TIDMKAT
RNS Number : 8824Z
Katoro Gold PLC
22 May 2019
Katoro Gold plc (Incorporated in England and Wales)
(Registration Number: 9306219)
Share code on AIM: KAT
ISIN: GB00BSNBL022
("Katoro" or "the Company")
Dated: 22 May 2019
Katoro Gold PLC ('Katoro' or the 'Company')
Audited Financial Results for Year Ended 31 December 2018
Katoro Gold PLC (AIM: KAT), the Tanzanian focused exploration
and development company, is pleased to announce its audited annual
financial results for the year ended 31 December 2018. The
Company's annual report and accounts will shortly be available on
its website and will be posted to shareholders, along with the
Notice of AGM, in due course. A further announcement will be made
at that time.
Overview
* Completed the acquisition of the highly prospective
Haneti Nickel Project ("Haneti") in Tanzania from
majority shareholder, Kibo Energy PLC
* Completed all technical aspects of the
pre-feasibility study for the Imweru Gold Project and
continuing engagement with the Tanzanian Ministry of
Minerals to determine next steps for potential
development of the project
* Ongoing assessment of the economic potential of the
Lubando Gold Project
* Raised GBP325,000 (before expenses) via a placing
with new and existing shareholders to finance the
continued development of the Company's project
portfolio
* Post period end, entered into an investment and
option agreement with African Battery Metals PLC
("ABM") enabling ABM to acquire up to a 35% interest
in Haneti for GBP125,000 aggregate consideration
o On 15 May 2019, ABM exercised its option to acquire a 25%
interest in Haneti and a 5.96% interest in Katoro for GBP100,000
aggregate consideration
For further information please visit www.katorogold.com or
contact:
Louis Coetzee louisc@katorogold.com Katoro Gold plc Executive Chairman
Richard Tulloch +44 (0) 20 7409 Strand Hanson Limited Nominated Adviser
Ritchie Balmer 3494
Georgia Langoulant
Ben Tadd +44 (0) 20 3700 SVS Securities Broker
Tom Curran 0093
Isabel de Salis +44 (0) 20 7236 St Brides Partners Investor and Media
Gaby Jenner 1177 Ltd Relations Adviser
This announcement contains inside information as stipulated
under the Market Abuse Regulations (EU) no. 596/2014.
Chairman's Statement
2018 saw Katoro advance work at its Imweru gold project in
Tanzania and broaden its project portfolio with the acquisition of
a highly prospective nickel project, Haneti, also in Tanzania, to
deliver on its commodity diversification strategy. We are
enthusiastic about advancing the work programme at Haneti and look
forward to demonstrating its expected economic and strategic value
over the coming months.
Imweru Gold Project, Tanzania
Located in the Lake Victoria Goldfields region of northern
Tanzania, Imweru has a total JORC Mineral Resource of 11.607 Mt at
grade of 1.38 g/t for a Mineral Resource of 515,110 oz Au at a
mineral resource pay limit of 0.4 g/t for the open-pit material and
1.3 g/t for the underground material. Crucially, we believe that
there is significant potential to enhance this further, especially
considering that exploration work to date has only covered 50% of
the project area.
During the year, our focus was on completing all technical
aspects of the pre-feasibility study ("PFS") at the project, which
we have done. However, due to changes in the Tanzanian mining
legislation and associated mining regulations we were then
compelled to temporarily suspend completion of the other elements
of the PFS to conduct further assessments to determine the extent
to which the new legislation and regulations could impact the
viability of the project. Having completed this assessment, we
concluded that there was still good upside exploration and
development potential for the further development in time of the
project. We are continuing our engagement with the Tanzanian
Ministry of Minerals to determine the next steps with regards to
the project's development.
Lubando Gold Project, Tanzania
We are continuing to assess the economic potential of our second
gold project, Lubando, also located in the Lake Victoria Goldfields
region of northern Tanzania, comprising prospecting licence
PL6248/2009. The project has an established Mineral Resource of
6.78 Mt at grade of 1.10 g/t for 239,870 oz Au at a pay limit of
0.4 g/t to a depth of 200 m and 1.3 g/t below the 200 m depth
cut-off. At present, this project remains on hold as we focus our
attention on the potential development of the Imweru Project and
the Haneti Nickel Project (as described above and below).
Haneti Nickel Project, Tanzania
As part of our strategy to diversify our portfolio, in November
2018, we completed the all-share acquisition of Kibo Nickel Limited
and its wholly owned subsidiary, Eagle Exploration Limited, from
the Company's majority shareholder, Kibo Energy plc, which was the
previous 100% owner of the polymetallic Haneti Nickel Project in
Tanzania ("Haneti Project") or ("Haneti"). We believe this to be an
exciting opportunity for Katoro, given nickel's notable role in the
rapidly growing electric vehicle battery market.
The 5,000 sq. km polymetallic Haneti Project is a highly
prospective, high-grade nickel sulphide asset. Previous work,
totalling approximately US$1.5 million, undertaken by Kibo Energy
PLC has identified grades of up to 13.59% nickel with additional
gold, cobalt, platinum credits and some significant lithium
anomalies. Additionally, independent work, undertaken by Western
Geophysics Pty prior to acquisition, underlines the potential of
Haneti to host a substantial nickel sulphide deposit.
On completing the acquisition, we hit the ground running and
immediately commenced a review and analysis of all historic work
completed on the project, which has led us to believe that Haneti
could host a chonolith type nickel sulphide deposit. Based on this
review, we identified several high priority exploration targets
including Mihanza Hill and are now advancing our 2019 work
programme to ascertain the existence of disseminated or massive
sulphide mineralisation at these targets. Using a variety of
exploration techniques, the programme will seek to define a future
drilling programme. To this end, we have completed a soil sampling
programme of 1,500 samples, which were submitted for independent
laboratory analysis, and which delivered results reconfirming, and
extending the strike length, of the previously identified high
priority ultramafic exploration targets, as well as identifying an
additional ultramafic target, previously unknown to the
Company.
Most recently, we entered into an agreement with the AIM quoted
African Battery Metals PLC ("ABM") through which they are able to
acquire up to a 35% interest in Haneti. This has formed the
foundation for a strategic partnership with ABM, that boasts a
highly experienced leadership team, as we continue to realise the
full potential of Haneti and develop in a considered but efficient
manner. Pursuant to the agreement, and following the recent
exercise of the option, ABM has already invested GBP100,000 to
acquire 10 million ordinary shares in the Company, 10 million
warrants and a 25% interest in Haneti, with the option to invest a
further GBP25,000 to acquire a further 10% interest in Haneti. We
are very pleased that ABM are now our partner in the Haneti
Project, as we seek to advance the project for the benefit of all
stakeholders. Under the agreement, monies received from ABM must be
allocated to the maintenance, exploration and development of Haneti
and ABM will also now be required to fund its 25% share of the
Haneti Project's costs, or its interest will be diluted in
accordance with standard industry fund or dilute provisions.
Financial Review
The result for the year amounted to a loss of GBP492,275 for the
year ended 31 December 2018 (31 December 2017: Loss
GBP1,903,676).
The Group currently generates no revenue and had net assets of
GBP446,732 (GBP391,374) as at 31 December 2018.
The Directors have reviewed budgets, projected cash flows and
other relevant information, and on the basis of this review and the
below, they are confident that the Company and the Group will have
adequate financial resources to continue in operational existence
for the foreseeable future.
Following receipt of the further monies from ABM, as detailed in
the Chairman's Statement, the Group has a cash balance of
approximately GBP248,000. Following receipt of these funds, the
Company has sufficient funds to complete the current proposed work
programme on the Haneti Project.
In the event that the Company is not able to raise further
funding, and before any mitigating actions are taken, the Company
has sufficient funds for its present working capital requirements
through to the end of September 2019. The Directors though continue
to review the Group's options to secure additional funding for its
general working capital requirements, alongside its ongoing review
of potential acquisition targets and corporate development needs.
The Directors are confident in this light that such funding will be
available, although there is no guarantee as to the terms of such
funding or that such funding will be available. In addition, any
equity funding may be subject to shareholder approvals in line with
legal and regulatory requirements as appropriate. As a result, the
Directors continue to monitor and manage the Company's cash and
overheads carefully in the best interests of its shareholders.
Whilst the Directors continue to consider it appropriate to
prepare the financial statements on a going concern basis the above
constitutes a material uncertainty that shareholders should be
aware of.
Outlook
Looking ahead, I am particularly excited about Haneti's
potential, which has multiple value upside triggers ahead and I
look forward to keeping shareholders updated on our progress in
this regard. We are also in the process of reviewing and assessing
prospective new projects as we advance our strategy of diversifying
Katoro's portfolio to increase our exposure to new commodities and
geographies.
Finally, I would like to thank our shareholders, management,
employees and advisors for their support over the course of the
year and I look forward to providing further updates on our
progress going forward.
Louis Coetzee
Executive Chairman
22 May 2019
Strategic Report
The Board of Directors present their Strategic report together
with the audited annual financial statements for the year ended 31
December 2018 of Katoro Gold PLC ("the Company") and its
subsidiaries (collectively "the Group").
Principal activities
The principal activity of the Group is gold and nickel focussed
exploration activities in Tanzania.
Review of business in the year
The Group is in its early stage of development and details of
the operational activities of the Group are included in the
Chairman's statement.
During the year to 31 December 2018 the Company successfully
concluded the all-share acquisition of Kibo Nickel Limited and its
wholly owned subsidiary, Eagle Exploration Limited, from the
Company's majority shareholder, Kibo Energy PLC, which was the
previous 100% owner of the polymetallic Haneti Nickel Project in
Tanzania. Additionally, the Company has raised GBP325,000 via a
placing of 25,000,000 new ordinary shares of GBP0.01 each in the
Company at a price of 1.30 pence.
Financial activities
During the year to 31 December 2018 and following the successful
completion of the acquisition of Kibo Nickel Limited, the Group
used existing cash resources and the proceeds from the GBP325,000
placing to continue to evaluate the Imweru Project, and to develop
an initial work programme to evaluate the Haneti Project and
incurred expenditure of GBP77,740.
Description 31 December 2018
Exploration expenditure GBP77,740
Cash balance held GBP412,731
The result for the year ended 31 December 2018 amounted to a
loss of GBP492,275 (31 December 2017: Loss GBP1,903,676). Following
receipt of the further monies from ABM, the Group has a cash
balance of approximately GBP248,000.
Key performance indicators
The Group is in its early stage of development and since its
admission to AIM in May 2017, the Group has been focussed on
exploration activities in Tanzania. The Group is currently in the
evaluation phase and the key business objective is to complete this
phase and move to development. Details of the expenditure incurred
during 2018 are included above and related predominantly to work
undertaken at the Imweru Project. Management do not consider there
to be any KPI's at this stage other than the result for the period,
which is included in the statement of comprehensive income.
Principal Risks and Uncertainties
The realisation of exploration and evaluation assets is
dependent on the discovery and successful development of economic
mineral reserves and is subject to a number of significant
potential risks summarised as follows, and described further
below:
-- Financial instrument & Foreign exchange risk;
-- Strategic risk;
-- Funding risk;
-- Commercial risk;
-- Operational risk;
-- Speculative Nature of Mineral Exploration and Development;
-- Political Stability; and
-- Foreign investment risks including increases in taxes,
royalties and renegotiation of contracts.
Financial instrument and foreign exchange risk
The Company and Group are exposed to risks arising from
financial instruments held and foreign exchange transactions
entered into throughout the period. These are discussed in Note 16
to the Annual Financial Statements.
