TIDMBRES
RNS Number : 8958Z
Blencowe Resources PLC
28 January 2022
Blencowe Resources Plc
("Blencowe" or the "Company")
Annual Results for the year ended 30 September 2021
Blencowe Resources Plc, the natural resources company focused on
the development of the Orom-Cross Graphite Project in Uganda, is
pleased to announce its audited financial results for the year
ended 30 September 2021 (the "Annual Report").
The Annual Report which includes an unqualified audit report and
audited Financial Statement for the year ended 30 September 2021
will be made available on the Company's website at
www.blencoweresourcesplc.com. Hard copies will be posted to the
Company's shareholders.
For further information, please contact:
Blencowe Resources www.blencoweresourcesplc.com
Sam Quinn Tel: +44 (0) 1624 681 250
info@blencoweresourcesplc.com
Investor Enquiries Tel: +44 (0) 7891 677 441
Sasha Sethi sasha@flowcomms.com
Tavira Securities Limited Tel: +44 (0)20 7100 5100
Jonathan Evans jonathan.evans@tavirasecurities.com
First Equity Limited Tel: +44 (0)203 192 1733
Jason Robertson jasonrobertson@firstequitylimited.com
Chief Executive Officer's Statement
Dear Shareholders,
It is with great pleasure that I update you on progress within
the Company and its operations for the year ended 30 September
2021. This was the first full year of activities within Blencowe
following the successful acquisition of the Orom-Cross graphite
project in April 2020 and a number of key milestones were met as we
continue to develop this exciting asset.
For those of you perhaps less aware, graphite has many uses
(over 150 applications in total) from the more traditional use
within refractory bricks to line steel foundries - due to its high
heat resistance - to electrodes in furnaces. There is a growing
market in fire and flame retardants and expandable graphite is
pressed into foils or sheets which are used in heat and fire
protection in applications ranging from building materials to
consumer electronics and fuel cells. But the seismic shift that
will radically alter demand ahead is the production of spherical
graphite for anodes inside each lithium-ion battery, which is the
frontrunner technology to power electric vehicles (EVs).
Approximately 50kgs of graphite goes into each and every Li-ion
battery and it is non-replaceable; and as EV numbers start to take
off there is widespread expectation for exponential growth of all
battery metals (lithium, cobalt, nickel and graphite). We are thus
highly leveraged into EV growth.
Most leading analysts forecast severe shortages of graphite from
as early as 2025, with this demand-supply imbalance growing
ever-larger as EVs become more widespread in the latter half of the
current decade. Currently there are 15 million EVs in the world and
analysts predict this number to grow to somewhere between 100-600
million by 2030. Whilst there will be any number of new graphite
mines that go into production to fulfil this demand there is
unlikely to be sufficient graphite produced to cover the shortfall,
mainly due to (1) the long lead time it takes to establish and
develop a new mine from scratch, (2) the complexity of funding new
projects and (3) the very specific graphite quality constraints
imposed by battery producers. Blencowe has a strategy for all of
these and it is clear that any company with a high quality, low
cost graphite source that can develop its asset into production
over the next few years will have a valuable asset ahead.
Blencowe acquired the Orom-Cross graphite project in Uganda just
18 months ago and is working to develop it towards first production
before 2025. Orom-Cross has an estimated 2-3 billion tonnes
graphite making it one of the largest deposits in the world, and
substantial volumes of graphite present near to surface (between
0-30 meters) which ultimately will make it easier and cheaper to
mine via open pits. Uganda is a landlocked country in East Africa
which has a strong, stable Government and the mining industry is
well supported. It has plentiful infrastructure such as roads,
water and rail and it is English speaking too, being a former
British Protectorate. These are all key advantages to successfully
developing a mining venture there.
Over the past 18 months Blencowe has delivered two extensive
programmes for 5,000m diamond drilling that were required for
Orom-Cross to progress; firstly to deliver a maiden JORC Standard
Resource of 16Mt grading at a respectable 6.0% TGC, and more
recently to upgrade this into a larger Measured and/or Indicated
Resource. The revised JORC Resource statement is due in early 2022
and will likely deliver enough graphite for the first 10-15 years
life of mine. It is also hoped that the in situ grade will rise as
a result of including the higher grade Camp Lode deposit into the
JORC Resource for the first time. Whilst this drilling has been
both costly and time consuming it was absolutely necessary as one
cannot proceed to mine planning and pit designs without knowing
where the graphite is positioned, geophysics (ground conditions)
and, very importantly, the metallurgical qualities of the
product.
Over the past year Blencowe sent quantities of graphite from
Orom-Cross to leading technical experts SGS Lakeside in Toronto to
establish the metallurgical properties of our graphite, and I am
pleased to report that the results have exceeded our expectations.
Not only did SGS deliver a higher grade concentrate than we hoped
for (97% versus 94% TGC), but they also delivered a concentrate
with almost zero impurities and high recoveries. The quality of the
end product is crucial in the sales and marketing process, which
will begin in early 2022 as prospective end users are identified
and samples sent to each of them to qualify and vet our
products.
Our management team also delivered a Preliminary Economic
Assessment (PEA) by end-September, which was the first, internally
driven, commercial overview of the entire mining operation. This
study highlighted strong economic returns from a profitable mining
venture and will form the basis of our next important step, the
Pre-Feasibility Study; already underway and due for completion by
mid-2022.
In amongst all of this work on the ground the Company has
established strong relationships on the ground which have been
critical for work to continue whilst Covid restrictions have forced
many of us to remain unable to travel. We thank these partners for
their continued support and their efforts. In addition the Company
has honoured the payments as agreed by the former owner of the
project to the local Orom community, which resulted in substantial
farming equipment being purchased to make a difference to their
lives. This community agreement is vital in the long run and was a
key requirement when the project secured its 21-year Mining License
in 2019.
Blencowe will be ever mindful of the environment as it develops
Orom-Cross and will look to establish a carbon neutral footprint
via use of green (hydro) power off the grid, plus solar power as
backup, as well as full restoration of areas mined ahead. This is
increasingly important and will play a role in attracting investors
and funding parties in the years to come.
Finally, management, and I am well supported by a board and
management team (including third party contractors) who are not
only experienced, capable mining executives, but also people that
have proven their ability to stand up and deliver when the
challenges present. I thank them for their efforts and we will
continue to add further key management as we progress.
It would be remiss to close without thanking all shareholders
for their efforts, as without your ongoing support we would not
have a project. Blencowe now owns 100% of a tier one project in a
safe location that will produce a key resource that the market is
anticipating huge growth and demand ahead. We also believe that the
market will understand this value proposition much better as we
continue to develop our project and this will naturally see further
growth in market value and share price. Be assured of our continued
efforts to work hard to do all we can to underline this
success.
Mike Ralston
Chief Executive Officer
Strategic Report
The Directors present the Strategic Report for the year ended 30
September 2021.
Results
The results are set out in the Consolidated Statements of
Comprehensive Income. The total comprehensive loss attributable to
the equity holders of the Group for the period was GBP694,726
(2020: GBP1,058,084).
The Group paid no distribution or dividends during the
period.
Business model, review of the business and future
developments
The Company was formed to undertake an acquisition of a target
company or business. The Company on 13 May 2019 announced that it
had entered into Heads of Agreement with Consolidated Africa
Limited ("CRA") and New Energy Minerals Africa Pty Ltd ("New
Energy") for the proposed assignment to the Company of a binding
option for it to acquire 100% of the share capital of Consolidated
African Resources (Uganda) Ltd ("CARU"), a subsidiary of CRA, by
way of a reverse takeover ("Transaction"). On 28 April 2020, the
Company completed the acquisition of CARU, the owner of the
Orom-Cross Graphite Project ("Orom-Cross Graphite Project") in
Northern Uganda.
The Group's aim is to create value for shareholders through the
discovery and development of economic mineral deposits. The Group's
strategy is to continue to progress the development of its existing
project in Uganda and to evaluate its existing and new mineral
resource opportunities.
The Group's business is directed by the Board and is managed on
a day-to-day basis by the Executive Chairman, Cameron Pearce. The
Board monitors compliance with objectives and policies of the Group
through performance reporting, budget updates and periodic
operational reviews.
Key performance indicators (KPIs)
Financial KPIs
Results for the year
With no income in the year the Group continues to monitor the
loss before tax to ensure the continued viability of the Group and
ability to continue to develop the Orom-Cross Graphite Project. The
Group has made a loss before tax of GBP694,726 for the year ended
30 September 2021 (2020: loss before tax of GBP1,058,084).
Exploration expenditure - funding and development costs
At this stage in the Group's development, the Group is focusing
on financing and continued development of the Orom-Cross Graphite
Project. Therefore, the funding and development costs of Orom-Cross
Graphite project have been chosen as Key Performance
Indicators.
The Group has incurred GBP976,084 (2020: GBP1,084,354) of
development costs at Orom-Cross Graphite Project which were
required to carry out the initial drilling costs and testing of the
mineral. These development costs are in line with the Board
expectations.
In 2021 the Group raised funds of GBP1,373,414 (2020:
GBP2,000,000) from the equity markets. Please see note 21 for
further details of the funds raised after the year end.
At 30 September 2021 the Group had a cash balance of GBP93,288
(2020: GBP205,856)
Employees
There were no employees during the year apart from the
directors, the Chief Executive Officer ("CEO") and the Chief
Operating Officer ("COO"), who are the key management personnel.
All current members of the Board and the key management personnel
are males. For more information about the Group's key management
personnel see note 8.
Social, Community and Human Rights Issues
The Orom-Cross Graphite Project is still at an early stage of
project development and further consideration will need to be given
to social, community and human rights issues affecting the Project.
Currently a key consideration is that under Ugandan law the Company
is required to rehabilitate the area affected by the mining
activities. Accordingly, there will be a potential cost associated
with undertaking this obligation. At this time, although the Group
continues to explore and test the minerals, the land has not been
affected and therefore the Group has not accounted for any costs
associated with the rehabilitation of the area.
Since the acquisition of CARU the Group has donated to local
causes, such as a scholarship programme and to fight against
COVID-19. The Group will continue to donate to the local
communities around the region of Uganda in which the Project
Licences are located.
Principal risks and uncertainties and risk management
The Group operates in an uncertain environment and is subject to
a number of risk factors. The Directors have carried out a robust
assessment on the principal risks facing the Group, including those
that threaten its business model, future performance, solvency or
liquidity.
The Group continues to monitor the principal risks and
uncertainties with the help of specialist to ensure that any
emerging risk are identified, managed and mitigated.
Geological risks
Only a small portion of the Orom-Cross Graphite Project has been
explored with no mineral resources estimated to date. Further
exploration work is therefore required to establish a mineral
resource. The potential quantity and grade of any product is
presently conceptual in nature and it is uncertain if further
exploration will result in the estimation of a mineral resource.
Flotation testwork conducted on graphite obtained from the
Orom-Cross Graphite Project has confirmed a final concentrate
grading of 94% with a TGC recovery of 31.7%. Whilst it is expected
that this recovery can be improved there is not guarantee that it
will be. The Group will need to undertakes additional metallurgical
test work and technical marketing to establish reasonable grounds
for a saleable product. If the final concentrate grading is less
than anticipated this will reduce the quantum of saleable product
and as the Orom-Cross Graphite Project is dependent on the
production of quality graphite to make the project economically
viable this could have a material impact on the Group's financial
position in the future.
The Group uses advisors with specialist knowledge in mining and
related environmental management for reducing the impacts of
environmental risk.
