TIDMZIOC
RNS Number : 6543E
Zanaga Iron Ore Company Ltd
03 July 2023
Zanaga Iron Ore Company Audited Results for the Year to 31
December 2022
3 July 2023
2022 Highlights and post reporting period end events to 30 June
2023
Zanaga Iron Ore Project (the "Project" or the "Zanaga
Project")
-- Partnership launched with Chinese iron ore technical expert
engineering firm ("Chinese EPC Partner") as part of a two stage
optimsation process of the Zanaga 30Mtpa staged development
project
o Phase 1 - Feasibility Study update (the "FS Update")
-- 2014 Feasibility Study cost estimates to be updated to
current market pricing using Chinese contractor pricing for both
phases of both 12Mtpa Stage One ("Stage One"), plus 18Mtpa Stage
Two expansion ("Stage Two") projects.
-- Chinese EPC Partner possesses specific, specialised, design
and construction expertise in slurry pipeline projects as well as
iron ore pellet feed concentrate projects similar to the Zanaga
Project.
-- Guidance provided by Chinese EPC Partner that potential
capital and operating cost savings of more than 20% could be
achieved.
-- The results of this exercise are expected to be received in
Q4 2023.
o Phase 2 - Processing technology application study
-- Chinese EPC Partner possesses proprietary new processing
technology for iron ore processing, with the potential to provide
further capital and operating cost savings beyond the results of
the FS Update.
-- The application of this processing technology to the iron ore
from the Zanaga Project is planned to undergo technical assessment
as initial results from the FS Update are received in the coming
months.
-- Port infrastructure discussions underway
o Discussions in progress with large port infrastructure
development firm, including consideration of:
-- Opportunity for expansion of the existing port of
Pointe-Noire.
-- Potential development solutions for a large bulk mineral port
capable of supporting the Zanaga 30Mtpa staged development
project.
-- Early Production Project ("EPP Project" or "EPP")
o Multiple production scenarios remain under investigation on
processing facilities and suitable logistics solutions, with a
particular focus on an export solution through the Republic of
Congo ("RoC").
Corporate
-- Acquisition completed of Glencore Projects Pty Limited's
("Glencore Projects") 50% plus one share interest in Jumelles
Limited (the "Acquisition"), owner of the Zanaga Project.
o Acquisition increased Zanaga Iron Ore Company Limited ("ZIOC"
or the "Company") ownership of the Zanaga Project to 100%.
o Acquisition concluded through the issuance of 286,340,379 new
Shares (the "Consideration Shares") to Glencore Projects,
representing a post-transaction shareholding of 48.26% in ZIOC.
o Appointment of Peter Hill and Denis Weinstein to the board of
the Company, following their nomination by Glencore Projects.
o Relationship Agreement entered into between Glencore Projects
and ZIOC to ensure that the Company can carry on its business
independently of Glencore Projects.
o Agreement by Glencore Projects that it will not dispose of any
of the Consideration Shares in the Company in the six months
following Admission without the consent of the Company (not to be
unreasonably withheld or delayed) other than in certain limited
circumstances and to comply with orderly market provisions in the
following six months.
-- Marketing Agreement entered into between Glencore International, the Company and MPD Congo.
o Life-of-mine marketing agreement granting Glencore
International the exclusive marketing right for all iron ore
conforming to certain specifications produced by MPD Congo, ZIOC or
their respective Affiliates from the Project or in the Republic of
Congo using similar infrastructure that is not subject to existing
sales arrangements.
o Agreement by Glencore Projects to purchase from MPD Congo or
the Company the Product, or sell the Product on behalf of the
Company on arm's length terms.
o Glencore International to be entitled to receive a marketing
fee in accordance with the detailed provisions of the Marketing
Agreement.
Funding
-- Loan funding agreement
o In order to fund the Project's continuing work programme and
budget, as well as the working capital requirements of ZIOC, until
31 December 2023, Glencore Projects entered into a loan facility
(the "Loan Facility") with Jumelles Ltd to provide up to US$1.8
million of loan capital.
-- Loan repayable by 31 December 2023.
-- ZIOC able to utilise up to US$200,000 of the loan facility to
fund its working capital.
-- As at 29 June 2023, ZIOC had drawn US$1.185m of the Loan
Facility and acrued US$70k of loan interest.
-- Shard Merchant Capital Ltd ("SMC") equity subscription agreements ("Shard ESAs").
o Original SMC equity subscription agreement (ESA) fully
completed ("2020 ESA").
-- In 2022 SMC subscribed for 7 million shares of no par value
in ZIOC, as part of the final tranche of the 21 million ordinary
share facility signed in 2020.
-- Total proceeds of GBP1,318,126.12 were received from the
facility, following the placement of the final 7,000,000 tranche
shares by SMC in 2022.
o New ESA signed with SMC on 1 July 2023 ("2023 ESA").
-- Following the successful completion of the 2020 ESA, ZIOC has
entered into the 2023 ESA with SMC.
-- Under the terms of the 2023 ESA the Company will issue and
SMC will subscribe for up to 36 million ordinary shares of no par
value in the Company ("Subscription Shares") in up to three
tranches of up to 12 million shares each.
-- Pursuant to the 2023 ESA, SMC has undertaken to use its
reasonable endeavours to place the relevant Subscription Shares
that it has subscribed for and to pay to ZIOC 95% of the gross
proceeds of any such sales.
o Proceeds of the Shard ESAs applied to general working capital,
including the provision of further contributions to the Zanaga
Project's operations.
-- Cash balance of US$0.3m as at 31 December 2022 and a cash
balance of US$0.5m as at 29 June 2023.
Clifford Elphick, Non-Executive Chairman of ZIOC, commented:
"I am pleased to report that ZIOC has launched a process with
its Chinese EPC Partner to secure Chinese contractor pricing and to
update the cost estimates of the 30Mtpa Feasibility Study, while
also considering the application of new iron ore processing
technology to reduce estimated costs further.
Furthermore, port infrastructure discussions are underway with a
large port infrastructure development firm seeking to expand the
existing port of Pointe-Noire. Consideration is also being given to
potential development solutions for a large bulk mineral port
capable of supporting the 30Mtpa staged development project.
2022 was apivotal year for ZIOC, with the controlling
shareholding of the Zanaga Project being acquired from Glencore in
exchnage for shares in ZIOC. The streamlining of the ownership and
control of the Zanaga Project enables ZIOC to now engage with
strategic entities interested in participating in the Zanaga
Project going forward, and ensures a single unified voice engaging
with collaboration partners on the ground. It is pleasing to have
secured the support of Glencore for this initiative and I look
forward to working with the Glencore team in unlocking value from
the project for all stakeholders going forward. "
The Company will post its Annual Report and Accounts for the
year ended 31 December 2022 ("2022 Annual Report and Accounts") to
shareholders on approximately 10 July 2023.
The 2022 Annual Report and Accounts will be available on the
Company's website www.zanagairon.com today .
For further information, please contact:
Zanaga Iron Ore
Corporate Development and Andrew Trahar
Investor Relations Manager +44 20 7399 1105
Liberum Capital Limited
Nominated Adviser, Financial Scott Mathieson, Edward Thomas
Adviser and Corporate Broker +44 20 3100 2000
About us:
Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM
ticker: ZIOC) is the owner of 100% of the Zanaga Iron Ore Project
based in the Republic of Congo (Congo Brazzaville) through its
subsidiary Jumelles Limited. The Zanaga Iron Ore Project is one of
the largest iron ore deposits in Africa and has the potential to
become a world-class iron ore producer.
Chairman's Statement
Dear Shareholder,
Following the acquisition of the controlling shareholding in the
Zanaga Project we are progressing in-country activities with the
objective of unlocking the potential of Zanaga's vast resource. Our
focus is on updating the cost estimates of the 30Mtpa staged
development project, while investigating the potential to enable
port logistics solutions in country with a large port developer and
operator.
Chinese EPC contractor engagement
ZIOC has entered into an engagement with a Chinese EPC partner
with substantial experience in the design, engineering and
construction management of large iron ore projects. The Chinese EPC
contractor possesses specific, specialised, design and construction
expertise in slurry pipeline projects as well as iron ore pellet
feed concentrate projects similar to the Zanaga Project.
The process involves a two stage project optimisation work
programme.
The initial FS Update will involve updating the 2014 Feasibility
Study cost estimates to current market pricing using Chinese
contractor pricing for both phases of the 30Mtpa staged development
project, including both 12Mtpa Stage One, plus 18Mtpa Stage Two
expansion.
The Chinese EPC has guided that cost savings of more than 20%
could be available through the utilisation of Chinese construction
contractor firms capable of building the Zanaga Project utilising
lower cost construction solutions than traditional Western EPC
firms would typically be able to provide.
The results of this exercise are expected to be received in Q4
2023.
The second phase of work will involve investigating the
potential to apply proprietary iron ore processing technology that
the Chinese EPC Partner possesses, with the potential to provide
further capital and operating cost savings beyond the results of
the FS Update.
The application of this processing technology to the iron ore
from the Zanaga Project is planned to undergo technical assessment
as initial results from the FS Update are received in the coming
months.
Port infrastructure discussions underway
I am pleased to report that discussions are in progress with a
large port infrastructure development firm to investigate
opportunities to align the Zanaga Project with their planned port
infrastructure facilities in Pointe-Noire. Consideration is being
given to both of the following port infrastructure initiatives:
-- Opportunity for expansion of the existing port of
Pointe-Noire, potentially enabling a larger solution for the EPP
Project.
-- Potential development solutions for a large bulk mineral port
terminal capable of supporting the Zanaga 30Mtpa staged development
project.
Iron Ore Market
The iron ore market has been relatively stable in recent months,
providing a positive backdrop for sustained pricing at these
levels. China continues to consume significant quantities of iron
ore to feed its substantial steel industry. Furthermore, given the
current geopolitical environment, we believe that increased
resource independence will provide impetus to strategtic investors
in China and outside of China to secure access to globally
signifiant assets, especially outside Australia and Brazil - for
Chinese investors. The Zanaga Project therefore has the potential
to deliver substantial iron ore production to strategic customers
looking to secure positions in the commodity.
