TIDMEML
RNS Number : 0260W
Emmerson PLC
13 April 2023
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
13 April 2023
Emmerson PLC ("Emmerson" or the "Company")
2022 Financial Results and Q1 Update
Emmerson, the Moroccan-focused potash development company, is
pleased to announce its 2022 audited results as well as an update
for Q1 2023, as it moves towards construction at the Khemisset
Potash Project ("Khemisset" or the "Project").
Highlights:
-- Environmental permit for Khemisset - continued positive
discussions to establish optimum water management routes ahead of
final approval. Enhanced designs incorporated in 2022 include:
o Sourcing water from Khemisset waste water treatment plant
rather than reservoirs; and
o Selection of dry stacking for tailings, a more environmentally
robust solution
-- Significant progress during 2022 and Q1 2023 on
pre-construction technical workstreams including basic engineering,
which are now largely complete
-- Syndicate of leading international and Moroccan banks
appointed during Q1 2023 as initial mandated lead arrangers to
co-ordinate and fund debt financing facilities for the development
of Khemisset
-- Potash prices remain well above long term averages and long-term outlook remains attractive
Graham Clarke, CEO, commented:
" A significant amount of work was completed during 2022 and in
the first quarter of 2023, and we move closer to obtaining the
environmental approval for our project.
Our efforts to finalise the remaining outstanding items with the
relevant authorities in Morocco ahead of the granting of our
Environmental Impact Assessment continue to be rewarded with
constructive meetings and encouragement from the various agencies
involved. I had hoped to be in position to provide a definitive
update on this process however the finer technical details of the
water management proposals, in particular our use of recycled water
from the Khemisset waste water treatment plant, and our brines and
dry tailings solutions, are awaiting final approvals from the
environmental and water agencies.
It remains our absolute priority to finalise this as quickly as
possible in conjunction with the Moroccan authorities with the
objective of moving into construction this year.
The Company achieved a key milestone during the period in the
form of the appointment of a syndicate of international and
Moroccan banks to act as mandated lead arrangers, to co-ordinate
and fund debt financing facilities for Khemisset. This is a huge
step for Emmerson, and one that provides a clear and tangible route
for us to deliver on the requisite financing for this large and
strategically important asset.
Securing quality and experienced institutions including ING
Bank, Banque Centrale Populaire and Bank of Africa (Groupe BMCE),
together with UK Export Finance, which will lead an Export Credit
Agency tranche of US$230 million, is a significant endorsement of
the Project and its future earnings potential. I believe that this
is also a clear signal to the market and our various stakeholders
in Morocco, that ours is a project with the commercial clout and
operational robustness to merit being fast-tracked into production.
"
**S**
For further information, please visit www.emmersonplc.com ,
follow us on Twitter (@emmerson_plc), or contact:
Emmerson PLC +44 (0) 20 7236
Graham Clarke / Jim Wynn / Charles Vaughan 1177
Liberum Capital Limited (Nominated Advisor
and Joint Broker) +44 (0)20 3100
Scott Mathieson / Kane Collings / William King 2000
Shard Capital LLP (Joint Broker) +44 (0)20 7186
Damon Heath / Isabella Pierre 9927
St Brides Partners (Financial PR/IR) +44 (0)20 7236
Susie Geliher / Isabelle Morris 1177
Notes to Editors
Emmerson is focused on advancing the Khemisset project
("Khemisset" or the "Project") in Morocco into a low cost, high
margin supplier of potash, and the first primary producer on the
African continent. With an initial 19-year life of mine, the
development of Khemisset is expected to deliver long-term
investment and financial contributions to Morocco including the
creation of permanent employment, taxation, and a plethora of
ancillary benefits. As a UK-Moroccan partnership, the Company is
committed to bringing in significant international investment over
the life of the mine.
Morocco is widely recognised as one of the leading phosphate
producers globally, ranking second in the world in terms of tonnes
produced annually, and the development of this mine is set to
consolidate its position as the most important fertiliser producer
in Africa. The Project has a large JORC Resource Estimate (2012) of
537Mt @ 9.24% K2O, with significant exploration potential, and is
perfectly located to support the expected growth of African
fertiliser consumption whilst also being located on the doorstep of
European markets. The need to feed the world's rapidly increasing
population is driving demand for potash and Khemisset is well
placed to benefit from the opportunities this presents. The
Feasibility Study released in June 2020 indicated the Project has
the potential to be among the lowest capital cost development stage
potash projects in the world and also, as a result of its location,
one of the highest margin projects. This delivered outstanding
economics, including a post-tax NPV8 of approximately US$1.4
billion using industry expert Argus' price forecasts, and the spot
price for granular MOP fertiliser has since risen, further
enhancing the valuations.
CHAIRMAN'S STATEMENT
It gives me great pleasure to present the 2022 Annual Report for
Emmerson PLC ("Emmerson" or "the Company") as we continue towards
construction at our Khemisset Potash Project in Morocco. Our
activities during the period have laid the foundations, both from
an operational and corporate perspective, to move this long-life
and low capex potash mine into construction in the near term.
It is hard to overstate the importance of potash in the context
of the global food security crisis. Potash is primarily used as a
fertiliser, improving yields and enhancing the resilience of crops
to drought. Used in combination with phosphates and nitrogen,
fertiliser increases crop yields, enabling food production to keep
up with a constantly rising population on diminishing available
farmland.
In 2022, amongst its many other negative consequences, the war
in Ukraine brought about significant disruption to the supply of
potash, as nearly 40% of the world's production comes from Russia
and Belarus.
As a result, the price of potash jumped almost fourfold, and
fertilisers became unaffordable for many farmers. Many took the
decision to sit out planting cycles, or reduce fertiliser usage
rates, in order to avoid potential losses. The inevitable
consequence of this is that basic foodstuffs like cereals and rice
have become less plentiful and more expensive. During the rest of
the year prices did fall back from their peaks as natural demand
waned, ending the year at more acceptable levels for farmers,
albeit still much higher than historic averages.
But this volatility in such an important basic commodity
highlights the need to develop new potash basins that diversify the
supply into politically safer and geographically convenient
locations.
Our Khemisset project benefits from a number of advantages.