Strategic risk
Significant and increasing competition exists for mineral
acquisition opportunities throughout the world. As a result of this
competition, the Group may be unable to acquire rights to exploit
additional attractive mining properties on terms it considers
acceptable. Accordingly, there can be no assurance that the Group
will acquire any interest in additional operations that would yield
reserves or result in commercial mining operations. The Company
expects to undertake sufficient due diligence where warranted to
help ensure opportunities are subjected to proper evaluation.
Funding risk
In the past the Group has raised funds via equity contributions
from new and existing shareholders, thereby ensuring the Group
remains a going concern until such time that revenues are earned
through the sale or development and mining of a mineral deposit.
There can be no assurance that such funds will continue to be
available on reasonable terms, or at all in future. The Directors
regularly review cash flow requirements to ensure the Group can
meet financial obligations as and when they fall due.
The Group currently generates no revenue and had net assets of
GBP446,732 (GBP391,374) as at 31 December 2018.
The Directors have reviewed budgets, projected cash flows and
other relevant information, and on the basis of this review and the
below, they are confident that the Company and the Group will have
adequate financial resources to continue in operational existence
for the foreseeable future.
Following receipt of the further monies from ABM, as detailed in
the Chairman's Statement, the Group has a cash balance of
approximately GBP248,000. Following receipt of these funds, the
Company has sufficient funds to complete the current proposed work
programme on the Haneti Project.
In the event that the Company is not able to raise further
funding, and before any mitigating actions are taken, the Company
has sufficient funds for its present working capital requirements
through to the end of September 2019. The Directors though continue
to review the Group's options to secure additional funding for its
general working capital requirements, alongside its ongoing review
of potential acquisition targets and corporate development needs.
The Directors are confident in this light that such funding will be
available, although there is no guarantee as to the terms of such
funding or that such funding will be available. In addition, any
equity funding may be subject to shareholder approvals in line with
legal and regulatory requirements as appropriate. As a result, the
Directors continue to monitor and manage the Company's cash and
overheads carefully in the best interests of its shareholders.
Whilst the Directors continue to consider it appropriate to
prepare the financial statements on a going concern basis the above
constitutes a material uncertainty that shareholders should be
aware of.
Commercial risk
The mining industry is competitive and there is no assurance
that, even if commercial quantities of minerals are discovered, a
profitable market will exist for the sale of such minerals. There
can be no assurance that the quality of the minerals will be such
that the Group properties can be mined at a profit. Factors beyond
the control of the Group may affect the marketability of any
minerals discovered. Mineral prices are subject to volatile price
changes from a variety of factors including international economic
and political trends, expectations of inflation, global and
regional demand, currency exchange fluctuations, interest rates and
global or regional consumption patterns, speculative activities and
increased production due to improved mining and production methods.
Ultimately, the Group expects that prior to a development decision,
a project would be the subject of a feasibility analysis to ensure
there exists an appropriate level of confidence in its economic
viability.
Operational risk
Mining operations are subject to hazards normally encountered in
exploration, development and production. These include unexpected
geological formations, rock falls, flooding, dam wall failure and
other incidents or conditions which could result in damage to plant
or equipment or the environment and which could impact any future
production throughout. Although it is intended to take adequate
precautions to minimise risk, there is a possibility of a material
adverse impact on the Group's operations and its financial results.
The Company will develop and maintain policies appropriate to the
stage of development of its various projects.
Staffing and Key Personnel Risks
Recruiting and retaining qualified personnel is critical to the
Group's success. The number of persons skilled in the acquisition,
exploration and development of mining properties is limited and
competition for such persons is intense. While the Company has good
relations with its employees, these relations may be impacted by
changes in the scheme of labour relations which may be introduced
by the relevant governmental authorities. Adverse changes in such
legislation may have a material adverse effect on the Group's
business, results of operations and financial condition. Staff are
encouraged to discuss with management matters of interest to the
employees and subjects affecting day-to-day operations of the
Group.
Speculative Nature of Mineral Exploration and Development
In addition to the above there can be no assurance that the
current exploration programmes will result in profitable mining
operations.
The recoverability of the carrying value of exploration and
evaluation assets is dependent on the successful discovery of
economically recoverable reserves, the achievement of profitable
operations, and the ability of the Group to raise additional
financing, if necessary, or alternatively upon the Company's
ability to dispose of its interests on an advantageous basis.
Changes in market conditions could require material write downs of
the carrying value of the Group's assets.
Development of the Group's mineral exploration properties is,
amongst others, contingent upon obtaining satisfactory exploration
results and securing additional adequate funding. Mineral
exploration and development involves substantial expenses and a
high degree of risk, which even a combination of experience,
knowledge and careful evaluation may not be able to adequately
mitigate. The degree of risk reduces substantially when a Group's
properties move from the exploration phase to the development
phase.
The discovery of mineral deposits is dependent upon a number of
factors including the technical skill of the exploration personnel
involved. The commercial viability of a mineral deposit, once
discovered, is also dependent upon a number of factors, including
the size, grade and proximity to infrastructure, metal prices and
government regulations, including regulations relating to
royalties, allowable production, importing and exporting of
minerals, and environmental protection. In addition, several years
can elapse from the initial phase of drilling until commercial
operations are commenced.
Political Stability
The Company is conducting its activities in Tanzania. Following
the recent changes to mining legislation and associated regulation
in Tanzania, the Directors believe that the Government of Tanzania
supports the development of natural resources by foreign investors
and the Directors actively monitor the situation on an ongoing
basis. However, there is no assurance that future political and
economic conditions in Tanzania will not result in the Government
of Tanzania adopting different policies regarding foreign
development and ownership of mineral resources. Any changes in
policy affecting ownership of assets, taxation, rates of exchange,
environmental protection, labour relations, repatriation of income
and return of capital, may affect the Company's ability to develop
the projects.
Uninsurable Risks
The Group may become subject to liability for accidents,
pollution and other hazards against which it cannot insure or
against which it may elect not to insure because of prohibitive
premium costs or for other reasons, such as amounts which exceed
policy limits.
Foreign investment risks including increases in taxes, royalties
and renegotiation of contracts
The Group is subject to risk arising from the ever-changing
economic environment in which its subsidiaries operate, mainly
driven by the changing regulatory environment governing corporate
taxation, transfer pricing and other investment related operational
activities. The Group continues to re-assess its investment
decisions in order to limit exposure to the ever-changing
regulatory environment in which it operates.
This report was approved by the Board on 22 May 2019 and signed
on its behalf by:
Louis Coetzee
Executive Chairman
Directors Report
The Board of Directors present their Annual Report together with
the audited annual financial statements for the year ended 31
December 2018 of Katoro Gold PLC ("the Company"), registered number
09306219, and its subsidiaries (collectively "the Group").
The Board comprises of an Executive Director and four
Non-executive Directors. As the Company evolves, the Board will be
reviewed and expanded if necessary to ensure appropriate expertise
is in place at all times to support its business activities.
The Board is responsible for formulating, reviewing and
approving the Company's strategy, budgets, major items of capital
expenditure and acquisitions. An agenda and all supporting
documentation is circulated to all Directors before each Board
Meeting. Open and timely access to all information is provided to
all Directors to enable them to bring independent judgement on
issues affecting the Group and facilitate them in discharging their
duties.
At the end of the financial year, and at the date of this
report, the Board comprised:
Louis Coetzee - Chairman (Executive Director)
Louis Scheepers (Non-Executive Director)
Myles Campion (Non-Executive Director)
Paul Dudley (Non-Executive Director)
Lukas Marthinus Maree (Lukas Maree) (Non-Executive Director)
Louis Coetzee, BA, MBA, Age 54 - Chairman (Executive)
Louis has 25 years' experience in business development,
promotion and financing in both the public and private sector. In
recent years he has concentrated on the exploration and mining area
where he has founded, promoted and developed a number of junior
mineral exploration companies based mainly on Tanzanian assets.
Louis has tertiary qualifications in law and languages, project
management, supply chain management and an MBA from Bond University
(Australia) specialising in entrepreneurship and business planning
and strategy. He has worked in various project management and
business development roles mostly in the mining industry throughout
his career. Between 2007 and 2009, Louis held the position of
Vice-President, Business Development with Canadian listed Great
Basin Gold (TSX: CBG).
Louis Scheepers, Age 61 - (Non-Executive)
Louis is an experienced project manager with more than eighteen
years' experience of practical project development and execution in
the mining and extractive industry. He has gained valuable
experience in mineral exploration, feasibility studies and
greenfields mining projects, spending much time in South, Central
and East Africa, as well as the Middle East.
Prior to joining Kibo Energy PLC, the Company's majority
shareholder, as Chief Operations Officer, he held the position of
CEO, Mzuri Exploration Services Ltd ("MXS"), as well as the
Executive responsible for Project Development at the TSX, NYSE and
JSE listed Great Basin Gold Ltd after completing a stint as a
mining consultant.
Myles Campion, BSc, MSc, Age 49 - (Non-Executive)
Myles has a comprehensive background in all technical and
financial facets of the resources sector, specialising
internationally in resource evaluation and project assessment. This
follows a 10-year career as an exploration and mine site geologist
in Australia covering base metals and gold. He holds a BSc (Hons)
in Geology from University of Wales College, Cardiff and an MSc
(MinEx) from the Royal School of Mines in London, and also holds a
Graduate Diploma of Business (Finance).
His financial experience ranges from Australian and UK equities
research through to project and debt financing in London, covering
the entire spectrum of mining companies with an extensive knowledge
of the global resources market covering the three main bourses, the
Toronto Stock Exchange, AIM and the ASX. This knowledge was applied
effectively as a Fund Manager at Oceanic Asset Management, where he
successfully managed the Australian Natural Resources Fund, an Open
Ended Investment Company (OEIC) traded in London, steering the fund
to an outperforming 50 percent return over five years. He is
currently a director of AIM quoted Europa Metals Ltd.
Paul Dudley, BSc, FCA, Age 46 - (Non-Executive)
Paul is a Fellow of the Chartered Institute of Accountants of
England and Wales and is a Member of the UK's Chartered Institute
of Securities and Investment. He co-founded HD Capital Partners Ltd
in 2010, a corporate advisory business that is authorised and
regulated by the UK's Financial Conduct Authority.
Earlier in his career, he worked as a Qualified Executive for
stockbroking firm WH Ireland, where he acted as a Nominated Adviser
on numerous flotations, fundraisings and provided advice on
takeovers and other transactions in the private and public arena.
Previously, Paul was seconded to the listing department of the
London Stock Exchange and worked at Sigma Capital plc, a venture
capital investment firm, where he advised on investment into
emerging growth companies. He began his career at
PriceWaterhouseCoopers.
Lukas Marthinus (Tinus) Maree, BLC, LLB, Age 56 -
(Non-Executive)
Tinus Maree is a lawyer by profession. He has served on the
boards of a number of public companies including Kibo Energy PLC,
Goldsource Mines Limited, Africo Resources Limited and Diamondworks
Limited that have made significant successful investments in
exploration projects in Africa and North America, and has more
recently served as the CEO of private investment companies Rusaf
Gold Limited and Mzuri Capital Group Limited, both of which have
successfully developed and sold mineral projects in Russia and
Tanzania in the last seven years.
He was also a founder principal of River Group, designated
advisors to the listing of Kibo on the JSE, and was responsible for
its Canadian office until his retirement from the group in 2013 to
pursue personal interests.
