TIDMKRPZ
RNS Number : 7067N
Kropz PLC
26 September 2019
26 September 2019
Kropz plc
("Kropz" or the "Company")
Interim Results for the Period ended 30 June 2019
Kropz plc (AIM: KRPZ), an emerging African explorer and
developer of plant nutrient feed minerals, announces its results
for the six months ended 30 June 2019.
The full financial report is available online at the Company's
website www.kropz.com.
Key financial indicators
-- Impairment in the value of property, plant, equipment, mine
development costs and exploration assets at Kropz Elandsfontein
(Pty) Ltd ("Elandsfontein") of US$49 million;
-- Cash at 30 June 2019 of US$17 million (as at 31 December 2018 US$30 million); and
-- Trade and other payables at 30 June 2019 of US$3 million (as
at 31 December 2018 US$12 million).
Key corporate and operational developments during the period
Corporate
On 1 February 2019, the Company issued 1,357,080 new ordinary
shares of GBP0.001 each in the capital of the Company at a price of
40 pence per share for a total consideration of GBP542,832
(equivalent to approximately US$710,000) and 1,116,544 warrants at
an exercise price of 40 pence per warrant to certain advisers in
lieu of cash fees arising from their involvement with the Company's
admission to AIM on 30 November 2018 and the acquisition of Cominco
Resources Limited ("Cominco"). The new ordinary shares were
admitted to trading on AIM on 6 February 2019.
On 19 February 2019, the Company applied the provisions of
section 176 of the BVI Business Companies Act 2004 to compulsorily
redeem any outstanding ordinary shares of Cominco held by the
remaining Cominco shareholders. Pursuant to the compulsory
redemption, Kropz acquired the remaining 482,927 Cominco shares for
which a further 803,315 ordinary shares were issued at a price of
40 pence per share for a total consideration of GBP321,326
(equivalent to approximately US$419,000). The new ordinary shares
were admitted to trading on AIM on 22 February 2019. Following the
compulsory redemption, the Company holds 100% of the issued share
capital of Cominco.
Elandsfontein
During the period under review, Elandsfontein continued to work
with Mintek, South Africa, and Eriez, USA, to undertake
confirmatory pilot scale and other processing test work ("Test
Work") to confirm the final processing design at Elandsfontein. DRA
Mineral Projects ("DRA") was appointed to complete the engineering
design.
Indications at 30 June 2019 were that the commissioning of the
Elandsfontein plant was expected to be delayed at an anticipated
additional cost of approximately US$20 million (inclusive of
working capital costs, debt repayments and capital
expenditure).
Hinda
The completed DRA Option Study has confirmed the potential to
export circa 1.8Mtpa phosphate rock from the Hinda project out of
the port of Pointe-Noire, as well as the potential viability of
both the starter and optimised projects.
The Port Authority at Pointe-Noire have agreed to allocate a
port site of increased dimensions to the Hinda project.
The ratification process for the signed Hinda Mining Investment
Agreement ("MIA") has been advanced to the level of the Republic of
Congo ("RoC") Supreme Court.
Aflao
A second phase of Mobile Metal Iron sampling was initiated in
April 2019 at Aflao in Ghana. Samples were taken from the most
prospective target area on a 100m by 500m grid. The samples were
sent to SGS in Toronto for multi element analyses.
Key corporate and operational developments post period end
Corporate
On 27 June 2019, Kropz announced that it had raised US$4.34
million (GBP3.41 million), before expenses, by way of a placing of
19,364,659 ordinary shares of 0.1 pence each at a price of 17.6 per
ordinary share, increasing the issued share capital to 283,406,307
ordinary shares. The net proceeds of the placing will be used to
provide additional working capital and more specifically to further
advance the programme of works being carried out at its Hinda and
Aflao projects. The placing shares were issued and admitted to
trading on AIM on 3 July 2019.
Elandsfontein
As announced on 12 September 2019 in an Elandsfontein update,
the Test Work has indicated that a reverse flotation modification
to the current circuit will produce a saleable product at lower
grade than originally targeted. As a direct consequence of the
prevailing depressed phosphate rock prices, an alternate process
modification is being considered to deliver the required process
efficiencies at viable economic returns. Further Test Work will be
required to at least the end of 2019 to confirm this.
As a result of the above delay in recommissioning and current
depressed phosphate rock prices, an impairment of US$ 49 million
was made to the carrying value of property, plant, equipment, mine
development costs and exploration assets in Elandsfontein.