Government regulation and political risk
The Group's operating activities are subject to laws and
regulations governing expropriation of property, health and worker
safety, employment standards, waste disposal, protection of the
environment, mine development, land and water use, prospecting,
mineral production, exports, taxes, labour standards, occupational
health standards, toxic wastes, the protection of endangered and
protected species and other matters. While the Group believes that
it is in substantial compliance with all material current laws and
regulations affecting its activities, future changes in applicable
laws, regulations, agreements or changes in their enforcement or
regulatory interpretation could result in changes in legal
requirements or in the terms of existing permits and agreements
applicable to the Group or its properties, which could have a
material adverse impact on the Group's current operations or
planned exploration and development projects. Where required,
obtaining necessary permits and licences can be a complex, time
consuming process and the Group cannot assure whether any necessary
permits will be obtainable on acceptable terms, in a timely manner
or at all. The costs and delays associated with obtaining necessary
permits and complying with these permits and applicable laws and
regulations could stop or materially delay or restrict the Group
from proceeding with any future exploration or development of its
properties. Any failure to comply with applicable laws and
regulations or permits, even if inadvertent, could result in
interruption or closure of exploration, development or mining
operations or material fines, penalties or other liabilities.
The Orom-Cross Graphite Project is located in Uganda. The
Group's activities may be affected in varying degrees by political
stability and governmental regulations. Any changes in regulations
or shifts in political attitudes in these countries or any other
countries in which the Group may operate are beyond the control of
the Group and may adversely affect its operations. To mitigate this
risk, the Board continues to review any changes on the government
regulations and the political stability in Uganda.
Pricing risk
The development and success of any project of the Group will be
primarily dependent on the future prices of graphite. The graphite
prices are subject to significant fluctuation and are affected by a
number of factors which are beyond the control of the Company. Such
factors include, but are not limited to exchange rates,
fluctuations in the value of the United States dollar and foreign
currencies, global and regional supply and demand, and political
and economic conditions. The price of graphite and other
commodities have fluctuated widely in recent years, and future
price declines could cause any future development of and commercial
production from the Group's property to be impracticable. Although
the Group will have sufficient working capital for the Working
Capital Period, depending on the price of graphite, projected cash
flow from planned mining operations may not be sufficient for
future operations and the Group could be forced to discontinue any
further development and may lose its interest in, or may be forced
to sell, some or all of its properties. Future production from the
Orom-Cross Graphite Project is dependent on the production of
graphite that is adequate to make the project economically viable.
The Board regularly monitors the prices of graphite and is prepared
to raise further capital if it is required.
Commodity and currency risk
As the Company's potential earnings will be largely derived from
the sale of graphite, the Company's future revenues and cash flows
will be impacted by changes in the prices and available market of
this commodity. Any substantial decline in the price of graphite or
in transport or distribution costs may have a material adverse
effect on the Company.
Commodity prices fluctuate and are affected by numerous factors
beyond the control of the Company. These factors include current
and expected future supply and demand, forward selling by
producers, production cost levels in major mineral producing
centers as well as macroeconomic conditions such as inflation and
interest rates.
Furthermore, the international prices of most commodities are
denominated in United States dollars while the Company cost base
will be in Pounds Sterling and Ugandan shilling. Consequently,
changes in the Pound Sterling and Ugandan Shilling exchange rates
will impact on the earnings of the Company. The exchange rates are
affected by numerous factors beyond the control of the Company,
including international markets, interest rates, inflation and the
general economic outlook. The Directors are confident that they
have put in place a strong management team capable of dealing with
the above issues as they arise.
Financing
The Group is likely to remain cash flow negative for some time
and, although the Directors have confidence in the future revenue
earning potential of the Group from its interests in the Orom-Cross
Graphite Project, there can be no certainty that the Group will
achieve or sustain profitability or positive cash flow from its
operating activities. However, should the Directors identify
working capital difficulties at the end of the Working Capital
Period, they will be in a position to reduce the Group's monthly
overheads to such an extent that a further twelve months of working
capital will be available to the Group. Should the Directors be
required to undertake a cost reduction exercise under this
scenario, there will be no impact on the ability on the Group to
deliver the current work programme at the Orom-Cross Graphite
Project. This is on the basis that the cost reductions will be made
from administrative expenses, primarily Directors' salaries and
professional fees. With regards to future capital expenditure on
the Orom-Cross Graphite Project, the Company may need to raise
additional capital beyond the Working Capital Period to fund
additional exploration work for the future development of the
Orom-Cross Graphite Project. The quantum of any future capital
raise will be dependent on the agreed work programme, which, at the
time of this Document, is unknown.
Future mineral prices, revenues, taxes, capital expenditures and
operating expenses and geological success will all be factors which
will have an impact on the amount of additional capital required.
Additionally, if the Group acquires further exploration assets or
is granted additional permits and/or exploration licences, this may
increase its financial commitments in respect of the Group's
exploration activities.
In common with many exploration entities, the Group will need to
raise further funds in order to progress the Group from
pre-construction phase of its business and eventually into
production of revenues.
COVID-19
Whilst the Group cannot predict any potential effect of COVID-19
in Uganda or elsewhere, it does not believe that COVID-19 will
impact the working capital requirements of the Group. It is
possible that if the current limited outbreak of COVID-19 in Uganda
increases then this may lead to the disruption of the Group's
operations in Uganda. An increase in the number of confirmed
COVID-19 cases in Uganda may lead to the Ugandan government
imposing travel restrictions and other similar restrictions on
economic activities within Uganda. Such restrictions have the
potential to delay the completion of the Group's planned work
programme until such time as such restrictions are lifted and as
such the Group's planned work programme may not be completed within
the anticipated timeframe.
Environmental and safety
The Orom-Cross Graphite Project is still at an early stage of
project development and further consideration will need to be given
to environmental and social issues affecting the Orom-Cross
Graphite Project. Environmental and safety legislation (e.g. in
relation to reclamation, disposal of waste products, protection of
wildlife and otherwise relating to environmental protection) may
change in a manner that may require stricter or additional
standards than those now in effect, a heightened degree of
responsibility for companies and their directors and employees and
more stringent enforcement of existing laws and regulations. There
may also be unforeseen environmental liabilities resulting from
both future and historic exploration or mining activities, which
may be costly to remedy. Risks may include on-site sources of
environmental contamination such as oil and fuel from the mining
equipment and rehabilitation of the site upon expiry of the Project
Licences. Under Ugandan law the Company is required to rehabilitate
the area affected by the mining activities, accordingly there will
be a potential cost associated with undertaking this obligation. It
is currently unknown what this could be but the funding of this
could have a material impact on the Group's financial position in
the future.
If the Group is unable to fully remedy an environmental problem,
it may be required to stop or suspend operations or enter into
interim compliance measures pending completion of the required
remedy. The potential exposure may be significant and could have a
material adverse effect on the Group.
The Group has not purchased insurance for environmental risks
(including potential liability for pollution or other hazards as a
result of the disposal of waste products occurring from exploration
and production) as it is not generally available at a price which
the Group regards as reasonable.
Environmental management systems are in place to mitigate
environmental hazard risks. The Group uses advisors with specialist
knowledge in mining and related environmental management for
reducing the impacts of environmental risk.
Section 172 Statement
The Board believes they have acted in a way most likely to
promote the success of the Group for the benefit of its members as
a whole, as required by section 172.
The requirements of section 172 are or the Board to:
-- consider the likely consequences of any decision in the long term,
-- act fairly between the members of the Group,
-- maintain a reputation for high standards of business conduct,
-- consider the interest of the Group's employees,
-- foster the Group's relationship with suppliers, customers and others, and
-- consider the impact of the Group's operations on the community and the environment.
The Group operates a mineral exploration business, which is
inherently speculative in nature and, without regular income, is
dependent upon fund-raising for its continued operation. The
pre-revenue nature of the business is important to the
understanding of the Group by its members, employees and suppliers,
and the Directors are as transparent about the cash position and
funding requirements as is allowed under LES regulations.
The principal decisions taken by the Board during the year
relate to the ongoing research and development of the Orom-Cross
Graphite Project, which since its acquisition in 2020 is still at
an early stage of project development. The Board has looked to
build upon the information available and the exploration activities
carried out by the Subsidiary prior to its acquisition. Through
work such as Metallurgical testwork and preliminary economic
assessment the board continues to gather information on the
long-term viability of the project and the impact on the local
community and the environment. The Board have outlined a work
program for the future strategy of the Project. In order to carry
out its strategy, the company has entered into a number of
contracts with providers who are best placed to undertake the
necessary research and review,
The Board is ultimately responsible for the direction,
management, performance and long-term sustainable success of the
Group. It sets the Group's strategy and objective considering the
interest of all its stakeholders. A good understanding of the
Company's stakeholders enables the Board to factor the potential
impact of strategic decisions on each stakeholder group into a
boardroom discussion. By considering the Company's purpose, vision
and values together with its strategic priorities the Board aims to
make sure that its decisions are fair. The Board has always, both
collectively and individually, taken decisions for the long term
and consistently aims to uphold the highest standards of business
conduct. Board resolutions are always determined with reference to
the interests of the Company's employees, its business
relationships with suppliers and customers. Wherever possible,
local communities are engaged in the geological operations and
support functions required for field operations providing much
needed employment and wider economic benefits to the local
communities. In addition, the Group contributes annually towards a
scholarship programme for the local community in Uganda. The Board
takes seriously its ethical responsibilities to the communities and
environment in which it works. We abide by the local and relevant
UK laws on anti-corruption and bribery.
The Group follows international best practice on environmental
aspects of our work.
Cameron Pearce
Director
27 January 2022
Directors' Report
The Directors submit their report with the audited Financial
Statements for the year ended 30 September 2021.
General information
Blencowe Resources Plc ("the Company"), was incorporated as a
private Limited Company under the laws of England and Wales with
registered number 10966847 on 18 September 2017. On 13 July 2018,
the Company was re-registered as a public company under the
Companies Act 2006.
Blencowe's primary focus is on developing the Orom-Cross
Graphite Project located in Northern Uganda.
Results for the year and distributions
The Group results are set out in the Consolidated Statements of
Comprehensive Income. The total consolidated comprehensive loss
attributable to the equity holders of the Group for the financial
year was GBP694,726 (2020: GBP1,058,084). The Group received no
income, and the full amount of the loss is due to expenses incurred
in capital raising (to the extent not deducted from share premium),
identifying and evaluating suitable acquisition targets, and
general corporate overheads.
The Group paid no distribution or dividends during the financial
year (2020: GBPNil).
The Board of Directors
The Directors who held office during the financial year and to
the reporting date, together with details of their interest in the
shares of the Company at the reporting date were:
Number of Percentage
Ordinary Shares of Ordinary
Shares
Sam Quinn 4,666,667 3.83%
Cameron Pearce 7,016,667 5.75%
Alexander Passmore 1,500,000 1.23%
The Board comprises of one Executive Director and two
Non-Executive Directors as detailed below:
Cameron Pearce - Executive Chairman
Cameron Pearce was a founder of the Company and has extensive
professional experience in both the Australian and United Kingdom
finance industries. In recent times he has provided corporate,
strategic, financial and advisory assistance to private and public
companies in both Australia and the United Kingdom. Mr Pearce is a
member of the Australian Institute of Chartered Accountants and has
been in commerce over twenty years holding senior financial and
management positions in both publicly listed and private
enterprises in Australia, Europe, Asia, Africa and Central America.
Mr. Pearce has considerable corporate and international expertise
and over the past decade has focussed on mining and exploration
activities.
Sam Quinn - Non Executive Director
Sam Quinn is a corporate lawyer with over a decade's worth of
experience in the natural resources sector, in both legal counsel
and executive management positions. Mr Quinn was formerly the
Director of Corporate Finance and Legal Counsel for the Dragon
Group, a London-based natural resources venture capital firm and is
currently a partner of Silvertree Partners, a natural resource
focussed back office outsourcing business. Mr Quinn has in addition
held several management roles for listed and unlisted natural
companies and has gained significant experience in the
administration, operation, financing and promotion of natural
resource companies. Prior to working in the natural resources
sector, Mr Quinn worked as a corporate lawyer for Jackson McDonald
Barristers & Solicitors in Perth, Western Australia and for
Nabarro LLP in London.