Review of Business Developments
As set out in the Chairman's Report and review of activities,
Katoro Gold's primary focus is on evaluating its Tanzanian projects
including the Imweru and Lubando Projects. The Company is also in
the process of reviewing other exploration and mining projects in
the region, which resulted in the Company's acquisition in November
2018 of the Haneti Nickel Project in Tanzania, with a view to
building a diversified mining portfolio. Accordingly, subject to
funding, the majority of Katoro's resources will be used to fund
the continued development of the Company's Tanzanian projects with
specific reference to the proposed initial work programme for the
Haneti Project.
Results
The result for the year amounted to a loss of GBP492,275 for the
year ended 31 December 2018 (31 December 2017: loss of
GBP1,903,676).
Post Statement of Financial Position Events
On 15 March 2019 the Company announced it had entered into an
investment and option agreement (the "Agreement") with AIM quoted
African Battery Minerals Plc ("ABM"). Under the Agreement ABM are
able to acquire up to 10 million new ordinary shares of 1.0 pence
each in the capital of the Company ("Ordinary Shares"), together
with up to 10 million warrants over Ordinary Shares, and an option
to acquire, subject to the completion of due diligence by ABM, up
to a 35% interest in Company's 100% owned Haneti Nickel Project
("Haneti") in Tanzania (the "Option") for a total consideration of
up to GBP125,000.
On the same day, for a consideration of GBP25,000, ABM acquired
2,500,000 new Ordinary Shares and were granted 2,500,000 warrants
to subscribe for 2,500,000 new Ordinary Shares at a price of 1.25
pence per share with a three year expiry term.
On 15 May 2019, ABM exercised the Option to invest a further
GBP75,000 to acquire an additional 7,500,000 new Ordinary Shares, a
further 7,500,000 warrants to subscribe for 7,500,000 new Ordinary
Shares at a price of 1.25 pence per share with a three-year expiry
term and a 25% interest in Haneti.
Pursuant to the Agreement, ABM has the right, at its sole
discretion, for a 12 month period, to acquire a further 10%
interest in Haneti for a further payment to Katoro of GBP25,000 in
cash.
Under the Agreement, Katoro is required to allocate all monies
received from ABM under the Agreement, other than in respect of
monies received on the exercise of the warrants issued pursuant to
the Agreement, to the maintenance, exploration and development of
Haneti.
Directors' Interests
The interests of the Directors (held directly and indirectly),
who held office at the date of approval of the financial
statements, in the share capital of the Company are as follows:
Louis Coetzee and Tinus Maree are also Directors of Kibo Energy
PLC, the Company's majority shareholder.
Ordinary Shares (held directly and indirectly)
Directors 21 May 2019 31 December 2018
Louis Coetzee - -
------------ -----------------
Louis Scheepers - -
------------ -----------------
Myles Campion 1,750,000 1,750,000
------------ -----------------
Paul Dudley 1,166,667 1,166,667
------------ -----------------
Tinus Maree - -
------------ -----------------
Share Options
Following the creation of a share option plan ("SOP") on 8
February 2019, as disclosed in the Company's re-admission Document
in May 2017 and approved by the shareholders, the Board resolved to
issue 14,944,783 new Ordinary Share options of GBP0.01 each in the
capital of the Company ("Options") to the Board and Management of
the Company. The Options constitute 10% of the Company's current
issued share capital and were issued at a price of 1.3 pence each,
being equal to the Company's most recent fundraising price. The
Options have an expiry date of the seventh anniversary of the Date
of Grant, with 50% vesting on issue and the remaining 50% vesting
in one year. The number of Options held are set out below:
Directors 31 December 21 May 2019 Options as % of
2018 current issued
share capital
Louis Coetzee - 4,782,330 3.0
------------- ------------ ----------------
Louis Scheepers - 1,494,478 0.9
------------- ------------ ----------------
Myles Campion - 2,391,165 1.5
------------- ------------ ----------------
Paul Dudley - 2,391,165 1.5
------------- ------------ ----------------
Tinus Maree - 2,391,165 1.5
------------- ------------ ----------------
For further detail surrounding the Ordinary Shares please refer
to Note 9 of the Annual Financial Statements.
Directors Remuneration (Period to 31 December 2018)
Directors 31 December 31 December
2018 2017
Louis Coetzee GBP18,000 -
------------ ------------
Louis Scheepers GBP18,000 -
------------ ------------
Myles Campion GBP19,321 -
------------ ------------
Paul Dudley GBP19,321 -
------------ ------------
Tinus Maree GBP18,000 -
------------ ------------
As stated in the Company's admission document dated 5 May 2017,
the Directors had agreed that salary or fees would only commence
with effect from the date falling 18 months after the Company
admitted to trading on AIM or earlier if a fundraise was
undertaken. Directors' remuneration commenced on 1 July 2018,
following completion of a placing undertaken by the Company in June
2018.
There have been no other contracts or arrangements of
significance during the year ended 31 December 2018 in which
Directors, or their related parties, were interested.
Directors' Meetings
The Company held the following Board and Committee meetings
during the reporting period and the number of meetings attended by
each of the Directors of the Company during the year to 31 December
2018 were:
Name Board Meeting Audit Committee Remuneration Committee
Louis Coetzee 15/15 - -
-------------- ---------------- -----------------------
Louis Scheepers 15/15 - -
-------------- ---------------- -----------------------
Myles Campion 15/15 1/1 1/1
-------------- ---------------- -----------------------
Paul Dudley 15/15 1/1 1/1
-------------- ---------------- -----------------------
Tinus Maree 15/15 1/1 1/1
-------------- ---------------- -----------------------
The Company held no Nominations Committee meetings during the
reporting period.
The Company held no Disclosure and AIM Rules Compliance
Committee meeting during the reporting period, although the
required topics in this regard were regularly discussed during
Board meetings.
Significant Shareholdings
The Company has been informed that, in addition to the interests
of the Directors, as at 31 December 2018 and as at the date of this
report, the following shareholders own 3% or more beneficial
interest, either direct or indirect, of the issued share capital of
the Company, which is considered significant for disclosure
purposes in the annual financial statements:
Percentage of Issued Share Capital
21 May 2019 31 December 2018 31 December 2017
------------ ----------------- -----------------
Kibo Energy PLC 56.7% 55.5% 56.7%
------------ ----------------- -----------------
Pelamis Investments
Limited 3.8% 4.1% -
------------ ----------------- -----------------
David Steinepreis 3.5% 3.7% 7.3%
------------ ----------------- -----------------
Yakoub Yakoubov 3.1% 3.3% -
------------ ----------------- -----------------
Subsidiary Undertakings
Details of the Company's subsidiary undertakings are set out in
Note 13 to the Annual Financial Statements.
Political Donations
During the period, the Group made no charitable or political
contributions (2017: GBP nil).
Going Concern
The Company and Group's ability to continue as a going concern
is dependent on the sourcing of additional funding by the Directors
for the foreseeable future. The future of the Company and the Group
is dependent on the successful future outcome of its short and
medium term ability to raise further funding and the successful
development of its exploration interests and of the availability of
further funding to bring these interests into production. The
Directors consider that in preparing the financial statements they
have taken into account all information that could reasonably be
expected to be available. Consequently, they consider that it is
appropriate to prepare the financial statements on the going
concern basis.
The Directors have reviewed budgets, projected cash flows and
other relevant information, and on the basis of this review and the
below information, they are confident that the Company and the
Group will have adequate financial resources to continue in
operational existence for the foreseeable future.
The Group currently generates no revenue and had net assets of
GBP446,732 (GBP391,374) as at 31 December 2018.
The Directors have reviewed budgets, projected cash flows and
other relevant information, and on the basis of this review and the
below, they are confident that the Company and the Group will have
adequate financial resources to continue in operational existence
for the foreseeable future.
Following receipt of the further monies from ABM, as detailed in
the Chairman's Statement, the Group has a cash balance of
approximately GBP248,000. Following receipt of these funds, the
Company has sufficient funds to complete the current proposed work
programme on the Haneti Project.
In the event that the Company is not able to raise further
funding, and before any mitigating actions are taken, the Company
has sufficient funds for its present working capital requirements
through to the end of September 2019. The Directors though continue
to review the Group's options to secure additional funding for its
general working capital requirements, alongside its ongoing review
of potential acquisition targets and corporate development needs.
The Directors are confident in this light that such funding will be
available, although there is no guarantee as to the terms of such
funding or that such funding will be available. In addition, any
equity funding may be subject to shareholder approvals in line with
legal and regulatory requirements as appropriate. As a result, the
Directors continue to monitor and manage the Company's cash and
overheads carefully in the best interests of its shareholders.
Whilst the Directors continue to consider it appropriate to
prepare the financial statements on a going concern basis the above
constitutes a material uncertainty that shareholders should be
aware of.
Environmental responsibility
The Group recognises that its activities require it to have
regard to the potential impact that it, its subsidiaries and
partners may have on the environment. Where exploration and
development works are carried out, care is taken to limit the
amount of disturbance and where any remediation works are required
they are carried out as and when required.
Dividends
There have been no dividends declared or paid during the current
financial period (2017: GBP nil).
Corporate Governance Policy
The Board is aware of the importance to conform to its statutory
responsibilities and industry good practice in relation to
corporate governance of the Group with effect from the 20 September
2018 the Company has adopted the Quoted Companies Alliance
Corporate Governance Code (the "QCA Code"). The Company's statement
of compliance against the QCA code is set out on pages 8 to 10.
Role of Directors
All Board members ensure that appropriate governance procedures
are adhered to and there is a clear division of responsibilities at
Board level to ensure a balance of power and authority so that no
one individual has unfettered powers of decision making.
Board and Audit Committee meetings have been taking place
periodically and the Executive Director manages the daily
operations of the Group with Board meetings taking place on a
regular basis throughout the financial period. During the current
reporting period, the Board met 15 (fifteen) times and provided
pertinent information to the Executive Committee of the Company,
consisting of Louis Coetzee.
The Board is responsible for effective control over the affairs
of the Company, including: strategic and policy decision-making
financial control, risk management, communication with
stakeholders, internal controls and the asset management
process.
Although there was no specific committee tasked with
identifying, analysing and reporting on risk during the financial
period, this was nevertheless part of the everyday function of the
Directors and was managed at Board level.
Directors are entitled, in consultation with the Chairman, to
seek independent professional advice about the affairs of the
Company, at the Company's expense.
Audit Committee
The Members of the Audit Committee are Paul Dudley, Myles
Campion and Tinus Maree.
The Audit Committee has set out its roles and responsibilities
within its terms of reference and ensured that it is aligned to
good financial governance principles.
These include:
-- the establishment of an Audit Committee to guide the audit
approach, as well as its modus operandi and the rules that govern
the audit relationship;
-- assess the processes relating to and the results emanating
from the Group's risk and control environment;
-- monitoring the integrity of the Group's integrated reporting
and all factors and risks that may impact on reporting;
-- annually reviewing the expertise, appropriateness and experience of the finance function;
-- annually nominating the external auditors for appointment by the shareholders;
-- reviewing developments in governance and best practice;
-- foster and improve open communication and contact with
relevant stakeholders of the Group; and
-- assessing the external auditor's independence and determining their remuneration.
The Audit Committee further sets the principles for recommending
the external auditors for non-audit services use.
The Committee met once during the current year as there was no
need to review its strategy.
The details of the work of the Audit Committee were included in
the Directors' Report.
Remuneration Committee
The members of the Remuneration Committee are Paul Dudley, Myles
Campion and Tinus Maree.