Located just 181km from the port of Casablanca, it is far closer to
the markets of South America, Europe, and above all Africa, than
many of the large established potash production markets, such as
Canada. Morocco itself is politically stable, with an established
legal and commercial system. Moreover, under the vision of King
Mohammed VI, Morocco recently introduced a new investment charter,
intended to promote foreign investment in strategic projects with
substantial incentives schemes. The Kingdom has good road and rail
infrastructure, abundant renewable energy and excellent ports.
Morocco is also a major fertiliser hub already. It is the second
largest phosphate producer in the world, built on its possession of
70% of the global reserves. It also uses its phosphates to make NPK
fertilisers, by blending with imported nitrogen and potash.
Developing an in-country source of potash would further enhance its
efficiency and self-reliance significantly.
The food security crisis is essentially about the availability
and affordability of basic nutrition. If the cost of weekly
shopping has already become problematic for low-income families in
Europe and North America, the consequences in the developing world
are far more serious still, where higher food prices can lead to
malnutrition and social unrest. These are major challenges that the
world needs to take very seriously.
For many years, potash was seen by investors as an unglamorous
commodity, compared with, for example precious metals, and, more
recently, those minerals deemed necessary for energy transition or
green technology (lithium, cobalt, copper etc). As a result, the
sector suffered from underinvestment, with few new sources brought
online in the last 10 years.
Even before the recent supply chain issues, this was short
sighted. With a growing population, whose dietary preferences are
moving towards land-intensive foods such as meat, and increasing
pressure on land availability for cultivation, demand for potash
and fertilisers will continue to grow steadily year-on-year.
As transportation prices have also risen, the location of
sources of potash production has become more important. The
Canadian potash region of Saskatchewan is ideally placed to serve
the US and Canadian markets, but the cost of shipping makes it
expensive for South America or Africa. Russia and Belarus will find
buyers among their allies and neutral countries, mainly in Asia,
and China will prioritise its own users.
Developing a project of such strategic importance will bring a
wide range of benefits to the Kingdom. At the national level, as
well as enhancing the country's status and influence as a
fertiliser producer, the project will bring in significant export
revenues and taxation payments. Thousands of new jobs (direct and
indirect) will be created In the Khemisset region, which has
relatively high unemployment, particularly among the growing youth
population. Local suppliers and contractors will continue to be
selected wherever possible, building on the core team in country
and the appointment in January 2022 of Reminex, the engineering arm
of the Moroccan mining company, Managem Group. A further indication
of our commitment to maximising Moroccan participation and
suppliers was the appointment of two large Moroccan banks to the
syndicate for the project finance debt.
As a company, our primary objective is simple: to bring the
Khemisset project into production as swiftly and efficiently as
possible. As we have noted before, it is a large project and
nationally strategic for Morocco. Its mine life will likely span
into several decades, underpinning the economic benefits to the
Kingdom and cementing Morocco's place as a premier producer of
fertiliser products.
The entire Emmerson team, both in Morocco and the UK, is
passionate about the project. We are determined to make Khemisset
the first African potash mine since the 1970s and to unlock the
inherent value of the project for the citizens of Khemisset, the
Kingdom of Morocco, and our shareholders.
James Kelly
Chairman
12 April 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
Against a backdrop of considerable upheaval in potash markets,
as well as the capital markets more recently, the Khemisset potash
project in Morocco represents a compelling investment opportunity,
which will bring benefits both locally and nationally within
Morocco, developing an important new source of potash at a time
when food security is a global concern.
All of our activities during 2022 were focused on bringing
Khemisset into production as quickly and efficiently as possible.
This is a simple objective but there are many steps to take on the
way, and hurdles to cross. These include the finalisation of the
basic engineering and design work, obtaining the environmental and
other approvals, the raising of finance, working with potential
offtake partners, and putting together the necessary teams to
execute construction.
Environmental approvals
Obtaining the environmental approval is clearly on the critical
path for the Company, and it would be impossible to deny that it
has already taken longer than had been hoped, or expected.
A considerable amount of work has gone into our submissions and
interactions with the Moroccan authorities on this issue, starting
in 2020 when the first Environmental and Social Impact Study
("ESIA") was submitted. Over the course of the next two years, a
further two revised versions of the ESIA have been completed,
incorporating important improvements, some in response to queries
and feedback from the authorities, others the result of initiative
from our own team and consultants.
An example of the innovative work we have undertaken is the
switching of the source of water from the Ouljet Essoltane Dam to
the Khemisset waste water treatment plant, which will save
2,000,000m(3) per annum of fresh water draw. The collective impact
of these changes is a substantially improved, more robust process
with an even more limited environmental and social footprint.
In January 2023, we reported that the environmental discussions
were now focused on water issues. Morocco has suffered from periods
of drought in recent years, and so ensuring sources of water remain
free of contamination is a key concern. In our recent reports,
which incorporate the improvements we have made, and in numerous
discussions, we have sought to demonstrate the robustness of our
proposals, supported by evidence and explanations which the Company
believes should address the concerns of the authorities.
The Moroccan authorities fully appreciate the importance of the
project to the Kingdom and are working through these proposals with
us to achieve solutions acceptable to all parties, whilst
protecting the water supply. We continue to work with the relevant
technical departments to ensure all risks are understood and
properly mitigated.
Technical work at Khemisset in 2022
At the start of 2022, we appointed two engineering firms, Barr
Engineering of the US, and Reminex SA of Morocco, to lead basic
engineering workstreams for the processing plant, and the balance
of the Khemisset potash project scope , respectively. This work is
nearing its completion with only the final reports and designs
outstanding, and has covered all key aspects of the project in
relation to the process facility, surface infrastructure and mine
access.
In addition to adding a much higher level of detail to the
design, the basic engineering has enabled some outstanding
optimisations, in particular with regard to the potential
environmental impact, which have resulted in a significant
reduction of risk to fresh water supplies.
An options study was completed with regard to the relative
merits of wet slurry versus dry stacking of salt tailings. After
due analysis, the dry stacking method was selected, primarily due
to its environmental robustness, as it essentially removes any
realistic risk of saline fluid outflow in the event of an extreme
rainfall event. This dry stacking development route is fully
supported by our technical team and consultants, as it raises the
environmental standard of the tailings storage solution with
minimal cost impact to the overall operation.
