TIDMEDL
RNS Number : 7296Q
Edenville Energy PLC
30 June 2022
30 June 2022
Edenville Energy Plc
("Edenville" or the "Company")
Annual Results for the year ended 31 December 2021
Edenville Energy Plc (AIM: EDL), the AIM quoted company
operating the Rukwa Coal Project in southwest Tanzania ("Rukwa"),
announces its audited results for the year ended 31 December
2021.
The Company's Annual Report for the year ended 31 December 2021
(the "Annual Report") will be available on the Company's website
at: https://edenville-energy.com/annual-reports/ later today,
pursuant to the Company's Articles of Association which allow
Edenville to use electronic communications for the posting of the
Annual Report.
Notice of the Company's Annual General Meeting will be announced
shortly, along with information regarding how shareholders can
request a hard copy of the Annual Report.
For further information please contact:
Edenville Energy Plc
Jeff Malaihollo - Chairman +44 (0) 20 3934
Alistair Muir- CEO 6630
Strand Hanson Limited
(Financial and Nominated Adviser)
James Harris +44 (0) 02 7409
Rory Murphy 3494
Tavira Securities Limited
(Broker)
Oliver Stansfield +44 (0) 20 7100
Jonathan Evans 5100
IFC Advisory Limited
(Financial PR and IR)
Tim Metcalfe +44 (0) 20 3934
Florence Chandler 6630
CHAIRMAN'S STATEMENT
The first half of 2021 was once again dominated by the impact of
COVID across the world. The start of 2021 coincided with the
re-emergence of lockdowns across much of the globe. Naturally this
provided significant challenges to the Company with the reduced
demand for coal seen in 2020 continuing and the logistical issues
remaining. In light of this the Company took a number of steps to
address both its financial position as well as its operational
plans for the future.
In January 2021 we announced an oversubscribed placing raising
GBP900,000. The placing was supported by Edenville's existing three
largest shareholder groups and specialist mining investor RAB
Capital. In May 2021 we announced a further placing to raise gross
proceeds of nearly GBP2.5 million, including a GBP1 million
participation from a new strategic investor, Tony Buckingham. The
Company used part of the proceeds to repay the outstanding debt to
Lind Partners LLC, leaving the majority to fund future
operations.
In August 2021 Franco Caselli joined the Board as a
Non-executive Director of the Company. Mr Caselli is a geologist
with more than 40 years of international operational and market
experience in the energy and mining sectors.
With the Company better capitalised, and with the support of new
shareholders, our focus during the year was to both monitor the
situation in Tanzania with respect to Rukwa and to look at various
opportunities and new assets to inject into the Company. We
continue to explore various options and look forward to updating
shareholders as soon as appropriate.
Post period end, in February 2022, the Company entered into a
contract mining agreement with Nextgen Coalmine Limited ("Nextgen")
for the operation of the Company's Rukwa Coal Project. Shortly
after that both the international and domestic coal price increased
significantly. This resulted in significant demand for both Rukwa's
washed and fine coal. Therefore, we were pleased that in May 2022
the Company reached an agreement with NextGen to terminate the
contract and the Company is now again in full control of the
operations at Rukwa.
Although the last few years have been difficult for the Company,
we believe that the current trend of high coal prices and increased
demand, combined with the fact that the Company is better
capitalised, put us in a great position to move the Company forward
significantly.
I would like to thank all our stakeholders, including you the
shareholders, our partners, the local authorities and local
communities, my fellow directors, our employees and contractors who
have collectively supported the Company throughout this difficult
period.
I believe the Company is now better positioned than it has been
for some considerable time and we look forward to reporting on the
Company's progress in the coming months.
Dr Jeffrey Malaihollo
Chairman
29 June 2022
CHIEF EXECUTIVE OFFICER'S REPORT
2021 was a year in which there was a significant positive change
in the prospects for the Company, both with regard to the Rukwa
coal project and more widely with an improved cash position.
Funding
On 19 January 2021 we announced an oversubscribed placing
raising gross proceeds of GBP900,000, supported by Edenville's
existing three largest shareholder groups and specialist mining
investor RAB Capital. On 5 May 2021 we announced a further placing
to raise gross proceeds of GBP2.48 million, including a GBP1
million participation from a new strategic investor, Tony
Buckingham.
Mr Buckingham is well known in the natural resources market,
particularly in Africa, having been CEO and major shareholder of
Heritage Oil Limited from 2006 until its acquisition by a wholly
owned subsidiary of Qatari investment fund, Al Mirqab Capital SPC,
in 2014 for a consideration of US$1.6 billion.
Additionally, following the GBP2.48 million fund raise, we
announced on 22 June 2021 that the Company had fully repaid in cash
the full outstanding amount owing to Lind Partners LLC ("Lind")
under the Funding Agreement dated 6 November 2018. and the Company
had no further outstanding obligations to Lind.
The fundings undertaken through the year ensured that the
Company is well capitalised, with cash resources as at 31 December
2021 of GBP1,229,801 (31 December 2020: GBP25,690) and reduced
borrowings of GBP18,258 (31 December 2021: GBP440,831).
As at 27 June 2022 the Company had cash balances of
approximately GBP515,428. Whilst this is sufficient for the
Company's current needs, at Rukwa, where it is expected the Company
will become cashflow positive later this year as production ramps
up.
Operational Review
Whilst the first half of 2021 was another period impacted by the
Covid 19 pandemic and the resultant reduced demand, there were
significant changes in the demand scenario and outlook as the year
progressed as international coal prices rose and local Tanzanian
producers started to switch to supplying the export market.
Prior to this uptick in coal prices and demand duringthe later
part of the year the Company successfully focused on preserving
cash for possible further asset acquisitions and focussed on
supplying existing customers. This translated into increasing
production in the final quarter of the year and revenue for the
year as a whole of GBP105,228 (2020: GBP33,852)
Corporate Social Responsibility
The Company has continued to take its corporate and social
responsibility very seriously. We understand that Edenville must
meet the social requirements of an operator in Tanzania. The
construction of a mining operation at Rukwa has already provided
several opportunities to improve infrastructure for the local
community, the most visible being the construction of the road from
Kipandi, past Mkomolo village and beyond, to the mine. This has
opened-up a major artery in the area which services farmers and the
local population, as well as the mine itself.
At Rukwa, wherever possible, we have sought to employ local
people from the surrounding villages. Many of the operators and
management are local and are proving to be highly competent and
skilled employees. The positive social benefits also overflow into
the general community where enterprising individuals are providing
services such as food supply for workers.
Post Period Events
On 3 February 2022 we announced that the Company's subsidiary
Edenville International (Tanzania) Limited had entered into a
contract with Nextgen Coalmine Limited ("Nextgen") for the
operation of the Company's Rukwa Coal Project. This superseded the
Coal Mining Agreement with Infrastructure and Logistics Tanzania
Limited and the Sales and Marketing Agreement with MarTek Global
FZ-LLC, announced on 8 June 2020 and 26 August 2020 respectively.
These agreements were terminated by Edenville due to lack of
progress on implementation.
Subsequent to entering into the agreement with NextGen both the
international and domestic coal price increased significantly. This
coincided with heightened interest from potential customers to
enter into offtake agreements for coal from Rukwa. Additionally,
the implementation of the coal mining agreement with Nextgen was,
for various reasons, problematic, resulting in very poor production
figures over the period from February to May 2022 and no material
revenue for the Company.
The lack of progress by Nextgen culminated in the announcement
on 31 May 2022 that the Company had reached an agreement with
NextGen to terminate the contract. Following the termination of the
contract all mining equipment has been brought back into service by
Edenville, whilst an additional pre-strip excavator has been added
to the fleet. Up to three additional trucks have been sourced to
rapidly scale production. Our initial goal is to satisfy existing
demand from local customers of 1,500 tonnes of washed lump coal
product and 500 tonnes of coal fines in the immediate future,
targeting sales of 5,000 tonnes per month of washed coal late in Q3
2022, with coal fines sales also expected to continue and possibly
expand. During the first half of 2022, 9,466 tonnes of ROM coal has
been mined.
We believe there is sufficient demand based on the Company's
order book and recent discussions with potential customers to sell
any coal that is produced at Rukwa. The Company is also exploring
the potential of exporting its coal for the first time, given
margins would be expected to be even greater.
Much of 2021 and the first half of 2022 was spent pursuing
reverse takeover and other opportunities to add assets to the
Company. During this time the Company focused on reducing cash burn
on its Tanzanian project whilst it has explored these potential new
projects. One potential transaction progressed significantly,
however was ultimately terminated by mutual consent. As part of the
termination it was agreed that the transaction costs incurred by
the Company would be re-imbursed in full by the potential take-over
target.
Further to the Company announcements on 18 and 31 May 2022 that
Upendo Group Ltd.'s current 10% economic interest in the joint
venture, which holds the licences governing the Rukwa Project, had
been transferred to a 10% direct holding on the principal
production licence. The Company has sought legal advice and has
been advised that the variation has been undertaken illegally and
that the holding should be reversed by the Government, This
reversal has been sought. The Company will provide a further update
as appropriate.
Summary and Outlook
With Edenville now being in full control of the operations at
Rukwa we are able to take advantage of the recent macro changes
that have made the economics of our Rukwa project considerably more
attractive. Edenville is determined to maximise cash returns in the
current global coal environment, especially given the attractive
pricing forecast over the coming years. To this end we have already
started applying a modest proportion of our existing cash resources
towards expanding the Rukwa operations to meet these heightened
sales enquiries.
Additionally, with an improved cash position we continue to
target additional asset acquisitions, leveraging the natural
resources and capital markets expertise of the Board, and
significant shareholders.
I look forward to the remainder of 2022 and beyond with
confidence that there is a positive future for Edenville that can
deliver shareholder value.
Alistair Muir
Chief Executive Officer
29 June 2022
REPORT OF THE INDEPENT AUDITORS TO THE MEMBERS OF EDENVILLE
ENERGY PLC
FOR THE YEARED 31 DECEMBER 2021
Opinion
We have audited the financial statements of Edenville energy plc
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 31 December 2021 which comprise the group statement of
comprehensive income, the group and company statement of financial
position, the group and company statement of changes in equity, the
group and company cash flow statements and notes to the group and
company financial statements, including significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international
accounting standards 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's and of the parent company's affairs
as at 31 December 2021 and of the group loss for the year
then ended;
-- The group financial statements have been properly prepared
in accordance with UK-adopted international accounting
standards;
-- The parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards 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
and parent company 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 as applied to listed entities,
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 in the financial statements, under
the heading 'Going concern' concerning the ability of the group and
parent company to continue as a going concern. The group and parent
company's forecasts and projections indicate that the group and
parent company has sufficient cash reserves to operate within the
level of its current facilities. However, if there are any material
variances to the forecasts which it is unable to manage with
cashflow management to continue in operation, the group and parent
company would be obliged to raise additional funds within twelve
months of the date of the approval of these financial statements.
The ability of the group and parent company to raise additional
funds is dependent upon investor appetite.