The appeal against Elandsfontein's existing and valid integrated
water use licence was set to be heard by the Water Tribunal on 11
September 2019, however the appellant requested that this be
postponed. At the date of this report no date has been fixed for
the hearing.
Hinda
On the Hinda project, four engineering companies have been
approached, all of whom have expressed interest in participating in
the tender process for the updated definitive feasibility study for
the optimised project.
An amended Environmental Social Impact Assessment will be
required in the RoC as a result of the addition of a gas pipeline
and the inclusion of a dryer on site.
Aflao
Radiometric and drone surveys were also completed within the
Aflao license area, with the results of all three stages of survey
work being reviewed and compiled.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) no 596/2014.
For further information visit www.kropz.com or contact:
Kropz Plc
+44 (0) 1892 516
Ian Harebottle (CEO) 232
Grant Thornton UK Nominated Adviser
LLP
Richard Tonthat +44 (0) 20 7383
Samantha Harrison 5100
Hannam & Partners Joint Broker
Andrew Chubb +44 (0)20 7907
Ernest Bell 8500
Mirabaud Securities Joint Broker
Ltd
Rory Scott +44 (0)20 3167 7220
Edward Haig-Thomas +44 (0)20 3167 7222
Tavistock Financial PR & IR
(UK)
Emily Moss +44 (0) 207 920
Jos Simson 3150
Oliver Lamb kropz@tavistock.co.uk
Russell & Associates PR (South Africa)
Charmane Russell +27 (0)11 880 3924
James Duncan charmane@rair.co.za
About Kropz plc
Kropz is an emerging African explorer and developer of plant
nutrient feed minerals with phosphate projects in South Africa and
the RoC and an exploration asset in Ghana. The vision of the Group
is to become a leading independent phosphate rock producer and to
develop into an integrated, mine-to-market plant nutrient company
focusing on sub-Saharan Africa.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30
JUNE 2019
30 June 31 December
2019 2018
Unaudited Audited
Notes US$'000 US$'000
Non-current assets
Property, plant, equipment and mine
development 6 56,284 101,826
Exploration assets 7 38,398 40,772
Other financial assets 1,661 1,623
----------- ------------
96,343 144,221
----------- ------------
Current assets
Inventories 880 861
Amounts due from a director 17 28 33
Trade and other receivables 1,135 331
Cash and cash equivalents 16,561 30,457
----------- ------------
18,604 31,682
----------- ------------
TOTAL ASSETS 114,947 175,903
----------- ------------
Current liabilities
Trade and other payables 3,156 11,956
Other financial liabilities 11 530 518
Current taxation 51 -
----------- ------------
3,737 12,474
----------- ------------
Non-current liabilities
Shareholder loans 10 14,779 14,386
Other financial liabilities 11 29,537 29,551
Tax payable 246 66
Provisions 4,024 3,931
----------- ------------
48,586 47,934
----------- ------------
TOTAL LIABILITIES 52,323 60,408
----------- ------------
NET ASSETS 62,624 115,495
----------- ------------
Shareholders' equity
Share capital 8 363 335
Share premium 8 143,127 142,026
Merger reserve (20,523) (20,523)
Accumulated losses (46,819) (6,255)
Foreign exchange translation reserve (180) (1,226)
----------- ------------
Total equity attributable to the
owners of the Company 75,968 114,357
Non-controlling interests (13,344) 1,138
----------- ------------
62,624 115,495
----------- ------------
The accompanying notes form part of the Condensed Consolidated
Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2019
Six months
ended Period from
30 June 10 January
to 31 December
2019 2018
Unaudited Audited
Notes US$'000 US$'000
Revenue - -
Other income 3 2
Operating expenses (4,475) (5,674)
----------- -----------------
Operating loss (4,472) (5,672)
Finance income 12 882 382
Finance expense 13 (2,186) (2,321)
Impairment losses 14 (48,900) -
----------- -----------------
Loss before taxation (54,676) (7,611)
----------- -----------------
Taxation 15 (246) (66)
Loss after taxation (54,922) (7,677)
----------- -----------------
Loss attributable to:
Owners of the Company (40,573) (6,255)
Non-controlling interests (14,349) (1,422)
----------- -----------------
(54,922) (7,677)
----------- -----------------
Loss for the period (54,922) (7,677)
Other comprehensive income:
Items that may be subsequently reclassified
to profit or loss
* Exchange differences on translation of parent company
financial statements from functional to presentation
currency 70 (956)
* Exchange differences on translating foreign
operations 1,268 (270)
----------- -----------------
Total comprehensive loss (53,584) (8,903)
----------- -----------------
Attributable to:
Owners of the Company (39,527) (7,481)