Alex Passmore - Non Executive Director
Alex Passmore is an experienced corporate executive with strong
financial and technical background. Mr Passmore managed the
arrangement of debt for many well-known resources companies and has
a wealth of experience in project evaluation. He also managed the
WA natural resources business of CBA which comprised a substantial
portfolio of loan, hedge, trade finance and working capital
products to ASX-listed and multi-national resource companies. Prior
to this, Mr Passmore held senior roles at Patersons Securities and
was director of corporate finance and head of research. Mr Passmore
holds a BSc (Hons) in Geology from the University of Western
Australia and a graduate diploma of Applied Finance and Investments
from the Institute of Securities Australia.
Directors' indemnities
To the extent permitted by law and the Articles, the Company has
made qualifying third-party indemnity provisions for the benefit of
its directors during the year, which remain in force at the date of
this report.
Policy for new appointments
Without prejudice to the power of the Company to appoint any
person to be a Director pursuant to the Articles the Board shall
have power at any time to appoint any person who is willing to act
as a Director, either to fill a vacancy or as an addition to the
existing Board, but the total number of Directors (other than
alternate directors) must not be less than two and must not be more
than 15 in accordance with the Articles. Any Director so appointed
shall hold office only until the annual general meeting of the
Company next following such appointment and shall then be eligible
for re-election but shall not be taken into account in determining
the number of Directors who are to retire by rotation at that
meeting. If not re-appointed at such annual general meeting, he
shall vacate office at the conclusion thereof.
Rules for amendments of articles
Directors cannot alter the Company's Articles unless a special
resolution is approved by the shareholders. A special resolution
requires at least 75% of a company's members to vote in favour for
it to pass.
Substantial shareholders
The share capital of Blencowe consist of only one class:
ordinary shares. Therefore, all of the Company's shares rank pare
passu and no preferential rights apply. No single person directly
or indirectly, individually or collectively, exercises control over
the Company. The Directors are aware of the following persons, who
had an interest in 3% or more of the issued ordinary share capital
of the Company as at 30 September 2021:
Shareholder % of issued share capital of the Company
Jim Nominees Limited 38.87%
Spreadex Limited 9.61%
ISI Nominees Limited 4.24%
The Bank of New York (Nominees) Limited 3.28%
Hargreaves Lansdown (Nominees) Limited 3.23%
Financial risk management
The Group's principal financial instruments comprise cash
balances, accounts payable and accounts receivable arising in the
normal course of its operations.
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares, or
sell assets to reduce debt.
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk and price risk), credit
risk, liquidity risk and cash flow interest rate risk. See note
19.2 for more information on the financial risk management
objectives and policies.
Employee and Greenhouse Gas (GHG) Emissions
The Group is trading with two employees (see note 8) and the
Directors disclosed above.
During 2021 the Company had gas emissions of 30t CO2-e from its
operations. As the project was acquired part way through the prior
year there were no procedures to measure gas emissions in 2020.
The energy consumption has not been disclosed as the Group's
consumption is below 40,000 kWh.
Responsibility statement
The Directors are responsible for preparing the Directors'
Report and the Financial Statements in accordance with applicable
law and regulations. In addition, the Directors have elected to
prepare the Financial Statements in accordance with International
Financial Reporting Standards ("IFRSs"), as adopted by the European
Union ("EU").
The Financial Statements are required to give a true and fair
view of the state of affairs of the Group and of the profit or loss
of the Group for that period.
In preparing these Financial Statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- present information and make judgements that are reasonable,
prudent and provide relevant, comparable and understandable
information.
-- provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particulars transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Group and Parent Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group to enable them to ensure that the
financial statements comply with the requirements of the Companies
Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and Financial Statements. Legislation governing
the preparation and dissemination of Financial Statements may
differ from one jurisdiction to another.
We confirm that to the best of our knowledge:
-- the Financial Statements, prepared in accordance with
International Financial Reporting Standards as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group for the period;
-- the Director's report includes a fair review of the
development and performance of the business and the position of the
company, together with a description of the principal risks and
uncertainties that they face.
-- the annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the company's performance,
business model and strategy.
Embed effective risk management, considering both opportunities
and threats, throughout the organisation
The Directors are responsible for maintaining the Group's
systems of controls and risk management in order to safeguard its
assets.
Risk is monitored and assessed by the Board who meet regularly
and are responsible for ensuring that the financial performance of
the Group is properly monitored and reported. This process includes
reviews of annual and interim accounts, results announcements,
internal control systems, procedures and accounting policies.
The Board receives guidance from FIM Capital Limited, the
Company Secretary to the Group, covering updates to relevant
legalisation and rules to ensure they remain fully informed and
able to make informed decisions.
Subsequent events
Please see note 21 for details of the Group's subsequent
events.
Auditors
So far as the directors are aware, there is no relevant audit
information of which the Group's auditors are unaware, and they
have taken all steps that they ought to have taken as directors in
order to make themselves aware of any relevant audit information
and to establish that the Group's auditors are aware of that
information.
The auditors, Crowe U.K LLP, have expressed their willingness to
continue in office and a resolution to reappoint them will be
proposed at the Annual General Meeting.
By Order of the Board
Cameron Pearce
Director
27 January 2022
Corporate Governance
The Group recognises the importance of, and is committed to,
high standards of Corporate Governance. At the date of this Report,
and whilst the Group is not formally required to comply with the UK
Corporate Governance Code 2018, the Group will try to observe,
where practical, the requirements of the UK Corporate Governance
Code 2018, as published by The Financial Reporting Council.
In addition, the Company intends to voluntarily observe the
requirements of the UK Corporate Governance Code 2018, save as set
out below. As at the date of the financial statements the Group is
in compliance with the UK Corporate Governance Code 2018 with the
exception of the following:
-- Given the composition of the Board, certain provisions of the
UK Corporate Governance Code, are considered by the Board to be
inapplicable to the Company. The Company does not comply with the
requirements of the UK Corporate Governance Code in relation to the
requirement to have a senior independent director and the Audit
Committee does not have three independent non-executive
directors
-- Due to the current size of the company, and the early stages
of the Project's life cycle, the Company has not developed a formal
diversity policy, and investment in and rewarding of the workforce.
Furthermore, there have been no board evaluations conducted within
the year.
-- The UK Corporate Governance Code also recommends the
submission of all directors for re-election at annual intervals. No
Director will be required to submit for re-election until the first
annual general meeting of the Company following the
acquisition.
-- No new Directors' nominations were brought forward by the
Nomination Committee during the year.
As at the date of the financial statements, the Board has a
share dealing code that complies with the requirements of the
Market Abuse Regulations. All persons discharging management
responsibilities (comprising only the Directors at the date of this
Document) shall comply with the share dealing code from the date of
Admission.
Set below are Blencowe Resources Plc's corporate governance
practices for the year ended 30 September 2021.
Leadership
The Company is headed by an effective Board which is
collectively responsible of the long term success of the
Company.
The role of the Board - The Board sets the Company's strategy,
ensuring that the necessary resources are in place to achieve the
agreed strategic priorities, and reviews management and financial
performance. It is accountable to shareholders for the creation and
delivery of strong, sustainable financial performance and long-term
shareholder value. To achieve this, the Board directs and monitors
the Company's affairs within a framework of controls which enable
risk to be assessed and managed effectively. The Board also has
responsibility for setting the Company's core values and standards
of business conduct and for ensuring that these, together with the
Company's obligations to its stakeholders, are widely understood
throughout the Company. The Board has a formal schedule of matters
reserved which is provided later in this report.
Board Meetings - The core activities of the Board are carried
out in scheduled meetings of the Board. These meetings are timed to
link to key events in the Company's corporate calendar and regular
reviews of the business are conducted. Additional meetings and
conference calls are arranged to consider matters which require
decisions outside the scheduled meetings. During the year, the
Board met on 15 occasions.
Outside the scheduled meetings of the Board, the Directors
maintain frequent contact with each other to discuss any issues of
concern they may have relating to the Company or their areas of
responsibility, and to keep them fully briefed on the Company's
operations.
Matters reserved specifically for Board - The Board has a formal
schedule of matters reserved that can only be decided by the Board.
The key matters reserved are the consideration and approval of:
-- the Group's overall strategy;
-- financial statements and dividend policy;
-- management structure including succession planning, appointments and remuneration;
-- material acquisitions and disposal, material contracts, major
capital expenditure projects and budgets;
-- capital structure, debt and equity financing and other matters;
-- risk management and internal controls;
-- the Group's corporate governance and compliance arrangements; and
-- corporate policies
Leadership (continued)
Summary of the Board's work in the financial year - During the
year, the Board considered all relevant matters within its remit,
but focused in particular on exploration and development of the
Orom-Cross Graphite Project in the Republic of Uganda.
Attendance at meetings:
Member Meeting attended
Cameron Pearce Executive Chairman 15
Sam Quinn Non-Executive Director 15
Alexander Passmore Non-Executive Director 15
The Board is pleased with the level of attendance and
participation of Directors at Board and committee meetings.
The Chairman, Cameron Pearce, sets the Board Agenda and ensures
adequate time for discussion.
Non-executive Directors - The non-executive Directors bring a
broad range of business and commercial experience to the Company
and have a particular responsibility to challenge independently and
constructively the performance of the Executive management (where
appointed) and to monitor the performance of the management team in
the delivery of the agreed objectives and targets.
Non-executive Directors - Are initially appointed for a term of
three years, which may, subject to satisfactory performance and
re-election by shareholders, be extended by mutual agreement.
Other governance matters - All of the Directors are aware that
independent professional advice is available to each Director in
order to properly discharge their duties as a Director. In
addition, each Director and Board committee has access to the
advice of the Company Secretary.
The Company Secretary - The Company Secretary is FIM Secretaries
Limited which is retained on a consultancy basis. FIM Secretary
Limited is available to Directors and advises the Board on UK
compliance matters.
Effectiveness
For the period under review the Board comprised of an Executive
Chairman and two non-executive Directors.
The Directors are of the view that the Board and its committees
consist of Directors with an appropriate balance of skills,
experience, independence and diverse backgrounds to enable them to
discharge their duties and responsibilities effectively.
Independence - None of the Directors are considered to be
independent, as they have shareholdings in the Company. It is
intended that additional Directors will be appointed in future and
that independence will be one of the key factors taken into account
at that time. As at the date of this Report no prospective
Directors have been identified and no arrangements exist (formal or
informal) for the appointment of any other Director.
Appointments - The Board is responsible for reviewing and the
structure, size and composition of the Board and making
recommendations to the Board with regards to any required
changes.
Commitments - All Directors have disclosed any significant
commitments to the Board and confirmed that they have sufficient
time to discharge their duties.
Induction - All new Directors received an induction as soon as
practical on joining the Board.
Conflict of interest - A Director has a duty to avoid a
situation in which he or she has, or can have, a direct or indirect
interest that conflicts, or possibly may conflict with the
interests of the Company. The Board had satisfied itself that there
is no compromise to the independence of those Directors who have
appointments on the Boards of, or relationships with, companies
outside the Company. The Board requires Directors to declare all
appointments and other situations which could result in a possible
conflict of interest.
Accountability
The Board is committed to provide shareholders with a clear
assessment of the Group's position and prospects. This is achieved
through this report and as required other periodic financial and
trading statements.
Going concern - As part of their going concern assessment, the
Board of Directors have reviewed cash flow forecasts reviewed for
the 12 months from the date these financial statements were signed
and considered the medium term outlook through to 2025 as described
in the Viability Statement. The Directors have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period to
December 2025 provided further funding can be raised as
required.
