana. The principal activity of the Company is that of a holding company for the Group, as well as performing all administrative, corporate finance, strategic and governance functions of the Group.

The Company was incorporated on 10 January 2018 and is a public limited company, with its ordinary shares admitted to the AIM Market of the London Stock Exchange on 30 November 2018 trading under the symbol, "KRPZ". The Company is domiciled in England and incorporated and registered in England and Wales. The address of its registered office is Suite 4F Easistore Building, Longfield Road, North Farm Estate, Tunbridge Wells TN2 3EY. The registered number of the Company is 11143400.

The Company entered into a number of agreements during 2018 to acquire phosphate assets and in turn become the holding company of the Group with interests in Ghana, South Africa and the RoC.

   2.       Basis of preparation 

These interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and in accordance with the accounting policies of the consolidated financial statements for the period ended 31 December 2018. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2018 annual report. The statutory financial statements for the period ended 31 December 2018 were prepared under IFRS and IFRIC interpretations as adopted by the European Union and in accordance with the requirements of the Companies Act 2006. They have been filed with the Registrar of Companies. The auditors reported on those financial statements; their Audit Report was unqualified but included a material uncertainty related to going concern.

The interim consolidated financial statements have been prepared under the historical cost convention, as modified for any financial assets which are stated at fair value through profit or loss. They are presented in United States Dollars, the presentation currency of the Company and figures have been rounded to the nearest thousand.

The interim financial information is unaudited and does not constitute statutory accounts as defined in the Companies Act 2006.

The interim financial information was approved and authorised for issue by the Board of Directors on 25 September 2019.

   3.       Going concern 

Cash and cash equivalents totalled US$16.5 million as at 30 June 2019, of which US$15.8 million is committed to Kropz Elandsfontein. The Group has no current source of operating revenue and is therefore dependent on existing cash resources and future fund raisings to meet overheads and future exploration requirements as they fall due.

In July 2019, the Company raised US$4.34 million (GBP3.41 million) before expenses by way of a placing of ordinary shares to enable the Group to continue to fund its Hinda and Aflao exploration and development programme and fulfil its working capital requirements.

The directors have prepared a cash flow forecast which indicates that the Group will have sufficient liquidity to meet its forecast working capital requirements for at least 12 months from the date of this Interim Report, primarily being corporate costs and costs related to the Aflao and Hinda projects in order for the Group to meet its targeted objectives for these projects and cost of Elandsfontein test work currently underway.

Additional funding will be required at Elandsfontein prior to initiating the targeted upgrades to the processing plant, which are currently expected to require additional funding of approximately US$20 million with various options being considered by the Board on how and when best to source this additional funding.

The directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the opinion that the operational and financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due for at least 12 months from the date of approval of these interim financial statements. Consequently, the Directors have concluded that it is appropriate to prepare the Group's Interim Consolidated Financial Statements on a going concern basis.

   4.      Significant accounting policies 

Other than as noted below, the Company has applied the same accounting policies, presentation, methods of computation, significant judgements and the key sources of estimation of uncertainties in its interim consolidated financial statements as in its audited financial statements for the period ended 31 December 2018, which have been prepared in accordance with IFRS as adopted for use by the European Union.

These accounting policies will be adopted in the Group's full financial statements for the year ending 31 December 2019.

Changes in accounting policy

IFRS 16

The Group has adopted IFRS 16 which became effective on 1 January 2019. The standard replaces IAS 17 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities.

Impact of adoption

The adoption of the standard did not have any impact on the Group.

   5.      Segment information 

Operating segments

Up to the date of approval of the nancial information for the period ended 30 June 2019, the Board of Directors considered that the Group had one operating segment, being that of phosphate mining. Accordingly, all revenues, operating results, assets and liabilities are allocated to this activity.

Geographical segments

Since the acquisition of First Gear Exploration Limited in June 2018, and the acquisitions of Kropz SA (Pty) Limited, Kropz Elandsfontein (Pty) Ltd, Elandsfontein Land Holdings (Pty) Ltd and Cominco Resources Limited in November 2018, the Group has operated in three principal geographical areas - South Africa, Ghana and the RoC.

The Group's non-current assets by location of assets are detailed below.