Non-controlling interests (14,057) (1,422)
----------- -----------------
(53,584) (8,903)
----------- -----------------
Earnings per share attributable to
owners of the Company:
Basic and diluted (US cents) 16 (15.39) (25.45)
----------- -----------------
The accompanying notes form part of the Condensed Consolidated
Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2019
Foreign
currency Total
Share Share Merger translation Retained attributable Non-controlling Total
capital premium reserve reserve earnings to owners interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 10
January 2018 - - - - - - - -
Total
comprehensive
loss for the
period - - - (1,226) (6,255) (7,481) (1,422) (8,903)
Issue of shares 335 143,297 14,878 - - 158,510 - 158,510
Costs of issuing
shares - (1,271) - - - (1,271) - (1,271)
Adjustments
on acquisition
of subsidiaries - - (35,401) - - (35,401) 2,560 (32,841)
Transactions
with owners 335 142,026 (20,523) - - 121,838 2,560 124,398
---------- -------- --------- ------------ --------- -------------- ---------------- ---------
Balance at 31
December 2018 335 142,026 (20,523) (1,226) (6,255) 114,357 1,138 115,495
---------- -------- --------- ------------ --------- -------------- ---------------- ---------
Total
comprehensive
profit /
(loss)
for the period - - - 1,046 (40,573) (39,527) (14,057) (53,584)
Issue of shares 28 1,101 - - - 1,129 - 1,129
Acquisition
of
non-controlling
interests - - - - 9 9 (425) (416)
Share based
payment charges - - - - - - - -
Transactions
with owners 28 1,101 - - 9 1,138 (425) 713
---------- -------- --------- ------------ --------- -------------- ---------------- ---------
Balance at 30
June 2019 363 143,127 (20,523) (180) (46,819) 75,968 (13,344) 62,624
---------- -------- --------- ------------ --------- -------------- ---------------- ---------
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS FOR THE SIX MONTHSED 30 JUNE 2019
Period from
Six months 10 January
ended to
30 June 31 December
2019 2018
Unaudited Audited
US$'000 US$'000
Cash flows from operating activities
Loss before taxation (54,676) (7,611)
Adjustments for:
Depreciation of property, plant and equipment 463 457
Impairment losses 48,900 -
Finance income (214) (55)
Finance costs 2,186 771
Fair value gains on game animals - 32
Operating cash flows before working capital
changes (3,341) (6,406)
Increase in trade and other receivables (814) (240)
Decrease in inventories 1 -
(Decrease) / increase in payables (8,386) 1,989
Decrease in amounts due from / (to) related
parties 5 (47)
Increase in provisions - 534
Foreign currency exchange differences 24 (2,611)
----------- --------------
(12,511) (6,781)
Income taxes paid (17) -
Net cash flows used in operating activities (12,528) (6,781)
----------- --------------
Cash flows used in investing activities
Purchase of property, plant and equipment (5) (505)
Exploration and evaluation expenditure (49) -
Decrease in loans receivable - 293
Acquisition of subsidiaries, net of cash
acquired - 303
Finance income received 214 54
Net cash flows from investing activities 160 145
----------- --------------
Cash flows from financing activities
Finance costs paid (2,186) (771)
Shareholder loan received - 696
Other financial liabilities (708) 867
Issue of ordinary share capital net of share
issue costs 710 36,364
Net cash flows (used by) / from financing
activities (2,184) 37,156
----------- --------------
Net (decrease) / increase in cash and cash
equivalents (14,552) 30,520
Cash and cash equivalents at beginning of
the period 30,457 -
Foreign currency exchange gains / (losses)
on cash 656 (63)
Cash and cash equivalents at end of the period 16,561 30,457
----------- --------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2019
1. General information
Kropz plc (the "Company") and its subsidiaries (together, the
"Group") is an emerging African explorer and developer of plant
nutrient feed phosphate projects in South Africa and the Republic
of Congo (" RoC") and exploration assets in Ghana. The principal
activity of the Company is that of a holding company for the Group,
as well as performing all administrative, corporate finance,
strategic and governance functions of the Group.
The Company was incorporated on 10 January 2018 and is a public
limited company, with its ordinary shares admitted to the AIM
Market of the London Stock Exchange on 30 November 2018 trading
under the symbol, "KRPZ". The Company is domiciled in England and
incorporated and registered in England and Wales. The address of
its registered office is Suite 4F Easistore Building, Longfield
Road, North Farm Estate, Tunbridge Wells TN2 3EY. The registered
number of the Company is 11143400.