Internal controls - The Board of Directors reviews the
effectiveness of the Company's system of internal controls in line
with the requirement of the Code. The internal control system is
designed to manage the risk of failure to achieve its business
objectives. This covers internal financial and operational
controls, compliance and risk management. Key controls consist of
segregation of duties, authorisation and approval policies and
accounting controls such as monthly reconciliations. The Company
has necessary procedures in place for the year under review and up
to the date of approval of the Annual Report and Financial
Statements. The Directors acknowledge their responsibility for the
Company's system of internal controls and for reviewing its
effectiveness. The Board confirms the need for an ongoing process
for identification, evaluation and management of significant risks
faced by the Company. The Directors carry out a risk assessment
before signing up to any commitments.
The Audit Committee
The Audit Committee comprises of Cameron Pearce, chairman of the
committee, and Alex Passmore and aims to meet at least twice a year
and is responsible for ensuring that the Group's financial
performance is properly monitored, controlled and reported to the
Board. During the year of review, the Audit Committee met twice.
The Audit Committee is responsible for the scope and effectiveness
of the external audit and compliance by the Group with statutory
and other regulatory requirements. Given the size of the Group and
the relative simplicity of the systems, the Board considers that
there is no current requirement for an internal audit function. The
procedures that have been established to provide internal financial
control are considered appropriate for a Group of its size and
include controls over expenditure, regular reconciliations and
management accounts.
The Audit Committee monitors in discussion with the
auditors:
-- the integrity of the financial statements of the Group and
significant financial reporting judgments contained in them
-- any formal announcements relating to the Group's financial performance
-- the Group's internal financial controls and risk management systems
-- the external auditor's independence and objectivity and the
effectiveness of the audit process, taking into consideration
relevant UK professional and regulatory requirements.
The Directors are responsible for taking such steps as are
reasonably available to them to safeguard the assets of the Company
and to prevent and detect fraud and other irregularities.
External auditor's independence
Since the last tender which was conducted in 2018, Crowe U.K LLP
has acted as independent auditor for four years.
Remuneration and Nominations Committee
A Remuneration and Nominations Committee was established during
2020 and is made up of the two non-executive directors. The
Committee comprises Sam Quinn, chairman of the committee, and Ales
Passmore. The Remuneration and Nomination Committee meets at least
annually and is responsible for setting the remuneration policy for
all executive directors and the Company's chairman, including
pension rights and any compensation payments, recommends and
monitors the level and structure of remuneration for senior
management and evaluates the board of directors and examines the
skills and characteristics required of board candidates. During the
year of review, the Remuneration and Nomination Committee met
once.
Remuneration paid to Directors in the period under review is
disclosed in the Directors' Remuneration Report.
Shareholder relations
Communication and dialogue - Open and transparent communication
with shareholders is given high priority and there is regular
dialogue with institutional investors, as well as general
presentations made at the time of the release of the annual and
interim financial results. All Directors are kept aware of changes
in major shareholdings in the Company and are available to meet
with shareholders who have specific interests or concerns. The
Company issues its results promptly to the market via RNS and also
publishes them on the Company's website: www.
blencoweresourcesplc.com . Regular market news updates are made in
relation to the Company including the status of its exploration and
development programme which is also included on the Company's
website. Shareholders and other interested parties can subscribe to
receive news updates by email by registering online on the website
free of charge.
The Directors are available to meet with institutional
shareholders to discuss any issues and gain an understanding of the
Company's business, its strategies and governance. Meetings are
also held with the corporate governance representatives of
institutional investors when requested.
Annual General Meeting - At every AGM individual shareholders
are given the opportunity to put questions to the Chairman and to
other members of the Board that may be present although, due to
COVID-19 pandemic, physical attendance at the AGM was not possible
in 2021. Notice of the AGM is sent to shareholders at least 21
working days before the meeting. Details of proxy votes for and
against each resolution, together with the votes withheld are
announced to the London Stock Exchange and are published on the
Company's website as soon as practical after the meeting.
Viability statement
In accordance with provision 31 of the UK Corporate Governance
Code (2018), the Board has assessed the prospects of the Company
over a five-year period, taking account of the Company's current
position and principal risks.
Time frame
The Board believes that four years is the most appropriate time
frame over which the Board should assess the long-term viability of
the Group. The Group's current activities do not generate any
revenues or positive operating cash flow, and the development of
the Orom-Cross Graphite Project to commence production and generate
revenues will require significant capital expenditures. The
Orom-Cross Graphite Project is not expected to generate positive
net cash flow until approximately 2025, some four years from
now.
Assessing viability
The main assumption in the Board making its viability assessment
is the ability of the Group to raise further funds in order to
progress from the exploration phase into feasibility and eventually
into production of revenues. The Group may not be able to obtain
additional financing as and when needed which could result in a
delay or indefinite postponement of exploration and development
activities. The expected cost of bringing the project to an initial
production target of 75,000t is USD80,000,000.
Principal risk
The Directors have carried out a robust assessment of the
principal risks facing the Group as described on the preceding
pages including those that threaten its business model, future
performance, solvency or liquidity. The Directors are confident
that they have put in place a strong management team wide-ranging
expertise in mineral exploration who are capable of dealing with
the risk management in order to safeguard the Group's assets.
Based on the financial impact of the analysis outlined above and
the associated risks, management actions and controls that are
either in place or could be implemented, the Board has been able to
conclude that the Company will be able to deliver the Orom-Cross
Graphite Project.
Confirmation of viability
Taking account of these matters, the Directors have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period to
December 2025, assuming that the financing referred to above is
completed as described. The Company's going concern statement is
detailed in note 2.7.
The Directors' Remuneration Report sets out the Company's policy
on the remuneration of Directors together with the details of
Directors' remuneration packages and services contracts for the
year ended 30 September 2021.
The Remuneration and Nomination Committee comprises Sam Quinn,
who acts as chairman of the committee and Alex Passmore, and meets
at least annually. The Remuneration Committee reviews the scale and
structure of the Directors' fees, taking into account the interests
of the shareholders and the performance of the Company and
Directors.
The items included in this report are unaudited unless otherwise
stated.
The Company maintains contact with its shareholders about
remuneration in the same way as other matters and, as required by
Section 439 of the Companies Act 2006, this remuneration report
will be put to an advisory vote of the Company's shareholders at
the forthcoming Annual General Meeting.
Directors' Remuneration report
Statement of Blencowe Plc's policy on Directors'
Remuneration
As set out in the Company's Prospectus dated 30 March 2020, each
of the Directors may be paid a fee at such rate as may from time to
time be determined by the Board. All the Directors are entitled to
be reimbursed by the Company for travel, hotel and other expenses
incurred by them in the course of their directors' duties relating
to the Company.
Any fees payable to the Directors after an Acquisition will be
determined as part of the negotiations for the Acquisition, and
will be dependent on whether the Directors remain on the board of
the Company in any event.
There have been no changes to the Directors' remuneration or
remuneration policy since the publication of the Company's
Prospectus dated 30 March 2020 with the exception of those
mentioned below. The terms and conditions of appointment for all
the members of the Board are available for inspection at our
registered office.
Terms of employment
Cameron Pearce was appointed on 8 June 2018 by the Company to
act as a Non-Executive Director and Chairman of the Company with
fees of GBP36,000 per annum. Following the Company's readmission to
the London Stock Exchange ("LSE") on 28 April 2020, Mr Pearce was
reappointed with fees of GBP96,000 per annum. The appointment is
for an initial term of 24 months and thereafter can be terminated
by the Company on six months written notice or by Mr Pearce on
three months written notice. If there is a change of control (as
defined in the letter of appointment), Mr Pearce will be entitled
to 100% of his annual fee as a lump sum payment if the Company
terminates his employment, or if Mr Pearce chooses to terminate his
appointment within 12 months following a change of control.
Sam Quin was appointed on 8 June 2018 by the Company to act as a
Non-Executive Director with fees of GBP24,000 per annum. Following
the readmission of the Company to the LSE on 28 April 2020, Mr
Quinn was engaged as a Non-Executive director with fees of
GBP24,000 per annum. The appointment is for an initial term of 24
months and thereafter the appointment can be terminated by the
Company on six months written notice or by Mr Quinn on three months
written notice. If there is a change of control (as defined in the
letter of appointment), Mr Quinn will be entitled to 100% of his
annual fee as a lump sum payment if the Company terminates his
employment, or if Mr Quinn chooses to terminate his appointment
within 12 months following a change of control.
Alex Passmore was appointed on 8 June 2018 by the Company to act
as a Non-Executive Director with fees of GBP12,000 per annum.
Following the readmission of the Company to the LSE on 28 April
2020, Mr Passmore was engaged as a Non-Executive director with fees
of GBP24,000 per annum. On 12 May 2020, the Board agreed to keep Mr
Passmore's fees at GBP12,000 per annum until further capital is
raised. On 15 March 2021, the Board agreed to increase Mr
Passmore's fees from 1 March 2021 to GBP18,000 per annum. The
appointment is for an initial term of 24 months and thereafter the
appointment can be terminated by the Company on six months written
notice or by Mr Passmore on three months written notice. If there
is a change of control (as defined in the letter of appointment),
Mr Passmore will be entitled to 100% of his annual fee as a lump
sum payment if the Company terminates his employment, or if Mr
Passmore chooses to terminate his appointment within 12 months
following a change of control.
Remuneration Policy
Base salary levels will take into account market data for the
relevant role, internal relativities, the individual's experience
and their current base salary. Where an individual is recruited
below market norms, they may be re-aligned over time (e.g. two to
three years), subject to performance in the role. Benefits will
generally be in accordance with the approved policy. Currently,
there are no benefits in place.
Directors' emoluments and compensation (audited)
Set out below are the emoluments of the Directors:
Alexander
Cameron Pearce Sam Quinn Passmore Total
30 September 2020
Base fee 61,000 26,000 12,000 99,000
Share Based Payments - - -
---------------------- --------------- ---------- ---------- --------
Total 30 September
2020 61,000 26,000 12,000 99,000
---------------------- --------------- ---------- ---------- --------
30 September 2021
Base fee 96,000 24,000 15,000 135,000
Share Based Payments 71,318 49,923 21,395 142,636
---------------------- --------------- ---------- ---------- --------
Total 30 September
2021 167,318 73,923 36,395 277,636
---------------------- --------------- ---------- ---------- --------
The percentage of directors' emoluments of the total
administrative costs for the year is 34% (2020: 10%). The
directors' base fees increased by 36%. While the base salary costs
of the key management employees increased by 82%.
Statement of Directors' shareholding and share interest
The Directors who served during the year ended 30 September
2021, and their interests at that date, are disclosed above.
Issue of options
As at the reporting date, the number of shares options that the
Company has issued to the Board and Senior Management are as
follow;
Cameron Pearce (Chairman) 2,500,000
Mike Ralston (CEO) 2,500,000
Lionshead Consultants Ltd (Sam Quinn) (Non
Exec Director) 1,750,000
Alexander Passmore (Non Exec Director) 750,000
Iain Wearing (COO) 2,500,000
For further information, please see notes 18 and 21.
Other matters
The Company does not currently have any annual or long-term
incentive schemes (other than the one stated above) in place for
any of the Directors and as such there are no disclosures in this
respect.
The Company does not have any pension plans for any of the
Directors and does not pay pension amounts in relation to their
remuneration.
The Company has not paid out any excess retirement benefits to
any Directors or past Directors. The Company has not paid any
compensation to past Directors.
As the Company currently has no trade, no performance graph and
table has been included but will be included in future accounting
periods.