Acquisition of controlling shareholding in the Zanaga
Project
On 16 December 2022 ZIOC completed the the acquisition of
Glencore Projects' controlling shareholding in the Project through
the purchase of Glencore Projects' 50% plus one share interest in
Jumelles, an entity which indirectly holds the benefit of the
Project's mining licence, in exchange for a minority shareholding
of 48.26% in ZIOC. ZIOC and MPD, an indirect wholly owned
subsidiary of Jumelles which holds the benefit of the Project's
mining licence, also entered into a Marketing Agreement with
Glencore International for the sale and purchase of all future iron
ore production from the Project or any other of their or their
Affiliates' assets using similar infrastructure in the Republic of
Congo.
Transaction overview
Prior to the Acquisition of Glencore Projects' ownership of
Jumelles, the Project was managed through a joint venture agreement
in respect of Jumelles. The Company held 50% less one share of the
entire issued share capital of Jumelles, whilst Glencore Projects
owned 50% plus one share of the entire issued share capital of
Jumelles. The Acquisition involved the Company purchasing Glencore
Projects' entire holding in the Project (comprising 50% plus one
share interest in Jumelles) in consideration for issuing new
Consideration Shares in the Company to Glencore Projects.
Transaction rationale
The Project is one of the largest iron ore deposits in Africa
and the Company believes that the Project has the potential to
become a world-class iron ore producer. Based on the 2014 FS, the
quality of the Project's iron ore resource indicates the potential
to produce premium iron ore product with prospective premium
pricing. It is expected that new strategic investors are required
to enable the development and construction of the Project.
The Acquisition enabled ZIOC to:
(a) consolidate the Company's ownership of Jumelles to provide a
clear ownership structure and direction in respect of the
development and management of the Project;
(b) provide Glencore Projects with the right to appoint up to
two non-executive directors of the Company (comprising of a
minority within the Board) whilst still also requiring Glencore
Projects to observe the terms of the Relationship Agreement;
(c) provide a new structure that is expected to facilitate
capital raising and enhance liquidity for Shareholders; and
(d) remove the complexities of the previous joint venture structure.
The Company believes that the factors mentioned above will
enhance the attractiveness of the Project as a potential investment
for large strategic investors.
Project progress
Whilst ZIOC's focus during 2022 was on completing the
acquisition of a controlling stake in the Zanaga Project, the
Project Team continued to undertake a process to evaluate the
potential development of an EPP Project that would be quicker to
construct than the larger 30Mtpa staged development project and
would utilise existing road, rail and port infrastructure.
Engagement with other mining project developers in RoC has been
increased in order to explore potential collaboration
opportunities, especially in relation to logistics solutions and
alternatives for upgrades to existing infrastructure. Multiple
contract operators have been engaged across mining, logistics, and
processing disciplines with the objective providing updated cost
estimates in-country.
The Project Team continued to advance study work in an effort to
improve their understanding of the viability of the EPP Project.
The Project Team has continued to evaluate the potential for the
EPP Project to operate as a standalone project, or as an initial
pathway to production during the construction period of the
flagship 30Mtpa staged development project.
Cash Reserves and Project Funding
At 31 December 2022 the Company had cash reserves of US$0.3m. As
at 29 June 2023, ZIOC has outlined a 2023 Project Work Programme
and Budget as outlined below.
The Company had cash reserves of US$0.5m as at 27 June 2023.
In order to raise additional funding the Company entered a
Subscription Agreement with SMC (as described above). The financing
structure with SMC enables the Company to access funding for the
costs that the Company is expected to meet in the near future. For
illustrative purposes only, if the average price at which SMC
places the 36,000,000 shares was 13.30 pence (being ZIOC's
mid-market closing share price on 29 June 2023), the net proceeds
received by ZIOC from such sales would be approximately GBP4.55m.
Based on the current cost base at the Zanaga Project, the direct
loan facility to Jumelles Ltd, the current low corporate overheads
of ZIOC, the agreed cash preservation plan adopted by the Company
(described on page 51 of the 2022 Annual Report), the Company's
existing cash reserves and (on the basis of cautious assumptions
made by the Company in its funding model) the funds expected to be
obtained from the funding facility established by the Subscription
Agreement with SMC, the board of directors of ZIOC (the "Board")
believes that the Company will be adequately positioned to support
its operations going forward in the near future. As the final cash
amounts to be received for each tranche of issued shares, and the
timing of this receipt, are dependent on SMC successfully selling
the shares prior to transferring funds to the Company, the Board is
of the view that the going concern basis of accounting is
appropriate. However, the Board acknowledges that there is a
material uncertainty which could give rise to significant doubt
over the Company's ability to continue as a going concern and,
therefore, that the Company may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Nevertheless, based on and taking into account the foregoing
factors, the Board are satisfied the Company will have sufficient
funds to meet its own working capital requirements up to, and
beyond, twelve months from the approval of these accounts.
The Company continues to review the costs of its operational
activities with a view to conserving its cash resources. As part of
such review, and in order to preserve the cash position of the
Company, it has been agreed with the Directors (since January 2019)
and Management (since September 2019) that fees previously deferred
would be reviewed. As of today, discussions with management
continue and a resolution is expected to be reached in due
course.
Subscription Agreement with Shard Merchant Capital Ltd
The Company has been pleased with the success of the 2020 ESA
with SMC which has provided the Company with access to funding
through a relatively low cost structure that minimised dilution to
shareholders.
The proceeds received by the Company from SMC pursuant to the
Subscription Agreement have been applied to general working
capital, including the provision of further contributions to the
Zanaga Project's operations.
As a result the Company has entered into a new 2023 ESA with
SMC. An overview of the two ESAs is provided below:
1) 2020 ESA
a. As previously announced, on 26 June 2020 ZIOC announced that
the Company had entered into a Subscription Agreement with SMC, a
financial services provider.
b. Under the Subscription Agreement, and over the course of 2020
to 2022, the Company issued and SMC subscribed for 21 million
ordinary shares of no par value in the Company ("Subscription
Shares") in three tranches of 7 million shares each (First tranche
in 2020 and the subsequent tranches in 2021 and 2022).
c. During 2022, the final 7,000,000 ordinary shares in the
Company were placed by SMC. As a result of such transactions, as at
28 June 2023, all of the 21,000,000 ordinary shares in the Company
had been placed and the Company had received the aggregate net sum
of GBP1,318,126.12.
2) 2023 ESA
a. As announced by the Company, on 1 July 2023 the Company
entered into a new Subscription Agreement (the 2023 ESA) with
SMC.
b. Under the Subscription Agreement, the Company will issue and
SMC has subscribed for 36 million ordinary shares of no par value
in the Company ("Subscription Shares") in three tranches of 12
million shares each (First tranche to be issued immediately).
Outlook
With ZIOC now positioned as 100% owner of the Zanaga Project we
are now able to engage with strategic entities interested in
partnering with us going forward. It is pleasing to have secured
the support of Glencore for this initiative and we look forward to
working with the Glencore team in unlocking value from the project
for all stakeholders.
Despite globally uncertainty, the Project Team have continued to
progress numerous workstreams with the potential to add significant
value to the options available for the development of the Zanaga
Project.
Our investigations of opportunities that have the potential to
unlock existing infrastructure solutions, as well as options
available for lowering capital and operating costs of the project
have been a key focus of the team, and we hope to provide an update
on these intitiatives in due course.
Clifford Elphick
Non-Executive Chairman
Business Review
The Zanaga Project remains a unique large scale tier one asset
with multiple potential development options from a scale
perspective.
The Project Team have dedicated significant effort to securing
updated development costs associated with the flagship 30Mtpa
staged development project, and are excited to have engaged its
Chinese EPC partner to provide a cost update of the 30Mtpa Zanaga
Project to current market pricing estimates. The Chinese EPC also
posseses substantial technical capabilities in iron ore process
plant design and engineering which we expect to bring value to the
cost exercise process. This study work is expected to complete by
the end of this year.
In addition, the EPP Project remains an area of significant
interest for the Project Team and work continues to explore the
potential to utilise existing logistics infrastructure to enable
initial production to take place, particularly through
collaboration and joint infrastructure intiaitives underway
investigation in RoC.
30Mtpa staged development Project
The Project Team's ultimate objective remains to develop the
flagship 30Mtpa staged development mining project. As a reminder,
the Stage One project plans to produce 12Mtpa of premium quality
66% Fe content iron ore pellet feed product at bottom quartile
operating costs for more than 30 years on a standalone basis.
The Stage Two expansion of 18Mtpa is nominally scheduled to suit
the project mine development, construction timing and forecast cash
flow generation, and would increase the Project's total production
capacity to 30Mtpa. The product grade would increase to an even
higher premium quality 67.5% Fe content due to the addition of
18Mtpa of 68.5% Fe content iron ore pellet feed production, at an
even lower operating cost. The capital expenditure for the
additional 18Mtpa production, including contingency, could
potentially be financed from the cash flows from the Stage One
phase.
The Zanaga Project Team has continually taken steps to monitor
evolving improvements into its strategy for assessing the options
available for the development of the Zanaga Project. The Project
Team maintained its view that high quality products will continue
to achieve significant price premiums in the future and has sought
to lock in this additional revenue benefit into the Project's
development plan.
The Project Team will continue to engage in activity to
ascertain opportunities for optimisation and improvement of the
30Mtpa staged development project and will update the market as
these improvements develop.
Chinese EPC contractor engagement
ZIOC has entered into an engagement with a Chinese EPC partner
with substantial experience in the design, engineering and
construction management of large iron ore projects. The Chinese EPC
contractor possesses specific, specialised, design and construction
expertise in slurry pipeline projects as well as iron ore pellet
feed concentrate projects similar to the Zanaga Project.
The process involves a two stage project optimisation
process.