The Company entered into a number of agreements during 2018 to
acquire phosphate assets and in turn become the holding company of
the Group with interests in Ghana, South Africa and the RoC.
2. Basis of preparation
These interim consolidated financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting and
in accordance with the accounting policies of the consolidated
financial statements for the period ended 31 December 2018. They do
not include all disclosures that would otherwise be required in a
complete set of financial statements and should be read in
conjunction with the 2018 annual report. The statutory financial
statements for the period ended 31 December 2018 were prepared
under IFRS and IFRIC interpretations as adopted by the European
Union and in accordance with the requirements of the Companies Act
2006. They have been filed with the Registrar of Companies. The
auditors reported on those financial statements; their Audit Report
was unqualified but included a material uncertainty related to
going concern.
The interim consolidated financial statements have been prepared
under the historical cost convention, as modified for any financial
assets which are stated at fair value through profit or loss. They
are presented in United States Dollars, the presentation currency
of the Company and figures have been rounded to the nearest
thousand.
The interim financial information is unaudited and does not
constitute statutory accounts as defined in the Companies Act
2006.
The interim financial information was approved and authorised
for issue by the Board of Directors on 25 September 2019.
3. Going concern
Cash and cash equivalents totalled US$16.5 million as at 30 June
2019, of which US$15.8 million is committed to Kropz Elandsfontein.
The Group has no current source of operating revenue and is
therefore dependent on existing cash resources and future fund
raisings to meet overheads and future exploration requirements as
they fall due.
In July 2019, the Company raised US$4.34 million (GBP3.41
million) before expenses by way of a placing of ordinary shares to
enable the Group to continue to fund its Hinda and Aflao
exploration and development programme and fulfil its working
capital requirements.
The directors have prepared a cash flow forecast which indicates
that the Group will have sufficient liquidity to meet its forecast
working capital requirements for at least 12 months from the date
of this Interim Report, primarily being corporate costs and costs
related to the Aflao and Hinda projects in order for the Group to
meet its targeted objectives for these projects and cost of
Elandsfontein test work currently underway.
Additional funding will be required at Elandsfontein prior to
initiating the targeted upgrades to the processing plant, which are
currently expected to require additional funding of approximately
US$20 million with various options being considered by the Board on
how and when best to source this additional funding.
The directors have reviewed the Group's overall position and
outlook in respect of the matters identified above and are of the
opinion that the operational and financial plans in place are
achievable and accordingly the Group will be able to continue as a
going concern and meet its obligations as and when they fall due
for at least 12 months from the date of approval of these interim
financial statements. Consequently, the Directors have concluded
that it is appropriate to prepare the Group's Interim Consolidated
Financial Statements on a going concern basis.
4. Significant accounting policies
Other than as noted below, the Company has applied the same
accounting policies, presentation, methods of computation,
significant judgements and the key sources of estimation of
uncertainties in its interim consolidated financial statements as
in its audited financial statements for the period ended 31
December 2018, which have been prepared in accordance with IFRS as
adopted for use by the European Union.
These accounting policies will be adopted in the Group's full
financial statements for the year ending 31 December 2019.
Changes in accounting policy
IFRS 16
The Group has adopted IFRS 16 which became effective on 1
January 2019. The standard replaces IAS 17 'Leases' and for lessees
eliminates the classifications of operating leases and finance
leases. Except for short-term leases and leases of low-value
assets, right-of-use assets and corresponding lease liabilities are
recognised in the statement of financial position. Straight-line
operating lease expense recognition is replaced with a depreciation
charge for the right-of-use assets (included in operating costs)
and an interest expense on the recognised lease liabilities
(included in finance costs). In the earlier periods of the lease,
the expenses associated with the lease under IFRS 16 will be higher
when compared to lease expenses under IAS 17. However, EBITDA
(Earnings Before Interest, Tax, Depreciation and Amortisation)
results improve as the operating expense is now replaced by
interest expense and depreciation in profit or loss. For
classification within the statement of cash flows, the interest
portion is disclosed in operating activities and the principal
portion of the lease payments are separately disclosed in financing
activities.
Impact of adoption
The adoption of the standard did not have any impact on the
Group.
5. Segment information
Operating segments
Up to the date of approval of the nancial information for the
period ended 30 June 2019, the Board of Directors considered that
the Group had one operating segment, being that of phosphate
mining. Accordingly, all revenues, operating results, assets and
liabilities are allocated to this activity.