By Order of the Board
Sam Quinn
Director
27 January 2022
Independent Auditor's Report to the Members of Blencowe
Resources Plc
Opinion
We have audited the financial statements of Blencowe Resources
PLC (the "Parent Company") and it's subsidiaries (the "Group") for
the year ended 30 September 2021 which comprise the Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Financial Position, Parent Statement of Financial Position,
Consolidated Statement of Changes in Equity, Parent Statement of
Changes in Equity, Consolidated Statement of Cash Flows, Parent
Statement of Cash Flows and notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Accounting
Standards in conformity with the requirements of the Companies Act
2006 and, as regards the Parent Company financial statements, as
applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group and Parent Company's affairs as at 30 September
2021 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006;
-- the Parent Company financial statements have been properly
prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and as
applied in accordance with the provisions of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2.7 to the financial statements which
explains that the Group and Parent Company's ability to continue as
a going concern is dependent on the availability of future further
fundraising. These conditions indicate the existence of a material
uncertainty which may cast significant doubt over the Parent
Company's and the Group's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the director's assessment of the group and parent
company's ability to continue to adopt the going concern basis of
accounting included review of management's assessment against
reports from metallurgical experts, the Preliminary Economic
Assessment as well as financial forecasts for the Orom-Cross
Graphite project.
Our responsibilities and the responsibilities of the director's
with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the group financial statements as a whole to be
GBP105,000 (2020: GBP95,000) and parent company's financial
statements to be GBP90,000 (2020: GBP75,000), based on 2% of total
assets as the carrying value of exploration assets is considered to
be line item of most interest to the users.
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment and
was determined to be GBP74,550 (2020: GBP67,450) for the group
financial statements as a whole and GBP63,900 (2020: GBP53,250) for
the parent company's financial statements.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and directors' remuneration.
We agreed with the Audit Committee to report to it all
identified errors in excess of GBP5,250 (2020: GBP430). Errors
below that threshold would also be reported to it if, in our
opinion as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
The Group is accounted for from one central operating location,
the Company's registered office. The main exploration activity of
the group is performed in Uganda. Our audit was performed remotely
and the scope of the audit included both the parent and the entity
acquired in the period.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
We set out below, together with the material uncertainty over
going concern above, those matters we identified as key audit
matters. This is not a complete list of all risks identified by our
audit.
Key audit matter How the scope of our audit addressed
the key audit matter
==================================== =========================================================================
Surface liability
As discussed in Note 16, The following work was undertaken:
The Ugandan Mining Act
2003 requires an applicant * We reviewed the calculations provided by the client
for a mining lease to obtain to ascertain the reasonableness of the assumptions
surface rights from land and judgements.
owners in the mineral area
before the respective mining
lease can be granted. Accordingly, * We reviewed and performed sensitivity analysis on the
when the Group acquired discount rate used in calculating the present value
its subsidiary it obtained of the surface rights liability.
surface rights by way of
49 years lease over the
area. The liability to * We discussed and challenged management on the change
the land owners is to be in the project's time frame.
paid in 10 instalments
on a section basis as the
project progresses. The
progress on each section
is not limited to any time We consider managements methodology
frames and is at the Group's and determination of the surface liability
discretion. After reviewing as at 30 September 2021 to be acceptable.
the project's time frame,
the Board believes that
the value of the liability
to the land owners needs
to be adjusted to reflect
the current status of the
project.
There is a risk that inappropriate
assumptions could result
in material errors in the
surface liability recognised.
==================================== =========================================================================
Carrying value of intangible
assets We considered the indicators of impairment
Following the acquisition applicable to the Orom-Cross exploration
of CARU the Group now owns asset, including those indicators identified
a mining licence and has in IFRS 6: 'Exploration for the Evaluation
significant exploration of Mineral Resources' and reviewed management's
assets. assessment of these indicators. The
There is a risk that these following work was undertaken:
may be impaired. * We reviewed the licence documentation to confirm the
Management performed an exploration permits are valid and whether there is an
impairment indicator review expectation that these will be renewed in the
to assess whether there ordinary course of business.
were any indicators of
impairment for the Orom-Cross
exploration assets and
whether an impairment test * We made specific enquiries of management and reviewed
was required to be performed. market announcements, budgets and plans which
No indicators of impairment confirmed the plan to continue investment in the
of the asset were identified. Orom-Cross project subject to sufficient funding
being available, as disclosed in note 2.7.
* We considered whether the feasibility studies to date
indicated any impairment for the project.
* We reviewed the adequacy of disclosures provided
within the financial statements in relation to the
impairment assessment against the requirements of the
accounting standards.
We are satisfied that there are no indicators
at present that require an impairment
assessment.
==================================== =========================================================================
Our audit procedures in relation to these matters were designed
in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters
individually and we express no such opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion based on the work undertaken in the course of our
audit
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and
the Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the Parent Company financial statements and the part of the
directors' remuneration report to be audited are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit
Responsibilities of the directors for the financial
statements
As explained more fully in the directors' responsibilities
statement set out above, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and Parent Company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, ate instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting fraud is detailed
below:
We design our procedures so as to obtain sufficient appropriate
audit evidence that the financial statements are not materially
misstated due to non-compliance with laws and regulations or due to
fraud or error.
We are not responsible for preventing non-compliance and cannot
be expected to detect non-compliance with all laws and regulations
- this responsibility lies with management with the oversight of
the Directors and the Audit Committee.
Based on our understanding of the Group and industry,
discussions with management and the Audit Committee we identified
financial reporting standards and Companies Act 2006 as having a
direct effect on the amounts and disclosures in the financial
statements.
Other laws and regulations where non-compliance may have a
material effect on the Group's operations are laws and regulations
associated with the listing on the London Stock Exchange and the
mining licence held.
As part of the engagement team discussion about how and where
the Group's financial statements may be materially misstated due to
fraud, we did not identify any areas with an increased risk of
fraud.
Our audit procedures included:
-- enquiry of management about the Group's policies, procedures
and related controls regarding compliance with laws and regulations
and if there are any known instances of non-compliance;
-- examining supporting documents for all material balances, transactions and disclosures;
-- review of the Board of directors minutes;
-- enquiry of management, external legal counsel about
litigations and claims and inspection of relevant
correspondence
-- evaluation of the selection and application of accounting
policies related to subjective measurements and complex
transactions;
-- analytical procedures to identify any unusual or unexpected relationships;
-- testing the appropriateness of journal entries recorded in
the general ledger and other adjustments made in the preparation of
the financial statements;
-- review of accounting estimates for biases including the
carrying value of intangibles which is included in the Key Audit
Matters.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that some material misstatements of the financial
statements may not be detected, even though the audit is properly
planned and performed in accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly
significant in the case of misstatement resulting from fraud
because fraud may involve sophisticated and carefully organized
schemes designed to conceal it, including deliberate failure to
record transactions, collusion or intentional misrepresentations
being made to us.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by the Board of Directors on 14 December 2018
to audit the financial statements for the period ending 30
September 2018. Our total uninterrupted period of engagement is 4
years, covering the periods ending 30 September 2018 to 31
September 2021.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Group and we remain independent of the
Group in conducting our audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
55 Ludgate Hill
London
EC4M 7JW
27 January 2022
Consolidated Statement of Comprehensive Income for the year
ended 30 September 2021
Notes 30 Sep 2021 30 Sep 2020
GBP GBP
Exploration costs (11,690) (9,736)
Administrative fees and other expenses 6 (815,415) (1,015,053)
Adjustments to Liability to the Land Owners 16 177,639 -
----------------------------------------------------------- ------ ------------ ------------
Operating loss (649,466) (1,024,789)
Finance costs (45,260) (33,295)
----------------------------------------------------------- ------ ------------ ------------
Loss before tax (694,726) (1,058,084)
Income tax 9 - -
Loss for the year attributable to owners of the parent (694,726) (1,058,084)
Other comprehensive income
Exchange differences on translation of foreign operation: 3,662 -
----------------------------------------------------------- ------ ------------ ------------
Other comprehensive income, net of tax 3,662
Total comprehensive loss (691,064) (1,058,084)
----------------------------------------------------------- ------ ------------ ------------
Basic and diluted loss per share (pence) 11 (0.61) (1.74)
Consolidated Statement of Financial Position as at 30 September
2021
Notes 30 Sep 2021 30 Sep 2020
GBP GBP
Non-Current Assets
Intangible assets 10 5,296,289 4,377,127
Current assets
Trade and other receivables 14 52,580 72,021
Cash and cash equivalents 93,288 205,856
Total current assets 145,868 277,877
Total assets 5,442,157 4,655,004
Current liabilities
Creditors: Amounts falling due within one year 15 280,071 498,588
------------------------------------------------ ------ ------------ ------------
Total current liabilities 280,071 498,588
Non-current liabilities
Surface liabilities 16 887,560 849,512
Total liabilities 1,167,631 1,348,100
Net assets 4,274,526 3,306,903
------------------------------------------------ ------ ------------ ------------
Equity
Share capital 17 901,316 783,333
Share premium 18 5,132,081 3,876,650
Share options reserve 19 317,876 100,471
Translation reserve 2.10 3,662 -
Retained earnings (2,080,409) (1,453,551)
------------------------------------------------ ------ ------------ ------------
Total equity 4,274,526 3,306,903
------------------------------------------------ ------ ------------ ------------
Parent Statement of Financial Position as at 30 September
2021
Notes 30 Sep 2021 30 Sep 2020
GBP GBP
Fixed assets
Investment in subsidiaries 12 2,000,000 2,000,000
Intangible assets 10 1,936,953 1,036,486
Non-current assets 13 445,804 326,221
------------------------------------------------ ------ ------------ ------------
Total fixed assets 4,382,757 3,362,707
Current assets
Trade and other receivables 14 187,163 113,688
Cash and cash equivalents 93,288 205,740
Total current assets 280,451 319,428
Total assets 4,663,208 3,682,135
Current liabilities
Creditors: Amounts falling due within one year 15 280,110 305,742
------------------------------------------------ ------ ------------ ------------
Total current liabilities 280,110 305,742
Net assets 4,383,098 3,376,393
------------------------------------------------ ------ ------------ ------------
Equity
Share capital 17 901,316 783,333
Share premium 17 5,132,081 3,876,650
Share options reserve 18 317,876 100,471
Retained earnings (1,968,175) (1,384,061)
------------------------------------------------ ------ ------------ ------------
Total equity 4,383,098 3,376,393
------------------------------------------------ ------ ------------ ------------
The Company has taken advantage of the exemption allowed under
section 408 of the Companies Act 2006 and has not presented its own
Statement of Comprehensive Income in these financial statements.
The loss after tax of the parent Company for the year was
GBP651,982 (2020: GBP977,421).
The Financial Statements were approved and authorised for issue
by the Board of Directors on 27 January 2022 and were signed on its
behalf by:
Cameron Pearce Sam Quinn
Director Director
Consolidated Statement of Changes in Equity for the year ended
30 September 2021
Share Share option Translation
capital Share premium reserve Retained earnings reserve Total equity
GBP GBP GBP GBP GBP GBP
Balance as at 30
Sep 2019 450,000 209,983 33,778 (406,639) - 287,122
Loss for the year - - - (1,058,084) - (1,058,084)
Total
comprehensive
loss - - - (1,058,084) - (1,058,084)
Transactions with
owners
New shares issued
(note 17) 333,333 3,666,667 - - - 4,000,000
Issue of share
options/warrants - - 66,693 - - 66,693
Adjustment on
consolidation -
IFRS 9 - - - 11,172 - 11,172
Total
transactions
with owners 333,333 3,666,667 100,471 11,172 - 4,077,865
Balance as at 30
Sep 2020 783,333 3,876,650 100,471 (1,453,551) - 3,306,903
------------------ --------- -------------- ----------------- ------------------ ----------------- -------------
Loss for the year - - - (694,726) - (694,726)
------------------ --------- -------------- ----------------- ------------------ ----------------- -------------
Total
comprehensive
loss - - - (694,726) - (694,726)
Transactions with
owners
New shares issued
(note 17) 117,983 1,344,300 - - - 1,462,283
Share issue costs - (88,869) - - - (88,869)
Issue of share
options/warrants - - 285,273 - - 285,273
Movement on
warrant reserve* - - (67,868) 67,868 - -
Exchange
differences on
translation of
foreign
operations - - - - 3,662 3,662
Total
transactions
with owners 117,983 1,255,431 217,405 67,868 3,662 1,662,349
Balance as at 30
Sep 2021 901,316 5,132,081 317,876 (2,080,409) 3,662 4,274,526
------------------ --------- -------------- ----------------- ------------------ ----------------- -------------
*The reserves transfer was made to appropriately reflect the
value of share options/warrants that are outstanding at 30
September 2021.