 
 
                             South Africa      Ghana         RoC      Group 
 30 June 2019                     US$'000    US$'000     US$'000    US$'000 
 
 
 Total non-current assets          56,536         62      39,745     96,343 
                            -------------  ---------  ----------  --------- 
 
 
 
                             South Africa      Ghana         RoC      Group 
 31 December 2018                 US$'000    US$'000     US$'000    US$'000 
 
 Total non-current assets         103,441         62      40,718    144,221 
                            -------------  ---------  ----------  --------- 
 
   6.      Tangible assets - Property, plant, equipment and mine development 
 
                                 30 June           30 June    30 June    31 Dec              31 Dec     31 Dec 
                                    2019              2019       2019      2018                2018       2018 
                                               Accumulated 
                                              Depreciation   Carrying                   Accumulated   Carrying 
                                    Cost    and impairment      value      Cost        Depreciation      value 
                                 US$'000           US$'000    US$'000   US$'000             US$'000    US$'000 
 Buildings and infrastructure 
 Land                              2,157                 -      2,157     2,108                   -      2,108 
 Buildings                        11,484           (5,519)      5,965    11,217                 (7)     11,210 
 Capitalised road 
  costs                            9,209           (5,528)      3,681     8,996             (1,499)      7,497 
 Capitalised electrical 
  sub-station costs                3,995           (2,352)      1,643     3,903               (564)      3,339 
 
 Machinery, plant 
  & equipment 
 Critical spare 
  parts                            1,212                 -      1,212     1,185                   -      1,185 
 Plant and machinery              55,615          (25,952)     29,663    54,329                (67)     54,262 
 Furniture & fittings                 45              (41)          4        44                (40)          4 
 Geological equipment                 49              (49)          -        48                (47)          1 
 Office equipment                     36              (10)         26        35                 (8)         27 
 Other fixed assets                    1               (1)          -         1                   -          1 
 Motor vehicles                      133             (121)         12       130               (106)         24 
 Computer equipment                   44              (37)          7        38                (33)          5 
 
 Mine development                 19,167           (9,206)      9,961    18,724                   -     18,724 
 Stripping activity 
  costs                            3,264           (1,568)      1,696     3,188                   -      3,188 
 
 Game animals                        257                 -        257       251                   -        251 
 
 Total                           106,668          (50,384)     56,284   104,197             (2,371)    101,826 
                                --------  ----------------  ---------  --------  ------------------  --------- 
 

Reconciliation of property, plant, equipment and mine development - Period ended 30 June 2019

 
                                                                              Foreign 
                         Opening               Impairment   Depreciation     exchange    Closing 
                         Balance   Additions    provision         charge    gain/loss    balance 
                         US$'000     US$'000      US$'000        US$'000      US$'000    US$'000 
 Buildings and 
  infrastructure 
 Land                      2,108           -            -              -           49      2,157 
 Buildings                11,210           -      (5,511)            (1)          267      5,965 
 Capitalised 
  road costs               7,497           -      (3,686)          (308)          178      3,681 
 Capitalised 
  electrical 
  sub- station 
  costs                    3,339           -      (1,642)          (133)           79      1,643 
 
 Machinery, 
  plant & equipment 
 Critical spare 
  parts                    1,185           -            -              -           27      1,212 
 Plant and machinery      54,262           -     (25,884)            (2)        1,287     29,663 
 Furniture & 
  fittings                     4           -            -              -            -          4 
 Geological 
  equipment                    1           -            -            (1)            -          - 
 Office equipment             27           -            -            (2)            1         26 
 Other fixed 
  assets                       1           -            -              -          (1)          - 
 
 Motor vehicles               24           -            -           (12)            -         12 
 Computer equipment            5           5            -            (4)            1          7 
 
 Mine development         18,724           -      (9,206)              -          443      9,961 
 
 Stripping activity 
  costs                    3,188           -      (1,568)              -           76      1,696 
 
 Game animals                251           -            -              -            6        257 
 
 Total                   101,826           5     (47,497)          (463)        2,413     56,284 
                       ---------  ----------  -----------  -------------  -----------  --------- 
 

Reconciliation of property, plant, equipment and mine development - Period ended 31 December 2018