The purpose of the Remuneration Committee is to discharge the
responsibilities of the Board relating to all compensation,
including equity compensation of the Company's executives. The
remuneration committee establishes and administers the Company's
executive remuneration with the broad objective of aligning
executive remuneration with Company performance and shareholder
interests, setting remuneration standards aimed at attracting,
retaining and motivating the executive team, linking individual pay
with operational and Company performance in relation to strategic
objectives; and evaluating compensation of executives including
approval of salary, equity and incentive-based awards.
The Committee is empowered by the Board to set short, medium and
long-term remuneration for the Executive Directors. More generally,
the Committee is responsible for the assessment and approval of a
Board remuneration strategy for the Group.
The Committee met once during the current year as there was no
need to review its strategy.
Nomination Committee
The members of the Nomination Committee are Paul Dudley, Myles
Campion and Tinus Maree.
The Nomination Committee is responsible for considering and
making recommendations to the Board in respect of appointments to
the Board. It is also responsible for keeping the structure, size
and composition of the Board under regular review, and for making
recommendations to the Board with regard to any changes necessary,
as well as succession planning, taking into account the skills and
expertise that will be needed on the Board in the future.
The Committee did not meet during the current year as there was
no need to review its strategy.
Disclosure and AIM Rules Compliance Committee
The members of the AIM Rules Compliance Committee are Paul
Dudley and Louis Coetzee.
The role of the Disclosure and AIM Rules Compliance Committee is
to oversee the Company's compliance with the AIM Rules and the
Disclosure Guidance and Transparency Rules which require the
Company to disclose, in the prescribed manner, as soon as possible,
any inside information directly concerning the Company, unless an
exemption from disclosure is available.
The Disclosure Committee is also, amongst other things,
responsible for maintaining and monitoring the adequacy of
procedures, systems and controls for the identification, treatment
and disclosure of inside information and for complying with other
disclosure obligations falling on the Company under the AIM Rules,
the Market Abuse Regulation and Disclosure Guidance and
Transparency Rules.
Internal Audit
The Company does not have an internal audit function. Currently
the operations of the Group do not warrant an internal audit
function, however the Board is assessing the need to establish an
internal audit department considering future prospects as the
Group's operations increase. During the period the Board has taken
responsibility to ensure effective governance, risk management and
that the internal control environment is maintained.
Health, Safety and Environmental Policy
The Group is committed to high standards of Health, Safety and
Environmental performance across our business. Our goal is to
protect people, minimise harm to the environment, integrate
biodiversity considerations and reduce disruption to our
neighbouring communities. We seek to achieve continuous improvement
in our Health, Safety and Environmental performance.
Corporate Social Responsibility Policy (CSR)
The Group's policy is to conduct all our business operations to
best industry standards and to behave in a socially responsible
manner. Our goal is to behave ethically and with integrity and to
respect cultural, national and religious diversity.
Governance of IT
The Board is responsible for IT governance as an integral part
of the Group's governance as a whole. The IT function is not
expected to significantly change in the foreseeable future. The
Board has the required policies and procedures in place to ensure
governance of IT is adhered to.
Integrated and Sustainability Reporting
Integrated Reporting is defined as a "holistic and integrated
representation of the Group's performance in terms of both its
finances and its sustainability". The Group currently does not have
a separate integrated report. The Board and its sub-committees are
in the process of assessing the principles and practices of
integrated reporting and sustainability reporting to ensure that
adequate information about the operations of the Group, the
sustainability issues pertinent to its business, the financial
results and the results of its operations and cash flows are
disclosed in a single report.
Statement of Directors' Responsibility
The Directors are responsible for preparing the Strategic
Report, the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards (IFRSs') as adopted by
the EU and applicable law.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the company and the Group and of
the profit or loss of the Group for that period. In preparing these
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
They are further responsible for ensuring that the Strategic
Report and the Report of the Directors and other information
included in the Annual Report and Financial Statements is prepared
in accordance with applicable law in the United Kingdom.
The maintenance and integrity of the Katoro Gold PLC website is
the responsibility of the Directors; the work carried out by the
auditors does not involve the consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred in the accounts since they were initially
presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of the accounts and the other information included in
annual reports may differ from legislation in other
jurisdictions.
The Board
The Board is responsible for the supervision and control of the
Company and is accountable to the shareholders. The Board has
reserved decision-making on a variety of matters, including
determining strategy for the Group, reviewing and monitoring
executive management performance and monitoring risks and
controls.
The Board has five Directors, comprising of an Executive
Director and four Non-executive Directors. The Board met formally
on 15 (fifteen) occasions during the year ended 31 December 2018.
An agenda and supporting documentation was circulated in advance of
each meeting. All the Directors bring independent judgement to bear
on issues affecting the Group and all have full and timely access
to information necessary to enable them to discharge their duties.
The Directors have a wide and varying array of experiences in the
industry.
Auditors
The auditors, Crowe U.K. LLP, were re-appointed as the auditors
of the Company at the last AGM and have indicated their willingness
to continue in office in accordance with section s475 of the
Companies Act 2006.
Annual General Meeting
Notice of the forthcoming Annual General Meeting of the Company
together with resolutions relating to the Company's ordinary and
special business will be given to the members separately.
Provision of information to auditors
Each of the persons who are Directors at the time when this
Directors' Report is approved has confirmed that:
-- So far as that Director is aware, there is no relevant audit
information of which the Company's auditors are unaware, and
-- That Director has taken all the steps that ought to have been
taken as a Director in order to be aware of any information needed
by the Company's auditors in connection with preparing their report
and to establish that the Company's auditors are aware of that
information.
This report was approved by the Board on 22 May 2019 and signed
on its behalf by:
Louis Coetzee
Chairman
Consolidated Statement of Comprehensive Income
GROUP
--------------------------------------
31 December 31 December
2018 2017
----------- -------------------------
Audited Audited
----
Continuing operations Note GBP GBP
----
Revenue 2 - -
Administrative expenses (423,121) (177,205)
Listing and Capital raising fees - (206,670)
Foreign exchange gain/(losses) 21,656 (36,005)
AIM IPO transaction costs - (556,935)
Exploration expenditure (77,740) (911,649)
Operating loss (479,205) (1,888,464)
- -
Loss on ordinary activities before tax (479,205) (1,888,464)
Taxation 5 - -
----------- -------------------------
Loss for the period (479,205) (1,888,464)
Other comprehensive loss:
Items that may be classified subsequently to
profit or loss:
Exchange differences on translation of foreign
operations (13,070) (15,212)
Other comprehensive loss for the period net
of tax (13,070) (15,212)
Total comprehensive loss for the period (492,275) (1,903,676)
----------- -------------------------
Loss for the period (479,205) (1,888,464)
----------- -------------------------
Attributable to the owners of the parent (479,205) (1,888,464)
Total comprehensive loss for the period (492,275) (1,903,676)
----------- -------------------------
Attributable to the owners of the parent (492,275) (1,903,676)
Loss Per Share
Basic loss per share (pence) 6 (0.39) (2.6)
Diluted loss per share (pence) 6 (0.39) (2.6)
All activities derive from continuing operations. All profits
and total comprehensive profit for the period are attributable to
the owners of the Company.
The Group has no recognised gains or losses other than those
dealt with in the Statement of Comprehensive Income.
On behalf of the Board
Louis Coetzee
Consolidated Statement of Financial Position
GROUP
31 December 31 December
2018 2017
----------- -------------------
Audited Audited
---- ----------- -------------------
Note GBP GBP
---- ----------- -------------------
Assets
Non-Current Assets
Intangible assets 7 209,500 -
----------- -------------------
209,500 -
----------- -------------------
Current Assets
Other receivables - 1,818
Cash and cash equivalents 8 412,731 564,840
Total current assets 412,731 566,658
----------- -------------------
Total Assets 622,231 566,658
=========== ===================
Equity and Liabilities
Equity
Called up share capital 9 1,494,478 1,082,833
Share premium account 9 2,186,406 2,050,418
Merger Reserve 11 1,271,715 1,271,715
Capital Contribution 11 10,528 10,528
Warrant reserve 10 41,808 41,808
Retained Earnings reserve (4,102,371) (3,623,166)
Translation Reserve 11 (455,832) (442,762)
----------- -------------------
Total Equity 446,732 391,374
----------- -------------------
Liabilities
Current Liabilities
Trade and other payables 12 175,499 175,284
Total Current Liabilities 175,499 175,284
=========== ===================
Total Equity and Liabilities 622,231 566,658
The accompanying notes on pages 36 - 49 form an integral part of
these financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 22 May 2019 and signed on its behalf
by:
On behalf of the Board
Louis Coetzee
Company Statement of Financial Position
Company
------------------------
31 December 31 December
2018 2017
----------- -----------
Audited Audited
----------- -----------
GBP GBP
----------- -----------
Non--Current Assets
Investments in group undertakings 13 987,109 1,761,014
Total Non- current assets 987,109 1,761,014
----------- -----------
Current Assets
Cash and cash equivalents 8 313,855 236,497
Total Current assets 313,855 236,497
----------- -----------
Total Assets 1,300,964 1,997,511
=========== ===========
Equity and Liabilities
Equity
Called up share capital 9 1,494,478 1,082,833
Share premium 9 2,186,406 2,050,418
Warrant Reserve 10 41,808 41,808
Retained deficit (2,464,926) (1,234,338)
----------- -----------
Total Equity 1,257,766 1,940,721
----------- -----------
Liabilities
Current Liabilities
Trade and other payables 12 43,198 56,790
Total liabilities 43,198 56,790
=========== ===========
Total Equity and Liabilities 1,300,964 1,997,511
=========== ===========
Equity includes a loss for the year of the parent company of
GBP1,230,588 (2017: GBP723,227).