The initial FS Update will involve updating the 2014 Feasibility
Study cost estimates to current market pricing using Chinese
contractor pricing for both phases of the 30Mtpa staged development
project, including both 12Mtpa Stage One, plus 18Mtpa Stage Two
expansion.
The Chinese EPC has guided that cost savings of more than 20%
could be available through the utilisation of Chinese construction
contractor firms capable of building the Zanaga Project utilising
lower cost construction solutions than traditional Western EPC
firms would typically be able to provide.
The results of this exercise are expected to be received in Q4
2023.
The second phase of work will involve investigating the
potential to apply proprietary processing technology to Chinese EPC
Partner possesses proprietary new processing technology for iron
ore processing, with the potential to provide further capital and
operating cost savings beyond the results of the FS Update.
The application of this processing technology to the iron ore
from the Zanaga Project is planned to undergo technical assessment
as initial results from the FS Update are received in the coming
months.
EPP Project
The Project Team continue to undertake a process to evaluate the
potential development of an EPP Project that would be quicker to
construct than the larger 30Mtpa staged development project and
would utilise existing road, rail and port infrastructure.
During 2022 the Project Team have made a number of significant
steps in advancing solutions to unlock the key logistical
challenges associated the EPP Project. The Project Team are
engaging with other mining project developers in RoC to explore
potential collaboration opportunities, especially in relation to
logistics solutions and alternatives for upgrades to existing
infrastructure. We look forward to updating our shareholders on the
outcome of these initiatives.
The Project Team continue to advance study work in an effort to
improve their understanding of the viability of the EPP Project.
The Project Team continue to evaluate the potential for the EPP
Project to operate as a standalone project, or as an initial
pathway to production during the construction period of the
flagship 30Mtpa staged development Project.
Next Steps
Throughout the remainder of 2023, the Project Team will focus on
engaging with our selected Chinese EPC partner to update the
development costs of the 30Mtpa Zanaga Project and investigate
applicability of new iron ore processing technology, while
continuing to investigate potential opportunities for smaller scale
production utilising existing infrastructure.
Financial Review
Results from operations
The financial statements contain the results for the Group's
twelfth full year of operations following its incorporation on 19
November 2009. The Group made a total comprehensive income in the
year of US$4.7m (2021: total comprehensive loss US$1.9m). The total
comprehensive income for the year comprised:
2022 2021
US$000 US$000
------------------------------------------------------------------------------ ------- -------
General expenses (516) (1,214)
Net foreign exchange (loss) - (12)
Share of loss of associate (436) (672)
G ain on revaluation of investment 9,050 -
Profit / (Loss) before tax 8,098 (1,898)
S hare of other comprehensive income / (loss) of associate - foreign exchange 61 (17)
Reclassification of share of other comprehensive (loss) / income of associate (3,447)
Total comprehensive income / (loss) 4,712 (1,915)
------------------------------------------------------------------------------ ------- -------
General expenses of US$0.5m (2021: US$1.2m) consists of Long
Term Incentivisation Plan ("LTIP") US$0.2m (2021 US$0.5m) and
US$0.3m (2021: US$0.7m) of other general operating expenses.
The share of loss of associate reflected above relates to ZIOC's
investment in the Project, through Jumelles, which, generated a
loss of US$0.8m in the year to 31 December 2022 (2021: loss
US$1.3m). During the year Jumelles spent a net US$0.8m (2021
US$1.3m) on continuing operations.
The aqquistion of the Glencore stake in Jumelles generated a
gain on revaluation of investment of US$9.05m
Financial Position
ZIOC's Net Asset Value ("NAV") of US$85.2m] (2021: US$37.7m)
comprises of US$nil (2021: US$37.3m) investment in Jumelles,
US$85.3m of exploration and evaluation assets.US$0.7m of PPE,
US$0.3m (2021: US$0.4m) of cash balances and US$1.11m (2021:
US$0.08m) of other net current liabilities.
2022 2021
US$000 US$000
---------------------------------- ------- ------
Investment in Associate - 37,269
Exploration and evaluation assets 85,300 -
PPE 703 -
Cash 310 387
Net current assets/(liabilities) (1,110) 80
---------------------------------- ------- ------
Net assets 85,203 37,736
---------------------------------- ------- ------
Subscription Agreement concluded with Shard Merchant Capital
Ltd
As outlined in the Chairman's Statement above, on 1 July 2023
ZIOC entered into a 2023 ESA with SMC, a financial services
provider. Under the terms of the agreement the Company will issue
and SMC will subscribe for up to 36 million ordinary shares of no
par value in the Company in up to three tranches of up to 12
million shares each.
Pursuant to the 2023 ESA, SMC has undertaken to use its
reasonable endeavours to place the relevant Subscription Shares
that it has subscribed for and to pay to ZIOC 95% of the gross
proceeds of any such sales.
Cash flow
Cash balances decreased by US$0.08m during 2022 (2021: decrease
of US$0.03m). Additional investment in Jumelles required under the
2022 Funding Agreement ( outline details in Note 1 to the financial
statements) utilised US$0.1m (2021: US$0.6m) and operating
activities utilised US$0.5m (2021: US$0.4m). The Company raised
funds of US$0.2m from the Shard facility during the year and $385k
was drawndown from the Glencore loan facilty
Fundraising activities
The fundraising activities carried out in 2022 of US$0.2m (2021:
US$0.6m) unaudited by MHA were those relating to the SMC facility
which are described earlier in this announcement.
Reserves & Resource Statement
The Zanaga Project has defined a 6.9bn tonne Mineral Resource
and a 2.1bn tonne Ore Reserve, reported in accordance with the JORC
Code (2012), and defined from only 25km of the 47km strike length
of the orebody so far identified.
Ore Reserve Statement
The Ore Reserve estimate (announced by the Company on 5 May
2021) was prepared by independent consultants, SRK Consulting (UK)
Ltd ("SRK") and is based on the 30Mtpa Feasibility Study and the
6,900Mt Mineral Resource (announced by the Company on 8 May
2014).
As stipulated by the JORC Code, Proven and Probable Ore Reserves
are of sufficient quality to serve as the basis for a decision on
the development of the deposit. Based on the studies performed, the
mine plan as reported in the 2014 FS was reassessed in respect of
the updated sales revenue, operating expenditure and capital
expenditures and confirmed as at 31 December 2020 to be technically
feasible and economically viable.
Ore Reserve Category Tonnes (Mt(Dry) Fe (%) SiO(2) (%) Al(2) O(3) P (%)
) (%)
---------------------- --------------- ------ ---------- ---------- -----
Proved 774 37.3 35.1 4.7 0.04
---------------------- --------------- ------ ---------- ---------- -----
Probable 1, 296 31.8 44.7 2.3 0.05
---------------------- --------------- ------ ---------- ---------- -----
Total 2,070 33.9 41.1 3.2 0.05
---------------------- --------------- ------ ---------- ---------- -----
Notes:
Long term price assumptions are based on a CFR IODEX 65%Fe
forecast of US$90tdry (USc138/dmtu) with adjustments for quality,
deleterious elements, moisture and freight.
Discount Rate 10% applied on an ungeared 100% equity basis
Mining dilution ranging between 5% and 6%
Mining losses ranging between 1% and 5%
Note: The full Ore Reserve Statement is available on the
Company's website (www.zanagairon.com)
Mineral Resource
Classification Tonnes Fe (%) SiO(2) Al(2) P (%) Mn (%) LOI
(Mt) (%) O(3) (%) (%)
---------------- ------- ------- ------- ---------- ------ ------- -----
Measured 2,330 33.7 43.1 3.4 0.05 0.11 1.46
Indicated 2,460 30.4 46.8 3.2 0.05 0.11 0.75
Inferred 2,100 31 46 3 0.1 0.1 0.9
---------------- ------- ------- ------- ---------- ------ ------- -----
Total 6,900 32 45 3 0.05 0.11 1.05
---------------- ------- ------- ------- ---------- ------ ------- -----
Reported at a 0% Fe cut-off grade within an optimised Whittle
shell representing a metal price of 130 USc/dmtu. Mineral Resources
are inclusive of Reserves. A revised Mineral Resource, prepared in
accordance with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the JORC Code, 2012
Edition) was announced on 8 May 2014 and is available on the
Company's website (www.zanagairon.com).
Note: The figures shown are rounded; they may not sum to the
subtotals shown due to the rounding used.
The Mineral Resource was estimated as a block model within
constraining wireframes based upon logged geological boundaries.
Tonnages and grades have been rounded to reflect appropriate
confidence levels and for this reason may not sum to totals
stated.
Geological Summary
The Zanaga iron ore deposit is located within a North-South
oriented (metamorphic) Precambrian greenstone belt in the eastern
part of the Chaillu Massif in South Western Congo. From airborne
geophysical survey work, and morphologically, the mineralised trend
constitutes a complex elongation in the North-South direction, of
about 47 km length and 0.5 to 3 km width.
The ferruginous beds are part of a metamorphosed,
volcano-sedimentary Itabirite/banded iron formation ("BIF") and are
inter-bedded with amphibolites and mafic schists. It exhibits
faulted and sheared contacts with the crystalline basement. As a
result of prolonged tropical weathering the BIF has developed a
distinctive supergene iron enrichment profile.
At surface there is sometimes present a high grade ore (+60%
Fe), classified as canga, of apparently limited thickness (<5m)
capping a discontinuous, soft, high grade, iron supergene zone of
structure-less hematite/goethite of limited thickness (<7m). The
base of the high-grade supergene iron zone grades quickly at depth
into a relatively thick, leached, well-weathered to moderately
weathered friable hematite Itabirite with an average thickness of
approximately 25 metres and grading 45-55% Fe.
The base of the friable Itabirite zone appears to correlate with
the moderately weathered/weakly weathered BIF boundary, and fresh
BIF comprises bands of chert and magnetite/grunerite layers.