Furthermore, following its experience executing a similar
project in southern Morocco, our basic engineering partner Reminex
developed an operational water supply solution that utilises water
from the local Khemisset waste water treatment plant, rather than
the previous solution of drawing water from upstream of the Ouljet
Essoltane Dam. This solution offers Capex and Opex benefits, as
well as significant operational, environment and social benefits
which are strongly supported by the relevant Moroccan
administrations.
In addition, a review of the layout of the surface
infrastructure and the alignment of the declines has resulted in a
smaller surface footprint requiring less land and an adjustment of
the exact location of the surface facilities to simplify access and
ensure a more socially responsible use of available land
parcels.
Other essential work that has been completed since the start of
2022 includes a traffic study by the Moroccan engineering firm
Novec S.A. to select the location and design of the new highway
intersection. The same consultant was engaged to work on a
logistics model for ultimate transportation of final products to
clients.
A drilling campaign was undertaken in the year to provide
geotechnical input to help select the optimal locations for the
declines and process plant. This will be supplemented by a further
campaign in 2023 to provide the detailed data for the optimised
location of the decline and surface infrastructure, as well as
providing information for the deep well injection proposals, all as
input to detailed engineering before construction.
A substantial modelling exercise has been undertaken by a global
ventilation expert to facilitate the definition and development of
the mine ventilation strategy and this has also fed into the
finalisation of mine access design along with the data from the
drilling program. Cutting trials using core samples have been
completed by a global mining organisation enabling finalisation of
capable mining equipment selection.
The Company also signed agreements with L'Office National de
l'Electricité et de l'Eau Potable ("ONEE") to approve the design of
powerlines and secure capacity in the grid for the project.
Subject to the approval of the environmental proposals, the next
phase with regard to the technical work will be to update the 2020
Feasibility Study to reflect all design changes, including an
updated mine plan and set of financial estimates, which will also
incorporate some of the cost inflation that has been seen in the
intervening period. An updated Bankable Feasibility Study ("BFS")
will then be completed, which will be reviewed by the technical and
due diligence teams of the banks and other financiers of the
project, ahead of the conclusion of the fundraise for construction
("Financial Close").
The timing of Financial Close will clearly depend above all on
the environmental approval, and on that basis is unlikely to be
sooner than Q4 2023.
Financing
In spite of difficult conditions in the capital markets, we have
had positive discussions with a number of potential investors in
the Khemisset project, who recognise the economic robustness of the
financials, as well as the strategic arguments for potash as a
long-term investment.
Most investors wish to await the award of the environmental
approval before committing resources, and some also wish to see the
updated BFS.
In the meantime, we have been able to rely on the continued
support of our strategic investor, Global Sustainable Minerals Ltd
("GSM"), who in September 2022 together with their partners Gold
Quay Capital ("GQC") renewed their commitment to invest up to US$40
million in the project, subject to appropriate shareholder and
regulatory approvals. Having already invested US$5.8 million in
2021, GSM invested a further US$6.0 million in new equity as part
of these renewals, underlining their commitment to the project.
In February 2023, we were delighted to announce the appointment
of a syndicate of leading international and Moroccan banks as
initial mandated lead arrangers ("MLAs") to co-ordinate and fund
dual-tranche debt financing facilities. The four MLAs selected were
ING Bank, Banque Centrale Populaire, Bank of Africa (Groupe BMCE)
and one further international European bank.
Based on current discussions, the facility proposed would be a
US$310 million dual-tranche project financing split between an
Export Credit Agency ("ECA") covered tranche led by UK Export
Finance US$230 million, and a commercial tranche of US$80
million.
This facility is subject to the normal project finance due
diligence process (incorporating financial, legal and technical
aspects) which will be undertaken following receipt of the
environmental approval. However, it clearly demonstrates the
attractiveness of the project to a group of significant
international and Moroccan banks.
In November 2022, we also announced that we had signed Memoranda
of Understanding ("MoUs") for potash and salt with Keytrade AG (for
250k potash) and Hexagon AG (for 250k potash and 500k salt pa)
being approximately two thirds of the project's potash
production.
These MoUs, although non-binding, set out the key terms for
subsequent formal bankable offtake agreements, and include the
understanding that the offtake terms will be "take-or-pay", a key
element of the process to reach financial close
Corporate
In February 2022, I was pleased to announce the appointment of
Jim Wynn as the Group's first CFO. We are delighted to have someone
of Jim's experience to help us build our team and work to pull
together the financing packages for the project.
In January 2023, we were also pleased to announce the
appointment of Liberum Capital as Nominated Advisor to the Group,
having been broker since February 2022. Liberum is a well-respected
mid-tier stockbroker with a strong mining franchise, and we
consider it to be an excellent fit, particularly as it matches our
ambition for the project.