On behalf of the Board
Louis Coetzee
Consolidate Statement of Changes in Equity
Share Share Warrant Merger Foreign Capital Retained Total equity
Capital premium reserve reserve currency contribution deficit
translation
GROUP reserve
-------------- --------- --------- ------------ --------- ----------- ------------ ------------ ------------
GBP GBP GBP GBP GBP GBP GBP GBP
-------------- --------- --------- ------------ --------- ----------- ------------ ------------ ------------
Balance as at
1 January
2018 1,082,833 2,050,418 41,808 1,271,715 (442,762) 10,528 (3,623,166) 391,374
--------- --------- ------------ --------- ----------- ------------ ------------ ------------
Loss for the
year - - - - - - (479,205) (479,205)
Other
comprehensive
loss - - - - (13,070) - - (13,070)
Issue of share
capital 411,645 135,988 - - - - - 547,633
Balance as at
31 December
2018 1,494,478 2,186,406 41,808 1,271,715 (455,832) 10,528 (4,102,371) 446,732
========= ========= ============ ========= =========== ============ ============ ============
Balance as at
1 January
2017 172,500 918,631 - (945,378) (427,550) 10,528 (1,734,702) (2,005,971)
--------- --------- ------------ --------- ----------- ------------ ------------ ------------
Loss for the
year - - - - - - (1,888,464) (1,888,464)
Other
comprehensive
loss - - - - (15,212) - - (15,212)
Warrants - - 41,808 - - - - 41,808
Issue of share
capital 910,333 1,501,710 - 2,217,093 - - - 4,629,136
Share issue
costs - (369,923) - - - - - (369,923)
--------- --------- ------------ --------- ----------- ------------ ------------ ------------
Balance as at
31 December
2017 1,082,833 2,050,418 41,808 1,271,715 (442,762) 10,528 (3,623,166) 391,374
========= ========= ============ ========= =========== ============ ============ ============
Note 9 9 10 11 11 11
Company Statement of Changes in Equity
COMPANY Share capital Share premium Warrant reserve Retained deficit Total equity
--------------------------------------- ------------- ------------- --------------- ---------------- ------------
GBP GBP GBP GBP GBP
--------------------------------------- ------------- ------------- --------------- ---------------- ------------
Balance at 1 January 2018 1,082,833 2,050,418 41,808 (1,234,338) 1,940,721
------------- ------------- --------------- ---------------- ------------
Loss for the year - - - (1,230,588) (1,230,588)
Proceeds of issue of share capital 411,645 135,988 - - 547,633
Balance at 31 December 2018 1,494,478 2,186,406 41,808 (2,464,926) 1,257,766
============= ============= =============== ================ ============
Balance at 1 January 2017 172,500 918,631 - (511,111) 580,020
------------- ------------- --------------- ---------------- ------------
Loss for the year - - - (723,227) (723,227)
Share options issued during the current
period - - 41,808 - 41,808
Proceeds of issue of share capital 910,333 1,501,710 - - 2,412,043
Share issue costs - (369,923) - - (369,923)
Balance at 31 December 2017 1,082,833 2,050,418 41,808 (1,234,338) 1,940,721
------------- ------------- --------------- ---------------- ------------
Note 9 9 10
Consolidated Statement of Cash Flows
GROUP
-------------------------------
31 December 31 December
2018 2017
----------- ------------------
Audited Audited
-----
Notes GBP GBP
-----
Cash flows from operating activities
Loss for the period before taxation (479,205) (1,888,464)
Adjustments for:
Foreign exchange (gain)/ loss (11,130) 36,005
Cost settled through the issue of shares 22,633 206,670
Deal cost settled in shares - 155,539
(Decrease)/Increase in trade and other payables 215 261,898
(Decrease)/Increase in trade and other receivable 1,818 (1,818)
(465,669) (1,230,170)
----------- ------------------
Cash flows from financing activities
Issue of shares (net of share issue cost) 313,000 1,318,345
Subsidiary cash acquired 14 560 465,408
Net cash proceeds from financing activities 313,560 1,783,753
----------- ------------------
Net cash flows (152,109) 553,583
Cash and cash equivalents at the start of the
financial period 564,840 11,257
Cash and cash equivalents at the end of the
financial period 412,731 564,840
=========== ==================
Company Statement of Cash Flows
COMPANY
------------------------
31 December 31 December
2018 2017
----------- -----------
Audited Audited
------ ----------- -----------
Notes GBP GBP
------ ----------- -----------
Cash flows from operating activities
Loss for the period before taxation
Adjusted for: (1,230,588) (723,227)
Impairment of investment in subsidiaries 1,044,915 -
Cost settled through the issue of shares 22,633 155,539
Foreign exchange gain (59,010) -
(Decrease)/ Increase in trade and other payables (13,592) (76,452)
Decrease/ (Increase) in trade and other receivables - 115,641
Net cash flows from operating activities (235,642) (528,499)
----------- -----------
Cash flows from financing activities
Issue of shares (net of share issue cost) 313,000 1,318,345
Increase in loans advanced to related parties - (1,151,013)
Net cash proceeds from financing activities 313,000 167,332
----------- -----------
Cash flows from investing activities
Net (decrease)/increase in cash 77,358 (361,167)
Cash and cash equivalents at the start of
the financial period 236,497 597,664
Cash and cash equivalents at the end of the
financial period 313,855 236,497
=========== ===========
Summary of Significant Accounting Policies
General Information
Katoro Gold PLC ("Katoro" or "the Company") is a company
incorporated in England & Wales as a public limited company.
The group financial statements consolidate those of the Company and
its subsidiaries (together referred to as the "Group"). The
Company's registered office is located at 60 Gracechurch Street,
London EC3V 0HR.
The principal activities of the Group are related to the
evaluation and exploration studies within a licenced portfolio area
with a view to generating commercially viable mineral
resources.
The Company has taken advantage of Section 408 of the Companies
Act 2006 and has not included a Company only Profit and Loss
Account in these Financial Statements. The loss attributable to
members of the Company for the year ended 31 December 2018 is
GBP1,230,588 (2017: GBP723,227).
Going Concern
The Group currently generates no revenue and had net assets of
GBP446,732 (GBP391,374) as at 31 December 2018.
The Directors have reviewed budgets, projected cash flows and
other relevant information, and on the basis of this review and the
below, they are confident that the Company and the Group will have
adequate financial resources to continue in operational existence
for the foreseeable future.
Following receipt of the further monies from ABM, as detailed in
the Chairman's Statement, the Group has a cash balance of
approximately GBP248,000. Following receipt of these funds, the
Company has sufficient funds to complete the current proposed work
programme on the Haneti Project.
In the event that the Company is not able to raise further
funding, and before any mitigating actions are taken, the Company
has sufficient funds for its present working capital requirements
through to the end of September 2019. The Directors though continue
to review the Group's options to secure additional funding for its
general working capital requirements, alongside its ongoing review
of potential acquisition targets and corporate development needs.
The Directors are confident in this light that such funding will be
available, although there is no guarantee as to the terms of such
funding or that such funding will be available. In addition, any
equity funding may be subject to shareholder approvals in line with
legal and regulatory requirements as appropriate. As a result, the
Directors continue to monitor and manage the Company's cash and
overheads carefully in the best interests of its shareholders.
Whilst the Directors continue to consider it appropriate to
prepare the financial statements on a going concern basis the above
constitutes a material uncertainty that shareholders should be
aware of.
Based on the above, the Directors consider that it is
appropriate to prepare the financial statements on the going
concern basis.
Statement of Compliance
As permitted by the European Union, the Group's financial
statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and their interpretations
issued by the International Accounting Standards Board (IASB) as
adopted by the EU. The individual financial statements of the
Company ("Company financial statements") have been prepared in
accordance with the Companies Act 2016.
The IFRS adopted by the EU as applied by the Company and the
Group in the preparation of these financial statements are those
that were effective at 31 December 2018.
Statement of Accounting Policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, other than the adoption of IFRS 9 and IFRS 15
in the current financial period.
Basis of Preparation
The Group and Company financial statements are prepared on the
historical cost basis. The accounting policies have been applied
consistently by Group entities, except for the adoption of new
standards and interpretations which became effective in the current
year. The Group and Company financial statements have been prepared
on a going concern basis as explained in the notes to the financial
statements.
The individual financial information of each Group entity is
measured and presented in the currency of the primary economic
environment in which the entity operates (its functional currency).
The consolidated financial information of the Group is presented in
Pounds Sterling, which is the presentation currency for the Group.
The functional currency of each of the Group entities is the local
currency of each individual entity.
Use of Estimates and Judgements
The preparation of financial statements in conformity with EU
IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
In particular, there are significant areas of estimation,
uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in
the financial statements in the following areas:
-- Exploration and evaluation expenditure;
-- Acquisition accounting; and
-- Valuation of mining licence in Kibo Nickel Limited
Exploration and evaluation expenditure - significant judgement
concerning the choice of accounting policy
In line with the Groups accounting policy, all the exploration
and evaluation expenditure has been charged to profit or loss, as
in the judgement of the Directors the commercial viability of the
mineral deposits had not been established. If a policy of
capitalisation of exploration expenditure had been adopted an
amount of GBP77,740 would have been capitalised in the current year
(2017: GBP911,649).
Acquisition accounting - significant judgement concerning the
choice of accounting policy
Where acquisitions do not meet the definition of a business
combination under IFRS 3, management is required to develop a
specific policy to account for these acquisitions. As described in
note 14 the acquisition of Kibo Nickel does not meet the definition
of a business combination under IFRS 3, management have therefore
had to determine an appropriate accounting policy. This has
therefore been accounted for as an asset acquisition and the fair
value of assets and liabilities acquired recognised on balance
sheet. Management has determined that this accounting policy more
faithfully reflects the underlying commercial substance of the
transaction and therefore provides the most useful information to
shareholders.
Valuation of mining licence in Kibo Nickel Limited - significant
estimate concerning valuation
On the acquisition of Kibo Nickel the principal asset acquired
was a mining licence for a prospective nickel sulphide asset where
previous work had identified grades of up to 13.59% nickel. The
asset is considered to be unique and a fair market price is not
easily obtainable. The overall value of the transaction, however,
was separately reviewed by the independent directors, as announced
to the market on 22 June 2018. Given this management have applied
the provisions within IFRS 2 to value the asset based on the fair
value of the instruments granted. As disclosed in note 14 this
assessment is considered to be provisional and may be subject to
revision in the next financial year.
Exploration & Evaluation Assets
Exploration and evaluation activity involves the search for
mineral resources, the determination of technical feasibility and
the assessment of commercial viability of an identified
resource.
Exploration and evaluation activity includes:
-- researching and analysing historical exploration data;
-- gathering exploration data through topographical, geochemical and geophysical studies;
-- exploratory drilling, trenching and sampling;
-- determining and examining the volume and grade of the resource;
-- surveying transportation and infrastructure requirements; and
-- conducting market and finance studies.
Exploration and evaluation expenditure is charged to the income
statement as incurred except in the following circumstances, in
which case the expenditure may be capitalised:
In respect of minerals activities:
-- the exploration and evaluation activity is within an area of
interest which was previously acquired as an asset acquisition or
in a business combination and measured at fair value on
acquisition; or
-- the existence of a commercially viable mineral deposit has been established.
At each reporting period end the capitalisation criteria had not
been met due to the existence of a commercially viable mineral
deposit not being established and therefore no exploration and
evaluation assets have been recognised.
Capitalised exploration and evaluation expenditure considered to
be tangible is recorded as a component of property, plant and
equipment at cost less impairment charges. Otherwise, it is
recorded as an intangible.
Intangible assets all relate to exploration and evaluation
expenditure which are carried at cost with an indefinite useful
life and therefore are reviewed for impairment annually and when
there are indicators of impairment. Where a potential impairment is
indicated, assessment is performed for each area of interest in
conjunction with the group of operating assets (representing a cash
generating unit) to which the exploration is attributed.
Exploration areas at which reserves have been discovered but
require major capital expenditure before production can begin, are
continually evaluated to ensure that commercial quantities of
reserves exist or to ensure that additional exploration work is
under way or planned.
Consolidation
The consolidated financial statements comprise the financial
statements of Katoro Gold PLC and its subsidiaries for the year
ended 31 December 2018, over which the Company has control.
Control is achieved when the Company:
-- has the power over the investee;
-- is exposed, or has rights, to variance return from its involvement with the investee; and
-- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if
facts and circumstance indicate that there are changes to one or
more of the three elements of control listed above.
In assessing control, potential voting rights that are currently
exercisable or convertible are taken into account. Subsidiaries are
fully consolidated from the date that control commences until the
date that control ceases.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
Intragroup balances and any unrealised gains or losses or income
or expenses arising from intragroup transactions are eliminated in
preparing the Group financial statements, except to the extent they
provide evidence of impairment.
Intangible Assets
An intangible asset is regarded as having an indefinite useful
life when, based on all relevant factors, there is no foreseeable
limit to the period over which the asset is expected to generate
net cash inflows. Amortisation is not provided for these intangible
assets but they are tested for impairment annually or more
frequently if events or changes in circumstances indicate that the
carrying value may be impaired, and it is subsequently carried at
cost less accumulated impairment losses. Intangible assets comprise
the acquisition of rights to explore in relation to the Group's
exploration and evaluation activities. Intangible assets comprise
fair value allocated to exploration projects purchased through
business combination for which no useful life has been accurately
determined.