Competent Persons
The statement in this announcement relating to Ore Reserves is
based on information compiled by Dr Iestyn Humphreys, FIMM, AIME,
PhD who is a Corporate Consultant, and Practice Leader with SRK. He
has sufficient experience relevant to the style of mineralisation
and type of deposit under consideration and to the activity he is
undertaking to qualify as a Competent Person as defined in the JORC
Code (2012). The Competent Person, Dr Iestyn Humphreys, confirms
that the Ore Reserve Estimate is accurately reproduced in this
announcement and has given his consent to the inclusion in the
report of the matters based on his information in the form and
context within which it appears.
The information in this announcement that relates to Mineral
Resources is based on information compiled by Malcolm Titley, BSc
MAusIMM MAIG, of CSA Global (UK) Ltd. Malcolm Titley takes overall
responsibility for the report as Competent Person. He is a Member
of the Australasian Institute of Mining and Metallurgy ("AUSIMM")
and has sufficient experience, which is relevant to the style of
mineralisation and type of deposit under consideration, and to the
activity he is undertaking, to qualify as a Competent Person in
terms of the JORC Code. The Competent Person, Mr Malcolm Titley,
has reviewed this Mineral Resource statement and given his
permission for the publication of this information in the form and
context within which it appears .
Definition of JORC Code
The Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (2012) as published by the Joint
Ore Reserves Committee of the Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals
Council of Australia.
Principal Risks & Uncertainties
The principal business of ZIOC currently comprises managing
ZIOC's interest in the Zanaga Project, including the Jumelles
group, and monitoring the development of the Project and engaging
in discussions with potential investors. The principal risks facing
ZIOC are set out below. Risk assessment and evaluation is an
essential part of the Group's planning and an important aspect of
the Group's internal control system. Overall these potential risks
have remained broadly constant over the past year with the
exception of the implications of COVID-19 on the long term outlook
for the iron ore market.
Risks relating to iron ore prices, markets and products
The ability to raise finance for the Project is largely
dependent on movements in the price of iron ore. Iron ore prices
have historically been volatile and are primarily affected by the
demand for and price of steel and the level of supply of iron ore.
Such prices are also affected by numerous other factors beyond the
Company's and the Jumelles group's control, including the relative
exchange rate of the U.S. dollar with other major currencies,
global and regional demand, political and economic conditions,
production levels and costs and transportation costs in major iron
ore producing regions.
While it appears to be the case that there has been some degree
of stabilisation of iron ore prices in the global market for iron
ore, the duration of such stabilisation remains uncertain. The
level of iron ore prices in the global market for iron ore
continues to be subject to uncertainty. Although the 2014 FS
identifies the product from the Project and the potential demand
for such product within a range of iron ore prices, there are no
assurances that the demand for the Project's product will be
sufficient in quantity or in price to ensure the economic viability
of the Project or to enable finance for the development of the
Project to be raised. Furthermore, the range of iron ore prices in
the 2014 FS will need to be reviewed so as to reflect changed
market conditions and changed expectations relating to the supply
and demand for iron ore. Such risk is reviewed constantly and any
relevant changes considered.
Risks relating to an EPP
For some considerable period, an initiative has been and is
being carried out to investigate the possibility of a low-cost
small scale start-up, using existing infrastructure, focussing on a
standard 62% Fe benchmark iron ore product or a high grade 65% Fe
pellet feed iron ore product that would involve simple 'processing'
applications. In conjunction with this, the possibility of a
low-cost small scale start-up involving the production of a pellet
feed concentrate and conventional pelletisation continues to be
investigated. This initiative also involves the assessment of
methods of providing the necessary power requirements as well as
logistical support to enable the product to be transported to an
available exit port. There will also be the need to put in place
the appropriate contractual and permitting arrangements. There is a
risk that such kind of start-up is found not to be viable or is not
proceeded with for other reasons or is delayed. Such risk is
reviewed constantly and any relevant changes considered.
Risks relating to financing the Zanaga Project
Any decision of the Company to proceed with construction of the
mine and related infrastructure (or any variant such as a low
capital cost, small scale start-up EPP Project) is itself dependent
upon the ability of the Company to raise the necessary debt and
equity to finance such construction and the initial operation of
the mine (or any variant such as a low-cost small scale start-up).
The Company may be unable to obtain debt and/or equity financing in
the amounts required, in a timely manner, on favourable terms or at
all and should this occur, it is highly likely to pose challenges
to the proposed development of the Zanaga Project and the proposed
timeline for its development. Moreover, the poor current global
equity and credit environment may pose additional challenges to the
ability of the Company to secure equity or debt finance or to
secure equity or debt finance on acceptable terms, including as to
rates of interest. Current negative global market conditions and
increasing political and geopolitical tensions could also adversely
impact the ability to finance the Zanaga Project. Such risk is
reviewed constantly and any relevant changes considered.
Risks relating to financing of the Company
The Company will not generate any material income until an
operating stage of the Project has been constructed and mining and
export of the iron ore has successfully commenced at commercial
volumes. In the meantime the Company will continue to expend its
cash reserves. Should the Company seek to raise additional finance,
it may be unable to obtain debt and/or equity financing in the
amounts required, in a timely manner, on favourable terms or at
all.
If construction of the mine and related infrastructure proceeds
(including any preparatory steps associated with the construction
of the mine and related infrastructure) or any small scale start-up
proceeds, and ZIOC elects to fund its pro rata equity share of
construction capital expenditure, there is no certainty as to its
ability to raise the required finance or the terms on which such
finance may be available.
If ZIOC raises additional funds (including for the purpose of
funding the construction of the Project or any part of the Project,
including any small-scale start-up) through further issuances of
securities, the holders of ordinary shares could suffer significant
dilution, and any new securities that ZIOC issues could have
rights, preferences and privileges superior to those of the holders
of the ordinary shares.
If the Company fails to generate or obtain sufficient financial
resources to develop and operate its business, this could
materially and adversely affect the Company's business, results of
operations, financial condition and prospects. Current negative
global market conditions and increasing political and geopolitical
tensions could also adversely impact the ability to finance the
Company. Such risk is reviewed constantly and any relevant changes
considered.
Risk relating to Ore Reserves estimation
Ore Reserves estimates include diluting materials and allowances
for losses, which may occur when the material is mined. Appropriate
assessments and studies have been carried out and include
consideration of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social
and governmental factors. These assessments demonstrate at the time
of reporting that extraction could reasonably be justified. Ore
Reserve estimates are by their nature imprecise and depend, to a
certain extent, upon statistical inferences and assumptions which
may ultimately prove unreliable. Estimated mineral reserves or
mineral resources may also have to be recalculated based on changes
in iron ore or other commodity prices, further exploration or
assessment or development activity and/or actual production
experience. Such risk is reviewed constantly and any relevant
changes considered.
Host country related risks
The operations of the Zanaga Project are located mainly in the
RoC. These operations will be exposed to various levels of
political, regulatory, economic, taxation, environmental and other
risks and uncertainties. As in many other countries, these
(varying) risks and uncertainties can include, but are not limited
to: political, military or civil unrest; fluctuations in global
economic and market conditions impacting on the economy; terrorism;
hostage taking; extreme fluctuations in currency exchange rates;
high rates of inflation; labour unrest; nationalisation; changes in
taxation; illegal mining; restrictions on foreign exchange and
repatriation. In addition, the RoC is an emerging market and, as a
result, is generally subject to greater risks than in the case of
more developed markets.
HIV/AIDS, malaria and other diseases are prevalent in the RoC
and, accordingly, the workforce of the ZIOC group and of the
Jumelles group will be exposed to the health risks associated with
the country. The operating and financial results of such entities
could be materially adversely affected by the loss of productivity
and increased costs arising from any effect of HIV/AIDS, malaria
and other diseases on such workforce and the population at
large.
Weather conditions in the RoC can fluctuate severely.
Rainstorms, flooding and other adverse weather conditions are
common and can severely disrupt transport in the region where the
Jumelles group operates and other logistics on which the Jumelles
group is dependent.
The host country related risks described above could be relevant
both as regards day-to-day operations and the raising of debt and
equity finance for the Project. The occurrence of such risks could
have a material adverse effect on the business, prospects,
financial condition and results of operations of the Company and/or
the Jumelles group. Such risk is reviewed constantly and any
relevant changes considered.
Risks relating to the Project's licences and the regulatory
regime
The Project's Mining Licence was granted in August 2014 and a
Mining Convention has been entered into. With effect from 20 May
2016, the Zanaga Mining Convention has been promulgated as a law of
the RoC, following ratification by the Parliament of the RoC and
publication in the Official Gazette.
The holder of a mining licence is required to incorporate a
Congolese company to be the operating entity and the Congolese
Government is entitled to a free participatory interest in projects
which are at the production phase. This participation cannot be
less than 10%. Under the terms of the Mining Convention, there is a
contingent statutory 10% free participatory interest in favour of
the Government of the RoC as regards the mine operating company and
a contingent option for the Government of the RoC to buy an
additional 5% stake at market price.
The granting of required approvals, permits and consents may be
withheld for lengthy periods, not given at all, or granted subject
to conditions which the Jumelles group may not be able to meet or
which may be costly to meet. As a result, the Jumelles group may
incur additional costs, losses or lose revenue and its business,
result of operations, financial condition and/or growth prospects
may be materially adversely affected. Failure to obtain, renew,
enforce or comply with one or more required approvals, permits and
consents could have a material adverse effect on the business,
prospects, financial condition and results of operations of the
Company and/or the Jumelles group. Mitigation of such risks is in
part dependent upon the terms of the Mining Convention and
compliance with its terms. Such risk is reviewed constantly and any
relevant changes considered.
Transportation and other infrastructure
The successful development of the Project (including any
low-cost small scale start-up) depends on the existence of adequate
infrastructure and the terms on which the Project can own, use or
access such infrastructure. The region in which the Project is
located is sparsely populated and difficult to access. Central to
the Zanaga Project becoming a commercial mining operation is access
to a transportation system through which it can transport future
iron ore product to a port for onward export by sea. In order to
achieve this it will be necessary to access a port at
Pointe-Indienne, which is still to be constructed, or some other
exit port in the case of a low-cost small scale start-up.