Graham Clarke
Chief Executive Officer
12 April 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2022
2022 2021
Note US$'000 US$'000
Continuing Operations
Administrative expenses 3 (2,581) (2,349)
Share-based payment expense 12 (256) (33)
Net foreign exchange loss (356) (388)
Operating loss (3,193) (2,770)
Finance cost - (7)
Loss before tax (3,193) (2,777)
Income tax 5 (5) -
-------- --------
Loss for the year attributable to equity owners (3,198) (2,777)
-------- --------
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange loss on translating foreign operations (45) (693)
Total comprehensive loss attributable to equity owners (3,243) (3,470)
-------- --------
Earnings per share (cents)
Basic and diluted 6 (0.34) (0.33)
The notes that follow are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT
31 DECEMBER 2022
2022 2021
Note US$'000 US$'000
Non-current assets
Intangible assets 7 18,607 13,555
Property, plant and equipment 43 41
Total non-current assets 18,650 13,596
Current assets
Trade and other receivables 8 1,181 771
Cash and cash equivalents 6,670 10,032
--------- ---------
Total current assets 7,851 10,803
Total assets 26,501 24,399
--------- ---------
Current liabilities
Trade and other payables 9 (1,032) (1,835)
Total current liabilities (1,032) (1,835)
Net assets 25,469 22,564
--------- ---------
Shareholders equity attributable to equity owners
Share capital 11 34,733 28,774
Share-based payment reserve 12 2,470 2,048
Reverse acquisition reserve 2,234 2,198
Retained earnings (13,636) (10,278)
Translation reserve (332) (178)
--------- ---------
Total equity 25,469 22,564
--------- ---------
These financial statements were approved by the Board on 12
April 2023 and signed on their behalf by
Graham Clarke
Director
The notes that follow are an integral part of these consolidated
financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2022
US$'000 Share Capital Share-based Reverse Retained Translation Total equity
payment reserve Acquisition earnings reserve
reserve
Balance at 1
January 2021 15,755 1,499 2,198 (7,508) 515 12,459
------------- ---------------- ---------------- ---------------- ---------------- ------------
Loss for the year - - - (2,777) - (2,777)
Other
comprehensive
income:
FX loss
translating
foreign
operations - - - - (693) (693)
------------- ---------------- ---------------- ---------------- ---------------- ------------
Total
comprehensive
loss - - - (2,777) (693) (3,470)
Issue of share
options 90 (104) - - - (14)
Transfer - (7) - 7 - -
Issue of shares
and warrants 14,345 660 - - - 15,005
Share issue costs (1,416) - - - - (1,416)
------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 31
December 2021 28,774 2,048 2,198 (10,278) (178) 22,564
------------- ---------------- ---------------- ---------------- ---------------- ------------
Change in
functional
currency 219 65 36 (211) (109) -
------------- ---------------- ---------------- ---------------- ---------------- ------------
Balance at 1
January 2022 28,993 2,113 2,234 (10,489) (287) 22,564
------------- ---------------- ---------------- ---------------- ---------------- ------------
Loss for the year - - - (3,198) - (3,198)
Other
comprehensive
income:
FX loss
translating
foreign
operations - - - - (45) (45)
------------- ---------------- ---------------- ---------------- ---------------- ------------
Total
comprehensive
loss - - - (3,198) (45) (3,243)
Fair value of
share options - 256 - - - 256
Shares issued to
settle
obligations 25 - - - - 25
Shares issued for
cash 6,106 - - - - 6,106
Cost of issuing
shares - cash (267) - - - - (267)
Cost of issuing
shares -
warrants (283) 283 - - - -
Options/warrants
exercised for
cash 28 - - - - 28
Options exercised
cashless 131 (131) - - - -
Transfer for
options expired
in 2021 - (51) - 51 - -
Balance at 31
December 2022 34,733 2,470 2,234 (13,636) (332) 25,469
------------- ---------------- ---------------- ---------------- ---------------- ------------
The notes that follow are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER
2022
Notes 2022 2021
US$ '000 US$ '000
Cash flows from operating activities
Loss before tax (3,193) (2,777)
Adjustments
Foreign exchange (205) (448)
Taxation 5 (5) -
Share-based payment - fair value of options 12 256 33
Directors' remuneration settled in shares 12 25 -
Depreciation (2) 5
Changes in working capital
Increase in trade and other receivables (410) (351)
(Decrease)/increase in trade and other payables (803) 1,182
Net cash flows used in operating activities (4,337) (2,356)
-------- --------
Cash flows from investing activities
Exploration expenditure 7 (5,052) (2,671)
Purchase of property, plant and equipment - (30)
Net cash flow used in investing activities (5,052) (2,701)
-------- --------
Cash flows from financing activities
Proceeds from issuing shares 11 6,106 14,958
Cost of issuing shares 11 (267) (1,416)
Proceeds from exercise of share options and warrants 12 28 -
-------- --------
Net cash flow generated from financing activities 5,867 13,542
-------- --------
(Decrease)/increase in cash and cash equivalents (3,522) 8,485
-------- --------
Cash and cash equivalents at beginning of year 10,032 1,563
Foreign exchange on cash and cash equivalents 160 (16)
-------- --------
Cash and cash equivalents at end of year 6,670 10,032
-------- --------
Significant non-cash transactions in respect of share issues are
disclosed within note 11.
The notes that follow are an integral part of these consolidated
financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER
2022
1. General information
Emmerson PLC (the "Company") is a company incorporated and
domiciled in the Isle of Man, whose shares were admitted to the
Standard Listing segment of the Main market of the London Stock
Exchange on 15 February 2017. On 27 April 2021, the Ordinary Shares
of the Company were admitted to trading on AIM and the listing of
the Company's ordinary shares on the Official List and their
trading on the Main Market were cancelled.
The principal activity of the Group is the exploration,
development and exploitation of the Khemisset potash project in
Morocco.
2. Basis of preparation
2.1. General
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRSs"), as adopted
by the United Kingdom (UK) in force at the reporting date, and
their interpretations issued by the International Accounting
Standards Board ("IASB"). The financial statements have been
prepared under the historical cost convention except for the
revaluation of certain financial instruments that are measured at
fair value.
2.2. Functional and presentational currency
The financial information of the Group is presented in US
dollars. The functional currency of the Company Emmerson PLC
changed on 1 January 2022 from GBP to US$ reflecting the stage in
development of activities whereby the cost base of the Group
changed from GBP to US$. The effect of a change in functional
currency is accounted for prospectively. All items were translated
into the new functional currency using the exchange rate at the
date of the change.
The individual financial statements of each of the Company's
wholly-owned subsidiaries are prepared in the currency of the
primary economic environment in which they operate (functional
currency).
2.3. Change in Presentation Currency
The Group presented its results in US dollars for the first time
for the year to 31 December 2021 having previously reported in GBP.
This change should help to provide a clearer understanding of the
Group's financial position as the future corporate development
activity is likely to be US focused.
In order to satisfy the requirements of IAS 21 with respect to a
change in presentation currency, the statutory financial
information as previously reported in the Group's Annual Reports
have been restated from UK Sterling into US Dollars using the
procedures outlined below:
-- Assets and liabilities were translated to US Dollars at the
closing rates of exchange at each respective balance sheet
date.
-- Share capital, share premium and other reserves were
translated at the historic rates prevailing at the dates of
transactions.
-- Income and expenses were translated to US Dollars at an
average rate at each of the respective reporting years. This has
been deemed to be a reasonable approximation.
-- Differences resulting from the retranslation were taken to reserves.
-- All exchange rates used were extracted from the Group's underlying financial records.
2.4. Basis of consolidation
The Consolidated Financial Statements comprise the financial
statements of the Company, Moroccan Salts Limited and Moroccan
Salts Limited's subsidiaries (the "MSL Group") following the
business combination which took place on 4 June 2018.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee.