Parent Statement of Changes in Equity for the year ended 30
September 2021
Share
capital Share premium Share option reserve Retained earnings Total equity
GBP GBP GBP GBP GBP
Balance as at 30 Sep 2019 450,000 209,983 33,778 (406,640) 287,121
Loss for the year - - - (977,421) (977,421)
--------------------------------- --------- -------------- --------------------- ------------------ -------------
Total comprehensive loss - - - (977,421) (977,421)
--------------------------------- --------- -------------- --------------------- ------------------ -------------
Total transactions with owners
New shares issued (note 17) 333,333 3,666,667 - - 4,000,000
Issue of share options/warrants - - 66,693 - 66,693
Total transactions with owners 333,333 3,666,667 66,933 - 4,066,693
Balance as at 30 Sep 2020 783,333 3,876,650 100,471 (1,384,061) 3,376,393
--------------------------------- --------- -------------- --------------------- ------------------ -------------
Loss for the year - - - (651,982) (651,982)
--------------------------------- --------- -------------- --------------------- ------------------ -------------
Total comprehensive loss - - - (651,982) (651,982)
Total transactions with owners
New shares issued (note 17) 117,983 1,344,300 - - 1,462,283
Share issue costs - (88,869) - - (88,869)
Issue of share options/warrants - - 285,273 - 285,273
Movement on warrant reserve* - - (67,868) 67,868 -
Total transactions with owners 117,983 1,255,431 217,405 67,868 1,658,687
Balance as at 30 Sep 2021 901,316 5,132,081 317,876 ( 1,968,175 ) 4,383,098
--------------------------------- --------- -------------- --------------------- ------------------ -------------
*The reserve transfer was made to correctly show the Share Based
Payment that were incurred in the prior year.
Consolidated Statement of Cash Flows for the year ended 30
September 2021
Restated
Notes 30 Sep 2021 30 Sep 2020
GBP GBP
Operating activities
Loss after tax (694,726) (1,058,084)
Finance costs 45,260 33,295
Adjustment to Surface Liability 16 (177,639) -
Share issue/warrant cost 18 285,273 66,693
Unrealised currency translation 55,785 1,919
Changes in working capital
Decrease/(Increase) in trade and other receivables 19,441 (27,426)
(Decrease)/Increase in trade and other payables (9,494) 236,598
-------------------------------------------------------- ------ ------------ -------------
Net cash flows utilised by operating activities (476,100) (747,005)
Cash flows from investing activities
Investment in exploration assets 10 (976,084) (1,084,354)
Net cash flows utilised by investing activities (976,084) (1,084,354)
Cash flows from financing activities
Payment of Surface Liability (33,798) (104,777)
Shares issued (net of issue cost) 17 1,373,414 2,000,000
-------------------------------------------------------- ------ ------------ -------------
Net cash flows from financing activities 1,339,616 1,895,223
(Decrease)/increase in cash and cash equivalents (112,568) 63,864
Cash and cash equivalents at the beginning of the year 205,856 141,992
Cash and cash equivalents at 30 September 93,288 205,856
-------------------------------------------------------- ------ ------------ -------------
Net Debt note
Cash at bank Surface
and in hand Liability Total
GBP GBP GBP
At 1 October 2019 141,992 - 141,992
On acquisition - (1,009,049) (1,009,049)
Cash flows 63,864 104,777 168,641
Other non-cash changes - (120,465) (120,465)
------------------------ ------------- ------------ ------------
As 30 September 2020
(restated) 205,856 (1,024,737) (818,881)
------------------------ ------------- ------------ ------------
As 30 September 2020 205,856 (1,024,737) (818,881)
Cash flows (112,568) 33,798 (112,568)
Other non-cash changes - 103,379 137,177
------------------------ ------------- ------------ ------------
As 30 September 2021 93,288 (887,560) (794,272)
------------------------ ------------- ------------ ------------
* The comparative information has been restated to correctly
show the payment of the Surface Liability as a Financing cash
flow.
Parent Statement of Cash Flows for the year ended 30 September
2021
30 Sep 2021 30 Sep 2020
Notes GBP GBP
Operating activities
Loss after tax (651,982) (977,421)
Less finance income (21,564) (16,415)
Increase in bad debt provision 13,14 12,048 -
Share issue/warrant cost 18 285,273 66,693
Changes in working capital
Increase in trade and other receivables (80,559) (166,640)
(Decrease)/increase in trade and other payables (25,632) 194,017
-------------------------------------------------------- ------ ------------ ------------
Net cash flows from operating activities (482,416) (899,766)
Cash flows from investing activities
Loan advanced to subsidiary (102,983) -
Investment in exploration assets 10 (900,467) (1,036,486)
Net cash flows from investing activities (1,003,450) (1,036,486)
Cash flows from financing activities
Shares issued (net of issue cost) 17 1,373,414 2,000,000
Net cash flows from financing activities 1,373,414 (2,000,000)
Increase/(decrease) in cash and cash equivalents (112,452) 63,748
Cash and cash equivalents at the beginning of the year 205,740 141,992
Cash and cash equivalents at 30 September 93,288 205,740
-------------------------------------------------------- ------ ------------ ------------
Notes to the Financial Statements for the year ended 30
September 2021
1. General
Blencowe Resources Plc (the "Company") is a public limited
company incorporated and registered in England and Wales on 18
September with registered company number 10966847 and its
registered office is situated in England and Wales at 1 King Street
Office 3.05, London, England, EC2V 8AU.
The Group did not earn any trading income during the year under
review but incurred expenditure associated with financing and
operation of the Group and developing its principal assets.
2. Accounting Policies
2.1 Basis of preparation
The principal accounting policies applied in the preparation of
the Company and Group's Financial Statements are set out below.
These policies have been consistently applied to the periods
presented, unless otherwise stated.
The Company and Group's Financial Statements have been prepared
in accordance with IFRS as adopted by EU. The Company Financial
Statements have been prepared using the measurement bases specified
by IFRS for each type of asset, liability, income and expense.
The Group's Financial Statements are presented in GBP, which is
the Company's functional currency. All amounts have been rounded to
the nearest pound, unless otherwise stated.
2.2 Basis of consolidation
The Consolidated Financial Statements comprise the financial
statement of the Company and Consolidated African Resources
(Uganda) Ltd ("CARU") following the Company's acquisition of CARU
on 27 April 2020.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over an investee,
including:
-- the contractual arrangement with the other vote holders of the investee;
-- rights arising from other contractual arrangements; and
-- the Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Assets, liabilities, income and expenses of a subsidiary acquired
or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised, are eliminated in full.
2.3 Changes in significant accounting policies
The following standards, interpretation and amendments were
adopted by the Group during the year:
-- Definition of a business (Amendments to IFRS 3)
-- Definition of Material (Amendments to IAS 1 and IAS 8)
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
-- COVID-19-Related Rent Concessions (Amendment to IFRS 16)
-- Amendments to References to Conceptual Framework in IFRS Standards
The transition to these standards had no material impact on the
Group. Future changes in accounting policies.
2.4 Standards, amendments and interpretations to published standards not yet effective
At the date of authorisation of these financial statements, the
following standards and interpretations, were in issue but not yet
effective, and have not been early adopted by the Group:
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) - Effective for periods
beginning on or after 1 January 2021
-- COVID-19-Related Rent Concessions beyond 30 June 2021
(Amendment to IFRS 16) - Effective for periods beginning on or
after 1 April 2021
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37) - Effective for periods beginning on or after 1 January
2022
-- Annual Improvements to IFRS Standards 2018-2020 - Effective
for periods beginning on or after 1 January 2022
-- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16) - Effective for periods beginning on or
after 1 January 2022
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
- Effective for periods beginning on or after 1 January 2022
-- IFRS 17 Insurance Contracts - Effective for periods beginning on or after 1 January 2023
-- Classification of liabilities as current or non-current
(Amendments to IAS 1) - Effective for periods beginning on or after
1 January 2023
-- Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2) - Effective for periods beginning on or
after 1 January 2023
-- Definition of Accounting Estimate (Amendments to IAS 8) -
Effective for periods beginning on or after 1 January 2023
-- Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes - Effective
for periods beginning on or after 1 January 2023
The Directors have reviewed the IFRS standards in issue which
are effective for annual accounting years ending on or after the
stated effective date. In their view, none of these standards would
have a material impact on the financial statements of the
Group.
2.5 Intangible assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation
assets when it determines that those assets will be successful in
finding specific mineral resources. Expenditure included in the
initial measurements of exploration and evaluation assets and which
are classified as intangible assets relate to the acquisition of
rights to explore, exploratory drilling, sampling and activities to
evaluate the technical feasibility and commercial viability of
extracting a mineral resource. Capitalisation of pre-production
expenditure ceases when the mining property is capable of
commercial production.
Impairment
Exploration and evaluation assets are not subject to
amortisation until production commences but are assessed for
impairment when an event or trigger requires an assessment to be
carried out. The assessment is carried out by allocating
exploration and evaluation assets to cash generating units
("CGU's"), which are based on specific projects or geographical
areas. Currently there is only one CGU relating to the Orom-Cross
Project. Whenever the exploration for and evaluation of mineral
resources in cash generating units does not lead to the discovery
of commercially viable quantities of mineral resources and the
Group has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Statement of
Comprehensive Income.
Exploration and evaluation assets recorded at fair-value on
acquisition
Exploration assets which are acquired are recognised at fair
value. When an entity is acquired whose only significant assets are
its exploration asset and/or rights to explore, the Directors
consider that the fair value of the exploration assets is equal to
the consideration.
2.6 Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another.
(i) Financial assets
Financial assets are classified at initial recognition. The
classification of financial assets at initial recognition that are
debt instruments depends on the financial asset's contractual cash
flow characteristics and the Group's business model for managing
them. The Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost, it needs to give rise to cash flows that are
'solely payments of principal and interest (SPPI)' on the principal
amount outstanding. This assessment is referred to as the SPPI test
and is performed at an instrument level.
Classification and measurement is based on both whether
contractual cash flows are solely payments of principal and
interest; and whether the debt instrument is held to collect those
cash flows. In the case of the Group, all financial assets meet
this criteria and they are held at amortised cost.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses - the ECL
model.
ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows
that the Company expects to receive, discounted at the original
effective interest rate. The expected cash flows will include cash
flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that
result from default events that are possible within the next 12
months (a '12-month ECL'). For those credit exposures for which
there has been a significant increase in credit risk since initial
recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a 'lifetime ECL').
For trade receivables, the Group applies a simplified approach
in calculating ECLs. Therefore, the Company does not track changes
in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date.
(ii) Financial liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at amortised cost. The Group's financial
liabilities include trade and other payables and surface
liabilities.
Subsequent measurements
Surface liabilities and trade and other payables.
After initial recognition, surface liabilities and trade and
other payables are subsequently measured at amortised cost using
the EIR method. Gains and losses are recognised in the statement of
profit or loss when the liabilities are derecognised, as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
2.7 Going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and positions
are set out in the Chief Executive Officer's Statement.
The Group had GBP5,442,157 of total assets at 30 September 2021
(2020: GBP4,655,004), of which GBP93,288 are held as cash and cash
equivalents (2020: GBP205,856).
Subsequent to the year-end the Group has raised additional
funding through a share capital raised in order to further the
development of the Group's activities (see note 21) however, the
Board of Directors appreciate that significant further funding will
be required to achieve the desired project outcome of cash
generative production in 2025. The raising of further funding is
not guaranteed and will be dependent on successful exploration
results to demonstrate the commercial potential of the project, for
these reasons there is a material uncertainty in respect of going
concern.