The nature and timing of construction of the proposed new port
are still under discussion with the government of the RoC and other
interested parties. In relation to the pipeline and Project
facilities at the proposed new port and (to the extent needed)
other infrastructure, the necessary permits, authorisations and
access, usage or ownership rights have not yet been obtained.
Failure to construct the proposed pipeline and/or facilities at
the proposed new port and/or other needed infrastructure or a
failure to obtain access to and use of the proposed new port and/or
other needed infrastructure or a failure to do this in an
economically viable manner or in the required timescale could have
a material adverse effect on the Project.
In the case of a low-cost small scale start-up, failure to put
in place the necessary logistical requirements (including trucking,
rail transportation and port facilities) and/or other needed
infrastructure or a failure to obtain access to and use of the
proposed logistical requirements or a failure to do this in an
economically viable manner or in the required timescale could have
a material adverse effect on the Project.
The availability of reliable and continuous delivery of
sufficient quantity of power to the Project at an affordable price
will also be a significant factor on the costs at which iron ore
can be produced and transported to any proposed exit port and will
impact on the economic viability of the Project.
Reliable and adequate infrastructure (including an outlet port,
roads, bridges, power sources and water supplies) are important
determinants which affect capital and operating costs and the
ability of the Jumelles group to develop the Project, including any
low-cost small scale start-up. Failure or delay in putting in place
or accessing infrastructure needed for the development of the
Zanaga Project could have a material adverse effect on the
business, prospects, financial condition and results of operations
of the Company and/or the Jumelles group. Such risk is reviewed
constantly and any relevant changes considered.
Risks associated with access to land
Pursuant to the laws of the RoC, mineral deposits are the
property of the government with the ability to purchase surface
rights. Generally speaking, the RoC has not had a history of native
land claims being made against the state's title to land. There is
no guarantee, however, that such claims will not occur in the
future and, if made, such claims could have a deleterious effect on
the progress of development of the Project and future
production.
The Mining Convention envisages that the RoC will carry out a
process to expropriate the land required by the Zanaga Project and
place such land at the disposal of the holder of the Mining Licence
in order to build the mine and the infrastructure, including the
pipeline, required for the realisation of the Zanaga Project. This
means that the rights of the Jumelles company which holds the
Mining Licence to the relevant land will be subject to negotiation
between the Congolese government and such company. Alternatively,
if the land is not declared DUP (i.e. is expropriated by the State
under its sovereign powers) then the Jumelles group will have to
reach agreement with the local land owners which may be a more time
consuming and costly process. Such risk is reviewed constantly and
any relevant changes considered.
Risks relating to timing
Any delays in (i) obtaining rights over and access to land and
infrastructure; (ii) obtaining the necessary permits and
authorisations; (iii) the construction or commissioning of the
mine, the pipeline or facilities at or offshore an exit port or
power transmission lines or other infrastructure; or (iv)
negotiating the terms of access to the exit port and supply of
power and other infrastructure (including an offshore loading
facility); or (v) raising finance to fund the development of the
mine and associated infrastructure, could prevent altogether or
impede the development of the Zanaga Project, including the ability
of the Zanaga Project to export its future iron ore products
whether on the anticipated timelines or at projected volumes and
costs or otherwise. Such delays or a failure to complete the
proposed infrastructure or the terms of access to infrastructure or
to do this in an economically viable manner, could have a material
adverse effect on the business, results of operations, financial
condition and prospects of the Company and/or the Jumelles group.
Such risk is reviewed constantly and any relevant changes
considered.
Environmental risks
The operations and activities of the Zanaga Project are subject
to potential risks and liabilities associated with the pollution of
the environment and the disposal of waste products that may occur
as a result of its mineral exploration, development and production,
including damage to preservation areas, over-exploitation and
accidental spills and leakages. Such potential liabilities include
not only the obligation to remediate environmental damage and
indemnify affected third parties, but also the imposition of court
judgments, administrative penalties and criminal sanctions against
the relevant entity and its employees and executive officers.
Awareness of the need to comply with and enforcement of
environmental laws and regulations continues to increase.
Notwithstanding precautions taken by entities involved in the
development of the Project, breaches of applicable environmental
laws and regulations (whether inadvertent or not) or environmental
pollution could materially and adversely affect the financial
condition, business, prospects and results of operations of the
Company and/or the Jumelles group. Such risk is reviewed constantly
and any relevant changes considered.
Health and safety risks
The Jumelles group is required to comply with a range of health
and safety laws and regulations in connection with its business
activities (including laws and regulations relating to the COVID-19
pandemic) and will be required to comply with further laws and
regulations if and when construction of the Project commences and
the mine goes into operation. A violation of health and safety laws
relating to the Jumelles group and/or the Project's operations, or
a failure to comply with the instructions of the relevant health
and safety authorities, could lead to, amongst other things, a
temporary shutdown of all or a portion of the business activity of
the Jumelles group and/or the Project's operations or the
imposition of costly compliance measures. Where health and safety
authorities and/or the RoC government require the business activity
of the Jumelles group and/or the Project to shut down or reduce all
or a portion of its activities of operations or to implement costly
compliance measures, whether pursuant to applicable health and
safety laws and regulations, or the more stringent enforcement of
such laws and regulations, such measures could have a material
adverse effect on the financial condition, business, prospects,
reputation and results of operations of the Company and/or the
Jumelles group. Such risk is reviewed constantly and any relevant
changes considered.
Risks relating to third party claims
Due to the nature of the operations to be undertaken in respect
of the development of the Zanaga Project, there is a risk that
substantial damage to property or injury to persons could be
sustained during such development. Any such damage or injury could
have a material adverse effect on the financial condition,
business, prospects, reputation and results of operations of the
Company and/or the Jumelles group. Such risk is reviewed constantly
and any relevant changes considered.
Risks relating to outsourcing
The 2014 FS envisages that certain aspects of the Zanaga Project
will be carried out by third parties pursuant to contracts to be
negotiated with such third parties. Any low-cost small scale
start-up is also likely to involve the undertaking of various key
elements of the Project by third parties. There is a risk that
agreement might not be reached with such third parties or that the
terms of any such agreement are more stringent than currently
anticipated; this could adversely impact upon the Project and/or
the proposed timescale for carrying out the Project. Such risk is
reviewed constantly and any relevant changes considered.
Fluctuation in economic factors
In terms of currency exchange rates, the Jumelles group's
functional and reporting currency is the U.S. dollar, and most of
its in country costs are and will be denominated in CFA francs and
Euros. Consequently, the Jumelles group must translate the CFA
franc and Euro denominated assets and liabilities into U.S.
dollars. To do so, non-U.S. dollar denominated monetary assets and
liabilities are translated into U.S. dollars using the closing
exchange rate at the reporting period end date. Consequently,
increases or decreases in the value of the U.S. dollar versus the
Euro (and consequently the CFA franc) and other foreign currencies
may affect the Jumelles group's financial results, including its
assets and liabilities in the Jumelles group's balance sheets.
These factors will affect the financial results of the Company. In
addition, ZIOC holds the majority of its funds in Pounds Sterling,
and incurs the majority of its corporate costs in Pounds Sterling,
but its contributions to funding the Jumelles group in 2021 and
2022 are calculated in U.S. dollars. Consequently, any fluctuation
in exchange rates between Pounds Sterling versus the U.S. dollar or
the Euro, could also adversely affect the financial results of the
Company. Furthermore, current fluctuations in inflation, interest
rates, and supply chain reliability has the potential to adversely
impact the Company and Jumelles today, while also potentially
adversely impacting the economic viability of the Zanaga Project,
as well as the ability to secure finance for the development of the
Zanaga Project. Such risks are reviewed constantly and any relevant
changes considered.
Cash resources
The Company has limited cash resources. Although the Company has
taken steps to conserve and replenish its cash resources, there is
a risk that a shortage of such cash resources will adversely affect
the Company. Such shortage could result in further expenditure cuts
being introduced by the Company, both in its internal and its
external operations. Volatile and uncertain economic global
conditions in means that there can be no certainty as to when the
Zanaga resource is likely to be developed. The challenging economic
conditions as well as difficulties of monetising this resource
given its location impact upon the ability of the Jumelles group to
raise new finance for the Project as well as on the Company's
ability to raise new finance for itself. The Company's existing
cash resources may continue to come under increasing pressure
unless a more predictable investment, travel and trading climate
materialises in the foreseeable future which benefits the Project
and the Company can take steps which result in an improvement of
its financial position. Such risk is reviewed constantly and any
relevant changes considered.
Financial Statements
Consolidated statement of total comprehensive income for year
ended 31 December 2022
2022 2021
Note US$000 US$000
--------------------------------------------------------------------------------- ---- -------- -------
Gain on revaluation of investment 6b 9,050 -
General and administrative expenses ( 516 ) (1,226)
Share of loss of associate 6b (436) (672)
--------------------------------------------------------------------------------- ---- -------- -------
Operating profit / (loss) 8,098 (1,898)
--------------------------------------------------------------------------------- ---- -------- -------
Profit / (Loss) before tax 8,098 (1,898)
Taxation 5 - -
--------------------------------------------------------------------------------- ---- -------- -------
Profit / (Loss) for the year 8,098 (1,898)
--------------------------------------------------------------------------------- ---- -------- -------
Items that will not be reclassified subsequently to profit or loss:
Share of other comprehensive loss of associate - foreign exchange translation 6b - (17)
Items that may be reclassified subsequently to profit or loss:
Share of other comprehensive income of associate - foreign exchange translation 6b 61 -
Reclassification of share of other comprehensive loss of associate 6b (3,447) -
--------------------------------------------------------------------------------- ---- -------- -------
Other comprehensive loss (3,386) (17)
--------------------------------------------------------------------------------- ---- -------- -------
Total comprehensive income / (loss) 4,712 (1,915)
--------------------------------------------------------------------------------- ---- -------- -------
Earnings / (Loss) per share
Basic (Cents) 12 0.3 (0.60)
Diluted (Cents) 12 0.3 (0.60)
Gain / (Loss) and total comprehensive income / (loss) for the
year is attributable to the equity holders of the Parent Company
and are from continuing operations.