Generally, there is a presumption that a majority of voting
rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement with the other vote holders of the investee;
-- Rights arising from other contractual arrangements; and
-- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Assets, liabilities, income and expenses of a subsidiary acquired
or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
All the Group's companies have 31 December as their year-end.
Consolidated financial statements are prepared using uniform
accounting policies for like transactions.
2.5. Going concern
The financial statements have been prepared on a going concern
basis. The Group has not yet earned revenues and is in the
pre-construction phase of its business. The operations of the Group
are currently financed from funds raised from shareholders and
strategic investors. In common with many pre-production entities,
the Group will need to raise further funds in order to progress the
Group from the feasibility phase into construction and eventually
into production of revenues.
The Group had cash and cash equivalents of US$5.0 million at 31
March 2023 and the Directors are of the view this is sufficient to
fund the Group's non-discretionary expenditure and maintain good
title to the exploration licences over the next 12 months from the
date of approval of these financial statements. The Company will
continue to work on advancing the Khemisset project and to commence
construction as soon as practicable, however the timing of these
activities will be dependent on availability of funds.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
2.6. Changes in accounting policies
Standards, interpretations and amendments to published standards
effective from 1 January 2022
There were no new standards or interpretations effective and
adopted for the first time for the year beginning on or after 1
January 2022 that had a significant effect on the Group's or
Company's financial statements. These include:
-- Amendments to IAS 16: Property, Plant and Equipment
-- Amendments to IFRS 3: Business Combinations - Reference to the Conceptual Framework
-- Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets
-- Annual Improvements to IFRS Standards 2018-2020 Cycle
Standards, interpretations and amendments to published standards
not yet effective
The Group has not early applied the following new and amendments
to IFRSs that have been issued but are not yet effective:
-- IFRS 17 Insurance Contracts - effective 1 January 2023
-- Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2) - effective 1 January 2023
-- Definition of Accounting Estimate (Amendments to IAS 8) effective 1 January 2023
-- Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes - effective
1 January 2023
-- Initial Application of IFRS 17 and IFRS 9 - Comparative
Information (Amendments to IFRS 17) - effective 1 January 2023
-- Classification of liabilities as current or non-current
(Amendments to IAS 1) - effective 1 January 2024
-- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) - effective 1 January 2024
-- Non-current Liabilities with Covenants (Amendments to IAS 1) - effective 1 January 2024
The Directors anticipate that the application of all new and
amendments to IFRSs will have no material impact on the future
results of the Group or Company in the foreseeable future.
2.7. Segment reporting
A business segment is a group of assets and operations engaged
in providing products or services that are subject to risks and
returns that are different from those of other business segments. A
geographical segment is engaged in providing products or services
within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in
other economic environments.
The Directors are of the opinion that the Group is engaged in a
single segment of business being the exploration and development of
potash in one geographical area, being Morocco.
2.8. Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another.
(a) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value through other
comprehensive income ("OCI"), or fair value through profit and
loss.
The classification of financial assets at initial recognition
that are debt instruments depends on the financial asset's
contractual cash flow characteristics and the Group's business
model for managing them. The Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest
("SPPI")' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The Group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
-- Financial assets at amortised cost (debt instruments)
-- Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
-- Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments)
-- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the effective interest rate ("EIR") method and are subject to
impairment. Interest received is recognised as part of finance
income in the statement of profit or loss and other comprehensive
income. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired. The Group's financial
assets at amortised cost include trade receivables (not subject to
provisional pricing) and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group's consolidated statement
of financial position) when:
-- The rights to receive cash flows from the asset have expired; or
-- The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
Impairment of financial assets
The Group recognises an allowance for expected credit losses
("ECLs") for all debt instruments not held at fair value through
the profit and loss. For trade receivables (not subject to
provisional pricing) and other receivables due in less than 12
months, the Group applies the simplified approach in calculating
ECLs, as permitted by IFRS 9. Therefore, the Group does not track
changes in credit risk, but instead, recognises a loss allowance
based on the financial asset's lifetime ECL at each reporting
date.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group.
A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually
occurs when past due for more than one year and not subject to
enforcement activity. At each reporting date, the Group assesses
whether financial assets carried at amortised cost are
credit-impaired. A financial asset is credit-impaired when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
(b) Financial liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case
of loans and borrowings and payables, net of directly attributable
transaction costs. The Group's financial liabilities include trade
and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
-- Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group that are
not designated as hedging instruments in hedge relationships as
defined by IFRS 9. Separated embedded derivatives are also
classified as held for trading unless they are designated as
effective hedging instruments. Gains or losses on liabilities held
for trading are recognised in the statement of profit or loss and
other comprehensive income.
-- Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings
and trade and other payables are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in the
statement of profit or loss and other comprehensive income when the
liabilities are derecognised, as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss and other comprehensive income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
(c) Financial liabilities
Liabilities within the scope of IFRS 9 are classified as
financial liabilities at fair value through profit and loss or
other liabilities, as appropriate.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are
recognised initially at fair value and subsequently at amortised
cost.
2.9. Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, determined using tax rates
that are expected to apply when the related deferred tax asset or
liability is realised or settled. Deferred tax assets are
recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary
differences can be utilised.
2.10. Intangible assets - exploration and evaluation expenditure
Exploration expenditure comprises all costs which are directly
attributable to the exploration of a project area.
When it has been established that a mineral deposit has
development potential, all costs (direct and applicable overheads)
incurred in connection with the exploration and development of the
mineral deposits are capitalised until either production commences,
or the project is not considered economically viable.
In the event of production commencing, capitalised costs in
respect of the asset are transferred into Tangible Fixed Assets,
and are depreciated over the expected life of the mineral reserves
on a unit of production basis. Other pre-trading expenses are
written off as incurred. For the purposes of impairment testing,
intangible assets are allocated to specific projects with each
licence reviewed annually. Where a project is abandoned or is
considered to be of no further interest, the related costs are
written off.
Intangible assets are not subject to amortisation and are tested
annually for impairment. The recoverability of all exploration
costs, licenses and mineral resources is dependent on the ability
of the Group to obtain necessary financing to complete the
development of reserves and future profitable production, or
proceeds from the disposition thereof.
2.11. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand and deposits held
at call with financial institutions.