As stated in note 2, these events or conditions, along with the
other matters as set forth in note 2, indicate that a material
uncertainty exists that may cast significant doubt on the group and
company'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 directors' assessment of the group and parent
company's ability to continue to adopt the going concern basis of
accounting included:
a) Reviewing management's assessment of going concern.
b) Determining if all relevant information has been included
in the assessment of going concern including completeness
of forecasted expenditure.
c) Analysing cash flow forecasts and budgets, reviewing
the underlying assumptions in relation to expenditure
and checking mathematical accuracy.
d) Considering the cash position at and after the year end.
e) Reviewing the reasonable worst-case forecast scenario
and the financial resources available to deal with this
outcome i.e. ability of the group and parent company
to raise funds.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Emphasis of matter - recoverability of value added tax
We draw attention to note 4 of the financial statements, which
describes group's assessment over the VAT receivable balance of
GBP279,157 in Tanzania. The group have explained their assessment
over the recoverability within critical accounting estimates and
conclude this to be recoverable. The nancial statements do not
include the adjustments that would result if the group was unable
to fully recover this.
Our opinion is not modi ed in this respect.
Emphasis of matter - recoverability of inventory
We draw your attention to Note 4 of the financial statements,
which describes the group's assessment over the inventory balance
of GBP142,721 in Tanzania. The group have explained their
assessment over the recoverability within the critical accounting
estimates and conclude this to be recoverable. The financial
statements do not include the adjustment that would result if the
group was unable to fully recover this.
Our opinion is not modified in this respect.
Our application of materiality
The quantitative and qualitative thresholds for materiality
determine the scope of our audit and the nature, timing and extent
of our audit procedures. The materiality for the financial
statements as a whole applied to the group financial statements was
GBP74,700 (2020: GBP67,250) based on 1% of gross assets. We based
the materiality on gross assets because we consider this to be the
most relevant performance indicator for a mining group. The
performance materiality for the group was GBP44,800 (2020:
GBP40,350). The materiality for the financial statements as a whole
applied to the parent company financial statements was GBP12,500
(2020: GBP37,100) based on 2% of the expenses. The performance
materiality for the parent company was GBP7,500 (2020: GBP22,260).
For the component in the scope of our group audit, we allocated a
materiality that was less than our overall group materiality. We
use performance materiality to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use
performance materiality in determining the scope of our audit and
the nature and extent of our testing of account balances, classes
of transactions and disclosures, for example in determining sample
sizes.
We agreed with those charged with governance that we would
report all differences identified during the course of our audit in
excess of GBP3,735 (2020: GBP3,363) for the group and GBP625
(GBP1,855) for the parent company.
Our approach to the audit
In designing our audit approach, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular we assessed the areas involving
significant accounting estimates and judgements by the directors in
respect of the carrying value of the mining assets and carrying
values of the parent company's investments in and loans to
subsidiaries and considered future events that are inherently
uncertain. We also addressed the risk of management override of
internal controls, including evaluation whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
Of the four components of the group, a full scope audit was
performed on the complete financial information of the parent and
its Tanzanian subsidiary that owns the asset. The remaining
components were subject to analytical review only because they were
not significant to the group.
Of the two reporting components of the group, one is located in
Tanzania and audited by a component auditor operating under our
instructions, and the audit of the remaining component was
performed in London, conducted by PKF Littlejohn LLP using a team
with specific experience of auditing mining entities and publicly
listed entities. The Senior Statutory Auditor interacted regularly
with the component audit team during all stages of the audit and
was responsible for the scope and direction of the audit process.
This, in conjunction with additional procedures performed, gave us
appropriate evidence for our opinion on the group and parent
company financial statements.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, 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) we identified, including 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. In addition to
the matter described in the Material uncertainty related to going
concern section we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key How
Audit our
Matters scope
addressed
these
matters
Carrying value mining assets
(Note 15)
The entity has capitalised Our work in this area included
mining assets of GBP5,116,268. but was not limited to:
Management is required to assess * Carried out testing to ensure existence, and
whether there is any indication ownership of mining licenses; and consideration has
of impairment of these assets. been given to whether a dilapidation provision is
The carrying value and recoverability required.
of these assets are tested annually
for impairment. The estimated
recoverable amount of this balance * Ensuring the reasonableness of the capitalization of
is subjective due to the inherent the new additions;
uncertainty involved in the
assessment of exploration projects.
* Considering whether there were indicators of
impairment of the mining assets such as expiring
concessions, licenses or rights, projections of
declining coal prices and/or declining demand and
projections of increased future capital costs or
operating costs and we note that the forecasted
revenue and production is higher than the actual and
historical levels
* Performing sensitivity analysis
* Consideration of whether treatment of mining assets
is in accordance with IFRS 6, and has been correctly
classified
* Reviewing management's assessment of the impairment
of mining assets and challenging their key
assumptions and estimates used as a basis to value
the intangible assets.
In forming our opinion, which
is not modified, our work indicated
that the value of mining assets
are fairly stated in the financial
statements, but that the future
carrying value of these mining
assets are dependent on the ability
of the subsidiary to fully realise
the potential of the mine and
increase the mining activities
and extraction to pre-pandemic
levels. This should be supported
by signing long term sales contracts
with a few customers in the short
to medium term. The financial
statements do not include the
adjustments that would result
if the group was unsuccessful
in increasing the production
and sales.
=============================================================
Valuation of the parent company's
investment in and loans to subsidiaries
(Note 14)
=============================================================
The parent company owns a significant We have obtained and critically
investment in Edenville International assessed the directors' impairment
(Tanzania) Limited of GBP17,197,652 review of the carrying value
which includes loans to the of the parent company's net investment
subsidiary of GBP10,154,340. in the subsidiaries. Our work
The value of the investment included:
is linked to the value of the * Reviewing the valuation methodology for the
assets held in Edenville International investment held and ensuring that the carrying values
(Tanzania) Limited. Value in were supported by sufficient and appropriate audit
use calculation for the carrying evidence.
value of investments are based
on judgments and estimates made
by the management which lead * Reviewing and challenging their key assumptions and
to a risk of misstatement estimates used as a basis to support carrying value
of investment by comparing the forecasted mining
levels to historic production, agreeing coal prices
used in the valuation to prices regulated by local
government, reviewing sales plan supported by signed
contracts or under contracts under negotiation. We
note that the forecasted revenue and production is
higher than the actual and historical levels.
* Performed sensitivity analysis and stress tests on
the valuation
* Ensuring the parent company has full title to the
investments held;
* Ensuring that appropriate disclosures surrounding the
estimates, including a review of how these estimates
were arrived at, are made in respect of any
valuations are included in the financial statements.
In forming our opinion, which
is not modified, our work indicated
that the value of its investment
and loans are fairly stated in
the financial statements, but
that the recoverability is dependent
on the ability of the subsidiary
to fully realise the potential
of the mine and increase the
mining activities and extraction
to pre-pandemic levels. This
should be supported by signing
long term sales contracts with
a few customers in the short
to medium term. The financial
statements do not include the
adjustments that would result
if the subsidiary was unsuccessful
in increasing the production
and sales.
=============================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group and parent company 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. 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 course of 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 this gives rise to a material
misstatement in the financial statements themselves. 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, based on the work undertaken in the course of
the 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 parent company and their 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 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 directors
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the group and parent company 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 group and parent company financial statements,
the directors are responsible for assessing the group and the
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 and 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 group and parent company 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, are 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 irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and parent
company and the sector in which they operate to identify
laws and regulations that could reasonably be expected
to have a direct effect on the financial statements.
We obtained an understanding in this regard through discussions
with management and the application of our cumulative
audit knowledge and experience of this sector.
-- We determined the principal laws and regulations relevant
to the group and parent company in this regard to be
those arising from Companies Act 2006, AIM Rules and
mining regulations applicable to the subsidiaries.
-- We designed our audit procedures to ensure the audit
team considered whether there were any indications of
non-compliance by the group and parent company with those
laws and regulations. These procedures included, but
were not limited to enquiries of management, review of
minutes and Regulatory News Service (RNS) announcements
and review of legal and regulatory correspondence.
-- We also identified the risks of material misstatement
of the financial statements due to fraud. We considered,
in addition to the non-rebuttable presumption of a risk
of fraud arising from management override of controls,
that the potential for management bias was identified
in relation to the impairment assessment of intangible
assets and valuation of investments. We addressed this
by challenging the assumptions and judgements made by
management when evaluating any indicators of impairment.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing
audit procedures which included, but were not limited
to: the testing of journals; reviewing accounting estimates
for evidence of bias; and evaluating the business rationale
of any significant transactions that are unusual or outside
the normal course of business
-- At a significant component level, we engaged with the
component auditors to ensure that they had conducted
an extensive review into whether the operating subsidiary
was fully compliant with laws and regulations at a local
level, and reviewed their work conducted into the posting
of journal entries to ensure there were no instances
of fraud detected at a local level.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
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.
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.
Zahir Khaki (Senior Statutory 15 Westferry Circus
Auditor)
For and on behalf of PKF Canary Wharf
Littlejohn LLP
Statutory Auditor London E14 4HD
29 June 2022
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2021
Note 2021 2020
GBP GBP
Revenue 5 105,228 33,852
Cost of sales (684,848) (583,876)
Gross loss (579,620) (550,024)
Administration expenses 6 (875,564) (529,632)
Share based payments 27 - (50,398)
Group operating loss (1,455,184) (1,130,054)
Finance income 10 701 112
Finance costs 11 (5,842) (111,503)
Loss on operations before
taxation (1,460,325) (1,241,445)
Income tax 12 (526) -
Loss for the year (1,460,851) (1,241,445)
Attributable to:
Equity holders of the Company (1,458,586) (1,239,553)
Non-controlling interest (2,265) (1,892)
Other comprehensive loss
Item that will or may be reclassified
to the profit and loss:
Gain/(loss) on translation
of overseas subsidiary 87,013 (203,935)
Total comprehensive loss for
the year (1,373,838) (1,445,380)
Attributable to:
Equity holders of the Company (1,371,573) (1,443,488)
Non-controlling interest (2,265) (1,892)
Earnings per Share (pence)
Basic and diluted loss per
share 13 (8.04p) (16.66p)
All operating income and operating gains and losses relate to
continuing activities.
No separate statement of comprehensive income is provided as all
income and expenditure is disclosed above.