The notes form an integral part of the financial statements.
Consolidated statement of financial position
as at 31 December 2022
2022 2021
Note US$000 US$000
------------------------------------------------------------ --------------- --------- ---------
Non-current assets
Exploration and evaluation assets 6a 85,300 -
Property, plant and equipment 6a 703 -
Investment in Associate 6b - 37,269
------------------------------------------------------------ --------------- --------- ---------
86,003 37,269
------------------------------------------------------------ --------------- --------- ---------
Current assets
Other receivables 7 113 233
Cash and cash equivalents 8 310 387
------------------------------------------------------------ --------------- --------- ---------
423 620
------------------------------------------------------------ --------------- --------- ---------
Total Assets 86,426 37,889
------------------------------------------------------------ --------------- --------- ---------
Non-current liabilities
Lease liability 9a 104 -
Current liabilities
Loans and borrowings 9b 385
------------------------------------------------------------ --------------- --------- ---------
Trade and other payables 9c 724 153
------------------------------------------------------------ --------------- --------- ---------
Lease Liability 9a 11
------------------------------------------------------------ --------------- --------- ---------
Net assets 85,202 37,736
------------------------------------------------------------ --------------- --------- ---------
Equity attributable to equity holders of the Parent Company
Share capital 10 313,689 270,935
Accumulated deficit (228,418) (236,516)
Foreign currency translation reserve (69) 3,317
------------------------------------------------------------ --------------- --------- ---------
Total equity 85,202 37,736
------------------------------------------------------------ --------------- --------- ---------
The notes form an integral part of the financial statements.
These financial statements were approved by the Board of
Directors on 2 July 2023 and were signed on its behalf by:
Mr Clifford Elphick
Director
Consolidated statement of changes in equity
for year ended 31 December 2022
Foreign
currency
Share Accumulated translation Total
Capital deficit reserve Equity
US$000 US$000 US$000 US$000
----------------------------------------------------------- ------- ----------- ----------- --------
Balance at 1 January 2021 268,864 (234,618) 3,334 37,580
Loss for the year - (1,898) - (1,898)
Other comprehensive loss - - (17) (17)
Total comprehensive income for the year - (1,898) (17) (1,915)
----------------------------------------------------------- ------- ----------- ----------- --------
Transactions with owners in their capacity as owners:
Issue of ordinary shares 1,525 - - 1,525
Consideration for share-based payments 546 - - 546
----------------------------------------------------------- ------- ----------- ----------- --------
Balance at 31 December 2021 270,935 (236,516) 3,317 37,736
----------------------------------------------------------- ------- ----------- ----------- --------
Balance at 1 January 2022 270,935 (236,516) 3,317 37,736
Profit for the year - 8,098 - 8,098
Other comprehensive income - - (3,386) (3,386)
----------------------------------------------------------- ------- ----------- ----------- --------
Total comprehensive income for the year - 8,098 (3,386) 4,712
----------------------------------------------------------- ------- ----------- ----------- --------
Transactions with owners in their capacity as owners:
Issue of shares as consideration for acquisition of assets 42,591 - - 42,591
Consideration for share-based payments 163 163
Balance at 31 December 2022 313,689 (228,418) (69) 85,202
----------------------------------------------------------- ------- ----------- ----------- --------
Consolidated cash flow statement
for year ended 31 December 2022
2022 2021
Note US$000 US$000
-------------------------------------------------------- ----- -------- -------
Cash flows used in operating activities
Profit/(Loss) for the year 8,098 -1,898
Adjustments for:
Share based payments 163 547
Net exchange loss - 12
Gain on revaluation of investment in associate 6b (9,050) -
Share of loss in associate 6b 436 672
Working capital changes:
* (Increase)/decrease in other receivables 7 130 (175)
* (Decrease)/increase in trade and other payables 9c 126 (31)
-------------------------------------------------------- ----- -------- -------
Net cash used in operating activities (97) (873)
-------------------------------------------------------- ----- -------- -------
Cash flows used in investing activities
Investment in associate 6b (95) (604)
-------------------------------------------------------- ----- -------- -------
Net cash used in investing activities (95) (604)
-------------------------------------------------------- ----- -------- -------
Cash flows generated by financing activities
Proceeds from share issuance - 1,524
-------------------------------------------------------- ----- -------- -------
Net cash flow generated by financing activities - 1,524
-------------------------------------------------------- ----- -------- -------
Net increase/(decrease) in cash and cash equivalents (192) 47
Cash and cash equivalents at beginning of year 387 352
Acquired as acquisition of assets (refer note 6b) 115 -
Effect of movements in exchange rates on cash held - (12)
Cash and cash equivalents at end of year 8 310 387
-------------------------------------------------------- ----- -------- -------
Notes to the financial statements
1 Business information and going concern basis of
preparation
Background
Zanaga Iron Ore Company Ltd (the "Company"), was incorporated on
19 November 2009 under the name of Jumelles Holdings Limited. The
Company changed its name on 1 October 2010. The Company is
incorporated in the British Virgin Islands ("BVI") with registered
office is situated at 2nd Floor, Coastal Building, Wickham's Cay
II, Road Town, P.O. Box 2221, Tortola, British Virgin Islands. On
18 November 2010, the Company's share capital was admitted to
trading on the AIM Market ("AIM") of the London Stock Exchange
("Admission"). The Company's principal place of business as an
investment holding vehicle is situated in Guernsey, Channel
Islands.
At 31 December 2010 the Company held 100% of the share capital
of Jumelles Limited subject to the then Call Option.
On 14 March 2011 the Company incorporated and acquired the
entire share capital of Zanaga UK Services Limited for US$2, a
company registered in England and Wales which provides investor
management and administrative services.
In 2007, Jumelles became the special purpose holding company for
the interests of its then ultimate 50/50 founding shareholders,
Garbet Limited ("Garbet") and Guava Minerals Limited ("Guava"), in
MPD Congo which, owns and operates 100% of the Zanaga Project in
the RoC (subject to a minimum 10% free carried interest in MPD
Congo in favour of the Government of the RoC).
In December 2009 Garbet and Guava contributed their then
respective 50/50 joint shareholding in Jumelles to the Company.
Guava is majority owned by African Resource Holdings Limited
("ARH"), a BVI company that specialises in the investment and
development of early-stage natural resource projects in emerging
markets. Guava owns approximately 27.39% of the share capital of
the Company.
At the time that Garbet was a shareholder in the Company, it was
majority owned by Strata Limited ("Strata"), a private investment
holding company based in Guernsey, which specialises in the
investment and development of early-stage natural resource projects
in emerging markets, predominately Africa. Until 3 April 2017
Garbet owned approximately 41.49% of the share capital of the
Company. Pursuant to a transaction effected on 2 April 2017 Garbet
ceased to hold any shares in the Company. As part of such
transaction the shares in the Company which were held by Garbet
were transferred directly or indirectly to Garbet's shareholders
and the shareholders of Garbet's holding company, Strata.
Jumelles has three subsidiary companies, namely Jumelles M
Limited, Jumelles Technical Services (UK) Limited and MPD Congo
.
Transactions involving Xstrata and Glencore
-- As a result of transactions entered into on 16 October 2009
and 3 December 2009, Xstrata acquired a majority stake in Jumelles
in return for providing funding towards ongoing exploration of the
Zanaga exploration licence area, the preparation of a
pre-feasibility study (the "PFS") and a feasibility study (the
"FS"). In addition a joint venture agreement which regulated the
respective rights of the Company, Jumelles and Xstrata in relation
to Jumelles was entered into. >Subsequently:
o Xstrata merged with the Glencore group on 2 May 2013 to form
Glencore Xstrata and the holding company of the merged group
subsequently changed its name to Glencore.
o the Feasibility Study was completed in March 2014 and paid
for.
o In December 2022, ZIOC acquired Glencore's 50% plus one share
in Jumelles in exchange for 286,340,379 new Shares in ZIOC,
enabling ZIOC to secure 100% ownership of Jumelles
Relationship between Jumelles and its shareholders since
February 2011 until December 2022
The Company, Jumelles and Xstrata Projects agreed to regulate
their respective rights in relation to the Project following
exercise of the Call Option under the terms of the joint venture
agreement ("JVA"). Under the terms of the JVA (as amended), all
significant decisions regarding the conduct of Jumelles' business
(other than certain protective rights which require the agreement
of shareholders holding at least 95% of the voting rights in
Jumelles) were made by the Board of Directors.
Glencore had the right to appoint three directors to the
Jumelles Board while ZIOC had a right to appoint two directors. At
any Jumelles Board meeting, the directors nominated by Glencore had
between them such number of votes as represents Glencore's voting
rights in the general meetings of Jumelles and the directors
nominated by ZIOC had between them such number of votes as
represents ZIOC's voting rights in the general meetings of
Jumelles.
As a consequence of the provisions of the JVA (in its original
version and as subsequently amended), Glencore controled Jumelles
at both a shareholder and director level and therefore controled
what was the Company's sole mineral asset, the Zanaga Project. As a
result, the Company previously accounted for this as an Investment
in Associate in respect of the Project with Glencore.
Since the acquisition by ZIOC of Glencore's majority stake in
Jumelles the JVA is no longer effective and ZIOC has 100% ownership
of Jumelles.
Future funding requirements and going concern basis of
preparation
The Directors have prepared the accounts on a going concern
basis. At 31 December 2022 the Company had cash reserves of
US$0.3m.
The Company had cash reserves of US$0.5m as at 27 June 2023,
with annual ZIOC corproate costs of US$0.6m, project operating
costs of US$1.3m, deferred transaction fees of US$0.2m, and
deferred Glencore loan and interest costs of US$1.2m. In order to
raise additional funding the Company entered a Subscription
Agreement with SMC (as described above). The financing structure
with SMC enables the Company to access funding for the costs that
the Company is expected to meet in the near future. For
illustrative purposes only, if the average price at which SMC
places the 36,000,000 shares was 13.30 pence (being ZIOC's
mid-market closing share price on 29 June 2023), the net proceeds
received by ZIOC from such sales would be approximately GBP4.55m.