2.12. Foreign currencies
Assets and liabilities in foreign currencies are translated into
US$ at the rates of exchange ruling at the Statement of Financial
Position date. Transactions in foreign currencies are translated
into sterling at the rate of exchange ruling at the date of the
transaction. Exchange differences are taken into account in
arriving at the operating result.
On consolidation of a foreign operation, assets and liabilities
are translated at the closing rate at the date of the Statement of
Financial Position, with the exception of Intangible Assets, which
have been translated at cost using the average exchange rate.
Income and expenses for each Statement of Comprehensive Income
presented are translated at average exchange rates. All resulting
exchange differences are recognised in other comprehensive income
and accumulated in equity.
2.13. Share-based payment arrangements
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of employee services received in exchange for the grant
of share options are recognised as an expense. The total expense to
be apportioned over the vesting period is determined by reference
to the fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance vesting conditions; and
-- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. At the end of each reporting period the Group
revises its estimate of the number of options that are expected to
vest.
The Group recognises the impact of the revision of original
estimates, if any, in profit or loss, with a corresponding
adjustment to equity.
When options are exercised, the Company issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The fair value of goods or services received in exchange for
shares is recognised as an expense and included within
administrative expenses.
2.14. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements, are disclosed below:
a) Recoverability of intangible assets
The Group tests annually for impairment or more frequently if
there are indications that the intangible assets might be
impaired.
Determining whether the intangible assets are impaired requires
an estimation of the value in use of the cash generating units to
which the intangible assets belong. Where impairment indicators are
present, the Group is required to evaluate the future cash flows
expected to arise from the cash-generating unit and the suitable
discount rate in order to calculate the present value.
The carrying value of Group's exploration and evaluation
intangible assets at 31 December 2022 was US$18.6 million (2021:
US$13.6 million), which relates to the Khemisset project.
The Directors therefore undertook an assessment of the following
areas and circumstances that could indicate the existence of
impairment:
-- The Group's right to explore in an area has expired, or will
expire in the near future without renewal;
-- No further exploration or evaluation is planned or budgeted for;
-- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves; or
-- Sufficient data exists to indicate that the book value will
not be fully recovered from future development and production.
The Board has reviewed the project for indicators of impairment,
and is satisfied that the prospects of deriving economic value are
likely to be considerably in excess of the carrying value of the
asset in the accounts.
In arriving at this conclusion, the Directors considered the
ongoing commitment to the project, the economic metrics of the
project as set out in the 2020 Feasibility Study, and the increase
in potash prices over the last 12 months.
Following their assessment, the Directors concluded that no
impairment charge was necessary for the year ended 31 December
2022.
b) Share-based payments
The Group has made awards of options on its unissued share
capital to certain Directors and employees as part of their
remuneration package.
The valuation of these options involved making a number of
critical estimates relating to price volatility, future dividend
yields, expected life of the options and interest rates. These
assumptions are described in more detail in note 12.
There was a charge to the Statement of Comprehensive Income
during the year in relation to share based payments of US$256k
(2021: US$33k).
c) Valuation of warrants
The Group issued 50 million warrants to investors in the year.
The fair value assigned to the warrants involved making a number of
critical estimates relating to price volatility, future dividend
yields and interest rates. The valuation of the warrants was
US$283k. These assumptions are described in more detail in note
12.
d) Going concern
In their assessment of going concern, the Directors have
prepared cash flow forecast showing the Group's non-discretionary
expenditure obligations, as well as discretionary activities. The
discretionary activities relate largely to the project work at
Khemisset, which are either uncommitted in nature, or are the
subject of contracts which include clauses allowing the Company to
suspend activities without penalty.
The Group has sufficient cash reserves to cover
non-discretionary expenditure beyond the Going Concern horizon of
at least 12 months from the date of this report, and accordingly
the Board believe the Going Concern basis to be appropriate for the
preparation of the 2022 Financial Statements.
3. Expenses by nature
2022 2021
US$'000 US$'000
Project costs - 7
Directors' fees (note 4) 601 635
Travel and accommodation 99 59
Auditor's remuneration 48 25
Employment costs 627 455
Professional and consultancy
fees 715 414
Other costs 491 754
Administrative expenses 2,581 2,349
------------------------------- -------- --------
4. Directors' remuneration
Details of Directors' remuneration during the year are as
follows:
2022 2021
US$'000 US$'000
Graham Clarke 348 401
James Kelly (appointed 22
March 2021) 117 65
Rupert Joy (appointed 12 July
2021) 55 19
Hayden Locke 35 33
Robert Wrixon 46 50
Edward McDermott (resigned
12 July 2021) - 51
Mark Connelly (resigned 12
July 2021) - 16
Total 601 635
-------------------------------- -------- --------
Graham Clarke, Hayden Locke and Robert Wrixon also received fees
for consultancy services which are disclosed within note 14. In
addition, certain Directors received share options and shares as
part of their remuneration (see note 12).
5. Income tax
2022 2021
US$'000 US$'000
Current tax:
Tax (5) -
Total taxation charge (5) -
-------- --------
Reconciliation of income tax
2022 2021
US$'000 US$'000
Loss before tax (3,193) (2,777)
-------- --------
Loss before tax multiplied by domestic tax
rates applicable to losses in the respective
countries (531) (464)
Effects of:
IFRS consolidation adjustments (195) -
Disallowed expenditures 21 -
Tax losses used up (28) -
Foreign tax attributes - (33)
Minimum tax charges (5) -
Losses on which no deferred tax is recognised 733 497
-------- --------
Total taxation charge (5) -
-------- --------
The weighted average applicable tax rate was 16.6% (2021:
16.7%). Emmerson PLC is registered for taxation in the United
Kingdom, where the corporation tax rate was 19%. Morocco has a 20%
tax rate applicable to mining companies, including Emmerson's
Moroccan subsidiaries, while the British Virgin Islands have a tax
rate of 0%.
A deferred tax asset has not been recognised in respect of
deductible temporary differences relating to certain losses carried
forward at the year end, as there is insufficient evidence that
taxable profits will be available in the foreseeable future against
which the deductible temporary difference can be utilised.
The unrecognised deferred tax asset for the Group was
approximately US$1,806k (2021: US$1,456k). The unrecognised
deferred tax asset relating to Moroccan tax losses amounted to
approximately US$109k (2021: US$144k).