GROUP AND COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Note Group 31 31 December Company
31 December December 2021 31 December
2021 2020 2020
GBP GBP GBP GBP
Non-current assets
Investment in
subsidiaries 14 - - 17,197,652 16,561,617
Property, plant
and equipment 15 5,451,921 5,644,577 1,000 1,334
Intangible assets 16 315,002 311,032 - -
5,766,923 5,955,609 17,198,652 16,562,951
Current assets
Inventories 17 142,721 251,736 - -
Trade and other
receivables 18 415,479 301,251 225,635 8,499
Cash and cash
equivalents 19 1,229,801 25,690 1,226,235 25,628
1,788,001 578,677 1,451,870 34,127
Current liabilities
Trade and other
payables 20 (389,264) (685,809) (103,362) (213,559)
Borrowings 21 (18,258) (440,831) - (416,142)
407,522 (1,126,640) (103,362) (629,701)
Current assets
less current
liabilities 1,380,479 (547,963) 1,348,508 (595,574)
Total assets less
current liabilities 7,147,402 5,407,646 18,547,160 15,967,377
Non-current liabilities
Borrowings 21 - (39,873) - (16,084)
Environmental
rehabilitation
liability 22 (24,632) (21,912) -
7,122,770 5,345,861 18,547,160 15,951,293
Equity
Called-up share
capital 23 4,176,601 4,041,601 4,176,601 4,041,601
Share premium account 22,254,317 19,390,849 22,254,317 19,390,849
Share option reserve 453,614 301,174 453,614 301,174
Foreign currency
translation reserve 581,143 494,130 - -
Retained earnings (20,325,577) (18,866,991) (8,337,372) (7,782,331)
Attributable to the equity
shareholders of the Company 7,140,098 5,360,763 18,547,160 15,951,293
Non- controlling
interests (17,328) (14,902) - -
Total equity 7,122,770 5,345,861 18,547,160 15,951,293
The financial statements were approved by the board of directors
and authorised for issue on 29 June 2022 and signed on its behalf
by:
Alistair Muir, Director
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
--------------------------------------------------Equity
Interests---------------------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January 2020 3,414,935 18,811,157 (17,718,347) 281,502 698,065 5,487,312 (13,517) 5,473,795
Comprehensive
Income
for the year
Foreign currency
translation - - - - (203,935) (203,935) - (203,935)
Loss for the year - - (1,239,553) - - (1,239,553) (1,892) (1,241,445)
---------- ----------- ------------- --------- ------------ ------------ ---------------- ------------
Total
comprehensive
income for the
year - - (1,239,553) - (203,935) (1,443,488) (1,892) (1,445,380)
Transactions with
owners
Issue of share
capital 626,666 648,334 - - - 1,275,000 - 1,275,000
Share issue costs - (68,642) - - - (68,642) - (68,642)
Share
options/warrants
charge - - - 110,581 - 110,581 - 110,581
Cancellation of
share options - - 90,909 (90,909) - - - -
Total
transactions
with owners 626,666 579,692 90,909 19,672 - 1,316,939 - 1,316,939
Non- controlling
interest share
of
goodwill - - - - - - 507 507
At 31 December
2020 4,041,601 19,390,849 (18,866,991) 301,174 494,130 5,360,763 (14,902) 5,345,861
========== =========== ============= ========= ============ ============ ================ ============
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
--------------------------------------------------Equity
Interests---------------------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January 2021 4,041,601 19,390,849 (18,866,991) 301,174 494,130 5,360,763 (14,902) 5,345,861
Comprehensive
Income
for the year
Foreign currency
translation - - - - 87,013 87,013 - 87,013
Loss for the year - - (1,458,586) - - (1,458,586) (2,265) (1,460,851)
---------- ----------- ------------- -------- ------------ ------------ ---------------- ------------
Total
comprehensive
income for the
year - - (1,458,586) - 87,013 (1,371,573) (2,265) (1,373,838)
Transactions with
owners
Issue of share
capital 135,000 3,240,000 - - - 3,375,000 - 3,375,000
Share issue costs - (224,092) - - - (224,092) - (224,092)
Share
options/warrants
charge - (152,440) 152,440 -
---------- ----------- ------------- -------- ------------ ------------ ---------------- ------------
Total
transactions
with owners 135,000 2,863,468 - 152,440 - 3,150,908 - 3,150,908
Non- controlling
interest share
of
goodwill - - - - - - (161) (161)
At 31 December
2021 4,176,601 22,254,317 (20,325,577) 453,614 581,143 7,140,098 (17,328) 7,122,770
========== =========== ============= ======== ============ ============ ================ ============
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
Retained Share
Share Capital Share Earnings Option
Premium Account Reserve Total
GBP GBP GBP GBP GBP
At 1 January 2020 3,414,935 18,811,157 (7,358,134) 281,502 15,149,460
Comprehensive Income for
the year
Total comprehensive loss
for the year - - (515,106) - (515,106)
---------------- ----------- ------------ --------- -----------
Total comprehensive income
for the year - - (515,106) - (515,106)
Transactions with owners
Issue of share capitals 626,666 648,334 - - 1,275,000
Share issue costs - (68,642) - - (68,642)
Share option/warrants charge - - - 110,581 110,581
Cancellation of share options - - 90,909 (90,909) -
---------------- ----------- ------------ --------- -----------
Total transactions with
owners 626,666 579,692 90,909 19,672 1,316,939
At 31 December 2020 4,041,601 19,390,849 (7,782,331) 301,174 15,951,293
Comprehensive Income for
the year
Total comprehensive loss
for the year - - (555,041) - (555,041)
---------------- ----------- ------------ --------- -----------
Total comprehensive income
for the year - - (555,041) - (555,041)
Transactions with owners
Issue of share capital 135,000 3,240,000 - - 3,375,000
Share issue costs - (224,092) - - (224,092)
Share option/warrants charge - (152,440) - 152,440 -
Total transactions with
owners 135,000 2,863,468 - 152,440 3,150,908
At 31 December 2021 4,176,601 22,254,317 (8,337,372) 453,614 18,547,160
================ =========== ============ ========= ===========
GROUP AND COMPANY CASH FLOW STATEMENTS
Year ended 31 December 2020
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP GBP GBP GBP
Operating activities
Operating loss (1,455,184) (1,130,054) (557,208) (515,218)
Adjustments to reconcile profit
before tax to net cash flows:
Depreciation 264,677 277,921 334 445
Interest paid - (351) - 100,090
Expected credit losses - - - -
Share based payments - 50,398 - 50,398
Foreign exchange difference 2,687 (34,531) -
Working capital changes:
Decrease/(Increase) in inventories 17,799 (4,198) - (10,482)
Impairment of inventories 92,150 - - -
(Decrease)/increase in trade
and other receivables (116,768) 54,984 (217,136) 39,912
Decrease in trade and other
payables (286,968) (116,836) (110,197) (189,149)
Net cash outflow from operating
activities (1,481,607) (902,657) (884,207) (524,004)
Cash flows from investing
activities
Capital introduced to subsidiaries - - (636,035) (400,904)
Purchase of property, plant - - - -
and equipment
Finance income 701 112 2,167 112
Net cash used in/(from) investing
activities 701 112 (633,868) (400,792)
Cash flows from financing
activities
Proceeds from borrowings - 180,000 - 180,000
Repayment of borrowings (120,000) - (120,0000 -
Repayment of convertible loan
notes (312,226) (160,421) (312,226) (160,421)
Repayment of lease liabilities (30,214) (17,404) - -
Lease interest (3,451) (5,059) - -
Proceeds from issue of ordinary
shares 3,375,000 950,000 3,375,000 950,000
Share issue costs (224,092) (60,000) (224,092) (60,000)
Net cash inflow from financing
activities 2,685,017 887,116 2,718,682 909,579
Net decrease in cash and
cash equivalents 1,204,111 (15,429) 1,200,607 (15,217)
Cash and cash equivalents
at beginning of year 25,690 41,110 25,628 40,845
Effect of foreign exchange
rate changes on cash and cash - 9 - -
equivalents
Cash and cash equivalents
at end of year 19 1,229,801 25,690 1,226,235 25,628
NOTES TO THE COMPANY'S FINANCIAL STATEMENTS
Year ended 31 December 2021
1. General Information
Edenville Energy Plc is a public limited Company incorporated in
England and Wales. The address of the registered office is Aston
House, Cornwall Avenue, London, N3 1LF. The Company's shares are
listed on AIM, a market operated by the London Stock Exchange.
The principal activity of the Group is the exploration,
development and mining of energy commodities predominantly coal in
Africa.
2. Group Accounting Policies
Basis of preparation and statement of compliance
The Group's and Company's financial statements have been
prepared in accordance with UK-adopted international accounting
standards, and the parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The Group's financial statements
have also been prepared under the historical cost convention,
except for the measurement to fair value of assets and financial
instruments as described in the accounting policies set out
below.
The preparation of financial statements in conformity with
UK-adopted international accounting standards requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the Group's financial statements are disclosed
in Note 4..
The Company has elected to take the exemption under section 408
of the Companies Act 2006 from presenting the Parent Company Income
Statement. The loss after tax for the Parent Company for the year
was GBP555,041 (2020: GBP515,106)
Going concern
At 31 December 2021 the Group had cash balances totalling
GBP1,229,801.
Production through the later half of 2021 struggled to achieve
target levels and as a result of this the company entered into a
Coal Mining Agreement which failed to have impact on production
rates despite the current high coal prices. This agreement was
terminated in May 2022.
The high coal prices have resulted in:
- the export of coal from the traditional local coal
suppliers in Tanzania, usually to India and
- created major demand from East Africa who would normally
source their coal from South Africa but now find
pricing prohibitive.
As a result of this situation the company is receiving regular
enquiries for coal supply from within Tanzania, East Africa and
internationally, the company has therefore taken back control of
the mining operations and is already investing to raise production
levels to leverage off the current demand situation.
Based on the current working capital forecast which includes
previous placings, the Group has sufficient funds in order to allow
it to continue in production and implement planned project
development and any upgrades. However, if there are delays in
procuring orders or if large export contracts are entered into then
the Group may require additional funds within twelve months of the
date of approval of these financial statements. The ability of the
Group to raise additional funds is dependent upon investor appetite
or the willingness of the banking sector to finance ongoing
operations.
Expenditure on excavation is related to the level of orders and
both head office costs and Tanzanian administration costs can be
reduced if the additional funds cannot be raised and the Group
therefore continues to adopt the going concern basis in preparing
its consolidated financial statements.
Adoption of new and revised standards and changes in accounting
policies
There were no new standards or interpretations impacting the
Group that will be adopted in the annual financial statements for
the year ended 31 December 2021, and which have given rise to
changes in the Group's accounting policies.
Standards and interpretations in issue but not yet effective or
not yet relevant
At the date of authorisation of these financial statements the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
Standard Detail Effective for
annual periods
commencing on
or after
--------- -------------------------------------------------------- ----------------
IFRS Amendments resulting from Annual improvements to 1 January 2022
1 IFRS Standards 2018-2020 (subsidiary as a first
time adopter)
IFRS Amendments updating a reference to the Conceptual 1 January 2022
3 Framework
IFRS Amendments resulting form Annual improvements to 1 January 2022
9 IFRS Standards 2018-2020 (fees in ' 10 per cent'
test for de-recognition of financial liabilities)
IFRS Original issue 1 January 2023
17
IAS 1 Amendments regarding the classification of liabilities. 1 January 2023
Amendments regarding the disclosure of accounting
policies
IAS 8 Amendments regarding the definition of accounting 1 January 2023
estimates
IAS 12 Amendments regarding deferred tax on leases and 1 January 2023
decommissioning obligations
IAS 16 Amendments prohibiting a company from deducting 1 January 2022
from cost of property, plant and equipment amounts
received from selling items produced while the
company is preparing the asset for its intended
use.
IAS 37 Amendments regarding the cost to include when assessing 1 January 2022
whether a contract is onerous
The Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the Group's financial statements.
Share based payments (Share options and Warrants)
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (share options)
of the Group. The fair value of the employee services received in
exchange for the grant of options is recognised as an expense.
The Group also , from time to time , issues warrants, primarily
to advisors of the company in connection with placing of shares
and/or other services. There fair value of these warrants is either
recognised as an expense or as a share issue costs offset against
share premium, depending on the nature of services.
The total amount to be expensed or offset against share premium
in respect of share issue costs is determined by reference to the
fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance
vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity
over a specified time period); and
-- excluding the impact of any non-vesting conditions (for
example, the requirement of employees to save).
Assumptions about the number of options that are expected to
vest include consideration of non-market vesting conditions. The
total expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium when the options are exercised.
Basis of consolidation
The Group's financial statements consolidate the financial
statements of Edenville Energy Plc and all its subsidiary
undertakings (Edenville International (Seychelles) Limited,
Edenville International (Tanzania) Limited and Edenville Power (TZ)
Limited) made up to 31 December 2021 (Note 11). Profits and losses
on intra-group transactions are eliminated on consolidation.
Subsidiaries are all entities over which the group has control.