Based on the current cost base at the Zanaga Project, the direct
loan facility to Jumelles Ltd, the current low corporate overheads
of ZIOC, the agreed cash preservation plan adopted by the Company
(described below), the Company's existing cash reserves and (on the
basis of cautious assumptions made by the Company in its funding
model) the funds expected to be obtained from the funding facility
established by the Subscription Agreement with SMC, the board of
directors of ZIOC (the "Board") believes that the Company will be
adequately positioned to support its operations going forward in
the near future. As the final cash amounts to be received for each
tranche of issued shares, and the timing of this receipt, are
dependent on SMC successfully selling the shares prior to
transferring funds to the Company, the Board is of the view that
the going concern basis of accounting
is appropriate. However, the Board acknowledges that there is a
material uncertainty which could give rise to significant doubt
over the Company's ability to continue as a going concern and,
therefore, that the Company may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Nevertheless, based on and taking into account the foregoing
factors, the Board are satisfied the Company will have sufficient
funds to meet its own working capital requirements up to, and
beyond, twelve months from the approval of these accounts.
The Company continues to review the costs of its operational
activities with a view to conserving its cash resources. As part of
such review, and in order to preserve the cash position of the
Company, it has been agreed with the Directors (since January 2019)
and Management (since September 2019) that deferred fees previously
would be reviewed. As of today, discussions with management
continue and a resolution is expected to be reached in due
course.
In common with many exploration and development companies in the
mining sector, the Company raises funding in phases as its project
develops. As the Zanaga Project is still in the development stage
and the cash resources of the Company are diminishing, the Company
recognises that steps will need to be taken to raise additional
investment either at the corporate level or at the Zanaga Project
level, or a combination of the two. The raising of additional funds
is linked to the progress that is made in relation to the
development of the Zanaga Project. The initiatives that are being
undertaken in relation to the development of the Zanaga Project
have been described earlier in this announcement. There are a range
of options for raising funds which the Company is pursuing. It is
recognised that there is a risk that the Company may be unable to
obtain debt and/or equity financing in the amounts required, in a
timely manner, on favourable terms or at all and should this occur,
it is highly likely to pose challenges for the Company and could
adversely have an impact upon the proposed development of the
Zanaga Project and the proposed timeline for its development.
If construction of the mine and related infrastructure proceeds
(including any preparatory steps associated with the construction
of the mine and related infrastructure), and the Company elects to
fund its pro rata equity share of construction capital expenditure,
it will need to raise further funds. There is no certainty as to
the Company's ability to raise the required finance or the terms on
which such finance may be available.
In addition, any decision of the Company to proceed with
construction of the mine and related infrastructure (or any variant
such as a low-cost small-scale start-up) is itself dependent upon
the ability of the Company to raise the necessary debt and equity
to finance such construction and the initial operation of the mine.
Jumelles itself may be unable to obtain debt and/or equity
financing in the amounts required, in a timely manner, on
favourable terms or at all and should this occur, it is highly
likely to pose challenges to the proposed development of the Zanaga
Project and the proposed timeline for its development.
The Company still believes that once the proposed staged
development of the Zanaga Project occurs, the Project offers high
grade ore at competitive cost, thereby offering an attractive rate
of return, at an acceptable level of risk. However, in order to
carry out such staged development, it is still the case that
substantial capital expenditure will be required both at the
prospective mine site and in respect of transportation and other
associated infrastructure and for working capital. Revenues from
mining are dependent upon such development being financed and
taking place.
At a time when the staged development of the Project takes place
(or, if viable, a small-scale start-up takes place) the Company
will need to obtain additional funding should it decide to elect to
fund its share of any such development of the mine. If such staged
development continues to be deferred due to unfavourable market
conditions, the Company will need at the appropriate time to
explore options to raise additional funding, pending the staged
development (or, if viable, a small-scale start-up) taking
place.
Volatility in currencies
Various factors, including the the Russia/Ukraine war and its
impact on global markets as well as supply chain issues and
inflation has resulted in increased volatility in currency rates
applicable to Pounds Sterling. Such volatility is likely to
continue. As the Company's cash resources are held in Pounds
Sterling, such volatility could adversely affect the Company's
financial position and results where it is obliged to make payments
of sums denominated in other currencies. This particularly applies
to contributions made by the Company to funding the Jumelles group
as these amounts are calculated in United States dollars.
2 Accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the periods presented, unless
otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with
the International Financial Reporting Standards as adopted by the
United Kingdowm ("UK Adopted IFRS"). Adopted IFRS comprise
standards and interpretations approved by the International
Accounting Standards Board ("IASB") and the International Financial
Reporting Interpretations Committee ("IFRIC") as adopted by the
United Kingdom.
These consolidated financial statements comprise the Company and
its subsidiaries (together referred as the 'Group'), and the
Company's investment in an associate which is accounted for using
the equity method.
The Company's presentation currency and functional currency is
US dollars. All amounts have been rounded to the nearest thousand,
unless otherwise indicated.
These financial statements were authorised for issue by the
Company's board of directors on 2 July 2023.
New standards, amendments and interpretations
The following IFRSs standards and amendments are effective from
1 January 2022 :
-- Annual Improvements to IFRS Standards 2018-2020 .
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16)
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
-- Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
The amendments listed above did not have a material impact on
the amounts recognsied in prior periods and are not expected to
significantly affect the current or future periods.
New and revised IFRS Standards in issue but not yet
effective
The following amendments are in issue, but are not effective for
the current period:
-- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
-- Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
-- Classification of Liabilities as Current or Non-current -
Deferral of Effective Date (Amendment to IAS 1)
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
-- Definition of Accounting Estimates (Amendments to IAS 8)
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
-- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
-- Non-current Liabilities with Covenants (Amendments to IAS 1)
These standards, amendments or interpretations are not expected
to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
Measurement convention
These financial statements have been prepared on the historical
cost basis.
The preparation of financial statements in conformity with
Adopted IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise 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 financial
statements are disclosed in Note 3.
Basis of consolidation
Subsidiaries
Subsidiaries are all entities over which the group has control.
. The group controls an entity where the group is exposed to, or
has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to
the group. They are deconsolidated from the date that control
ceases.
In case of acquisition of assets that do not qualify as a
business, these are recignised as acquired when the company obtains
control over the asset, which is typically evidenced by legal
ownership or the ability to direct the use and obtain the economic
benefits.
Acquired assets are initially measured at their fair value,
which represents the amount for which the asset could be exchanged
between knowledgeable, willing parties in an arm's length
transaction.
Consideration paid for the asset acquisition is allocated to the
individual assets and liabilities acquired based on their
respective fair values at the date of acquisition. The fair value
of acquired assets is determined using appropriate valuation
techniques, such as market comparisons, income-based approaches, or
other relevant methods.
The initial recognition and measurement of acquired assets and
liabilities occur at the date when the company obtains control over
the assets, which is typically the date of legal transfer or other
events signalling control. Subsequent measurement depends on the
nature of the asset and is driven by the applicable standards.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of an impairment of the transferred asset.
Associates
Associates are all entities over which the group has significant
influence but not control or joint control. This is generally the
case where the group holds between 20% and 50% of the voting
right.
Investments in associates are recorded using the equity method
of accounting.
Under the equity method of accounting, the investments are
initially recognised at cost and adjusted thereafter to recognise
the group's share of post-acquisition profits or losses of the
investee in profit or loss, and the group's share of movements in
other comprehensive income.
Where the group's share of losses in an equity-accounted
investment equals or exceeds its interest in the entity, including
any other unsecured long-term receivables, the group does not
recognise further losses, unless it has incurred obligations or
made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its
associates are eliminated to the extent of the group's interest in
these entities. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred.
The carrying amount of equity-accounted investments is tested
for impairment in accordance with the policy described below.
Changes in ownership interests
An entity remeasures the previously held equity interest to fair
value at the date on which it obtains control and recognises any
resulting gain or loss in profit or loss or other comprehensive
income, as appropriate.
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency').
(ii) Transactions and balances
Transactions in foreign currencies are translated into the
functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation of
monetary assets and liabilities denominated in foreign currencies
at year end exchange rates, are generally recognised in profit or
loss.
All foreign exchange gains and losses are presented in the
statement of profit or loss on a net basis within general and
administrative expenses.
(iii) Group companies
The results and financial position of foreign operations (none
of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
-- assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet
-- income and expenses for each statement of profit or loss and
statement of comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the
dates of the transactions), and
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities are
recognised in other comprehensive income. When a foreign operation
is sold, the associated exchange differences are reclassified to
profit or loss, as part of the gain or loss on sale.
Leases
Assets and liabilities arising from a lease are initially
measured on a present value basis, measured in accordance with IFRS
16.26. Lease liabilities include the net present value of the
following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable
-- variable lease payments that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date
-- amounts expected to be payable by the group under residual value guarantees
-- the exercise price of a purchase option if the group is
reasonably certain to exercise that option, and
-- payments of penalties for terminating the lease, if the lease
term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date
less any lease incentives received
-- any initial direct costs, and
-- restoration costs.
Impairment of non financial assets
Assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
Share-based payments
Employees
The Group makes equity-settled share-based payments to certain
employees and similar persons as part of a Long-Term Incentive Plan
('LTIP'). The fair value of options granted is recognised as an
expense within general and administrative expenses, with a
corresponding increase in equity. The total amount to be expensed
is determined by reference to the fair value of the options
granted:
-- including any market performance conditions (e.g. the entity's share price).
-- excluding the impact of any service and non-market
performance vesting conditions (e.g. profitability, sales growth
targets and remaining an employee of the entity over a specified
time period).
-- including the impact of any non-vesting conditions (e.g. the
requirement for employees to save or hold shares for a specific
period of time).
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 period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting and service conditions. It
recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to
equity
Where awards were granted to employees of the Group's associate
and similar persons, the equity-settled share-based payments were
recognised by the Group as an increase in the cost of the
investment with a corresponding increase in equity over the vesting
period of the awards.