As part of their going concern assessment, the Board of
Directors have reviewed cash flow forecasts reviewed for the 12
months from the date these financial statements were signed and
considered the medium term outlook through to 2025 as described in
the Viability Statement. The Directors have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period to
December 2025 provided further funding can be raised as
required.
Accordingly, the Directors have a reasonable expectation,
subject to the uncertainty noted above, that the Company and the
Group will continue in operational existence for the foreseeable
future, provided future funding can be obtained following
anticipated positive feasibility study results, for a period of at
least 4 years from the date of signing of these financial
statements. Therefore, the financial statements have been prepared
as a going concern.
2.8 Comparative figures
The comparative figures have been presented as the Group
Financial Statements cover the Company's figures for the year ended
30 September 2020.
2.9 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from proceeds.
Warrants
Warrant options are classified as equity. The fair value of the
warrants has been calculated using the Black-Scholes option pricing
model. For more information, please see note 18.
2.10 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
Great British Pounds currency (GBP).
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies
at the reporting date are retranslated to the functional currency
at the exchange rate at that date. Foreign exchange gains and
losses resulting from the settlement of such transactions, and from
the translation of monetary assets and liabilities denominated in
foreign currencies at year end exchange rates, are generally
recognised in profit or loss.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair
value was determined. Non-monetary items in a foreign currency that
are measured in terms of historical cost are translated using the
exchange rate at the date of the transaction. Foreign currency
differences arising on the consolidation of the Group's companies
are accumulated in the translation reserve. The Company's only
subsidiary is CARU, whose functional currency is USD.
2.11 Earnings per share
The Company presents basic and diluted earnings per share
("EPS") data for its Ordinary Shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of Ordinary Shares
outstanding during the year. Diluted EPS is calculated by adjusting
the earnings and number of shares for the effects of dilutive
potential Ordinary Shares.
2.12 Income tax
Income tax expense comprises current tax and deferred tax.
Current income tax
Being resident in England and Wales, a 19% rate of corporate
income tax applies to the Company.
Deferred income tax
Deferred tax is recognised in profit or loss except to the
extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.
Deferred income tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the Financial Statements. Deferred income tax assets and
liabilities are measured on an undiscounted basis at the tax rates
that are expected to apply to the period when the related asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the date
of the Consolidated Statement of Financial Position.
2.13 Cash and cash equivalents
Cash and cash equivalents in the Company and Group statements of
financial position comprise bank balances only. For the purpose of
the statement of cash flows, cash and cash equivalents consist of
bank balances only.
3. Business Combination
On 27 April 2020 the Company acquired 100% of the voting equity
instrument of CARU. The Group applies the acquisition method in
accounting for business combinations. The Consideration transferred
by the Group to obtain control of a subsidiary is calculated as the
sum of the acquisition date fair value of assets transferred,
liabilities incurred, and the equity interests issued by the Group,
which includes the fair value of any asset or liability arising
from a contingent consideration arrangement. Acquisition costs are
expensed as incurred.
The Company was formed for the purposes of acquiring a natural
resources asset. Graphite is a metal that has a strong future for
the next 20 years given that graphite is the largest component of
the lithium battery. The board believe that the Orom-Cross Graphite
Project can be globally significant due to the high-quality product
and scale of the target resource.
The Group recognises identifiable assets acquired and
liabilities assumed in a business combination regardless of whether
they have been previously recognised in the acquiree's financial
statements prior to the acquisition. Assets acquired and
liabilities assumed are generally measured at their
acquisition-date fair values.
Details of the fair value of the identifiable assets and
liabilities and purchase consideration are as follows;
Book Value Adjustment Fair Value
GBP GBP GBP
Exploration assets 1,391,366 1,903,326 3,294,692
Cash 116 - 116
Payables (285,759) - (285,759)
Surface liabilities (1,009,049) - (1,009,049)
--------------------- ------------ ----------- ------------
Total 96,674 1,903,326 2,000,000
On acquisition the exploration assets were fair valued to bring
the fair value of the assets in line with the consideration paid to
the company. The company has minimal other assets and liabilities
other that those relating to the mining licence and therefore the
fair value is considered to the value that the Company has paid to
acquire CARU in the year.
4. Critical accounting estimates and judgments
In preparing the Company and Group Financial Statements, the
Directors are required to make judgements, estimates and
assumptions that affect the amounts reported. These estimates and
judgements are continually reviewed and are based on experience and
other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Accounting estimates and assumptions are made concerning the
future and, by their nature, may not
accurately reflect the related actual outcome. There are no key
assumptions and other sources of estimation uncertainty that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial
year.
Critical accounting estimates
a) Impairment of intangible assets - exploration and evaluation costs
Exploration and evaluation costs have a carrying value as at 30
September 2021 of GBP5,296,289 (2020: GBP4,377,895). Licences have
a useful life of 49 years and the Group has a right to renew
exploration licences. The surface rights are amortised at a rate of
2.25% per annum once extraction of the resource commences. The
results of actual or future mining test will be taken into
consideration when evaluating the value of the intangible
assets.
b) Interest charge on amounts falling after one year
At year end NPV of the surface rights owed to the owners of the
land is GBP887,560 (2019: GBP1,024,737). Interest is charged on the
liability at a rate of 5%, if the discount rate used to calculate
the present value of the liability was to increase by 1%, the
carrying value of the liability would decrease by around GBP25,000.
The interest charged during the year was GBP45,260 (2020:
GBP33,295), if the rate was increased by 1% then the interest
charge would increase by approximately GBP17,000 (2020: GBP10,000).
For further information on the lease, please see note 16.
Critical accounting judgements
Interest charge on amounts falling after one year
The surface rights are to be paid in 10 instalments on a section
basis as the project progress. The progress on each section is not
limited to any time frames and is at the Group's discretion. The
value of the surface liability is measured at the present value of
the estimated payments due to the Land Owner's Association over the
lease term. If the payments were made one year earlier the
difference in the liability to the Land Owners would increase by
USD59,848. It the payments were made one year later the difference
in the liability to the Land Owners would decrease by
USD51,815.
5. Operating Segment activities
The Group is engaged in the business of mining. At this stage in
the Group's development, the Group is focusing on financing and
continued development of the Orom-Cross Graphite Project. Which is
the only operating segment, and all non-current assets are located
in Uganda.
With no income in the year the Group continues to monitor the
loss before tax to ensure the continued viability of the Group and
ability to continue to develop the project.
6. Administrative fee and other expenses
30 Sep 2021 30 Sep 2020
GBP GBP
Directors' remuneration (see note
7) 138,787 107,102
Professional fees 100,256 437,340
Salaries (see note 8) 58,000 27,500
Listing fees 42,535 26,599
Audit fees 25,000 25,000
Fees payable to group auditors
for non-audit services - 69,275
Share option/warrant cost (see
note 18) 285,273 66,693
Administration fees 52,000 24,486
Broker fees 48,990 190,833
Travelling expenses 1,529 7,260
Miscellaneous fees 63,046 32,965
Total 815,415 1,015,053
----------------------------------- ------------------ ------------
Key management remuneration is disclosed in note 8.
7. Directors' remuneration
30 Sep 2021 30 Sep 2020
GBP GBP
Base fees 135,000 99,000
Employer NI 2,095 2,287
Directors expenses 1,691 5,815
Share based payments 142,636 -
Total 281,423 107,102
---------------------- ------------ ------------
In addition, the Directors received options which are disclosed
in note 18. The total value of warrants issued to the Directors
during the financial year is GBPNil (2020: GBP11,229)
Directors' fees do not include any accrued fees from the
previous year (2020: GBP2,000).
8. Key management personnel
The number of key management (excluding members the Board)
employees throughout the year was as follows;
30 Sep 2021 30 Sep 2020
By the Company 2 2
By the Group 2 2
The key management employees who were appointed during the year,
together with details of their interest in the shares of the
Company as at the reporting date were:
Number of shares Value of the
shares
Michael Ralston - CEO 2,725,000 GBP163,950
Iain Wearing - COO 208,333 GBP12,500
The total base salary costs for the year was GBP111,000 (2020:
GBP61,000) of which GBP53,000 (2020: GBP33,500) were capitalised as
they are related to the Orom-Cross Graphite Project. Total share
based payments for the year were GBP142,636 (2020: nil). There was
no other component of compensation.
9. Taxation
Analysis of charge in the year 30 Sep 2021 30 Sep 2020
GBP GBP
Current tax:
UK Corporation tax on loss for - -
the year
Deferred tax - -
Tax on loss on ordinary activities - -
30 Sep 2021 30 Sep 2020
GBP GBP
Loss on ordinary activities before
tax (694,726) (1,058,084)
Analysis of charge in the year
Loss on ordinary activities multiplied
by rate of corporation tax in
the UK of 19% (2019: 19%) (131,998) (201,036)
Tax losses carried forward 131,998 201,036
---------------------------------------- ------------ ------------
Current tax charged - -
---------------------------------------- ------------ ------------
The Parent Company has accumulated tax losses arising in the UK
of GBP2,096,238 (2020: GBP1,401,512) that are available, under
current legislation, to be carried forward against future
profits.
10. Intangible and other assets
For the year ended in 30 September 2021 intangible assets
represent only capitalised costs associated with the Group's
exploration, evaluation and development of mineral resources.
Group Exploration assets Total
GBP GBP
Balance at 30 September 2019 - -
Additions - on acquisition 3,294,692 3,294,692
Additions - during the year 1,084,354 1,084,354
Exchange Differences (1,919) (1,919)
------------------------------ ------------------- ----------
Balance at 30 September 2020 4,377,127 4,377,127
------------------------------ ------------------- ----------
Additions - during the year 976,084 976,084
Exchange Differences (56,922) (56,922)
------------------------------ ------------------- ----------
Balance at 30 September 2021 5,296,289 5,296,289
------------------------------ ------------------- ----------
Company Exploration assets Total
GBP GBP
Balance at 30 September 2019 - -
Additions - during the year 1,036,486 1,036,486
Balance at 30 September 2020 1,036,486 1,036,486
------------------------------ ------------------- ----------
Additions - during the year 900,467 900,467
Balance at 30 September 2021 1,936,953 1,936,953
------------------------------ ------------------- ----------
The additions during the year represent the development costs at
Orom-Cross Graphite Project which were required to carry out the
initial drilling costs and testing of the mineral.
11. Loss per share
The calculation of the basic and diluted loss per share is based
on the following data:
30 Sep 2021 30 Sep 2020
Earnings
Loss from continuing operations for the year attributable to the equity holders of the
Company
(GBP) (694,726) (1,058,084)
Number of shares
Weighted average number of Ordinary Shares for the purpose of basic and diluted earnings
per
share 114,070,173 60,707,758
Basic and diluted loss per share (pence) (0.61) (1.74)
------------------------------------------------------------------------------------------ ------------ ------------
The share options issued during the year to the Board and Senior
Management have not been included in this calculation as they would
be anti-dilutive.
12. Investment in subsidiary
Details of the Company's subsidiary at 30 September 2021 are as
follows:
Place of Portion of ordinary Principal
Name of the subsidiary incorporation shares held activity
Consolidated African Resources Uganda 100% Exploration
(Uganda) Ltd
13. Long term: non-current assets
30 Sep 2021 30 Sep 2020
Group Company Group Company
GBP GBP GBP GBP
Loan to subsidiaries
(see below) - 469,267 - 344,720
Less: ECL provision - (23,463) - (18,499)
Total - 445,804 - 326,221
---------------------- ------- --------- ------ ---------
On 18 December 2020 the Company and its subsidiary entered into
a loan agreement. This agreement replaces any previous loan
agreements. The facility is for an amount up to GBP5,000,000 and
carries an interest of 5% per annum chargeable at year end.
Following the acquisition of CARU, the loan now is considered to
be a long term asset.