The group controls an entity when the group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the group. They are deconsolidated
from the date that control ceases.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the statement of profit or loss and other comprehensive income from
the date the Group gains control until the date the Group ceases to
control the subsidiary. Where the Group's interest is less than 100
per cent, the interest attributable to outside shareholders is
reflected in non-controlling interests (NCIs).
Business combinations
The Group adopts the acquisition method in accounting for the
acquisition of subsidiaries. On acquisition the cost is measured at
the fair value of the assets given, plus equity instruments issued
and liabilities incurred or assumed at the date of exchange. The
assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured at their fair value at the
date of acquisition. Any excess of the fair value of the
consideration over the fair value of the identifiable net assets
acquired is recorded as goodwill.
Any deficiency of the fair value of the consideration below the
fair value of identifiable net assets acquired is credited to the
income statement in the period of the acquisition.
The results of subsidiary undertakings acquired or disposed of
during the year are included in the group statement of
comprehensive income statement from the effective date of
acquisition or up to the effective date of disposal.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the group. Inter-company transactions
and balances between group companies are eliminated.
Revenue recognition
consideration received or receivable, and represent amounts
receivable for goods supplied, stated net of discounts, returns and
value added taxes. Under IFRS 15 there is a five-step approach to
revenue recognition which is adopted across all revenue streams.
The process is:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the
contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance
obligations in the contract; and
Step 5: Recognise revenue as and when the entity satisfies the
performance obligation.
The Group has one revenue stream being the sale of coal and
other aggregate bi-products produced by the Group. Sales are
predominantly made at the Group's premises as customers collect
their quantities from the mine. Such revenue is recognised at the
point of contact at a pre-agreed fixed price on a per tonnage
basis. For deliveries made to customer premises, revenue is
recognised at the point of which the products leave the Group's
premises
Presentational and functional currency
This financial information is presented in pounds sterling,
which is the Company's functional currency.
The functional currency of the Groups subsidiaries is US
Dollars. The financial statements are presented in pounds
sterling.
In preparing the financial statements of individual entities,
transaction in currencies other than the entity's functional
currency (foreign currencies) are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet
date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the balance sheet date.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations (including comparatives) are expressed in pounds
sterling using exchange rates prevailing at the balance sheet date.
Income and expense items are translated at the average exchange
rate for the period. Exchange differences arising, if any, are
classified as equity and transferred to the Group's foreign
currency translation reserve. Such translation differences are
recognised in the income statement in the period in which the
foreign operation is disposed.
Financial instruments
Financial assets
Financial assets comprise investments, cash and cash equivalents
and receivables. Unless otherwise indicated, the carrying amounts
of the Group's financial assets are a reasonable approximation of
their fair values.
Classification and measurement
The Group classifies its financial assets into the following
categories: those to be measured subsequently at fair value (either
through other comprehensive income (FVOCI) or through the income
statement (FVPL) and those to be held at amortised cost.
Classification depends on the business model for managing the
financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at
initial recognition. The Group's policy with regard to financial
risk management is set out in note 3. Generally, the group does not
acquire financial assets for the purpose of selling in the short
term.
The group's business model is primarily that of "hold to
collect" (where assets are held in order to collect contractual
cash flows). When the group enters into derivative contracts, these
transactions are designed to reduce exposures relating to assets
and liabilities, firm commitments or anticipated transactions.
Financial Assets
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss.
ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation
of the original EIR. 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 (not subject to provisional pricing) and
other receivables due in less than 12 months, the Group applies the
simplified approach in calculating ECLs, as permitted by IFRS 9.
Therefore, the Group does not track changes in credit risk, but
instead, recognises a loss allowance based on the financial asset's
lifetime ECL at each reporting date.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually
occurs when past due for more than one year and not subject to
enforcement activity.
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Financial Assets held at fair value through other comprehensive
income (FVOCI)
The classification applies to the following financial
assets:
- Debt instruments that are held under a business model
where they are held for the collection of contractual
cash flows and also for sale ("collect and sale") and
which have cash flows that meet the SPPI criteria. An
example would be where trade receivable invoices for certain
customers were factored from time to time. All movements
in the fair value of these financial assets are taken
through comprehensive income, except for the recognition
of impairment gains and losses, interest revenue (including
transaction costs by applying the effective interest method),
gains or losses arising on derecognition and foreign exchange
gains and losses which are recognised in the income statement.
When the financial asset is derecognised, the cumulative
fair value gain or loss previously recognised in other
comprehensive income is reclassified to the income statement.
- Equity investments where the group has irrevocably elected
to present fair value gains and losses on revaluation
of such equity investments, including any foreign exchange
component, are recognised in other comprehensive income.
- When equity investment is derecognised, there is no reclassification
of fair value gains or losses previously recognised in
other comprehensive income to the income statement. Dividends
are recognised in the income statement when the right
to receive payment is established.
Financial Assets held at fair value through profit or loss
(FVPL)
The classification applies to the following financial assets. In
all cases, transaction costs are immediately expensed to the income
statement.
- Debt instruments that do not meet the criteria of amortised
costs or fair value through other comprehensive income.
- Equity investments which are held for trading or where
the FVOCI election has not been applied. All fair value
gains or losses and related dividend income are recognised
in the income statement.
- Derivatives which are not designated as a hedging instrument.
All subsequent fair value gains or losses are recognised
in the income statement.
Derecognition
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset's carrying amount and the
sum of the consideration received and receivable is recognised in
profit or loss.
Financial Liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All
financial
Liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly
attributable transaction costs. The Group's financial liabilities
include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group that are
not designated as hedging instruments in hedge relationships as
defined by IFRS 9. Separated embedded derivatives are also
classified as held for trading unless they are designated as
effective hedging instruments. Gains or losses on liabilities held
for trading are recognised in the statement of profit or loss and
other comprehensive income.
Trade and other payables
After initial recognition, trade and other payables are
subsequently measured at amortised cost using the EIR method. Gains
and losses are recognised in the statement of profit or loss and
other comprehensive income when the liabilities are derecognised,
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss and other comprehensive
income.
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.
Liabilities within the scope of IFRS 9 are classified as
financial liabilities at fair value through profit and loss or
other liabilities, as appropriate.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are
recognised initially at fair value and subsequently at amortised
cost.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the average costing method.
Components of inventories consist of coal, parts and supplies, net
of allowance for obsolescence. Coal inventories represent coal
contained in stockpiles, coal that has been mined and hauled to the
wash plant (raw coal) for processing and coal that has been
processed (crushed, washed and sized) and stockpiled for shipment
to customers.
The cost of raw and prepared coal comprises extraction costs,
direct labour, other direct costs and related production overheads
(based on normal operating capacity). It excludes borrowing costs.
Net realisable value is the estimated selling price in the ordinary
course of business, less applicable variable selling expenses.
The Company performs inventory obsolescence at each reporting
date. In determining whether inventories are obsolete, the Company
assesses the age at which inventories held in the store in order to
make an assessment of the inventory write down to net realisable
value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand,
demand deposits and other short term highly liquid investments that
are readily convertible to a known amount of cash and are subject
to insignificant risk of changes in value.
Convertible loan notes
The convertible loan notes issued by the Company are classified
separately as financial liabilities in accordance with the
substance of contractual arrangements. The convertible loan note
("CLN") is a compound financial instrument that cannot be converted
to share capital at the option of the holder. As the CLN, and the
accrued interest, can only be repaid as a loan, it has been
recognised within liabilities. Interest is accounted for on an
accruals basis and charged to the Consolidated Income Statement and
added to the carrying amount of the liability component of the
CLN.
Property, plant and equipment
Property, plant and equipment are stated at cost on acquisition
less accumulated depreciation and accumulated impairment
losses.
Depreciation is provided on all property, plant and equipment
categories at rates calculated to write off the cost, less
estimated residual value on a reducing balance basis over their
expected useful economic life. The depreciation rates are as
follows:
Basis of depreciation
Fixtures, fittings and 25% reducing balance
equipment
Plant and machinery 5 years straight line or 25% reducing
balance
Office equipment 25% reducing balance
Motor vehicles 25% reducing balance
Costs capitalised include the purchase price of an asset and any
costs directly attributable to bringing it into working condition
for its intended use.
Production assets
Coal land, mine development costs, which include directly
attributable construction overheads, land and coal rights are
recorded at cost. Coal land and mine development are depleted and
amortised, respectively, using the units of production method,
based on estimated recoverable tonnage. The depletion of coal
rights and depreciation of restoration costs are expensed by
reference to the estimated amount of coal to be recovered over the
expected life of the operation.
Coal Mine Reclamation Costs
Future cost requirements for land reclamation are estimated
where surface operations have been conducted, based on the Group's
interpretation of the technical standards of regulations enacted by
the Government of Tanzania. These costs relate to reclaiming the
pit and support acreage at surface mines and sealing portals at
deep mines. Other costs include reclaiming refuse and slurry ponds
as well as related termination/exit costs.
The Group records asset retirement obligations that result from
the acquisition, construction or operation of long-lived assets at
fair value when the liability is incurred. Upon the initial
recognition of a liability, that cost is capitalised as part of the
related long-lived asset and expensed over the useful life of the
asset. The asset retirement costs are recorded in Land, Coal Rights
and Restoration Costs.
The Group expenses reclamation costs prior to the mine closure.
The establishment of the end of mine reclamation and closure
liability is based upon permit requirements and requires
significant estimates and assumptions, principally associated with
regulatory requirements, costs and recoverable coal lands.
Annually, the end of mine reclamation and closure liability is
reviewed and necessary adjustments are made, including adjustments
due to mine plan and permit changes and revisions of cost and
production levels to optimize mining and reclamation efficiency.
The amount of such adjustments is reflected in the year end
reclamation provision calculation.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping
(waste removal) costs both during the production phase of its
operations. Stripping activities undertaken during the production
phase of a surface mine (production stripping) are accounted for as
set out below.
After the commencement of production, further development of the
mine may require a phase of unusually high stripping that is
similar in nature to development phase stripping. The cost of such
stripping is accounted for in the same way as development stripping
(as outlined above). Production stripping is generally considered
to create two benefits, being either the production of inventory or
improved access to the ore to be mined in the future. Where the
benefits are realised in the form of inventory produced in the
period, the production stripping costs are accounted for as part of
the cost of producing those inventories.
Where the benefits are realised in the form of improved access
to ore to be mined in the future, the costs are recognised as a
non-current asset, referred to as a 'stripping activity asset', if
the following criteria are met:
a) Future economic benefits (being improved access to the ore
body) are probable;
b) The component of the ore body for which access will be
improved can be accurately identified; and
c) The costs associated with the improved access can be reliably
measured
If any of the criteria are not met, the production stripping
costs are charged to profit or loss as operating costs as they are
incurred.
In identifying components of the ore body, the Group works
closely with the mining operations personnel for each mining
operation to analyse each of the mine plans. Generally, a component
will be a subset of the total ore body, and a mine may have several
components. The mine plans, and therefore the identification of
components, can vary between mines for a number of reasons. These
include, but are not limited to: the type of commodity, the
geological characteristics of the ore body, the geographical
location, and/or financial considerations.
The stripping activity asset is initially measured at cost,
which is the accumulation of costs directly incurred to perform the
stripping activity that improves access to the identified component
of ore, plus an allocation of directly attributable overhead costs.