Irrespective of whether there is any indication of impairment,
the Group also tests intangible assets not yet available for use
for impairment annually by comparing its carrying amount with its
recoverable amount. This impairment test is performed during the
annual period and at the same time every period.
Impairment
Non-financial assets
Assets are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value
less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash generating units).
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in the
Statement of Comprehensive Income immediately.
Income Tax
Income tax expense comprises current and deferred tax. Income
tax expense is recognised in the Income Statement.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised using the balance sheet method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is not recognised
for the following temporary differences: the initial recognition of
goodwill, the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects
neither accounting nor taxable profit, and differences relating to
investments in subsidiaries to the extent that they probably will
not reverse in the foreseeable future. Deferred tax is measured at
the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which temporary difference can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised.
Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided.
A liability is recognised for the amount expected to be paid
under short-term cash bonuses or profit-sharing plans if the
Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an employee benefit
expense in profit or loss in the periods during which related
services are rendered by employees. Pre-paid contributions are
recognised as an asset to the extent that a cash refund or a
reduction in future payments is available. Contributions to a
defined contribution plan that are made more than 12 months after
the end of the period in which the employees render the service are
discounted to their present value.
Foreign Currencies
Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
Pound Sterling, which is the Group's presentation currency. This is
also the functional currency of the Group and Company and is
considered by the Board also to be appropriate for the purposes of
preparing the Group financial statements.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the Statement of
Comprehensive Income.
Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- Monetary assets and liabilities for each Statement of
Financial Position presented are presented at the closing rate at
the date of that Statement of Financial Position. Non-monetary
items are measured at the exchange rate in effect at the historical
transaction date and are not translated at each Statement of
Financial Position date;
-- Income and expenses for each income statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transaction): and
-- All resulting exchange differences are recognised as a
separate component of equity. On consolidation, exchange
differences arising from the translation of monetary items
receivable from foreign subsidiaries for which settlement is
neither planned nor likely to occur in the foreseeable future are
taken to shareholders equity. When a foreign operation is sold,
such exchange differences are recognised in the income statement as
part of the gain or loss on sale.
Issue Expenses and Share Premium Account
Issue expenses are written off against the premium arising on
the issue of share capital.
Lease payments
Payments made under operating leases are recognised in profit or
loss on a straight-line basis over the term of the lease.
Earnings per Share
The Group presents basic and diluted earnings per share (EPS)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for
the effects of all dilutive potential ordinary shares.
Financial Instruments
Recognition
Financial instruments comprise loans receivable, trade and other
receivables, cash and cash equivalents, trade and other payables,
other financial liabilities and bank overdrafts.
Financial assets and liabilities are recognised in the group's
statement of financial position when the group becomes a party to
the contractual provisions of the instruments.
Classification
The group classifies financial assets on initial recognition as
measured at amortised cost as the group's business model and
objective is to hold the financial asset in order to collect the
contractual cash flow and the contractual terms allows for cash
flows on specified dates for the payment of the principal amounts
outstanding.
Financial liabilities are classified at amortised cost.
Financial assets Classification in 2018 Classification in 2017
(IFRS 9) (IAS 32)
Loans to Group Companies Financial assets at Loans and receivables
amortised cost at amortised cost
Trade and other receivables Financial assets at Loans and receivables
amortised cost at amortised cost
Cash and Cash Equivalents Financial assets at Loans and receivables
amortised cost at amortised cost
Financial liabilities Classification in 2018 Classification in 2017
(IFRS 9) (IAS 32)
Loans from Group Financial liabilities Financial liabilities
Companies at amortised cost at amortised cost
Trade and other payables Financial liabilities Financial liabilities
at amortised cost at amortised cost
Borrowings Financial liabilities Financial liabilities
at amortised cost at amortised cost
Bank overdraft Financial liabilities Financial liabilities
at amortised cost at amortised cost
Financial assets are classified as current if expected to be
realised or settled within 12 months from the reporting date; if
not, they are classified as non-current. Financial liabilities are
classified as non-current if the group has an unconditional right
to defer payment for more than 12 months from the reporting
date.
Measurement on Initial recognition
All financial assets and liabilities are initially measured at
fair value, including transaction costs.
Subsequent measurement
Financial assets held at amortised cost are subsequently
measured at amortised cost using the effective interest method,
less any impairment losses.
Foreign exchange gains and losses and impairments are recognised
in profit or loss. Any gain or loss on de-recognition is recognised
in profit or loss.
Financial liabilities are subsequently measured at amortised
cost using the effective interest method.
De-recognition
Financial assets are derecognised when the rights to receive
cash flows from the assets have expired or have been transferred
and the group has transferred substantially all risks and rewards
of ownership.
Financial liabilities are derecognised when the obligations
specified in the contracts are discharged, cancelled or expire.
On de-recognition of a financial asset/liability, any difference
between the carrying amount extinguished and the consideration paid
is recognised in profit or loss.
Impairment of Financial Assets not carried at Fair value - IFRS
9
Under IFRS 9 the group calculates its allowance for credit
losses as expected credit losses (ECLs) for financial assets
measured at amortised cost. ECLs are a probability weighted
estimate of credit losses.
To calculate ECLs the group groups trade receivables and loans
to group companies by customer type and ageing. The group applies
the simplified approach to determine the ECL for trade receivables
loans to group companies. This results in calculating lifetime
expected credit losses for trade receivables and loans to group
companies. ECLs for trade receivables is calculated using a
provision matrix.
Impairment of Financial Assets not carried at Fair value - IAS
39
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events had a negative
effect on the estimated future cash flows for that asset.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows
discounted at the original effective interest rate.
Significant financial assets are tested for impairment on an
individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk
characteristics.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. For financial assets measured at amortised cost, the
reversal is recognised in the profit or loss.
Warrant reserves
For such grants of share options or warrants qualifying as
equity-settled share based payments, the fair value as at the date
of grant is calculated using the Black-Scholes option pricing
model, taking into account the terms and conditions upon which the
options or warrants were granted.
The amount recognised as an expense is adjusted to reflect the
actual number of share options or warrants that are likely to vest,
except where forfeiture is only due to market based conditions not
achieving the threshold for vesting.
Share capital
Share capital is determined using the nominal value of the
shares that have been issued. The share premium account includes
any premium on the initial issuing of share capital. Any
transaction costs associated with the issue of shares are deducted
from the share premium account.
Segment reporting
The group determines and presents operating segments based on
the information that is internally provided to the
Chief Executive Officer, who is the chief operating decision
maker. A segment is a distinguishable component of the group that
is engaged either in providing related products or services
(business segment), or in providing products or services within a
particular economic environment (geographical segment), which is
subject to risks and returns that are different from those of the
other segments. The group's primary format for segment reporting is
based on business segments. The business segments are determined
based on the reporting business units.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
NEW STANDARDS AND INTERPRETATIONS
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the
following standards and interpretations relevant to the Group and
which have not been applied in these financial statements, were in
issue but were not yet effective. In some cases these standards and
guidance have not been endorsed for use in the European Union.
Standard Effective
date, annual
period beginning
on or after
IFRS 16 Leases 1 January
IFRS 16 introduces a single lessee accounting model and 2019
requires a lessee to recognise assets and liabilities
for all leases with a term of more than 12 months, unless
the underlying asset is of low value. A lessee is required
to recognise a right-of-use asset representing its right
to use the underlying leased asset and a lease liability
representing its obligation to make lease payments. A
lessee measures right-of-use assets similarly to other
non-financial assets (such as property, plant and equipment)
and lease liabilities similarly to other financial liabilities.
As a consequence, a lessee recognizes depreciation of
the right-of-use asset and interest on the lease liability,
and also classifies cash repayments of the lease liability
into a principal portion and an interest portion and
presents them in the statement of cash flows.
------------------
The directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the financial statements of the Group, as the Group has no
significant leases in excess of a 12 month period.
The Group expects to adopt all relevant standards and
interpretations as and when they become effective.
Standards and interpretations which are effective in the current
period (Changes in accounting policies):
The Group has adopted all new accounting standards that became
effective in the current reporting period. IFRS 9 Financial
Instruments (IFRS 9) is the only new standard which is applicable
to the Groups operations at this stage.
IFRS 9 was issued by the IASB in July 2014 and is effective for
accounting periods beginning on or after 1 January 2018. IFRS 9
replaces IAS 39 Financial Instruments: Recognition and Measurement
and introduces new requirements for:
-- the classification, measurement and de-recognition of
financial assets and financial liabilities;
-- the impairment of financial assets and financial liabilities; and
-- general hedge accounting.
Classification, measurement and de-recognition
There has been no change in the classification of the company's
financial assets and financial liabilities.
Impairment model
IFRS 9 introduces an expected credit loss model as opposed to an
incurred credit loss approach in recognising any impairment of
financial assets. The expected credit loss model requires the
company to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in
credit risk since initial recognition of the financial assets. In
other words, it is no longer necessary for a credit event to have
occurred before credit losses are recognised.
Financial impact
The Group has adopted the modified retrospective approach in
applying IFRS 9 whereby no comparative figures are restated but
instead, a cumulative catch up adjustment is recognised, if
necessary, in opening retained earnings.
Other than disclosure, the above change in accounting policy has
not resulted in a material difference for the year ended 31
December 2018 by performing the 2018 allowance calculation based on
the IFRS 9 requirements and consequently the opening retained
earnings has not been adjusted.
1. Segment analysis
IFRS 8 requires an entity to report financial and descriptive
information about its reportable segments, which are operating
segments or aggregations of operating segments that meet specific
criteria. Operating segments are components of an entity about
which separate financial information is available that is evaluated
regularly by the Chief Operating decision maker. The Chief
Executive Officer is the Chief Operating decision maker of the
Group.
Management currently identifies two divisions as operating
segments - Mining (Sub-holding company and operating entities) and
Corporate (Ultimate Holding Company) . These operating segments are
monitored and strategic decisions are made based upon them together
with other non-financial data collated from exploration activities.
Principal activities for these operating segments are as
follows:
2018 Group Mining and 31 December
Exploration Corporate 2018 (GBP)
Group Group Group
Administrative cost (166,439) (256,682) (423,121)
Exploration expenditure (77,740) - (77,740)
Foreign exchange gain/(losses) 21,656 - 21,656
Profit/ (Loss) after tax (222,523) (256,682) (479,205)
------------- ---------- ------------
2017 Group Mining and 31 December
Exploration Corporate 2017 (GBP)
Group Group Group
Administrative cost (217,583) (723,227) (940,810)
Exploration expenditure (911,649) - (911,649)
Foreign exchange gain/(losses) (36,005) - (36,005)
Profit/ (Loss) after tax (1,165,237) (723,227) (1,888,464)
------------- ---------- ------------
2018 Group 31 December
Mining Corporate 2018 (GBP)
Group Group Group
-------- ---------- ------------
Assets 308,376 313,855 622,231
Segment assets
Liabilities
Segment liabilities 132,301 43,198 175,499
2017 Group 31 December
Mining Corporate 2017 (GBP)
Group Group Group
-------- ---------- ------------
Assets
Segment assets 330,161 236,497 566,658
Liabilities
Segment liabilities 132,669 42,615 175,284
Geographical segments
The Group operates in three principal geographical areas -
United Kingdom, Cyprus and Tanzania.
Total
Tanzania Cyprus United Kingdom 31 December
(GBP) (GBP) (GBP) (GBP)
2018
Major Operational indicators
Carrying value of segmented
assets 236,989 71,387 313,855 622,231
Loss after tax (98,399) (124,124) (256,682) (479,205)
--------- ---------- --------------- -------------
Total
Tanzania Cyprus United Kingdom 31 December
(GBP) (GBP) (GBP) (GBP)
2017
Major Operational indicators
Carrying value of segmented
assets 1,818 - 564,840 566,658
Loss after tax (1,078,685) (175,497) (634,282) (1,888,464)
2. Revenue
The Group did not generate any revenue during the period 1
January 2018 to 31 December 2018.