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2022 2021
Loss from continuing operations for the year attributable to the equity holders of the
Company
(US$'000) (3,198) (2,777)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted earnings
per
share 939,716,598 822,875,086
Basic and diluted loss per share 0.34 cents 0.33 cents
------------------------------------------------------------------------------------------ ------------ ------------
The potential number of shares which could be issued following
the exercise of options and warrants currently outstanding amounts
to 230,804,714 (see note 12). Dilutive earnings per share equals
basic earnings per share as, due to the losses incurred, there is
no dilutive effect from the existing share options and
warrants.
7. Intangible assets
The intangible assets consist of capitalised exploration and
evaluation expenditure in respect of the Company's potash interests
in Morocco (the Khemisset project).
2022 2021
US$'000 US$'000
Cost:
At the beginning of the year 13,555 11,132
Additions 5,052 2,671
Effects of changes in foreign
exchange rates - (248)
Total 18,607 13,555
-------------------------------- -------- --------
Intangible assets are reviewed at each reporting date to
determine whether there is objective evidence of impairment. See
note 2.14 detailing the Company's judgement in this area.
8. Trade and other receivables
2022 2021
US$'000 US$'000
Other receivables 1,097 551
Prepayments 84 220
Total 1,181 771
-------------------- -------- --------
Other receivables include recoverable VAT and other taxes.
9. Trade and other payables
2022 2021
US$'000 US$'000
Other payables 635 934
Accruals 397 901
Total 1,032 1,835
----------------- -------- --------
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method. Other payables consist of supplier
invoices for administration expenses. Included within Accruals are
engineering costs of US$65k and bonus accruals of US$43k.
10. Financial instruments
Categories of financial instruments
2022 2021
US$'000 US$'000
Financial assets measured at amortised
cost
Other receivables 1,097 551
Cash and cash equivalents 6,670 10,032
---------------------------------------------- --------- ---------
7,767 10,583
---------------------------------------------- --------- ---------
Financial liabilities measured at amortised
cost
---------------------------------------------- --------- ---------
Other payables 635 934
---------------------------------------------- --------- ---------
Financial risk management objectives and policies
The Company is exposed through its operations to credit risk and
liquidity risk. In common with all other businesses, the Company is
exposed to risks that arise from its use of financial instruments.
This note describes the Company's objectives, policies and
processes for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is
presented throughout this financial information.
General objectives, policies and processes
The Directors have overall responsibility for the determination
of the Company's risk management objectives and policies. Further
details regarding these policies are set out below:
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The capital structure of the Group consists of issued capital,
reserves and retained earnings. The Directors reviews the capital
structure on a semi-annual basis. As a part of this review, the
Directors consider the cost of capital, the risks associated with
each class of capital and overall capital structure risk management
through the new share issues and share buy-backs as well as the
issue of new debt or the redemption of existing debt.
The management's strategy remained unchanged from 2021.
Market price risk
The development and success of any project of the Group will be
primarily dependent on the future price of potash. Potash prices
are subject to significant fluctuation and are affected by a number
of factors which are beyond the control of the Company. Future
production from the Khemisset Project is dependent on potash prices
that are adequate to make the project economic. Potash prices were
volatile during 2022, although by 2023 had returned closer to
longer term expected levels at US$400-500 per tonne MOP.
Credit risk
The Company's credit risk arises from cash and cash equivalents
with banks and financial institutions. For banks and financial
institutions, only independently rated parties with minimum rating
"A" are accepted.
Liquidity risk
Liquidity risk arises from the Directors' management of working
capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due.
The Directors' policy is to ensure that the Company will always
have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, the Directors seek to maintain a
cash balance sufficient to meet expected requirements.
The Directors have prepared cash flow projections on a monthly
basis through to 31 December 2024. At the end of the period under
review, these projections indicated that the Group is expected to
have sufficient liquid resources to continue in operational
existence and meet its obligations under all reasonably expected
circumstances.
Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures. Foreign
exchange risk arises from future commercial transactions,
recognised monetary assets and liabilities and net investments in
foreign operations. The consolidated accounts use US$ as a
presentational currency, and from 1 January 2022, Emmerson PLC (the
parent company) determined that US$ was the appropriate functional.
The Group's Moroccan entities use MAD as their functional
currency.
Net current assets denominated in MAD at the year-end amounted
to US$1.1 million and net liability of US$0.44 million
respectively.
At 31 December 2022, had the exchange rate between the US$ and
MAD increased or decreased by 5% with all other variables held
constant, the increase or decrease respectively in net assets would
amount to approximately US$0.03k.
The Group does not hedge against foreign exchange movements.
11. Share capital
The Ordinary Shares issued by the Company have no par value and
are fully paid. Each Ordinary Share carries one vote on a poll
vote. The Company does not have a limited amount of authorised
capital.