During the year, the Company agreed to cover some expenses for
Consolidated African Resources (Uganda) Ltd ("CARU") for the value
of GBP102,983 (2020: GBP121,289). The amount borrowed at the
yearend was GBP431,288 (2020: GBP328,305). The total interest
charged for the year ended 30 September 2021 was GBP21,564 (2020:
GBP16,415). The interest payable at the yearend was GBP37,979
(2020: GBP16,415).
The value of the loan is subject to 12 months ECL of 5%,
representing the possible default events over the next 12 months of
the financial instrument. Due to the increase of expenses paid by
the Company on behalf of CARU, the loan and its interest has
increased, this has led to an increase in the provision during the
year.
30 Sep 2021 30 Sep 2020
Group Company Group Company
GBP GBP GBP GBP
Brought forward ECL
provision - 18,499 - 11,172
Provision expense - 4,964 - 7,327
Carried forward ECL
provision - 23,463 - 18,499
--------------------- ------- -------- ------ --------
14. Trade and other receivables
30 Sep 2021 30 Sep 2020
Group Company Group Company
GBP GBP GBP GBP
Other receivables 8,752 143,335 67,902 109,569
Prepayments 43,828 43,828 4,119 4,119
Total 52,580 187,163 72,021 113,688
------------------- ------- -------- ------- --------
Included within other receivables is amounts receivable from
CARU.
Group Company Group Company
GBP GBP GBP GBP
Amount receivable from
CARU - 141,667 - 41,667
Less: ECL provision - (7,084) - -
Total - 134,583 - 41,667
------------------------ ------- -------- ------ --------
In the current year the value of the receivable was subject to
12 months ECL of 5%. The increase in the provision expense is due
to the charge of management fees from the Company to its subsidiary
CARU. As of the year end, the amount that CARU owes the Company on
management services was GBP141,667 (2020: GBP41,667).
30 Sep 2021 30 Sep 2020
Group Company Group Company
GBP GBP GBP GBP
Brought forward ECL - - - -
provision
Provision expense - 7,084 - -
Carried forward ECL - 7,084 - -
provision
-------------------- ------ -------- ------ --------
15. Creditors: Amounts falling due within one year
30 Sep 2021 30 Sep 2020
Group Company Group Company
GBP GBP GBP GBP
Trade Payables 238,614 238,653 281,726 264,105
Land Owners Liability - - 175,225 -
Accruals 41,457 41,457 41,637 41,637
Total 280,071 280,110 498,588 305,742
----------------------- -------- -------- -------- --------
16. Creditors: Amounts falling after one year
The Ugandan Mining Act 2003 requires an applicant for a mining
lease to obtain surface rights from land owners in the mineral area
before the respective mining lease can be granted. Accordingly,
when the Group acquired its subsidiary it obtained surface rights
by way of 49 years lease over the area. The liability to the land
owners is to be paid in 10 instalments on a section basis as the
project progresses. The progress on each section is not limited to
any time frames and is at the Group's discretion. At the point of
inception assumptions were made about the timing of the payments
and that now, with further information about the likely development
of the project, those assumptions have been revised so as to better
align payment dates with project milestones and this has resulted
in an adjustment of GBP177,639 .
30 Sep 2021 30 Sep 2020
GBP GBP
Total payable as at 1 October 1,024,737 -
Addition to non-current liabilities - 1,009,049
Change in estimate (177,639) -
Interest charged during the period 45,260 11,923
Exchange (gain)/loss on valuation (4,798) 3,765
---------------------------------------------------- ------------ ------------
Total payable as at 30 September 887,560 1,024,737
Analysis between current and non-current liability
Payable within 12 months - 175,225
Payable after 12 months 887,560 849,512
---------------------------------------------------- ------------ ------------
887,560 1,024,737
The value of the liability is measured at the present value of
the contractual payments due to the Land Owners' Association over
the lease term, with the discount rate of 5%.
At the balance sheet date, the Group undiscounted amount payable
to the land owners is;
2021 2020
GBP GBP
Payable within 1 years - 142,027
Payable within 2-5 years 279,964 568,110
Payable after 5 years 979,875 568,110
-------------------------- ---------- ----------
1,259,839 1,278,247
17. Share capital
Number of Nominal value Share capital Share Total share
shares issued per share Premium capital
GBP GBP GBP GBP
At 30 Sep 2019 31,666,664 450,000 209,983 659,983
Issue of Ordinary
Shares 66,666,662 0.005 333,333 3,666,667 4,000,000
Share issue - - - - -
costs
At 30 Sep 2020 98,333,326 783,333 3,876,650 4,659,983
------------------- --------------- -------------- -------------- ---------- ------------
Issue of Ordinary
Shares 23,596,624 0.005 117,983 1,344,300 1,462,283
Share issue
costs - - - (88,869) (88,869)
At 30 Sep 2020 121,929,950 901,316 5,132,081 6,033,397
------------------- --------------- -------------- -------------- ---------- ------------
On 28 April 2020, the Company issued a further 66,666,662
Ordinary Shares of 0.5p each at a price of 6p per share, to raise
GBP4,000,000 before costs. GBP2,000,000 of this capital raised was
used for the acquisition of CARU.
During the year ended 30 September 2021, the Company issued the
following shares;
Number of Ordinary Nominal Share
Date Shares issued Value Share price
GBP GBP
12 October
2020 3,339,806 0.005 0.0515
27 November
2020 1,750,000 0.005 0.0400
2 December
2020 1,540,984 0.005 0.0610
23 December
2020 5,000,000 0.005 0.0600
29 January
2021 6,250,000 0.005 0.0800
12 February
2021 666,667 0.005 0.0400
30 March 2021 437,500 0.005 0.0600
14 April 2021 520,000 0.005 0.0600
14 April 2021 166,667 0.005 0.0400
20 July 2021 3,925,000 0.005 0.0600
All of the shares issued, with different nominal values, are
classed as ordinary and have similar rights attached to them.
The Directors are authorised to issue 138,333,326 ordinary
shares. As at 30 September 2021 the number of shares issued and
fully paid were 121,929,950 (2020: 98,333,326).
18. Share based payments
Warrants
The following warrants were issued in exchange for a good or
service:
30 Sep 2021 30 Sep 2020
Warrants Number Weighted Number warrants Weighted
warrants Average exercise Average
price exercise
price
Outstanding on 01
Oct 1,250,000 6.00p - -
Issued during the
year - - 1,250,000 6.00p
Cancelled/ Exercised - - - -
Outstanding on 30
Sep 1,250,000 6.00p 1,250,000 6.00p
------------------------ ---------- ------------------ ---------------- -----------
Weighted average 1.57 years 2.57 years
remaining contractual
Life
------------------------ ------------------------------ ---------------- -----------
The warrants have no vesting period and have been recognised in
full upon issue. If the warrants remain unexercised after a period
of three years from the date of grant, they will expire. The holder
may exercise the subscription right at any time within the
subscription period.
The above warrants were valued using the Black Scholes valuation
method. The assumptions used are detailed below. The expected
future volatility has been determined by reference to the average
volatility of similar entities:
Warrants 30 Sep 2021 30 Sep 2020
Weighted Average Share Price 6.00p 6.00p
Weighted Average Exercise Price 6.00p 6.00p
Expected Volatility 51% 51%
Expected Life 3 years 3 years
Risk-free Rate 0.23% 0.23%
Expected Divided Nil Nil
----------------------------------- ------------ ------------
Weighted Average Fair Value (GBP) 32,603 32,603
----------------------------------- ------------ ------------
Options
The following options were issued in exchange for a good or
service:
30 Sep 2021 30 Sep 2020
Options Number Options Weighted Number Options Weighted
Average exercise Average
price exercise
price
Outstanding on 01 - - - -
Oct
Issued during the
year 10,000,000 6.00p - -
Cancelled/ Exercised - - - -
Outstanding on 30
Sep 10,000,000 6.00p - -
Weighted average remaining 4.21 years -
contractual Life
---------------------------- --------------- ------------------ --------------- ----------
The options have no vesting periods and have been recognised
upon issue. If the options remain unexercised after a period of
five years from the date of grant they will expire. The share
options cannot be exercised if the holder has ceased
employment.
The above options were valued using the Black Scholes valuation
method. The assumptions used are detailed below. The expected
future volatility has been determined by reference to the average
volatility of similar entities:
Options 30 Sep 2021 30 Sep 2020
Weighted Average Share Price 6.13p -
Weighted Average Exercise Price 6.00p -
Expected Volatility 54% -
Expected Life 5 years -
Risk-free Rate 0.27% -
Expected Divided Nil -
-------------------------------- ------------ ------------
Weighted Average Fair Value 285,273 -
(GBP)
-------------------------------- ------------ ------------
Deferred Tax
No deferred tax asset has been recognised in respect of share
options and warrants due to the uncertainty of the future trading
profits.
19. Financial instruments
19.1 Categories of financial instruments
30 Sep 2021 30 Sep 2020
Group Company Group Company
GBP GBP GBP GBP
Financial assets at amortised
cost
Trade and other receivables - 150,419 4,119 4,119
Cash and cash equivalents 93,288 93,288 205,856 205,856
Financial liabilities at
amortised cost
Trade and other payables 280,071 280,110 498,588 305,742
Surface liability 887,560 - 849,512 -
19.2 Financial risk management objectives and policies
The Company's major financial instruments include cash and cash
equivalents, trade and other payables and trade and other
receivables. Details of these financial instruments are disclosed
in respective notes. The risks associated with these financial
instruments, and the policies on how to mitigate these risks are
set out below. The management manages and monitors these exposures
to ensure appropriate measures are implemented in a timely and
effective manner.
Currency risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the United States Dollar ("USD") and Ugandan
shilling ("UGX"). Foreign exchange risk arises from recognised
monetary assets and liabilities. The Group also exposes to currency
exposure, CARU expenses are paid in both USD and UGX, with the
amount payable to the land owners denominated in UGX.
The table below summaries the financial assets and liabilities
denominated in foreign currencies.
30 Sep 2021 30 Sep 2020
USD UGX USD UGX
Financial Assets 566 - 591 -
Financial Liabilities 185,268 887,560 177,659 1,024,737
With all other variables held constant, the effect on profit and
loss had the functional currency of the Group weakened or
strengthened against USD/UGX by 5% at the yearend results in a
GBP35,000 (2020: GBP7,000) change in value.
Credit risk
Credit risk arises on cash balances. The amount of credit risk
is equal to the amounts stated in the statements of financial
position for each of the assets (notes 13 & 14).
The Group's policy to manage this risk is to deal with banks
that are regulated entities. The Group's principal banker, Barclays
Bank PLC, is regulated by the United Kingdom Financial Services
Authority, and has a credit rating of A1 (2020: A1).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities and the availability of funding
through an adequate amount of committed credit. The Company aims to
maintain flexibility in funding.
The maturity of the Company's financial liabilities at the
statement of financial position date, based on the contracted
undiscounted payments is disclosed in notes 145, falls within one
year and payable on demand.
Capital risk
The Company defines capital as the total equity of the Company.
The Company's objectives when managing capital are to safeguard the
Company's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
20. Related party transactions
Details of Directors' remuneration are disclosed in note 7.
Sam Quinn is a director and shareholder of the Company and a
Director of Lionshead Consultants Limited. During the year,
Lionshead Consultants Limited charged consultancy fees of GBP24,000
(2020: GBP10,000).
21. Events after the reporting date
On 12 November 2021, the Company issued 40,000,000 new ordinary
shares of 0.06p at a price of 6p per new ordinary share with half a
warrant per new ordinary share that is exercisable at 8p for 3
years from admission to trading. The share capital raised was
GBP2,000,000 before costs.
On 16 December 2021, the Company issued the Board and Senior
Management with 6,000,000 share options. These options will not
vest unless the share price of the Company trades in excess of 10p
per share for 10 consecutive days.
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