 
                                                                                 Foreign 
                             Opening                           Depreciation     exchange    Closing 
                             Balance   Additions   Disposals         charge    gain/loss    balance 
                             US$'000     US$'000     US$'000        US$'000      US$'000    US$'000 
 Buildings and 
  infrastructure 
 Land                              -       2,182           -              -         (74)      2,108 
 Buildings                                11,608                        (2)        (396)     11,210 
 Capitalised road 
  costs                            -       8,072           -          (302)        (273)      7,497 
 Capitalised electrical 
  sub-station costs                -       3,592           -          (131)        (122)      3,339 
 
 Machinery, plant 
  & equipment 
 Critical spare 
  parts                            -       1,256        (28)              -         (43)      1,185 
 Plant and machinery               -      56,057           -              -      (1,795)     54,262 
 Furniture & fittings              -           5           -            (1)            -          4 
 Geological equipment              -           3           -            (2)            -          1 
 Office equipment                  -          30           -            (2)          (1)         27 
 Other fixed assets                -           1           -              -            -          1 
 
 Motor vehicles                    -          37           -           (12)          (1)         24 
 Computer equipment                -          11           -            (5)          (1)          5 
 
   Mine development                -      19,384           -              -        (660)     18,724 
 
 Stripping activity 
  costs                            -       3,300           -              -        (112)      3,188 
 
 Game animals                      -         293           -              -         (42)        251 
 Total                             -     105,831        (28)          (457)      (3,520)    101,826 
                          ----------  ----------  ----------  -------------  -----------  --------- 
 

Kropz Elandsfontein has a fully drawn down project financing facility with BNP Paribas for USD30 million. BNP Paribas has an extensive security package over all the assets of Kropz Elandsfontein and Elandsfontein Land Holdings as well as the share investments in those respective companies owned by Kropz SA.

   7.      Intangible assets - exploration and evaluation costs 
 
                   30 June           30 June      30 June     31 Dec      31 Dec       31 Dec 
                      2019              2019         2019       2018        2018         2018 
                                      Amort- 
                                     isation     Carrying                 Amort-     Carrying 
                      Cost    and impairment        value       Cost     isation        value 
                   US$'000           US$'000      US$'000    US$'000     US$'000      US$'000 
 
   Capitalised 
   costs            39,801           (1,403)       38,398     40,772           -       40,772 
                 ---------  ----------------  -----------  ---------  ----------  ----------- 
 

Reconciliation of exploration assets

 
                                                                  Foreign 
                           Opening                 Impairment    exchange    Closing 
                           Balance   Additions      provision        loss    balance 
                           US$'000     US$'000        US$'000     US$'000    US$'000 
 Period ended 30 
  June 2019 
 
 Capitalised costs          40,772          49        (1,403)     (1,020)     38,398 
                     -------------  ----------  -------------  ----------  --------- 
 
 
                                                       Amounts 
                                                   transferred     Foreign 
                        Opening                 on acquisition    exchange    Closing 
                        Balance   Additions    of subsidiaries        loss    balance 
                        US$'000     US$'000            US$'000     US$'000    US$'000 
 Period ended 31 
  December 2018 
 
 Capitalised costs            -      42,083            (1,267)        (44)     40,772 
                     ----------  ----------  -----------------  ----------  --------- 
 
 
   8.      Share capital 

Shares were issued during the period as set out below:

 
                                           Number of      Share       Share       Merger       Total 
                                              shares    capital     premium      reserve 
                                                        US$'000     US$'000      US$'000     US$'000 
 
 On incorporation                                  1          -           -            -           - 
 Issued to Kropz International 
 S.a.r.l. ("Kropz International")             49,999          -          70            -          70 
 Subdivision of shares                       450,000          -           -            -           - 
 Issued to Kropz International               163,221          -         117            -         117 
 Issued to Kropz International                     1          -           -            -           - 
 Issued to Kropz International            93,260,034        120      69,320        3,809      73,249 
 Issued to ARC Fund                        5,499,124          7       2,811            -       2,818 
 Capitalisation of debt                    9,875,698         13       5,049            -       5,062 
 Conversion of Loan 
  Note                                     6,902,148          9       2,520            -       2,529 
 Offer for Cominco                        55,669,176         71      28,461            -      28,532 
 Placing and Subscription 
  shares                                  68,359,376         88      34,949            -      35,037 
 Further acceptances 
  of Offer for Cominco                    21,652,475         27           -       11,069      11,096 
 Cost of issuing shares                            -          -     (1,271)            -     (1,271) 
 Adjustments on acquisition 
  of subsidiaries                                  -          -           -     (35,401)    (35,401) 
                                      --------------  ---------  ----------  -----------  ---------- 
 