Geographical segments
Since the acquisition of First Gear Exploration Limited in June
2018, and the acquisitions of Kropz SA (Pty) Limited, Kropz
Elandsfontein (Pty) Ltd, Elandsfontein Land Holdings (Pty) Ltd and
Cominco Resources Limited in November 2018, the Group has operated
in three principal geographical areas - South Africa, Ghana and the
RoC.
The Group's non-current assets by location of assets are
detailed below.
South Africa Ghana RoC Group
30 June 2019 US$'000 US$'000 US$'000 US$'000
Total non-current assets 56,536 62 39,745 96,343
------------- --------- ---------- ---------
South Africa Ghana RoC Group
31 December 2018 US$'000 US$'000 US$'000 US$'000
Total non-current assets 103,441 62 40,718 144,221
------------- --------- ---------- ---------
6. Tangible assets - Property, plant, equipment and mine development
30 June 30 June 30 June 31 Dec 31 Dec 31 Dec
2019 2019 2019 2018 2018 2018
Accumulated
Depreciation Carrying Accumulated Carrying
Cost and impairment value Cost Depreciation value
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Buildings and infrastructure
Land 2,157 - 2,157 2,108 - 2,108
Buildings 11,484 (5,519) 5,965 11,217 (7) 11,210
Capitalised road
costs 9,209 (5,528) 3,681 8,996 (1,499) 7,497
Capitalised electrical
sub-station costs 3,995 (2,352) 1,643 3,903 (564) 3,339
Machinery, plant
& equipment
Critical spare
parts 1,212 - 1,212 1,185 - 1,185
Plant and machinery 55,615 (25,952) 29,663 54,329 (67) 54,262
Furniture & fittings 45 (41) 4 44 (40) 4
Geological equipment 49 (49) - 48 (47) 1
Office equipment 36 (10) 26 35 (8) 27
Other fixed assets 1 (1) - 1 - 1
Motor vehicles 133 (121) 12 130 (106) 24
Computer equipment 44 (37) 7 38 (33) 5
Mine development 19,167 (9,206) 9,961 18,724 - 18,724
Stripping activity
costs 3,264 (1,568) 1,696 3,188 - 3,188
Game animals 257 - 257 251 - 251
Total 106,668 (50,384) 56,284 104,197 (2,371) 101,826
-------- ---------------- --------- -------- ------------------ ---------
Reconciliation of property, plant, equipment and mine
development - Period ended 30 June 2019
Foreign
Opening Impairment Depreciation exchange Closing
Balance Additions provision charge gain/loss balance
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Buildings and
infrastructure
Land 2,108 - - - 49 2,157
Buildings 11,210 - (5,511) (1) 267 5,965
Capitalised
road costs 7,497 - (3,686) (308) 178 3,681
Capitalised
electrical
sub- station
costs 3,339 - (1,642) (133) 79 1,643
Machinery,
plant & equipment
Critical spare
parts 1,185 - - - 27 1,212
Plant and machinery 54,262 - (25,884) (2) 1,287 29,663
Furniture &
fittings 4 - - - - 4
Geological
equipment 1 - - (1) - -
Office equipment 27 - - (2) 1 26
Other fixed
assets 1 - - - (1) -
Motor vehicles 24 - - (12) - 12
Computer equipment 5 5 - (4) 1 7
Mine development 18,724 - (9,206) - 443 9,961
Stripping activity
costs 3,188 - (1,568) - 76 1,696
Game animals 251 - - - 6 257
Total 101,826 5 (47,497) (463) 2,413 56,284
--------- ---------- ----------- ------------- ----------- ---------
Reconciliation of property, plant, equipment and mine
development - Period ended 31 December 2018
Foreign
Opening Depreciation exchange Closing
Balance Additions Disposals charge gain/loss balance
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Buildings and
infrastructure
Land - 2,182 - - (74) 2,108
Buildings 11,608 (2) (396) 11,210
Capitalised road
costs - 8,072 - (302) (273) 7,497
Capitalised electrical
sub-station costs - 3,592 - (131) (122) 3,339
Machinery, plant
& equipment
Critical spare
parts - 1,256 (28) - (43) 1,185
Plant and machinery - 56,057 - - (1,795) 54,262
Furniture & fittings - 5 - (1) - 4
Geological equipment - 3 - (2) - 1
Office equipment - 30 - (2) (1) 27
Other fixed assets - 1 - - - 1
Motor vehicles - 37 - (12) (1) 24
Computer equipment - 11 - (5) (1) 5
Mine development - 19,384 - - (660) 18,724
Stripping activity
costs - 3,300 - - (112) 3,188
Game animals - 293 - - (42) 251
Total - 105,831 (28) (457) (3,520) 101,826
---------- ---------- ---------- ------------- ----------- ---------
Kropz Elandsfontein has a fully drawn down project financing
facility with BNP Paribas for USD30 million. BNP Paribas has an
extensive security package over all the assets of Kropz
Elandsfontein and Elandsfontein Land Holdings as well as the share
investments in those respective companies owned by Kropz SA.