3. Employee information (Including Directors)
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Wages and salaries - paid by
parent company 26,501 - 26,501 -
Wages and salaries - paid by
subsidiary companies 54,000 - 54,000 -
Social security costs 12,141 - 12,141 -
The average monthly number of employees (including executive
Directors) during the period was as follows:
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Directors 5 4 5 4
Management - - - -
Employees - - - -
------------- ------------- ------------- -------------
5 4 5 4
------------- ------------- ------------- -------------
Total remuneration of key management personnel (Directors and
key senior personnel) is GBP26,501 (2017: GBPnil).
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Short-term benefits 26,501 - 26,501 -
26,501 - 26,501 -
------------- ------------- ------------- -------------
No Director received emoluments more than GBP250,000
(2017:nil).
4. Auditors remuneration
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Fees payable to the Group's
auditors for the audit of the
Group's annual financial statements 15,000 15,000 - -
Fees payable to the Group's
auditors for the audit of the
Company and subsidiary annual
financial statements 31,266 - 23,065 12,000
46,266 15,000 23,065 10,000
------------- ------------- ------------- -------------
Included in auditors remuneration are fees of GBP2,000 paid to
the auditors in respect of non-audit services performed for the
Group.
5. Taxation
Current tax
31 December 31 December
2018 (GBP) 2017 (GBP)
UK corporation tax based on the results for the - -
period at 20% (2017: 20%)
------------ ------------
- -
------------ ------------
2018 (GBP) 2017 (GBP)
----------- ------------
Loss on ordinary activities before tax (479,205) (1,888,464)
----------- ------------
Income tax expense calculated at 20% (2017: 20%) (95,841) (377,693)
----------- ------------
Expenses which are not deductible 95,841 377,693
Income tax expense recognised in the Statement - -
of Comprehensive Income
----------- ------------
No provision has been made for the 2018 deferred taxation as no
taxable income has been received to date, and the probability of
future taxable income is indicative of current market conditions
which remain uncertain.
At the Statement of Financial Position date, the Directors
estimate that the Group has unused tax losses of GBP1,561,587
(2017: GBP1,234,338) available for potential offset against future
profits.
Losses may be carried forward indefinitely in accordance with
the applicable taxation regulations ruling within each of the above
jurisdictions.
6. Loss per share
Basic loss per share
The basic loss and weighted average number of ordinary shares
used for calculation purposes comprise the following:
Basic Loss per share 31 December 31 December
2018 (GBP) 2017 (GBP)
Loss for the period attributable
to equity holders of the parent (479,205) (1,888,464)
Weighted average number of ordinary
shares for the purposes of basic
loss per share 122,411,677 72,618,218
Basic loss per ordinary share (pence) (0.39) (2.6)
Katoro has no dilutive instruments in existence as at year end.
The Company had in issue warrants as at 31 December 2017 and 2018,
though the inclusion of such warrants in the weighted average
number of shares in issue in 2017 and 2018 would be anti-dilutive
and therefore they have not been included for the purpose of
calculating the loss per share.
7. Exploration and evaluation assets
Exploration and evaluation assets consist solely of separately
identifiable prospecting assets acquired during the current
financial period as part of the acquisition of Kibo Nickel and its
subsidiaries (refer to note 14 for more detail on this
acquisition).
The following reconciliation serves to summarise the composition
of intangible prospecting assets as at period end:
Reconciliation of exploration and evaluation assets
Haneti
(GBP)
Carrying value as at 1 January 2017 -
--------
Acquisition of prospecting licences -
Impairment of licences -
Carrying value as at 1 January 2018 -
--------
Acquisition of prospecting licences (Haneti) 209,500
Impairment of licences -
Carrying value as at 31 December 2018 209,500
--------
Exploration and evaluation assets are not amortised, due to the
indefinite useful life which is attached to the underlying
prospecting rights, until such time that active mining operations
commence, which will result in the exploration and evaluation asset
being amortised over the useful life of the relevant mining
licences.
Exploration and evaluation assets with an indefinite useful life
are assessed for impairment on an annual basis, against the
prospective fair value of the exploration and evaluation asset. The
valuation of exploration and evaluation assets with an indefinite
useful life is reassessed on an annual basis through valuation
techniques applicable to the nature of the exploration and
evaluation assets.
In assessing whether a write-down is required in the carrying
value of a potentially impaired exploration and evaluation asset,
the asset's 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. The valuation techniques applicable
to the valuation of the abovementioned exploration and evaluation
assets comprise a combination of fair market values, discounted
cash flow projections and historic transaction prices.
The following key assumptions influence the measurement of the
exploration and evaluation assets recoverable amounts, through
utilising the value in use method in order to determine the
recoverable amount:
-- Comparable market value of similar mineral statements;
-- Currency fluctuations and exchange movements;
-- Expected growth rates;
-- Cost of capital related to funding requirements;
-- Applicable discounts rates;
-- Future operating expenditure for extraction and mining of measured mineral resources; and
-- Co-operation of key project partners going forward.
Management have considered indicators of impairment in relation
to the exploration and evaluation assets and have not identified
any existing as at period end. The following factors were
considered by management:
-- The period for the entity has the right to explore in the specific area;
-- Substantive expenditure required on further exploration for
and evaluation of mineral resources in the specific area which is
neither budgeted nor planned;
-- Whether the exploration for and evaluation of mineral
resources in the specific area have not led to the discovery of
commercially viable quantities of mineral resources and the entity
has decided to discontinue such activities in the specific area;
and
-- Sufficient data exists to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
Haneti comprises tenements (prospecting licences, offers and
applications) prospective for nickel, platinum-group-elements and
gold. It covers an area of approximately 5,000 sq. km in central
Tanzania and forms a near contiguous project block. The project
area straddles the Dodoma, Kondoa and Manyoni districts all within
the Dodoma (Administrative) Region. The main prospective belt of
rocks within the project, the Haneti-Itiso Ultramafic Complex
(HIUC), is centred on the small town of Haneti, located 88
kilometres north of Tanzania's capital city Dodoma . The HIUC
sporadically crops out over a strike length of 80 kilometres with
most outcrop exposure occurring 15 kilometres east of Haneti
village where artisanal mining of the sem-precious mineral
chrysoprase (nickel stained chalcedonic quartz) is being carried
out at a few localities.
8. Cash and cash equivalents
Group (GBP) Company (GBP)
Cash consists of: 2018 2017 2018 2017
------- ------- ------- -------
Cash at bank and in hand 412,731 564,480 313,855 236,497
412,731 564,480 313,855 236,497
======= ======= ======= =======
Cash and cash equivalents have not been ceded, or placed as
encumbrance toward any liabilities as at year end.
9. Share capital - Group and Company
The called-up and fully paid share capital of the Company is as
follows:
2018 2017
Allotted, issued and fully paid shares
149,447,825 (2017: 108,283,332 Ordinary GBP1,494,478 GBP1,082,833
shares of GBP0.01 each)
GBP1,494,478 GBP1,082,833
Ordinary
Number of Share Capital Share Premium
Shares (GBP) (GBP)
Balance at 31 December 2016 17,250,000 172,500 918,631
------------ --------------- --------------
Shares issued during the period 91,033,332 910,333 1,131,787
Balance at 31 December 2017 108,283,332 1,082,833 2,050,418
------------ --------------- --------------
Shares issued during the period 41,164,493 411,645 135,988
Balance at 31 December 2018 149,447,825 1,494,478 2,186,406
------------ --------------- --------------
All ordinary shares issued have the right to vote, right to
receive dividends, a copy of the annual report, and the right to
transfer ownership of their shares.
A summary of the shares issued is as follows:
Share
Number capital Share premium Total
of shares (GBP) (GBP) (GBP)
----------- --------- -------------- --------
Shares issued for settlement of
expenditure 779,878 7,799 14,834 22,633
Placing shares 25,000,000 250,000 75,000 325,000
Consideration shares 15,384,615 153,846 46,154 200,000
41,164,493 411,645 135,988 547,633
----------- --------- -------------- --------
10. Warrants reserve
Following the Company's admission to trading on the AIM market
of London Stock Exchange, the Company issued warrants over
1,208,333 Ordinary Shares as follows:
-- As part of Beaufort's (Beaufort Securities Limited, the
former broker to the Group) fees in respect of the Placing, the
Company issued 1,208,333 warrants in respect of 1,208,333 Ordinary
Shares, exercisable at the issue price. Each warrant shall entitle
Beaufort to subscribe for one new Ordinary Share and shall be
exercisable at the Placing Price for up to five years.
The fair value of the warrants issued have been determined using
the Black-Scholes option pricing model. The fair value at the date
of grant per warrant was GBP0.06. The fair value of the warrants
issued has been charged to the share premium account, as the
warrants were issued for services directly related to the issue of
shares, the resulting charge is GBP41,808.
The following reconciliation serves to summarise the composition
of the warrant reserve as at period end:
Group (GBP)
----------------
2018 2017
------- -------
Opening balance of warrant reserve 41,808 -
Issue of share options and warrants - 41,808
41,808 41,808
------- -------
The inputs to the Black-Scholes model were as follows:
Description of key input Quantum
Warrants granted 1,208,333
Stock price 6p
Exercise price 6p
Risk free rate 0.1%
Volatility 70%
Time to maturity 5 years
11. Reserves
Share premium
The share premium account includes any premium on the initial
issuing of share capital. Any transaction costs associated with the
issue of shares are deducted from the share premium account.
Translation reserve
The translation reserve relates to the foreign exchange effect
of the retranslation of the Group's overseas subsidiaries on
consolidation into the Group Financial Information.
Capital contribution reserve
During the year ended 31 December 2014, Kibo Gold converted a
balance of GBP7,226 owed to Kibo Energy PLC into equity as there
were no repayment terms. During the year ended 31 December 2015 an
additional amount of GBP3,302 was converted to equity.
Merger reserve
The introduction of the new holding company has been accounted
for as a capital reorganisation using merger accounting principles.
The use of merger accounting principles has resulted in a balance
on Group capital and reserves that have been classified as a merger
reserve and included in the Group's shareholders' funds.
12. Trade and other payables
Group Group Company Company
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
------------ ------------ ------------ ------------
Amounts falling due within one year:
Trade payables 135,461 70,926 28,198 42,572
Accruals 40,038 104,322 15,000 14,218
175,499 175,248 43,198 56,790
------------ ------------ ------------ ------------
The carrying value of current trade and other payables equals
their fair value due mainly to the short term nature of these
payables.
13. Investment in subsidiaries
Subsidiary
undertakings
(GBP)
Investments at Cost
--------------
At 1 January 2017 -
--------------
Additions 610,000
Advances to subsidiaries 1,151,014
At 31 December 2017 (GBP) 1,761,014
--------------
Additions (capitalised acquisition cost of Haneti
Project) 200,000
Advances to subsidiaries 71,010
Provision for impairment (1,044,915)
At 31 December 2018 (GBP) 987,109
--------------
The above investment in subsidiaries comprises the carrying
value of the investments in Kibo Gold Ltd and Kibo Nickel Ltd, as
well as the capital contributions, net of impairment.