   At 31 December 2018                   261,881,253        335     142,026     (20,523)     121,838 
                                      --------------  ---------  ----------  -----------  ---------- 
 
 
 
 Issue of shares to 
  advisers                     1,357,080      18         692            -         710 
 Issue of shares on 
  compulsory redemption 
  of Cominco minorities          803,315      10         409            -         419 
                          --------------  ------  ----------  -----------  ---------- 
 
   At 30 June 2019           264,041,648     363     143,127     (20,523)     122,967 
                          --------------  ------  ----------  -----------  ---------- 
 

On 1 February 2019, the Company issued 1,357,080 new ordinary shares of GBP0.001 each in the capital of the Company at a price of 40 pence per share for a total consideration of GBP542,832 (equivalent to approximately US$710,000) and 1,116,544 warrants at an exercise price of 40 pence per warrant to certain advisers in lieu of cash fees arising from their involvement with the Company's admission to AIM on 30 November 2018 and the acquisition of Cominco. The new ordinary shares were admitted to trading on AIM on 6 February 2019.

On 19 February 2019, the Company applied the provisions of section 176 of the BVI Business Companies Act 2004 to compulsorily redeem any outstanding ordinary shares of Cominco ("Cominco Shares") held by the remaining Cominco shareholders ("Compulsory Redemption"). Pursuant to the Compulsory Redemption, Kropz acquired the remaining 482,927 Cominco Shares for which a further 803,315 ordinary shares were issued at a price of 40 pence per share for a total consideration of GBP321,326 (equivalent to approximately US$419,000). The new ordinary shares were admitted to trading on AIM on 22 February 2019. Following the Compulsory Redemption, the Company holds 100% of the issued share capital of Cominco.

A difference of approximately US$9,000 arose between the consideration paid and the amount by which the non-controlling interests have been adjusted. This has been recognised directly in equity and attributed to the owners of the parent.

Subsequent to 30 June 2019, the Company issued further shares as follows:

On 3 July 2019, the Company raised US$4.34 million (GBP3.41 million) before expenses by way of a placing (the "Placing") for 19,364,659 ordinary shares of 0.1 pence each at a price of 17.6 pence per ordinary share (the "Placing Shares").

The net proceeds of the Placing will be used to provide additional working capital and more specifically to further advance the programme of works being carried out at its Hinda and Aflao projects.

The Placing Shares were admitted to trading on AIM on 3 July 2019. The Placing Shares were issued as fully paid and rank pari passu in all respects with the existing ordinary shares.

Following the issue of the Placing Shares and their admission to AIM, the Company has 283,406,307 ordinary shares in issue.

Share based payment arrangements

Equity warrants

The Company issued 1,116,544 equity warrants over ordinary shares in the Company during the period, as more fully described above (period ended 31 December 2018: 83,456 equity warrants). No equity warrants have been exercised or forfeited. Accordingly, 1,200,000 equity warrants remained in place at 30 June 2019 (31 December 2018: 83,456 equity warrants).

The warrants were valued at the period end using a Black-Scholes valuation model. The charge to profit and loss during the year was US$nil due to the immateriality of the value of the warrants for the period ended 30 June 2019 (31 December 2018: US$nil).

   9.      Key management personnel remuneration 

The remuneration for each Director and Key Management Personnel of the Group during the period was as follows:

 
                                           Short-Term Benefits 
 Period ended 30 June       Base Salary 
  2019                              US$      Bonus      Options       Total 
                                               US$          US$         US$ 
 Executive directors 
 Ian Harebottle                 205,326          -            -     205,326 
 Mark Summers                   139,011          -            -     139,011 
                           ------------  ---------  -----------  ---------- 
                                344,337          -            -     344,337 
                           ------------  ---------  -----------  ---------- 
 Non-executive directors 
 Lord Robin Renwick              29,649          -            -      29,649 
 Linda Beal                      24,121          -            -      24,121 
 Mike Daigle                     31,677          -            -      31,677 
 Machiel Reyneke                      -          -            -           - 
 Michael Nunn                         -          -            -           - 
                           ------------  ---------  -----------  ---------- 
                                 85,447          -            -      85,447 
                           ------------  ---------  -----------  ---------- 
 