7. Intangible assets - exploration and evaluation costs
30 June 30 June 30 June 31 Dec 31 Dec 31 Dec
2019 2019 2019 2018 2018 2018
Amort-
isation Carrying Amort- Carrying
Cost and impairment value Cost isation value
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Capitalised
costs 39,801 (1,403) 38,398 40,772 - 40,772
--------- ---------------- ----------- --------- ---------- -----------
Reconciliation of exploration assets
Foreign
Opening Impairment exchange Closing
Balance Additions provision loss balance
US$'000 US$'000 US$'000 US$'000 US$'000
Period ended 30
June 2019
Capitalised costs 40,772 49 (1,403) (1,020) 38,398
------------- ---------- ------------- ---------- ---------
Amounts
transferred Foreign
Opening on acquisition exchange Closing
Balance Additions of subsidiaries loss balance
US$'000 US$'000 US$'000 US$'000 US$'000
Period ended 31
December 2018
Capitalised costs - 42,083 (1,267) (44) 40,772
---------- ---------- ----------------- ---------- ---------
8. Share capital
Shares were issued during the period as set out below:
Number of Share Share Merger Total
shares capital premium reserve
US$'000 US$'000 US$'000 US$'000
On incorporation 1 - - - -
Issued to Kropz International
S.a.r.l. ("Kropz International") 49,999 - 70 - 70
Subdivision of shares 450,000 - - - -
Issued to Kropz International 163,221 - 117 - 117
Issued to Kropz International 1 - - - -
Issued to Kropz International 93,260,034 120 69,320 3,809 73,249
Issued to ARC Fund 5,499,124 7 2,811 - 2,818
Capitalisation of debt 9,875,698 13 5,049 - 5,062
Conversion of Loan
Note 6,902,148 9 2,520 - 2,529
Offer for Cominco 55,669,176 71 28,461 - 28,532
Placing and Subscription
shares 68,359,376 88 34,949 - 35,037
Further acceptances
of Offer for Cominco 21,652,475 27 - 11,069 11,096
Cost of issuing shares - - (1,271) - (1,271)
Adjustments on acquisition
of subsidiaries - - - (35,401) (35,401)
-------------- --------- ---------- ----------- ----------
At 31 December 2018 261,881,253 335 142,026 (20,523) 121,838
-------------- --------- ---------- ----------- ----------
Issue of shares to
advisers 1,357,080 18 692 - 710
Issue of shares on
compulsory redemption
of Cominco minorities 803,315 10 409 - 419
-------------- ------ ---------- ----------- ----------
At 30 June 2019 264,041,648 363 143,127 (20,523) 122,967
-------------- ------ ---------- ----------- ----------
On 1 February 2019, the Company issued 1,357,080 new ordinary
shares of GBP0.001 each in the capital of the Company at a price of
40 pence per share for a total consideration of GBP542,832
(equivalent to approximately US$710,000) and 1,116,544 warrants at
an exercise price of 40 pence per warrant to certain advisers in
lieu of cash fees arising from their involvement with the Company's
admission to AIM on 30 November 2018 and the acquisition of
Cominco. The new ordinary shares were admitted to trading on AIM on
6 February 2019.
On 19 February 2019, the Company applied the provisions of
section 176 of the BVI Business Companies Act 2004 to compulsorily
redeem any outstanding ordinary shares of Cominco ("Cominco
Shares") held by the remaining Cominco shareholders ("Compulsory
Redemption"). Pursuant to the Compulsory Redemption, Kropz acquired
the remaining 482,927 Cominco Shares for which a further 803,315
ordinary shares were issued at a price of 40 pence per share for a
total consideration of GBP321,326 (equivalent to approximately
US$419,000). The new ordinary shares were admitted to trading on
AIM on 22 February 2019. Following the Compulsory Redemption, the
Company holds 100% of the issued share capital of Cominco.
A difference of approximately US$9,000 arose between the
consideration paid and the amount by which the non-controlling
interests have been adjusted. This has been recognised directly in
equity and attributed to the owners of the parent.