If incidental operations are occurring at the same time as the
production stripping activity, but are not necessary for the
production stripping activity to continue as planned, these costs
are not included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping
activity asset are not separately identifiable, a relevant
production measure is used to allocate the production stripping
costs between the inventory produced and the stripping activity
asset. This production measure is calculated for the identified
component of the ore body and is used as a benchmark to identify
the extent to which the additional activity of creating a future
benefit has taken place. The Group uses the expected volume of
waste extracted compared with the actual volume for a given volume
of ore production of each component.
The stripping activity asset is accounted for as an addition to,
or an enhancement of, an existing asset, being the mine asset, and
is presented as part of 'Intangible assets' in the statement of
financial position. This forms part of the total investment
Finance costs
Finance costs of debt, including premiums payable on settlement
and direct issue costs are charged to the income statement on an
accruals basis over the term of the instrument, using the effective
interest method.
Income taxation
The taxation charge represents the sum of current tax and
deferred tax.
The tax currently payable is based on the taxable profit for the
period using the tax rates that have been enacted or substantially
enacted by the balance sheet date. Taxable profit differs from the
net profit as reported in the income statement
because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are
never taxable or deductible.
Deferred taxation
Deferred tax is recognised, using the liability method, in
respect of temporary differences between the carrying amount of the
Group's assets and liabilities and their tax base. Deferred tax
liabilities are offset against deferred tax assets within the same
taxable entity or qualifying local tax group. Any remaining
deferred tax asset is recognised only when, on the basis of all
available evidence, it can be regarded as probable that there will
be suitable taxable profits, within the same jurisdiction, in the
foreseeable future against which the deductible temporary
difference can be utilised. Deferred tax is determined using tax
rates that are expected to apply in the periods in which the asset
is realised or liability settled, based on tax rates and laws that
have been enacted or substantially enacted by the balance sheet
date. Deferred tax is recognised in the income statement, except
when the tax relates to items charged or credited directly in
equity, in which case the tax is also recognised in equity.
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 deduction, net of tax, from the proceeds.
Intangible assets
Intangible assets arose as a result of the valuation placed on
the original six Tanzanian licences acquired on the acquisition of
Edenville (Tanzania) Limited. The allocation price was based on the
price paid to acquire these the Group's licences. The licences are
amortised over the life of the production asset using rates of
depletion.
Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief executive officer.
The Board considers that the Group's project activity
constitutes one operating and reporting segment, as defined under
IFRS 8.
The total profit measures are operating profit and profit for
the year, both disclosed on the face of the combined income
statement.
3. Financial risk management
Fair value estimation
The carrying value less impairment provision of trade
receivables and payables is assumed to approximate their fair
values, due to their short-term nature. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate
that is available to the group for similar financial
instruments.
4. Critical accounting estimates and areas of judgement
The Group makes estimates and assumptions concerning the future,
which by definition will seldom result in actual results that match
the accounting estimate. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amount of assets and liabilities within the next financial year are
those in relation to:
-- the impairment of coal production assets and intangible
assets;
-- share based payments
-- Valuation of provision for restoration costs
-- Recoverability of VAT balance
-- Recoverability of Inventory
Impairment - coal production assets and intangible assets (notes
15 and 16)
The Group is required to perform an impairment review, on coal
production assets, for each CGU to which the asset relates.
Impairment review is also required to be performed on other
intangible assets when facts and circumstances suggest that the
carrying amount of the asset may exceed its recoverable amount. The
recoverable amount is based upon the Directors' judgements and are
dependent upon the ability of the Company to obtain necessary
financing to complete the development and future profitable
production or proceeds from the disposal, at which point the value
is estimated based upon the present value of the discounted future
cash flows.
In assessing whether an impairment is required for the carrying
value of an asset, its carrying value is compared with its
recoverable amount. The recoverable amount is the higher of the
asset's fair value less costs to sell and value in use. Given the
nature of the Group's activities, information on the fair value of
an asset is usually difficult to obtain unless negotiations with
potential purchasers or similar transactions are taking place.
Consequently, unless indicated otherwise, the recoverable amount
used in assessing the impairment charges described below is value
in use.
The calculation of value in use is most sensitive to the
following assumptions:
-- Production volumes
-- Sales volumes
-- Discount rates
-- Coal prices
-- Operating overheads
-- Inventory
Estimated production volumes are based on the production
capability of the plant and estimated customer demand.
The Group generally estimates value in use using a discounted
cash flow model. The future cash flows are adjusted for risks
specific to the asset and discounted using a pre-tax discount rate
of 10%. The Directors believe this rate to be appropriate as this
is in line with the borrowing rates the Group are expected to
receive if they were to obtain significant long term finance based
on discussions between the Directors and prospective parties. The
Directors acknowledge that the Group does have small short term
finance arrangements which attract a higher rate but have chosen
not to use these rates as they would not be financing the
production asset using short term borrowing facilities. These short
term loans were needed mostly for working capital needs and most
have been paid off in 2021.
The directors have assessed the value of exploration and
evaluation expenditure and development assets and intangible
assets. In their opinion there has been no impairment loss to these
intangible assets in the period, other than the amounts charged to
the income statement.
Share based payments (note 27)
The estimate of share based payments costs requires management
to select an appropriate valuation model and make decisions about
various inputs into the model including the volatility of its own
share price, the probable life of the options, the vesting date of
options where non-market performance conditions have been set and
the risk free interest rate.
Valuation of provision for restoration costs (note 15)
The Company makes full provision for the future cost of
rehabilitating mine sites and related production facilities on a
discounted basis at the time of developing the mines and installing
and using those facilities. The rehabilitation provision represents
the present value of rehabilitation costs relating to mine sites,
which are expected to be incurred in the future, which is when the
producing mine properties are expected to cease operations. These
provisions have been created based on the Company's internal
estimates and a third party estimate from an independent
consultant. Assumptions based on the current economic environment
have been made, which management believes are a reasonable basis
upon which to estimate the future liability. These estimates are
reviewed regularly to take into account any material changes to the
assumptions. However, actual rehabilitation costs will ultimately
depend upon future market prices for the necessary rehabilitation
works required that will reflect market conditions at the relevant
time. Furthermore, the timing of rehabilitation is likely to depend
on when the mines cease to produce at economically viable rates.
This, in turn, will depend upon future coal prices, which are
inherently uncertain.
Management increases reclamation costs estimates at an annual
inflation rate to the anticipated future mine closure date. This
inflation rate is based on the historical rate for the industry for
a comparable.
Recoverability of VAT receivable (note 18)
The group considers the recoverability of the VAT balance in
Tanzania to be a key area of judgement, as the VAT can only be
recovered by an offset against VAT payable on future sales.. The
directors believe that the debtor is recoverable based on their
knowledge of the market in Tanzania.
Recoverability of Inventory (Note 17)
The group considers the recoverability of the inventory to be a
key area of judgement, and this is held at its realisable value.
The directors believe the inventory to be in good condition and the
main reason why the stock has remained high in the last two years
is mainly because of the Covid-19 impact which necessitated the
closure of the mine. The mine has now fully reopened in May 2021
and the directors are taking making concerted efforts to sell this
excess stock. They have recently identified key customers and have
sold 1,000 tonnes in June 2021 with an expected commitment to
purchase at a rate of 1,200 tonnes per month thereafter. They are
optimistic that the remainder of the stock will be sold over the
next 1-3 years on the presumption that one of the key customers
will sign a long term contract. As a result of this, they have
concluded no impairment is required at this stage, based on the
directors' judgement of the local market and estimates regarding
the timeframe in which the goods can be sold.
5. Segmental information
The Board considers the business to have one reportable segment
being Coal production assets.
Other represents unallocated expenses and assets held by the
head office. Unallocated assets primarily consist of cash and cash
equivalents.
Coal Production
Assets
2021 Coal Other Total
Consolidated Income Statement GBP GBP GBP
Revenue - Tanzania 105,228 - 105,228
Cost of sales (excluding
depreciation and amortisation) (470,780) - (470,780)
Depreciation (207,604) - (207,604)
Depletion of development
assets (6,464) - (6,464)
Gross profit (579,620) - (579,620)
Administrative expenses (183,321) (646,874) (830,195)
Depreciation (45,035) (334) (45,369)
Group operating loss (807,976) (647,208) (1,455,184)
Finance income 701 701
Finance cost (5,842) (5,842)
Loss on operations before
taxation (813,818) (646,507) (1,460,325)
Income tax (526) - (526)
Loss for the year (814,344) (646,507) (1,460,851)
Coal Production
Assets
2020 Coal Other Total
Consolidated Income Statement GBP GBP GBP
Revenue - Tanzania 33,030 - 33,030
Revenue - other 822 - 822
Cost of sales (excluding
depreciation and amortisation) (349,121) - (349,121)
Depreciation (209,208) - (209,208)
Depletion of development
assets (25,547) - (25,547)
Gross profit (550,024) - (550,024)
Administrative expenses (122,780) (363,685) (486,465)
Share based payment - (50,398) (50,398)
Depreciation (42,722) (445) (43,167)
Group operating loss (715,526) (414,528) (1,130,054)
Finance income - 112 112
Finance cost (10,812) (100,691) (111,503)
Loss on operations before
taxation (726,338) (515,107) (1,241,445)
Income tax - -
Loss for the year (726,338) (515,107) (1,241,445)
By Business Segment Carrying value Additions to Total liabilities
of segment assets non-current assets
and intangibles
2021 2020 2021 2020 2021 2020
GBP GBP GBP GBP GBP GBP
Coal 6,199,083 6,498,828 17,788 335,132 548,980
Other 1,361,402 35,458 - 97,022 639,445
7,560,485 6,534,286 - 17,788 432,154 1,188,425
By Geographical
Area
GBP GBP GBP GBP GBP GBP
Africa (Tanzania) 6,199,083 6,498,828 - 17,788 335,132 548,980
Europe 1,361,402 35,458 - - 97,022 639,445
7,560,485 6,534,286 - 17,788 432,154 1,188,425
Information about major customers
Included in revenues arising from the sale of coal are revenues
which arose from sales to the Group's largest customers based in
Tanzania. No other customers contributed 10% or more to the Group's
revenue in either 2021 or 2020.
2021 2020
GBP GBP
Customer 1 28,507 31,386
Customer 2 69,886 -
98,393 31,386
6. Expenses by nature
2021 2020
GBP GBP
Staff costs 256,776 235,557
Audit fees 35,000 38,019
Office and other administrative services 109,840 70,257
AIM related costs including investor relations 77,405 3,220
Professional, legal and consultancy fees 317,131 113,110
Travel, entertaining and subsistence 10,534 7,906
Exchange gain (1,358) (10,482)
Depreciation 45,369 43,167
Provisions and expected credit losses - 1,929
Other costs 24,867 26,949
875,564 529,632
7. Auditors' remuneration
2021 2020
GBP GBP
Fees payable to the Company's auditor for the audit
of the parent Company and consolidated accounts 47,000 40,000
8. Employees
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Wages and salaries 405,452 325,009 174,000 179,250
Social security costs 40,484 20,781 13,807 -
Pensions 13,354 10,071 814 303
459,290 355,861 188,621 179,553
The average number of employees and directors during the year
was as follows:
Group Company
2021 2020 2021 2020
Administration 8 11 3 3
Mining , plant processing and security 13 29 - -
21 40 3 3
Remuneration of key management personnel
The remuneration of the directors and other key management
personnel is set out below:
2021 2020
GBP GBP
Emoluments 272,130 197,988
Compensation for loss of office - 28,000
Pensions 814 303
272,944 226,291
9. Directors' remuneration
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Emoluments 184,000 151,250 184,000 151,250
Compensation for loss of office - 28,000 - 28,000
Pensions 814 303 814 303
184,814 179,553 184,814 179,553
The highest paid director received remuneration of GBP97,500
(2020: GBP97,500).