Number of shares US$'000
As at 31 December 2021 915,062,661 28,774
----------------------------------------------- ----------------- --------
Adjustment for change in functional
currency 1 Jan 2022 - 219
Shares issued for cash 90,902,780 6,106
Less cash cost of share issue - (267)
Less warrants issued as cost of equity - (283)
Shares issued part of Directors' remuneration
(note 12) 284,777 25
Share options exercised in year for
cash 400,000 16
Share options exercised in year cashless 7,509,673 131
Warrants exercised in year for cash 333,333 12
As at 31 December 2022 1,014,493,224 34,733
----------------------------------------------- ----------------- --------
12. Share-based payments
The following is a summary of the share options and warrants
outstanding as at 31 December 2022:
Date of Expiry date Vesting date Exercise No of Share price Risk Free Volatility Option
grant Price Options at grant rate Value
------------ ------------ ------------ ------------ ----------- ----------- ----------- ---------- -----------
04-Jun-18 04-Jun-23 04-Jun-18 GBP0.0300 4,250,000 GBP0.0225 1.30% 34% GBP0.0098
04-Jun-18 04-Jun-23 04-Dec-18 GBP0.0300 4,250,000 GBP0.0225 1.30% 34% GBP0.0098
04-Jun-18 04-Jun-23 04-Jun-19 GBP0.0300 12,250,000 GBP0.0225 1.30% 34% GBP0.0098
04-Jun-18 04-Jun-23 04-Dec-19 GBP0.0300 4,250,000 GBP0.0225 1.30% 34% GBP0.0098
26-Mar-19 24-Mar-24 26-Mar-20 GBP0.0350 6,900,000 GBP0.0400 2.10% 68% GBP0.0242
07-Aug-19 05-Aug-24 07-Aug-19 GBP0.0500 1,500,000 GBP0.0375 2.10% 58% GBP0.0192
01-Aug-20 31-Jul-25 01-Aug-20 GBP0.0010 18,750,000 GBP0.0435 1.10% 71% GBP0.0070
01-Aug-20 31-Jul-25 01-Aug-21 GBP0.0010 20,583,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-22 GBP0.0010 7,333,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-23 GBP0.0010 3,333,334 GBP0.0435 1.10% 71% GBP0.0219
21-Jul-22 20-Jul-27 02-Jul-24 GBP0.0700 1,500,000 GBP0.0700 2.05% 55% GBP0.0342
21-Jul-22 20-Jul-32 02-Jul-24 GBP0.0700 4,513,000 GBP0.0700 2.05% 55% GBP0.0457
21-Jul-22 20-Jul-32 15-Mar-23 GBP0.0700 1,000,000 GBP0.0700 2.05% 55% GBP0.0457
21-Jul-22 20-Jul-32 15-Mar-23 GBP0.1000 1,500,000 GBP0.0700 2.05% 55% GBP0.0410
21-Jul-22 20-Jul-32 15-Mar-23 GBP0.1500 1,333,333 GBP0.0700 2.05% 55% GBP0.0352
21-Jul-22 20-Jul-32 15-Mar-24 GBP0.0700 1,000,000 GBP0.0700 2.05% 55% GBP0.0457
21-Jul-22 20-Jul-32 15-Mar-24 GBP0.1000 1,500,000 GBP0.0700 2.05% 55% GBP0.0410
21-Jul-22 20-Jul-32 15-Mar-24 GBP0.1500 1,333,333 GBP0.0700 2.05% 55% GBP0.0352
21-Jul-22 20-Jul-32 15-Mar-25 GBP0.1500 1,333,334 GBP0.0700 2.05% 55% GBP0.0352
98,413,000
-----------
Date of Expiry date Vesting date Exercise No of Share price Risk Free Volatility Warrant
grant Price Warrants at grant rate Value
------------ ------------ ------------ ------------ ----------- ----------- ----------- ---------- -----------
9-Nov-21 9-Nov-22 9-Nov-21 GBP0.0830 82,391,714 GBP0.0565 0.8% 57% GBP0.0058
26-Sep-22 26-Sep-23 26-Sep-23 GBP0.0820 50,000,000 GBP0.0550 1.3% 34% GBP0.0053
132,391,714
-----------
Total outstanding at 31 December 2022 230,804,714
===========
T he weighted average remaining contractual life of the options
and warrants at year-end was 1.73 years.
Share options Warrants Total
-------------------------- ------------- ------------ ------------
At 1 January 2021 101,900,000 10,666,666 112,566,666
Issued in year - 82,391,714 82,391,714
Exercised in year - (10,000,000) (10,000,000)
Expired/cancelled in year (5,000,000) (333,333) (5,333,333)
------------- ------------ ------------
At 31 December 2021 96,900,000 82,725,047 179,625,047
------------- ------------ ------------
Issued in year 15,013,000 50,000,000 65,013,000
Exercised in year (13,500,000) (333,333) (13,833,333)
Expired/cancelled in year - - -
------------- ------------ ------------
At 31 December 2022 98,413,000 132,391,714 230,804,714
------------- ------------ ------------
The options and warrants issued were valued using the
Black-Scholes valuation method and the assumptions used are
detailed above. The expected future volatility has been determined
by reference to the historical volatility.
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from Directors and
employees as consideration for equity instruments (options) of the
Group.
During 2022, James Kelly and Rupert Joy received 218,406 and
66,371 shares respectively at a VWAP of 7.1 pence (total value
US$25k) as part of their contractual remuneration.
The total share-based payment recognised in the Statement of
Changes in Equity during the year was a US$256k (2021: US$33k), in
respect of the fair value of employee share options. The 2021
figure included credits of US$14k in respect of cancelled and
unvested share options in the year.
There were 53,763,000 (2021: 65,763,000) options at the year-end
held by current Directors and employees at year end. Vesting of the
options is subject to the option holder providing continuous
service during the vesting period and there are no other
performance conditions attached to the options.
Share options Number issued Expiry
Graham Clarke (Director) 19,321,000 2 to 9 years
Hayden Locke (Director) 10,000,000 2 years
Robert Wrixon (Director) 11,000,000 1 to 2 years
Jim Wynn (PDMR) 9,000,000 9 years
Other employees 4,442,000 2 to 9 years
-------------------------- -------------- -------------
Total 53,763,000
-------------------------- -------------- -------------
13. Future rental payments
The commitments arising from operating leases are largely rental
payments for buildings. The future minimum lease payments
(payables) under non-cancellable operating leases are:
2022 2021
US$'000 US$'000
Within one year 23 20
More than one year - -
-------------------- -------- --------
As at end of year 23 20
--------------------- -------- --------
14. Related party transactions
Directors' consultancy fees
Hayden Locke is a Director of the Company and is a Director of
Benson Capital Limited, which provides consulting services to the
Company. During the year, Benson Capital Limited received total
fees of US$95k (2021: US$244k). The amount outstanding as at the
year-end is US$9K (2021: US$ nil).
Robert Wrixon is a Director of the Company and also provides
consulting services to the Company. During the year, Robert Wrixon
received fees of US$71K (2021: US$116k). The amount outstanding as
at the year-end is US$ nil (2021: US$ nil).
Graham Clarke is a Director of the Company and is a Director of
GCUK Consulting Limited, which provided consulting services to the
Company to the value of US$99k during 2021.
Details of Directors' remuneration during the year are given in
note 4.
There are no other related party transactions.
15. Ultimate controlling party
The Directors consider that there is no controlling or ultimate
controlling party of the Company.
16. Events after the reporting date
There were no material events that took place after the
reporting date.
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END
FR EAKLAFFEDEFA
(END) Dow Jones Newswires
April 13, 2023 02:00 ET (06:00 GMT)
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