Subsequent to 30 June 2019, the Company issued further shares as
follows:
On 3 July 2019, the Company raised US$4.34 million (GBP3.41
million) before expenses by way of a placing (the "Placing") for
19,364,659 ordinary shares of 0.1 pence each at a price of 17.6
pence per ordinary share (the "Placing Shares").
The net proceeds of the Placing will be used to provide
additional working capital and more specifically to further advance
the programme of works being carried out at its Hinda and Aflao
projects.
The Placing Shares were admitted to trading on AIM on 3 July
2019. The Placing Shares were issued as fully paid and rank pari
passu in all respects with the existing ordinary shares.
Following the issue of the Placing Shares and their admission to
AIM, the Company has 283,406,307 ordinary shares in issue.
Share based payment arrangements
Equity warrants
The Company issued 1,116,544 equity warrants over ordinary
shares in the Company during the period, as more fully described
above (period ended 31 December 2018: 83,456 equity warrants). No
equity warrants have been exercised or forfeited. Accordingly,
1,200,000 equity warrants remained in place at 30 June 2019 (31
December 2018: 83,456 equity warrants).
The warrants were valued at the period end using a Black-Scholes
valuation model. The charge to profit and loss during the year was
US$nil due to the immateriality of the value of the warrants for
the period ended 30 June 2019 (31 December 2018: US$nil).
9. Key management personnel remuneration
The remuneration for each Director and Key Management Personnel
of the Group during the period was as follows:
Short-Term Benefits
Period ended 30 June Base Salary
2019 US$ Bonus Options Total
US$ US$ US$
Executive directors
Ian Harebottle 205,326 - - 205,326
Mark Summers 139,011 - - 139,011
------------ --------- ----------- ----------
344,337 - - 344,337
------------ --------- ----------- ----------
Non-executive directors
Lord Robin Renwick 29,649 - - 29,649
Linda Beal 24,121 - - 24,121
Mike Daigle 31,677 - - 31,677
Machiel Reyneke - - - -
Michael Nunn - - - -
------------ --------- ----------- ----------
85,447 - - 85,447
------------ --------- ----------- ----------
Total directors'
remuneration 429,784 - - 429,784
------------ --------- ----------- ----------
Executives
Michelle Lawrence 83,749 - - 83,749
83,749 - - 83,749
------------ --------- ----------- ----------
Short-Term Benefits
Period ended 31 December Base Salary Bonus Options Total
2018 US$ US$ US$ US$
Executive directors
Ian Harebottle 341,589 - - 341,589
Mark Summers 39,035 10,430 - 49,465
------------ ----------- --------- ----------
380,624 10,430 - 391,054
------------ ----------- --------- ----------
Non-executive directors
Lord Robin Renwick 7,961 - - 7,961
Linda Beal 3,185 - - 3,185
Mike Daigle 3,185 - - 3,185
Machiel Reyneke - - - -
Michael Nunn - - - -
------------ ----------- --------- ----------
14,331 - - 14,331
------------ ----------- --------- ----------
Total directors' remuneration 394,955 10,430 - 405,385
------------ ----------- --------- ----------
Executives
Michelle Lawrence 22,273 10,430 - 32,703
Nicola Taylor 42,043 - - 42,043
------------ ----------- --------- ----------
64,316 10,430 - 74,746
------------ ----------- --------- ----------
The following ESOP options, which were issued at the time of
admission to AIM as share-based payment arrangements, were
outstanding at the period ended 30 June 2019:
Name Expiry Date Exercise Price Number of Options
(pence)
------------------- ------------- --------------- ------------------
28 November
Ian Harebottle 2028 0.1 3,362,609
28 November
Mark Summers 2028 0.1 3,362,609
28 November
Michelle Lawrence 2028 0.1 1,465,137
------------------
8,190,355
------------------
10. Shareholder loans payable
30 June 31 December
2019 2018
US$'000 US$'000
ARC Fund 14,779 14,386
--------- ------------
The loans: (i) are US$ denominated but any payments will be made
in ZAR at the then current exchange rate; (ii) carry interest at
monthly US LIBOR plus 3 per cent; and (iii) are repayable by no
later than 1 January 2035 (or such earlier date as agreed between
the parties to the shareholder agreements).
11. Other financial liabilities
30 June 31 December
2019 2018
US$'000 US$'000
BNP Paribas 29,537 29,551
Greenheart Foundation 530 517
Other loans - 1
--------- ------------
Total 30,067 30,069
--------- ------------
Non-current financial liabilities 29,537 29,551
Current financial liabilities 530 518
------- -------
Total 30,067 30,069
------- -------
Kropz Elandsfontein has a fully drawn down project financing
facility with BNP Paribas for USD30 million. BNP Paribas has an
extensive security package over all the assets of Kropz
Elandsfontein and Elandsfontein Land Holdings as well as the share
investments in those respective companies owned by Kropz SA.