Included in the above are accrued Director's remuneration of
GBP17,750 (2020: GBP122,750)
Directors' interest in outstanding share options per director is
disclosed in the directors' report in the Annual Report.
10. Finance income
2021 2020
GBP GBP
Interest income on short-term bank deposits 701 112
701 112
11. Finance Costs
2021 2020
GBP GBP
Interest on convertible loan notes - 87,977
Convertible loan finance costs - 12,652
Bank interest - 61
Hire purchase interest 3,450 6,423
Interest on rehabilitation provision 2,392 4,390
5,842 111,503
12. Income tax
2021 2020
GBP GBP
Current tax:
Current tax on loss for the year - -
Foreign taxation 542
Total current tax 542 -
Deferred tax
On write off/impairment on intangible assets - -
Tax charge for the year 542 -
No corporation tax charge arises in respect of the year due to
the trading losses incurred. The Group has Corporation Tax losses
available to be carried forward and used against trading profits
arising in future periods of GBP7,840,335 (2020: GBP7,313,803).
A deferred tax asset of GBP1,959,833 (2020: GBP1,389,369)
calculated at 25% (2020: 19%) has not been recognised in respect of
the tax losses carried forward due to the uncertainty that profits
will arise against which the losses can be offset.
The tax assessed for the year differs from the standard rate of
corporation tax in the UK as follows:
2021 2020
GBP GBP
Loss on ordinary activities before tax (1,460,325) (1,241,445)
Expected tax credit at standard rate
of UK Corporation Tax
19% (2020: 19%) and 30% (2020:30%) In
Tanzania (377,043) (235,875)
Disallowable expenditure 4,501 21,116
Depreciation in excess of capital allowances 79,367
Other adjustments (106,947)
Capital allowances in excess of depreciation - (310,464)
Movement in deferred tax not recognised 400,648 525,223
Tax charge for the year 526 -
On 24 May 2021, the UK Government enacted that from 1 April 2023
the corporation tax rate would increase to 25% for companies with
profits of over GBP250,000. A small profits rate will also be
introduced for companies with profits of GBP50,000 or less so that
they will continue to pay corporation tax at 19%. From this date
companies with profits between GBP50,000 and GBP250,000 will pay
tax at the main rate reduced by a marginal relief providing a
gradual increase in the effective corporation tax rate.
13. Earnings per share
The basic loss per share is calculated by dividing the loss
attributable to equity shareholders by the weighted average
number of shares in issue.
The loss attributable to equity shareholders and weighted average
number of ordinary shares for the purposes of calculating diluted
earnings per ordinary share are identical to those used for
basic earnings per ordinary share. This is because the exercise
of warrants would have the effect of reducing the loss per ordinary
share and is therefore anti-dilutive.
2021 2020
GBP GBP
Net loss for the year attributable
to ordinary shareholders (1,460,851) (1,241,445)
Weighted average number of shares
in issue 18,144,205 7,452,470
Basic and diluted loss per share (8.04p) (16.66p)
The earnings per share as at 31 December 2020 has been restated
to reflect the consolidation of shares that took place in January
2021 (see note 23).
14. Investment in subsidiaries
Shares Loans
in to
subsidiaries subsidiaries Total
Company GBP GBP GBP
Cost
At 1 January 2020 7,043,312 9,117,401 16,160,713
Additions - 400,904 400,904
Disposal
_________ _________ _________
At 31 December 2020 7,043,312 9,518,305 16,561,617
Accumulated impairment
As at 1 January 2020 - - -
Impairment - - -
_________ _________ _________
At 31 December 2020 - - -
Net Book Value
As at 31 December 2020 7,043,312 9,518,305 16,561,617
Shares Loans
in to
subsidiaries subsidiaries Total
Company GBP GBP GBP
Cost
At 1 January 2021 7,043,312 9,518,305 16,561,617
Additions - 636,035 636,035
_________ _________ _________
At 31 December 2021 7,043,312 10,154,340 17,197,652
Accumulated impairment
As at 1 January 2021 - - -
Impairment - - -
_________ _________ _________
At 31 December 2021 - - -
Net Book Value
As at 31 December 2021 7,043,312 10,154,340 17,197,652
The value of the Company's investment and any indications of
impairment is based on the prospecting and mining licences held by
its subsidiaries.
The Tanzanian licences comprise a mining licence and various
prospecting licences. The licences are, located in a region
displaying viable prospects for coal and occur in a country where
the government's policy for development of the mineral sector aims
at attracting and enabling the private sector to take the lead in
exploration mining, development, mineral beneficiation and
marketing.
During 2018 the activities of the Company's subsidiary evolved
from exploration and evaluation to development and as a result the
exploration and evaluation assets held by the Company's subsidiary
were transferred to development expenditure. The Directors carried
out an impairment review on reclassification of exploration and
evaluation assets to development assets, which covered the
Company's investments in, and loans to, its subsidiaries. Following
the impairment reviews the Directors did not consider the Company's
investments to be impaired.
In April 2019, the subsidiary moved into the production
phase.
The Directors have carried out an impairment review and consider
the value in use to be greater than the book value in respect of
The Company's investment in its subsidiary Company Edenville
International (Tanzania) Limited.
The Directors considered the recoverable amount by assessing the
value in use by considering future cash flow projections of the
revenue generated by its subsidiary through the sale of its coal
resources.
Cash flows were based on the revenue generated to date plus
expected growth from current production levels to 10,000 tons per
month in the short to medium term.
In addition, the projections include future potential revenue
generated from the Company's plans relating to the Rukwa Coal to
Power Project. It is expected that the Project will move ahead in
parallel with the transmission development which is currently in
the procurement stage and the Directors understand should be
completed sometime in 2024. There is no guarantee that the Company
will be chosen as the successful party to develop the Power
Project, and therefore there is no guarantee that revenue will be
generated from this Project. Should this be the case then the
Company would need to review its cash flow projections, and review
the carrying value of its investment in Edenville International
Tanzania Limited
However, based upon current know resources the subsidiary has
significant coal resources which based upon current projections
prepared by the Directors would be sufficient to support the book
value in the financial statements. The Directors are of the view
that this amount is adequately supported by proposed returns
generated by the Power Plant Project. The Directors have applied a
10% discount rate in their forecasts. Additional factors that may
affect these projections include the following: -
A 16% reduction in the margin per ton of coal would result in an
impairment of the Edenville International (Tanzania) Limited
investment by GBP187k.
An increase in the discount factor to 11.1% would result in an
impairment of the Edenville International (Tanzania) Limited
investment by GBP125k.
A decrease of 16% of the EBITA would result in an impairment of
the Edenville International (Tanzania) Limited investment by
GBP187k.
The mining licence is due to expire in 2026. Should the mining
licence not be renewed this would result in an impairment of
GBP14.1m.
Holdings of more than 20% :
The Company holds more than 20% of the share capital of the
following companies:
Subsidiary undertaking Country of incorporation Class Shares held
Edenville International (Seychelles)
Limited Seychelles Ordinary 100%
Edenville International (Tanzania) Tanzania Ordinary 99.75%*
Limited
Edenville Power (Tz) Limited Tanzania Ordinary 99.9%
Edenville (South Africa)
Limited England Ordinary 100%
* These shares are held by Edenville International (Seychelles) Limited.
15. Property, plant and equipment
Group Plant and Fixtures, Motor vehicles Total
machinery fittings
Coal Production and equipment
assets
GBP GBP GBP GBP GBP
Cost
As at 1 January
2020 5,317,637 1,225,972 7,253 197,196 6,748,058
Additions 17,788 - - - 17,788
Foreign exchange
adjustment (171,033) (39,191) (100) (5,806) (216,130)
As at 31 December
2020 5,164,392 1,186,781 7,153 191,390 6,549,716
Depreciation
As at 1 January
2020 83,342 482,401 6,990 89,925 662,658
Depletion/Charge
for the year 25,547 224,719 65 27,590 277,921
Foreign exchange
adjustment (2,674) (28,648) (97) (4,021) (35,440)
As at 31 December
2020 106,215 678,472 6,958 113,494 905,139
Net book value
As at 31 December
2020 5,058,177 508,309 195 77,896 5,644,577
Coal Production Fixtures,
assets Plant and fittings Motor
machinery and equipment vehicles Total
GBP GBP GBP GBP GBP
Cost
As at 1 January
2021 5,164,392 1,186,781 7,153 191,390 6,549,716
Foreign exchange
adjustment 65,902 15,050 38 2,230 83,220
As at 31 December
2021 5,230,294 1,201,831 7,191 193,620 6,632,936
Depreciation
As at 1 January
2021 106,215 678,472 6,958 113,494 905,139
Depletion/ Charge
for the year 6,464 238,444 49 19,720 264,677
Foreign exchange
adjustment 1,347 8,568 38 1,246 11,199
As at 31 December
2021 114,026 925,484 7,045 134,460 1,181,015
Net book value
As at 31 December
2021 5,116,268 276,347 146 59,160 5,451,921
Plant and machinery depreciation amounting to GBP207,604 (2020:
GBP209,208) is included within cost of sales as it relates to
mining equipment.
Company
Fixtures,
Plant and fittings Motor Vehicles
machinery and equipment Total
GBP GBP GBP GBP
Cost
As at 1 January 2020 and 31
December 2020 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2020 7,003 3,894 15,640 26,537
Charge for the year 117 64 263 444
As at 31 December 2020 7,120 3,958 15,903 26,981
Net book value
As at 31 December 2020 351 195 788 1,334
Fixtures,
Plant and fittings Motor Vehicles
machinery and equipment Total
GBP GBP GBP GBP
Cost
As at 1 January 2021 and 31
December 2021 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2021 7,120 3,958 15,903 26,981
Charge for the year 88 49 197 334
As at 31 December 2021 7,208 4,007 16,100 27,315
Net book value
As at 31 December 2021 263 146 591 1,000
16. Intangible assets
Group
Mining Licences
GBP
Cost or valuation
As at 1 January 2020 1,519,712
Foreign exchange adjustment (48,879)
At 31 December 2020 1,470,833
Accumulated depletion, amortisation
and impairment
As at 1 January 2020 1,198,344
Amortisation
Foreign exchange adjustment (38,543)
At 31 December 2020 1,159,801
Net book value
As at 31 December 2020 311,032
Mining Licences
Intangible assets arose as a result of the valuation placed on
the original six Tanzanian licences acquired on the acquisition of
Edenville (Tanzania) Limited. The allocation price was based on the
price paid to acquire these the Group's licences.
These assets are reviewed for impairment annually alongside the
coal production assets.(see note 4 for Critical accounting
estimates and judgements).
17. Inventories
Group
2021 2020
GBP GBP
ROM stockpiles 453 10,752
Fines 134,756 223,480
Washed coal 7,512 17,504
142,721 251,736
The cost of inventories recognised as an expense during the year
in was GBP158,296 (2020: GBP78,448 restated).
18. Trade and other receivables
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Other receivables 128,281 - 126,127 -
Amounts due from related parties - 91,467
VAT receivable 287,198 301,251 8,041 8,499
Prepayments - - - -
415,479 301,251 225,635 8,499
Included within VAT receivable is VAT owed to Edenville
International (Tanzania) Limited which is only recoverable against
future sales made by Edenville International (Tanzania) Limited.
The Group expects to recover the above VAT from sales of commercial
coal.
19. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes
of the cash flow statement:
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Cash at bank and in hand 1,229,801 25,690 1,226,235 25,628
20. Trade and other payables
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Trade and other payables 308,043 227,288 15,801 41,505
Amounts owed to subsidiary undertakings - 6,340 6,340
Social security costs and other
taxes - 10,279 - 10,279
Other creditors - - - 33,437
Accruals and deferred income 81,221 448,242 81,221 121,998
389,264 685,809 103,362 213,559
21. Borrowings
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
(restated)
Convertible loan notes
Repayable within 1 year - 416,142 - 416,142
Repayable within 2 to 5 years - 16,084 - 16,084
- 432,226 - 432,226
Hire purchase finance
Repayable within 1 year 18,258 24,689 - -
Repayable within 2 to 5 years - 23,789 - -
18,258 48,478 - -
Total
Repayable within 1 year 18,258 440,831 - 416,142
Repayable within 2 to 5 years - 39,873 - 16,084
18,258 480,704 - 432,226
Convertible loan
In November 2018 $750,000 conditionally convertible loan notes
were issued: the face value of these convertible securities is
$900,000. A commitment fee of GBP37,500, which has been offset
against the proceeds of issue of the convertible loan notes, was
payable by the Company as well as issuing share options over
99,568,966 ordinary shares exercisable for 4 years at a conversion
price on 0.29p per share. The Company is required to make
repayments of $45,000 over 20 months commencing in February 2019.
If repayments are made in cash, then an additional 3% is payable on
the $45,000. The Company may elect to make the repayment in its
shares priced at 90% of the average five day Volume Weighted
Average Price (VWAP) chosen by the investor during the 20 days
before issuance, or a combination of both.
The Company has the option to buy back the entire outstanding
face value at any time at a premium of 5%. If this right is
exercised the investor has an option to convert 25% of the face
value into shares at the lesser of the repayment price or 0.29p per
share. The repayment price being 130% of the 10-day VWAP
immediately prior to the Company entering the Convertible
Agreement.
In addition to the above the investor was offered 36,000,000
collateral shares which were issued by the Company on 20 February
2019.
In April 2019, the Company agreed a repayment holiday up to
September 2019 in respect of the convertible loan notes. As a
condition of granting the repayment holiday the outstanding balance
at the time. $855,000, was increased by 15% to $983,250
On 15 January 2021 the Company also agreed repayment terms with
Lind Partners LLC whereby it agreed to repay 20% of the outstanding
debt by 31 January 2021 with the balance to be paid in monthly
instalments from the end of April 2021. Lind Partners LLC also
agreed that no further interest is to be charged on the outstanding
balance.
As announced on 22 June 2021, following two fund raises in
January and May 2021, Edenville was able to pay off all outstanding
obligations to Lind.
22. Environmental rehabilitation liability
Group
2021 2020
GBP GBP
At 1 January 2020 21,912 -
Additions - 17,784
Interest 2,392 4,389
Foreign exchange movement 318 (261)
24,623 21,912
The group makes full provision for the future cost of
rehabilitating mine sites and related production facilities on a
discounted basis at the time of developing the mines and installing
and using those facilities. The rehabilitation provision represents
the present value of rehabilitation costs relating to mine sites
which are expected to be incurred in the future, which is when the
producing mine properties are expected to cease operations. Those
provisions have been created based on the Company's internal
estimates. Assumptions based on the current economic environment
have been made, which management believes are a reasonable basis
upon which to estimate the future liability. These estimates are
reviewed regularly to take into account any material changes to the
assumptions. However actual rehabilitation costs will ultimately
depend upon future market prices for the necessary rehabilitation
costs will ultimately depend upon future market prices for the
necessary rehabilitation works required that will reflect market
conditions at the relevant time. Furthermore, the timing of
rehabilitation is likely to depend on when the mines cease to
produce at economically viable rates. This, in turn will depend
upon future coal prices, which inherently uncertain.
23. Share capital
Group and Company
No GBP No GBP GBP
Ordinary shares Ordinary Deferred Deferred Total
of 0.02p each shares shares of shares share capital
of 0.02p 0.001p each of 0.001p
each each
Issued and fully paid
At 1 January 2020 5,012,241,761 1,002,450 241,248,512,346 2,412,485 3,414,935
On 9 January 2020 Ordinary
shares were issued
at 0.05p 50,000,000 10,000 - - 10,000
On 21 January 2020
Ordinary shares were
issue at 0.04p 1,750,000,000 350,000 - - 350,000
On 8 June 2020 Ordinary
shares were issued
at 0.04p 1,250,000,000 250,000 - - 250,000
On 14 August 2020 Ordinary
shares were issued
at 0.06p 83,333,333 16,666 - - 16,666
As at 31 December 2020 8,145,575,094 1,629,116 241,248,512,346 2,412,485 4,041,601
================ ========== ================ =========== ===============
No No GBP No GBP GBP
Ordinary Ordinary Ordinary Deferred Deferred Total
shares shares of shares shares of shares share
of 1p each 0.02p each of 0.02p/1p 0.001p each of 0.001p capital
each each
Issued and fully
paid
At 1 January 2021 - 8,145,575,094 1,629,116 241,248,512,346 2,412,485 4,041,601
On 5 January the
company consolidated
and then subdivided
the brought forward
shares* 8,145,575 (8,145,575,094) (1,547,659) 154,765,925,000 1,547,659 -
On 21 January
the company issued
3,600,000 1p shares
at 0.25p 3,600,000 - 36,000 - - 36,000
On 26 May the
company issued
9,900,000 1p shares
at 0.25p 9,900,000 - 99,000 - - 99,000
As at 31 December
2021 21,645,575 - 216,457 396,014,437,346 3,960,144 4,176,601
============ ================ ============= ================ =========== ==========
*On 5 January 2021 the Company reduced the number of issued
ordinary shares of GBP0.0002 each in the Company by a multiple of
1,000 (the "Consolidation"), Following the Consolidation the
Company sub-divided each consolidated ordinary share of GBP0.20
each in the capital of the Company, into 1 ordinary share of
GBP0.01 each in the capital of the Company and 19,000 new deferred
shares of GBP0.00001 each in the capital of the Company.
The deferred shares have no voting rights, dividend rights or
any rights of redemption. On return of assets on winding up the
holders are entitled to repayment of amounts paid up after
repayment to ordinary share holders.
24. Capital and reserves attributable to shareholders
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Share capital 4,176,601 4,041,601 4,176,601 4,041,601
Share premium 22,254,317 19,390,849 22,254,317 19,390,849
Other reserves 1,034,757 795,304 453,614 301,174
Retained deficit (20,325,577) (18,866,991) (8,337,372) (7,782,331)
Total equity 7,140,098 5,360,763 18,547,160 15,951,293
============= ============= ============ ============
There have been no significant changes to the Group's capital
management objectives or what is considered to be capital during
the year.
25. Capital management policy
The Group's policy on capital management is to maintain a low
level of gearing. The group funds its operation primarily through
equity funding.
The Group defines the capital it manages as equity shareholders'
funds less cash and cash equivalents.
The Group objectives when managing its capital are:
-- To safeguard the group's ability to continue as a going
concern.
-- To provide adequate resources to fund its exploration,
development and production activities with a view to
providing returns to its investors.
-- To maintain sufficient financial resources to mitigate
against risk and unforeseen events.
The group's cash reserves are reported to the board and closely
monitored against the planned work program and annual budget. Where
additional cash resources are required the following factors are
considered:
-- the size and nature of the requirement.
-- preferred sources of finance.
-- market conditions.
-- opportunities to collaborate with third parties to reduce
the cash requirement.
26. Financial instruments
The Board of Directors determine, as required, the degree to
which it is appropriate to use financial instruments to mitigate
risk with the main risk affecting such instruments being foreign
exchange risk, which is discussed below.
Group Company
Categories of financial instruments 2021 2020 2021 2020
GBP GBP GBP GBP
Receivables at amortised cost
including cash and cash equivalents:
Investments and loans to subsidiaries - - 10,154,340 9,518,305
Cash and cash equivalents 1,229,801 25,690 1,226,235 25,628
Trade and other receivables 415,479 301,251 225,635 8,498
---------- ---------- ----------- -----------
Total 1,645,280 326,941 11,606,210 9,552,431
---------- ---------- ----------- -----------
Financial liabilities
Financial liabilities at amortised
cost:
Trade and other payables 389,264 675,330 103,362 203,280
Convertible loan notes - 432,226 - 432,226
---------- ---------- ----------- -----------
389,264 1,107,566 103,362 635,506
---------- ---------- ----------- -----------
Net 1,256,016 (780,625) 18,546,160 15,960,237
========== ========== =========== ===========
Cash and cash equivalents
This comprises cash held by the Group and short-term deposits.
The carrying amount of these assets approximates to their fair
value.
General risk management principles
The Directors have an overall responsibility for the
establishment of the Group's risk management framework. A formal
risk assessment and management framework for assessing, monitoring
and managing the strategic, operational and financial risks of the
Group is in place to ensure appropriate risk management of its
operations.
The following represent the key financial risks that the Group
faces:
Interest rate risk
The Group only interest-bearing asset is cash invested on a
short-term basis which attracts interest at the bank's variable
interest rate.
In 2020, the Group was exposed to interest rate risk through its
convertible loan notes, its only interest-bearing liabilities. The
level of interest payable will vary depending on whether the
repayments are made with shares or in cash. The effective interest
rate per month is 20.78%. If repayments are made in cash then the
monthly repayments increase by 3%. These convertible loan notes
were repaid during the year.
Credit risk
Credit risk arises principally from the Group's trade
receivables and investments in cash deposits. It is the risk that
the counterparty fails to discharge its obligation in respect of
the instrument.
VAT receivable is owed to Edenville International (Tanzania)
Limited which is only recoverable against future sales made by
Edenville International (Tanzania) Limited. The Group expects to
recover the above VAT from sales of commercial coal.
The Group holds its cash balances with reputable financial
institutions with strong credit ratings. There were no amounts past
due at the balance sheet date.
The maximum exposure to credit risk in respect of the above at
31 December 2020 is the carrying value of financial assets recorded
in the financial statements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as and when they fall due.
Liquidity risk is managed through an assessment of short, medium
and long-term cash flow forecasts to ensure the adequacy of working
capital.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances
to meet expected requirements for a period of one year.
Currency Risk
The Group is exposed to currency risk as the assets (see note 5)
of its subsidiaries are denominated in US Dollars. The Group's
policy is, where possible, to allow group entities to settle
liabilities denominated in their functional currency (primarily US
Dollars) with cash. The Company transfers amounts in sterling or US
dollars to its subsidiaries to fund its operations. Where this is
not possible the parent Company settles the liability on behalf of
its subsidiaries and will therefore be exposed to currency
risk.
The Group has no formal policy is respect of foreign exchange
risk; however, it reviews its currency exposure on a regular basis.
Currency exposures relating to monetary assets held by foreign
operations are included in the Group's income statement. The Group
also manages its currency exposure by retaining the majority of its
cash balances in sterling, being a relatively stable currency.
The effect of a 10% rise or fall in the US dollar/Sterling
exchange rate would result in an increase or decrease in the net
assets of the group of GBP650,958.
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could
be exchanged in an arm's length transaction between informed and
willing parties, other than a forced or liquidation sale and
excludes accrued interest. Where available, market values have been
used to determine fair values. Where market values are not
available, fair values have been calculated by discounting expected
cash flows at prevailing interest rates and by applying year end
exchange rates.