 Total directors' 
  remuneration                  429,784          -            -     429,784 
                           ------------  ---------  -----------  ---------- 
 
 Executives 
 Michelle Lawrence               83,749          -            -      83,749 
                                 83,749          -            -      83,749 
                           ------------  ---------  -----------  ---------- 
 
 
                                                 Short-Term Benefits 
 Period ended 31 December         Base Salary        Bonus    Options       Total 
  2018                                    US$          US$        US$         US$ 
 Executive directors 
 Ian Harebottle                       341,589            -          -     341,589 
 Mark Summers                          39,035       10,430          -      49,465 
                                 ------------  -----------  ---------  ---------- 
                                      380,624       10,430          -     391,054 
                                 ------------  -----------  ---------  ---------- 
 Non-executive directors 
 Lord Robin Renwick                     7,961            -          -       7,961 
 Linda Beal                             3,185            -          -       3,185 
 Mike Daigle                            3,185            -          -       3,185 
 Machiel Reyneke                            -            -          -           - 
 Michael Nunn                               -            -          -           - 
                                 ------------  -----------  ---------  ---------- 
                                       14,331            -          -      14,331 
                                 ------------  -----------  ---------  ---------- 
 
 
 Total directors' remuneration        394,955       10,430          -     405,385 
                                 ------------  -----------  ---------  ---------- 
 
 Executives 
 Michelle Lawrence                     22,273       10,430          -      32,703 
 Nicola Taylor                         42,043            -          -      42,043 
                                 ------------  -----------  ---------  ---------- 
                                       64,316       10,430          -      74,746 
                                 ------------  -----------  ---------  ---------- 
 

The following ESOP options, which were issued at the time of admission to AIM as share-based payment arrangements, were outstanding at the period ended 30 June 2019:

 
 Name                 Expiry Date    Exercise Price   Number of Options 
                                         (pence) 
-------------------  -------------  ---------------  ------------------ 
                      28 November 
 Ian Harebottle           2028            0.1             3,362,609 
                      28 November 
 Mark Summers             2028            0.1             3,362,609 
                      28 November 
 Michelle Lawrence        2028            0.1             1,465,137 
                                                     ------------------ 
                                                          8,190,355 
                                                     ------------------ 
 
   10.     Shareholder loans payable 
 
                    30 June   31 December 
                       2019          2018 
                    US$'000       US$'000 
       ARC Fund      14,779        14,386 
                  ---------  ------------ 
 

The loans: (i) are US$ denominated but any payments will be made in ZAR at the then current exchange rate; (ii) carry interest at monthly US LIBOR plus 3 per cent; and (iii) are repayable by no later than 1 January 2035 (or such earlier date as agreed between the parties to the shareholder agreements).

   11.     Other financial liabilities 
 
                           30 June   31 December 
                              2019          2018 
                           US$'000       US$'000 
 BNP Paribas                29,537        29,551 
 Greenheart Foundation         530           517 
 Other loans                     -             1 
                         ---------  ------------ 
 Total                      30,067        30,069 
                         ---------  ------------ 
 
 
 Non-current financial liabilities    29,537   29,551 
 Current financial liabilities           530      518 
                                     -------  ------- 
 Total                                30,067   30,069 
                                     -------  ------- 
 

Kropz Elandsfontein has a fully drawn down project financing facility with BNP Paribas for USD30 million. BNP Paribas has an extensive security package over all the assets of Kropz Elandsfontein and Elandsfontein Land Holdings as well as the share investments in those respective companies owned by Kropz SA.

   12.     Finance income 
 
                           Six months         Period 
                                ended          ended 
                              30 June    31 December 
                                 2019           2018 
                              US$'000        US$'000 
 Interest income                  214            382 
 Foreign exchange gains           668              - 
 Total                            882            382 
                          -----------  ------------- 
 
   13.     Finance expense 
 
                            Six months         Period 
                                 ended          ended 
                               30 June    31 December 
                                  2019           2018 
                               US$'000        US$'000 
 Shareholder loans                 395            409 
 Foreign exchange losses             -          1,555 
 Bank debt                       1,791            357 
 Total                           2,186          2,321 
                           -----------  ------------- 
 
   14.     Impairment losses 

As announced on 12 September 2019 in an Elandsfontein update, Test Work confirmed that a reverse flotation modification to the current circuit would produce a saleable product at lower grade than originally targeted. As a direct consequence of the prevailing depressed phosphate rock prices, an alternate process modification is being considered to deliver the required process efficiencies at viable economic returns and further test work will be required to at least the end of 2019 to confirm this.