12. Finance income
Six months Period
ended ended
30 June 31 December
2019 2018
US$'000 US$'000
Interest income 214 382
Foreign exchange gains 668 -
Total 882 382
----------- -------------
13. Finance expense
Six months Period
ended ended
30 June 31 December
2019 2018
US$'000 US$'000
Shareholder loans 395 409
Foreign exchange losses - 1,555
Bank debt 1,791 357
Total 2,186 2,321
----------- -------------
14. Impairment losses
As announced on 12 September 2019 in an Elandsfontein update,
Test Work confirmed that a reverse flotation modification to the
current circuit would produce a saleable product at lower grade
than originally targeted. As a direct consequence of the prevailing
depressed phosphate rock prices, an alternate process modification
is being considered to deliver the required process efficiencies at
viable economic returns and further test work will be required to
at least the end of 2019 to confirm this.
As a result of the above delay in recommissioning and current
depressed phosphate rock prices, an impairment of US$49 million was
made to the carrying value of property, plant, equipment, mine
development costs and exploration assets in Elandsfontein.
The impairment was allocated as follows:
US$'000
Property, plant, equipment and mine
development assets 47,497
Exploration assets 1,403
--------
Total 48,900
--------
15. Taxation
Major components of tax charge Six months Period
ended ended
30 June 31 December
2019 2018
US$'000 US$'000
Deferred
Originating and reversing temporary differences - -
Current tax
UK tax in respect of current period 246 -
Local income tax recognised in respect
of prior periods - 66
Total 246 66
----------- -------------
The Group had losses for tax purposes of approximately US$33.5
million (US$27.8 million as at 31 December 2018) which, subject to
agreement with taxation authorities, are available to carry forward
against future profits.
16. Earnings per share
The calculations of basic and diluted earnings per share have
been based on the following loss attributable to ordinary
shareholders and weighted average number of ordinary shares
outstanding:
Six months Period
ended ended
30 June 31 December
2019 2018
US$'000 US$'000
Loss attributable to ordinary shareholders (40,573) (6,255)
Weighted average number of ordinary shares
in Kropz plc 263,591,748 24,575,156
Basic and diluted earnings per share (US
cents) (15.39) (25.45)
-------------- -------------
17. Related party transactions
Details of the Key Management Personnel remuneration and
shareholder loans are explained in Notes 9 and 10. In addition, the
following transactions were carried out with related parties:
Related party balances
Loan accounts - Owed (to) / by related parties
30 June 31 December
2019 2018
US$'000 US$'000
ARC Fund (14,779) (14,386)
M Nunn 28 33
Others - (1)
Total (14,751) (14,354)
--------- ------------
M Nunn repaid the loan owing in September 2019.
Related party balances
Interest paid to / (received from) related parties
Period ended Period ended
30 June 31 December
2019 2018
US$'000 US$'000
Kropz International - 345
ARC Fund 395 64
Total 395 409
------------- -------------
The ARC Fund, a substantial shareholder, agreed to subscribe for
14,497,848 new ordinary shares in the placing referred to in Note
8, bringing its aggregate holding to 139,600,912 ordinary shares
(representing 49.3 per cent. of the so enlarged issued share
capital).
Kropz International, a substantial shareholder of Kropz, agreed
to subscribe for 3,345,657 new ordinary shares in the placing,
bringing its aggregate holding to 54,933,474 ordinary shares
(representing 19.4 per cent. of the so enlarged issued share
capital).
Consequently, the subscriptions of the ARC Fund and Kropz
International are related party transactions pursuant to Rule 13 of
the AIM Rules. Mike Nunn, a director of the Company, is the
beneficial owner of Kropz International and Machiel Reyneke, a
director of the Company, is the representative of the ARC Fund.
Accordingly, neither was involved in the approval of the placing by
the Company's board.
18. Seasonality of the Group's business
There are no seasonal factors which materially affect the
operations of any company in the Group.
19. Events after the reporting period
Other than the placing in July 2019, described in Note 8, the
impairment of the property, plant, equipment, mine development
costs and exploration assets in Kropz Elandsfontein (Pty) Ltd as
set out in Note 14 and M Nunn repaying the loan owing to the Group
as set out in Note 17, there were no other events occurring since
30 June 2019 requiring disclosure herein.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR PGUWABUPBPUA
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