At 31 December 2018 the Company had the following
undertakings:
Subsidiary,
associate Interest Interest
or Joint Registered Incorporated held held
Description Venture address Activity in (2018) (2017)
------------------- ------------- ----------------- --------------------- -------------- --------- ---------
Directly held subsidiaries
Kolonakiou,57
Ag. Athanasios
4103, Limassol
Kibo Gold Limited Subsidiary Cyprus Holding Company Cyprus 100% 100%
Kibo Nickel Subsidiary Kolonakiou,57 Holding Company Cyprus 100% -
Limited Ag. Athanasios
4103, Limassol
Cyprus
Indirectly held subsidiaries
Amani Place
10(th) Floor,
Wing A
Ohio Street
Savannah Mining Dar es Salaam
Limited Subsidiary Tanzania Mineral Exploration Tanzania 100% 100%
Amani Place
10(th) Floor,
Wing A
Ohio Street
Reef Miners Dar es Salaam
Limited Subsidiary Tanzania Mineral Exploration Tanzania 100% 100%
Eagle Exploration Subsidiary Amani Place Mineral Exploration Tanzania 100% -
Limited 10(th) Floor,
Wing A
Ohio Street
Dar es Salaam
Tanzania
The value of the investments is dependent on the discovery and
successful development of evaluation and exploration assets. Taking
into account the slow progress in furthering the development, and
continued resistance from the Tanzanian Government on the growth of
foreign - owned Gold Mining entities, management believe that the
partial value of the Lake Victoria Gold project, which constitutes
a substantial portion of the value of the investment in Kibo Gold
Limited, will not be realistically realised in the foreseeable
future, and an impairment of GBP1,044,915 has been provided against
this investment. Should the development of the evaluation and
exploration assets prove unsuccessful, the carrying value in the
statement of financial position will be written off. In the opinion
of the Directors' the carrying value of the investments is
appropriate.
14. Acquisition of subsidiary
On 22 June 2018, the Company entered into an agreement to
acquire the entire interest held ("100%") in Kibo Nickel Group
(Kibo Nickel Limited and its subsidiary Eagle Exploration Limited)
from Kibo Mining Cyprus Limited, an existing subsidiary of Kibo
Energy PLC. The acquisition price of GBP200,000 was settled through
the issue of 15,384,615 ordinary shares in Katoro together with a
2% royalty payable on any sales revenue (less transportation and
refining costs) in respect to nickel or nickel concentrates, thus
making the acquisition a significant non-cash transaction. As the
project is at a very early stage, the royalty liability cannot be
measured reliably and is not recognised in the accounts.
The assets were acquired from the parent company, thus the
transaction is considered a common control transaction. As
described in the Summary of significant accounting policies on page
28, management applied the provisions of IFRS 3.
In accordance with IFRS 3: Business Combinations, Kibo Nickel,
an entity which does not have processes, input and output, cannot
be defined as a business. Thus, as Kibo Nickel is not a business as
defined in accordance with IFRS 3, the acquisition method as
prescribed by IFRS 3 would not be applicable. As a result, the
acquisition was classified as an asset acquisition. The management
consider the asset to be unique and hence a fair market price is
not easily obtainable. On this basis the management used the
provisions within IFRS 2 to value it based on the fair value of the
instruments granted.
The following table provides detail relating to the
acquisition:
2018 (GBP)
Fair value of exploration licenses acquired 209,500
Cash and cash equivalents 560
Trade and other payables (10,060)
-----------
Net assets acquired 200,000
-----------
A comparison of the book value and fair value of the assets and
liabilities acquired is presented below:
Description Book value Fair value
Exploration licences acquired - 209,500
Cash and cash equivalents 560 560
Trade and other payables (10,060) (10,060)
----------- -----------
Net (liabilities)/assets (9,500) 200,000
----------- -----------
The intangible asset has been recognised at a provisional fair
value as management have not completed their assessment as at 31
December 2018.
15. Related parties
Relationships
Name Relationship
Kibo Energy PLC Ultimate parent company
Mzuri Exploration Services Common shareholding
Limited
Balances and transactions
Name Amount Amount (GBP)
(GBP)
2018 2017
Mzuri Exploration Services Limited 103,500 85,081
Related parties of the Group comprise subsidiaries, significant
shareholders, and the Directors.
The ultimate controlling party is Kibo Energy PLC, and no single
party controls Kibo Energy PLC.
The acquisition of Kibo Nickel Limited and its subsidiary,
discussed in Note 14, is a related party transaction as the
ultimate holding company of these entities before the acquisition
was Kibo Energy PLC, the ultimate controlling party of Katoro.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation.
The transactions during the period between the Company and its
subsidiaries included the settlement of expenditure to/from
subsidiaries, working capital funding, and settlement of the
Company's liabilities through the issue of equity in subsidiaries.
The loans to/from Group companies do not have fixed repayment terms
and are unsecured.
16. Financial Instruments and Financial Risk Management
The Group and Company's principal financial instruments
comprises cash. The main purpose of these financial instruments is
to provide finance for the Group and Company's operations. The
Group has various other financial assets and liabilities such as
trade receivables and trade payables, which arise directly from its
operations.
It is, and has been throughout the 2018 and 2017 financial
period, the Group and Company's policy not to undertake trading in
derivatives.
The main risks arising from the Group and Company's financial
instruments are foreign currency risk, credit risk, liquidity risk,
interest rate risk and capital risk. Management reviews and agrees
policies for managing each of these risks which are summarised
below.
2018 (GBP) 2017(GBP)
Financial Financial
Loans at liabilities Loans at liabilities
Financial instruments of amortised at amortised amortised at amortised
the Group are: cost cost cost cost
----------------------------- ----------- -------------- ----------- --------------
Financial assets
Trade and other receivables - - 1,818 -
Cash and cash equivalents 412,731 - 564,840 -
Financial liabilities
Trade payables - 175,499 - 175,284
2018 (GBP) 2017(GBP)
Financial Financial
Loans at liabilities Loans at liabilities
Financial instruments of amortised at amortised amortised at amortised
the Company are: cost cost cost cost
--------------------------- ----------- -------------- ----------- --------------
Financial assets
Cash and cash equivalents 313,855 - 236,497 -
Financial liabilities
Trade payables - 43,198 - 56,790
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currencies and exposures to exchange rate fluctuations therefore
arise. Exchange rate exposures are managed by continuously
reviewing exchange rate movements in the relevant foreign
currencies. The exposure to exchange rate fluctuations is limited
as the Company's subsidiaries operate mainly with Sterling, Euros,
US Dollar and Tanzanian Shillings.
At the period ended 31 December 2018, the Group had no
outstanding forward exchange contracts.
There was no material exposure to foreign currencies at 31
December 2018.
Exchange rates used for conversion of foreign subsidiaries
undertakings were:
2018 2017
------- -------
USD to GBP (Spot) 0.78711 0.74108
USD to GBP (Average) 0.74994 0.77649
EURO to GBP (Spot) 0.90053 0.88773
EURO to GBP (Average) 0.88481 0.87638
The Executive Chairman of the Group monitor the Group's exposure
to the concentration of fair value estimation risk on a monthly
basis.
Credit risk
Credit risk refers to the risk that a counter party will default
on its contractual obligations resulting in financial loss to the
Group. As the Group does not, as yet, have any sales to third
parties, this risk is limited.
The Group and Company's financial assets comprise receivables
and cash and cash equivalents. The credit risk on cash and cash
equivalents is limited because the counterparties are banks with
high credit-ratings assigned by international credit rating
agencies. The Group and Company's exposure to credit risk arise
from default of its counterparty, with a maximum exposure equal to
the carrying amount of cash and cash equivalents in its
consolidated statement of financial position.
The Group does not have any significant credit risk exposure to
any single counterparty or any Group of counterparties having
similar characteristics. The Group defines counterparties as having
similar characteristics if they are connected or related
entities.
Financial assets exposed to credit risk at period end were as
follows:
Financial instruments Group (GBP) Company (GBP)
2018 2017 2018 2017
----------- ---------- ----------- ----------
Trade & other receivables - 1,818 - -
Cash 412,731 564,840 313,855 236,497
----------- ---------- ----------- ----------
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has built an appropriate liquidity
risk management framework for the management of the Group and
Company's short, medium and long-term funding and liquidity
management requirements.
The Group manages liquidity risk by maintaining adequate
reserves and by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and
liabilities. Cash forecasts are regularly produced to identify the
liquidity requirements of the Group.
The Group and Company's financial liabilities as at 31 December
2018 were all payable on demand, other than the trade payables to
other Group undertakings.
Less than Greater than
Group (GBP) 1 year 1 year
At 31 December 2018
Trade and other payables 175,499 -
At 31 December 2017
Trade and other payables 175,284 -
Company (GBP)
At 31 December 2018
Trade and other payables 43,198 -
At 31 December 2017
Trade and other payables 56,790 -
Interest rate risk
The Group and Company's exposure to the risk of changes in
market interest rates relates primarily to the Group and Company's
holdings of cash and short term deposits.
It is the Group and Company's policy as part of its management
of the budgetary process to place surplus funds on short term
deposit in order to maximise interest earned.
Group Sensitivity Analysis:
Currently no significant impact exists due to possible interest
rate changes on the Company's interest bearing instruments.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and
equity balance.
The Group manages its capital structure and makes adjustments to
it, in light of changes in economic conditions. To maintain or
adjust its capital structure, the Group may adjust or issue new
shares or raise debt. No changes were made in the objectives,
policies or processes during the period ended 31 December 2018. The
capital structure of the Group consists of equity attributable to
equity holders of the parent, comprising issued capital, reserves
and retained losses as disclosed in the consolidated statement of
changes in equity.
Fair values
The carrying amount of the Group and Company's financial assets
and financial liabilities recognised at amortised cost in the
financial statements approximate their fair value.
Hedging
At 31 December 2018, the Group had no outstanding contracts
designated as hedges.
17. Events after the reporting period
Issue of share options and fee shares
The Company issued 14,944,783 new Ordinary Share options of
GBP0.01 each in the capital of the Company ("Options") to the Board
and Management of the Company during February 2019. The Options
constituted 10% of the Company's issued share capital at the time
of issue, and were issued at a price of 1.3 pence each. The Options
have an expiry date of the seventh anniversary of the date of
grant, with 50% vesting on issue and the remaining 50% vesting in
one year.
The Company also agreed to issue 7,958,575 new Ordinary Shares
to Mzuri Exploration Services Ltd ("MXS") (the "MXS Fee Shares")
during February 2019 for services provided to the Company. The
Board resolved, in order to conserve cash, to settle all
outstanding fees accrued up to 31 December 2018, which amounted to
approximately GBP103,500 through the issue of the MXS Fee Shares at
a price of 1.3 pence each.
The Company also issued 556,077 new Ordinary Shares to Pieter
Krugel, the Company's financial controller, in lieu of overtime for
his ongoing services provided to the Company at a price of 1.3
pence each.
Investment and Option Agreement with African Battery Metals PLC
("ABM")
ABM, the AIM quoted battery metal exploration and development
company, acquired an interest in Katoro and entered into an option
agreement (the "Option") with Katoro to acquire an interest in the
Haneti Project during March 2019. Following the recent exercise of
the option, ABM has invested GBP100,000 and acquired 10 million new
Ordinary Shares, together with 10 million warrants over Ordinary
Shares, and a 25% interest in the Haneti Project. Pursuant to the
agreement, ABM has the ability to acquire a further 10% of Haneti
for a further GBP25,000.
18. Commitments and Contingencies
The Group does not have identifiable material contingencies or
commitments as at the reporting date. Any contingent rental is
expensed in the period in which it is incurred.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR PGURWAUPBGPP
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