The Directors consider that there is no significant difference
between the book value and fair value of the Group's financial
assets and liabilities.
The tables below summarise the maturity profit of the combined
Group's non-derivative financial liabilities at each financial year
end based on contractual undiscounted payments.
Group
2020
Less than 1- 2 years 2-5 years
1 year
Trade payables 227,288 - -
Other payables 10,279 - -
Accruals 448,242 - -
Borrowings 440,831 39,873 -
---------- ------------------ ----------
1,126,640 39,873 -
========== ================== ==========
2021
Less than 1- 2 years 2-5 years
1 year
Trade payables 308,043 - -
Accruals 81,221 - -
Borrowings 18,258 - -
========== ================ ==========
407,522 - -
========== ================ ==========
Company
2020
Less than 1-2 years 2-5 years
1 year
Convertible loan notes (current
and non - current) 416,142 16,084 -
Trade payables 41,505 - -
Other payables 39,777 - -
Accruals 121,998 - -
---------- ------------------ ----------
619,422 16,084 -
========== ================== ==========
2021
Less than 1-2 years 2-5 years
1 year
Convertible loan notes (current
and non - current) - - -
Trade payables 15,801 - -
Other payables 6,340 - -
Accruals 81,221 - -
---------- --------------- ----------
103,362 - -
========== =============== ==========
27. Equity-settled share-based payments
The following options over ordinary shares have been granted by
the Company:
Number of options
Grant Date Expiry date Exercise As at Granted Lapsed As at
price* 1 January 31 December
2021 2021
28 March 27 March
2017 2022** GBP10.80 23,333 - - 23,333
7 November 6 November
2018 2022 GBP2.90 99,569 - - 99,569
9 May 2019 8 May 2023 GBP2.60 100,000 - - 100,000
3 April 2020 2 April 2025 GBP3.00 270,000 - - 270,000
----------- -------- ------- -------------
492,902 - - 492,902
=========== ======== ======= =============
The following warrants over ordinary shares have been granted by
the Company:
*The brought forward outstanding share options have been divided
a factor of 1,000 and the related exercise price has been
multiplied by 1,000 to account for the share consolidation that
took place on 5 January 2021 (see note 23)
** These options were not exercised and have expired post year
end.
At the date of grant, the options were valued using the
Black-Scholes option pricing model. The fair value per option
granted and the assumptions used in the calculation were as
follows:
28. Equity-settled share-based payments (continued)
Date of grant 28 March 5 November 26 April 17 April
2017 2018 2019 2020
Expected volatility 131% 70% 101% 72%
Expected life 3 years 4 years 3.5 years 3 years
Risk-free interest
rate 0.37% 0.96% 0.75% 0.11%
Expected dividend - - - -
yield
Possibility of ceasing - - - -
employment before
vesting
Fair value per option 0.56p/0.42p/0.28p 0.08p 0.02p 0.02p
Volatility was determined by reference to the standard deviation
of daily share prices for one year prior to the date of grant.
The charge to the income statement for share-based payments for
the year ended 31 December 2020 was GBPNil (2020: GBP50,398).
On 6 June 2020 85,900,800 warrants were issued to settle
liabilities of GBP51,540.
The following warrants over ordinary shares have been granted by
the Company:
Number of Warrants
Grant Date Expiry date Exercise As at Granted Exercised As at 31
price 1 January December
2021 2021
2 May 2019 31 May 2022** 20p* 127,500 - - 127,500
23 January 22
2020 January 2022** 60p* 791,667 - - 791,667
6 June 2020 5 June 2023 40p* 125,000 - - 125,000
6 June 2020 5 June 2023 60p* 85,901 - - 85,901
14 January 13 January
2021 2024 25p - 180,000 - 180,000
26 May 2021 25 May 2024 25p - 9,900,000 - 9,900,000
26 May 2021 25 May 2024 25p - 495,000 - 495,000
26 May 2021 25 May 2024 35p - 117,459 - 117,459
----------- ----------- ---------- -----------
1,130,068 10,692,459 - 11,822,526
=========== =========== ========== ===========
*The brought forward outstanding share options have been divided
a factor of 1,000 and the related exercise price has been
multiplied by 1,000 to account for the share consolidation that
took place on 5 January 2021 (see note 23).
** These warrants were not exercised and have expired post year
end.
At the date of grant, those warrants that came under the scope
of IFRS 2 Share based payment were valued using the Black-Scholes
option pricing model. The fair value per option granted and the
assumptions used in the calculation were as follows:
28. Equity-settled share-based payments (continued)
Date of grant 14 January 26 May 2021
2021
Expected volatility 81% 69%
Expected life 3 years 3 years
Risk-free interest rate (0.06)% 0.14%
Expected dividend yield - -
Possibility of ceasing employment before vesting - -
Fair value per option GBP0.2241p GBP0.1571/GBP0.1892
Volatility was determined by reference to the standard deviation
of daily share prices for one year prior to the date of grant.
The charge to GBP152,440 was made against share premium in
respect of share issue costs. (2020: GBPNil).
Movements in the number of options outstanding and their related
weighted average exercise prices are as follows:
2021 2020
Number of Weighted Number of Weighted average
options average exercise options exercise price
price per per share
share pence
pence
At 1 January 492,901 327 240,574 46
Granted - - 270,000 30
Cancelled - - (17,672) 1750
At 31 December 492,901 327 492,902 327
Exercisable at
year end 482,235 482,235
The weighted average remaining contractual life of options as at
31 December 2021 was 2.15 years (2020: 3.15 years).
Warrants
Movements in the number of warrants outstanding and their
related weighted average exercise prices are as follows:
2021 2020
Number of Weighted average Number of Weighted average
options exercise price options exercise price
per share per share
pence pence
At 1 January 1,130,067 53.27 127,500 20.00
Granted 10,692,459 25.11 1,085,900 60.00
Exercised - - (83,333) 60.22
At 31 December 11,822,526 27.80 1,130,067 53.27
The 2020 outstanding warrants have been divided a factor of
1,000 and the related exercise price has been multiplied by 1,000
to account for the share consolidation that took place on 5 January
2021 (see note 23)
The weighted average remaining contractual life of warrants as
at 31 December 2021 was 2.20 years (2020: 1.36 years).
28. Contingent liabilities
Edenville International (Tanzania) Limited has a dispute with a
third party and arises from an Acquisition and Option Agreement
signed in August 2010 (and its variation made in 2015)
("Agreement"). The third party is seeking financial compensation
and other costs in addition to a dispute over certain mining
licenses granted in the name of Edenville International (Tanzania)
Limited. Further to the Company announcements on 18 and 31 May 2022
that Upendo Group Ltd.'s current 10% economic interest in the joint
venture, which holds the licences governing the Rukwa Project, had
been transferred to a 10% direct holding on the principal
production licence. The Company has sought legal advice and has
been advised that the variation has been undertaken illegally and
that the holding should be reversed by the Government, This
reversal has been sought. The Company will provide a further update
as appropriate.
29. Reserves
The following describes the nature and purpose of each
reserve:
Share Capital represents the nominal value of equity shares
Share Premium amount subscribed for share capital in excess
of the nominal value
Share Option Reserve fair value of the employee and key personnel equity
settled share option scheme and broker warrants
as accrued at the balance sheet date.
Retained Earnings cumulative net gains and losses less distributions
made
30. Related Party Transactions
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling activities
of the Company, and are all directors of the Company. For details
of their compensation please refer to the Remuneration report.
During the year the Company paid GBP636,035 (2020: GBP400,904)
to or on behalf of its wholly owned subsidiary, Edenville
International (Tanzania) Limited. The amount due from Edenville
International (Tanzania) Limited at year end was GBP10,154,340
(2020: GBP9,518,305). This amount has been included within loans to
subsidiaries. The company also invoiced Edenville International
(Tanzania) Limited GBP90,000 (2020: Nil) in respect of management
fees. This remained outstanding at the year end.
At the year end the Company was owed GBP3,712 (2020: GBP3,712)
by its subsidiary Edenville International (Seychelles) Limited.
At the year end the Company was owed GBP6,340 (2020: GBP6,340)
by its subsidiary Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was
owed $41,677 (2020: $41,677) by Edenville Power Tz Limited and
$9,517 (2020: $9,517) was owed to JICL Consultants.
31. Events after the reporting date
Subsequent to the year end, the Directors confirmed their
intention to convert the loan of GBP10,154,340 between the Company
and its subsidiary into equity. This process will commence soon and
it is anticipated that the conversion will be completed before 31
December 2022.
On 3 February 2022 we announced that the Company's subsidiary
Edenville International (Tanzania) Limited had entered into a
contract with Nextgen Coalmine Limited ("Nextgen") for the
operation of the Company's Rukwa Coal Project. This superseded the
Coal Mining Agreement with Infrastructure and Logistics Tanzania
Limited and the Sales and Marketing Agreement with MarTek Global
FZ-LLC, announced on 8 June 2020 and 26 August 2020 respectively.
These agreements were terminated by Edenville due to lack of
progress on implementation.
Subsequent to entering into the agreement with NextGen both the
international and domestic coal price increased significantly. This
coincided with heightened interest from potential customers to
enter into offtake agreements for coal from Rukwa. Additionally,
the implementation of the coal mining agreement with Nextgen was,
for various reasons, problematic, resulting in very poor production
figures over the period from February to May 2022 and no material
revenue for the Company.
The lack of progress by Nextgen culminated in the announcement
on 31 May 2022 that the Company had reached an agreement with
NextGen to terminate the contract. Following the termination of the
contract all mining equipment has been brought back into service by
Edenville, whilst an additional pre-strip excavator has been added
to the fleet. Up to three additional trucks have been sourced to
rapidly scale production. Our initial goal is to satisfy existing
demand from local customers of 1,500 tonnes of washed lump coal
product and 500 tonnes of coal fines in the immediate future,
targeting sales of 5,000 tonnes per month of washed coal late in Q3
2022, with coal fines sales also expected to continue and possibly
expand. During the first half of 2022, 9,466 tonnes of ROM coal has
been mined.
We believes there is sufficient demand based on the Company's
order book and recent discussions with potential customers to sell
any coal that is produced at Rukwa. The Company is also exploring
the potential of exporting its coal for the first time, given
margins would be expected to be even greater.
Much of 2021 and the first half of 2022 was spent pursuing
reverse takeover and other opportunities to add assets to the
Company. During this time the Company focused on reducing cash burn
on its Tanzanian project whilst it has explored these potential new
projects. One potential transaction progressed significantly,
however was ultimately terminated by mutual consent. As part of the
termination it was agreed that the transaction costs incurred by
the Company would be re-imbursed in full by the potential take-over
target.
Further to the Company announcements on 18 and 31 May 2022 that
Upendo Group Ltd.'s current 10% economic interest in the joint
venture, which holds the licences governing the Rukwa Project, had
been transferred to a 10% direct holding on the principal
production licence. The Company has sought legal advice and has
been advised that the variation has been undertaken illegally and
that the holding should be reversed by the Government, this
reversal has been sought. The Company will provide a further update
as appropriate.
32. Commitments
License commitments
Edenville owns a coal mining exploration licences in Tanzania.
These licences includes commitments to pay annual licence fees and
minimum spend requirements.
As at 31 December 2021 these are as follows:
Group 2021 2020
GBP GBP
------- -------
Not later than one year 21,993 23,089
Later than one year and no later than five years 65,979 72,619
------- -------
Total 87,972 95,708
======= =======
33. Ultimate Controlling Party
The Group considers that there is no ultimate controlling
party.
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