As a result of the above delay in recommissioning and current depressed phosphate rock prices, an impairment of US$49 million was made to the carrying value of property, plant, equipment, mine development costs and exploration assets in Elandsfontein.

The impairment was allocated as follows:

 
                                         US$'000 
 Property, plant, equipment and mine 
  development assets                      47,497 
 Exploration assets                        1,403 
                                        -------- 
 Total                                    48,900 
                                        -------- 
 
   15.     Taxation 
 
 Major components of tax charge                     Six months         Period 
                                                         ended          ended 
                                                       30 June    31 December 
                                                          2019           2018 
                                                       US$'000        US$'000 
 Deferred 
 Originating and reversing temporary differences             -              - 
 Current tax 
 UK tax in respect of current period                       246              - 
 Local income tax recognised in respect 
  of prior periods                                           -             66 
 Total                                                     246             66 
                                                   -----------  ------------- 
 

The Group had losses for tax purposes of approximately US$33.5 million (US$27.8 million as at 31 December 2018) which, subject to agreement with taxation authorities, are available to carry forward against future profits.

   16.     Earnings per share 

The calculations of basic and diluted earnings per share have been based on the following loss attributable to ordinary shareholders and weighted average number of ordinary shares outstanding:

 
                                                          Six months         Period 
                                                               ended          ended 
                                                             30 June    31 December 
                                                                2019           2018 
                                                             US$'000        US$'000 
 
   Loss attributable to ordinary shareholders               (40,573)        (6,255) 
 
         Weighted average number of ordinary shares 
         in Kropz plc                                    263,591,748     24,575,156 
 
 Basic and diluted earnings per share (US 
  cents)                                                     (15.39)        (25.45) 
                                                      --------------  ------------- 
 
   17.     Related party transactions 

Details of the Key Management Personnel remuneration and shareholder loans are explained in Notes 9 and 10. In addition, the following transactions were carried out with related parties:

Related party balances

Loan accounts - Owed (to) / by related parties

 
              30 June   31 December 
                 2019          2018 
              US$'000       US$'000 
 ARC Fund    (14,779)      (14,386) 
 M Nunn            28            33 
 Others             -           (1) 
 Total       (14,751)      (14,354) 
            ---------  ------------ 
 

M Nunn repaid the loan owing in September 2019.

Related party balances

Interest paid to / (received from) related parties

 
                        Period ended   Period ended 
                             30 June    31 December 
                                2019           2018 
                             US$'000        US$'000 
 Kropz International               -            345 
 ARC Fund                        395             64 
 Total                           395            409 
                       -------------  ------------- 
 

The ARC Fund, a substantial shareholder, agreed to subscribe for 14,497,848 new ordinary shares in the placing referred to in Note 8, bringing its aggregate holding to 139,600,912 ordinary shares (representing 49.3 per cent. of the so enlarged issued share capital).

Kropz International, a substantial shareholder of Kropz, agreed to subscribe for 3,345,657 new ordinary shares in the placing, bringing its aggregate holding to 54,933,474 ordinary shares (representing 19.4 per cent. of the so enlarged issued share capital).

Consequently, the subscriptions of the ARC Fund and Kropz International are related party transactions pursuant to Rule 13 of the AIM Rules. Mike Nunn, a director of the Company, is the beneficial owner of Kropz International and Machiel Reyneke, a director of the Company, is the representative of the ARC Fund. Accordingly, neither was involved in the approval of the placing by the Company's board.

   18.     Seasonality of the Group's business 

There are no seasonal factors which materially affect the operations of any company in the Group.

   19.     Events after the reporting period 

Other than the placing in July 2019, described in Note 8, the impairment of the property, plant, equipment, mine development costs and exploration assets in Kropz Elandsfontein (Pty) Ltd as set out in Note 14 and M Nunn repaying the loan owing to the Group as set out in Note 17, there were no other events occurring since 30 June 2019 requiring disclosure herein.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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