N on-employees
Where the Group receives goods or services from a third party in
exchange for a fixed number of its own equity instruments, the
equity instruments and related goods or services are measured at
the fair value of the goods or services received. These are
recognised as the goods are obtained or the services rendered.
Equity instruments issued under such arrangements for the receipt
of services are only considered to be vested once provision of
services is complete.
Non-derivative financial instruments
Financial assets and financial liabilities are initially
recognised when the group becomes a party to the contractual
provisions of the instrument in accordance with IFRS 9.
Financial assets are initially recognised at their fair value,
including, in the case of instruments not recorded at fair value
through profit or loss, directly attributable transaction costs.
Financial assets are subsequently measured at amortised cost, at
fair value through other comprehensive income (FVTOCI) or at fair
value through profit or loss (FVTPL) depending upon the business
model for managing the financial assets and the nature of the
contractual cash flow characteristics of the instrument.
Financial liabilities, other than derivatives, are initially
recognised at fair value of consideration received net of
transaction costs as appropriate and subsequently carried at
amortised cost.
Non-derivative financial instruments in the balance sheet
comprise other receivables, cash and cash equivalents, and trade
and other payables.
(i) Impairment of financial assets
A loss allowance for expected credit losses is determined for
all financial assets, other than those at FVTPL, at the end of each
reporting period. The expected credit loss recognised represents a
probability-weighted estimate of credit losses over the expected
life of the financial instrument.
The expected credit loss allowance is determined on the basis of
twelve month expected credit losses and where there has been a
significant increase in credit risk, lifetime expected credit
losses. Financial assets are credit impaired when there is no
realistic likelihood of recovery.
(ii) Derecognition of financial assets and financial
liabilities
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party.
The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or have expired.
On derecognition of a financial asset/financial liability in its
entirety, the difference between the carrying amount of the
financial asset/financial liability and the sum of the
consideration received and receivable/paid and payable is
recognised in profit and loss.
Other receivables
Other receivables amounts due from related parties and trade
receivables, which are recognised initially at the amount of
consideration that is unconditional, unless they contain
significant financing components when they are recognised at fair
value. They are subsequently measured at amortised cost using the
effective interest method, less loss allowance. See note 13 for a
description of group's impairment policies.
Trade and other payables
Trade and other payables are initially recognised at the fair
value of consideration received net of transaction costs as
appropriate and subsequently measured at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise balances with financial
institutions.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares are
recognised as a deduction from equity.
When share capital recognised as equity is repurchased, the
amount of consideration paid, including directly attributable
costs, is recognised as a change in equity. Repurchased shares are
cancelled.
Impairment of investment in associate
The carrying amounts of the group's investment in associate are
reviewed at each reporting period end to determine whether there is
any indication of impairment. The investment is considered to be
impaired if objective evidence indicates that one or more events
have had a negative effect on the estimated future cash flows of
that investment. If any such indication exists, the investment's
recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of
the investment or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the income
statement.
(i) Calculation of recoverable amount
The recoverable amount of the Group's investments carried at
amortised cost is calculated as the present value of estimated
future cash flows, discounted at the original effective interest
rate (i.e., the effective interest rate computed at initial
recognition of these financial assets).
(ii) Reversals of impairment
An impairment loss is reversed when there is an indication that
the impairment loss may no longer exist and there has been a change
in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
Financing income and expenses
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method.
Borrowing costs
Borrowing costs are expensed in the period in which they are
incurred unless they relate to a qualifying asset, in which these
are capitalised.
Taxation
The income tax expense or credit for the period is the tax
payable on the current period's taxable income, based on the
applicable income tax rate for each jurisdiction, adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the end of the reporting
period in the countries where the company and its subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation and
considers whether it is probable that a taxation authority will
accept an uncertain tax treatment. The group measures its tax
balances either based on the most likely amount or the expected
value, depending on which method provides a better prediction of
the resolution of the uncertainty, and any adjustment to tax
payable in respect of previous years.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
consolidated financial statements. . However, deferred tax
liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not accounted
for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the
time of the transaction, affects neither accounting nor taxable
profit or loss and does not give rise to equal taxable and
deductible temporary differences.
Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the end of the
reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised only if it is probable that
future taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax bases of
investments in foreign operations where the company is able to
control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset where there is a
legally enforceable right to offset current tax assets and
liabilities and where the deferred tax balances relate to the same
taxation authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
Segmental Reporting
The Group has one operating segment, being its investment in the
Project, held through Jumelles. Financial information regarding
this segment is provided in Note 6b.
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
-- the profit attributable to owners of the company, excluding
any costs of servicing equity other than ordinary shares
-- by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary
shares issued during the year and excluding treasury shares
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
-- the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares, and
-- the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares
Exploration and evaluation expenditure
Capitalised exploration and evaluation expenditure represents
the accumulated costs incurred relating to exploration and
evaluation of the Zanaga properties.
Ultimate recoupment of these costs is dependent on the
successful development and commercial exploitation, or
alternatively sale of the respective areas of interest.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. Where
parts of an item of property, plant and equipment have different
useful lives, they are accounted for as separate components of the
item of property, plant and equipment and each component is
depreciated over its estimated useful life.
Depreciation is charged to the consolidated income statement on
a straight-line basis over the estimated useful lives of each part
of an item of property, plant and equipment. The estimated useful
lives are as follows:
- Fixtures and fittings 3-10 years
- Motor vehicles 4 years
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
Subsequent events
Post year-end events that provide additional information about
the Group's position at the end of each reporting period (adjusting
events) are reflected in the financial statements. Post year-end
events that are not adjusting events are disclosed in the notes to
financial statements where material. Please see note 17.
3 Critical accounting judgements and key sources of estimation
uncertainty
The preparation of the Group's consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the reported amounts of expenses, assets and
liabilities, and the accompanying disclosures as at the reporting
date. However, uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to the
carrying amounts of assets or liabilities affected in future
periods.
Judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which has the most
significant effect on the amounts recognised in the consolidated
financial statements:
Acquisition of assets
The Company has acquired a 100% stake in Jumelles during the
current year. IFRS 3 'Business Combinations' requires an entity to
assess if the acquired set of assets and activities constitutes a
business, which needs to have an input and a substantive process.
The acquired set of assets and activities does not have significant
processes and programs in place at the acquisition date. In
addition, the employees that have been transferred are merely for
administrative, maintenance and security of the site, which are not
considered to have the intellectual capability or expertise to
start development of the mine and convert the reserves underground
into output for sales.
The acquired set does not include substantive processes due to
lack of a skilled workforce or contracts in place for development
and extraction activities and therefore does not meet the
definition of business, and is accounted for as an asset
acquisition. Accordingly, the Group has allocated the cost of
acquisition to the assets and liabilities acquired in proportion of
their relative fair values.
Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation undertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates
on parameters available when the consolidated financial statements
were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or
circumstances arising that are beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
Given the material risk but also upside potential, in our
opinion, detailed disclosure in the Financial Statementsshould be
made that:
-- the potential of the project is material, given the results
of thefeasibility study, the material reserves, etc.
-- the estimated future value considers the material risk at
this phase, driven by the early/greenfield stage of the project,
the relatively long development period of more than four years and
large capital cost, and major project assumptions which might
change in due course, but also country risk effects.
-- the volatility of the markets, including the global uncertain
geopolitical situation and country risks adds to the risks that
affect the project.
-- the sensitivity of the project to the weighted average cost
of capital ("WACC") (and other major assumptions) could be
indicated as: +/-0.5% change in the discount rate would change the
value of the project by approximately -/+US$ 50-54m.
-- due to the above factors, material risk and volatility of the
future value could be expected under better/worse market or
operational conditions.
(i) Deferred taxes
At each balance sheet, the Group assesses whether the
realisation of future tax benefits is sufficiently probable to
recognise deferred tax assets. This assessment requires the use of
significant estimates with respect to assessment of future taxable
income. The recorded amount of total deferred tax assets could
change if estimates of projected future taxable income or if
changes in current tax regulations are enacted. Refer note 5 for
further information on potential tax benefits for which no deferred
tax asset is recognised.
4 Note to the comprehensive income statement
Operating profit/(loss) before tax is stated after
charging/(crediting):
2022 2021
US$000 US$000
----------------------------------- ------ ------
Share-based payments (see Note 11) 163 547
Net foreign exchange loss/(gain) (34) (12)
Directors' fees - -
Auditor's remuneration 107 70
----------------------------------- ------ ------
Other than the Company Directors, the Group did not directly
employ any staff in 2022 (2021: Nil). The Directors received Nil
remuneration for their services as Directors of the Group (2021:
Nil).
5 Taxation
The Group is exempt from most forms of taxation in the BVI,
provided the Group does not trade in the BVI and does not have any
employees working in the BVI. All dividends, interest, rents,
royalties and other expense amounts paid by the Company, and
capital gains are realised with respect to any shares, debt
obligations or other securities of the Company, are exempt from
taxation in the BVI.
The effective tax rate for the Group is Nil % (2021: Nil %).
In case of the wholly-owned subsidiary, Jumelles Limited
(acquired during the current year), the Avenant to the MPD
Convention applied from August 2010 provides corporate income tax
exemption to foreign companies providing services to MPD for the
benefit of the Zanaga project during the exploration and
feasibility phase of the project. In 2011 a service note from the
Congolese tax authorities gave further precisions and
interpretations on the tax exemptions. The Mine Operating Agreement
signed in August 2014 contains a detailed tax regime and in effect
at the authorisation date.
Under the Mine Operating Agreement provisions of corporate tax
exemption are as follows:
Complete exemption from corporate income tax during the First
Exemption Period of 5 years from the First Financial Year which is
defined as the financial year of the mining code ("SEM") as:
(i) after the year, in the course of which the date of
Commercial Production Stage 1 occurs.
(ii) in relation to which previously reported tax deficits
(ordinary losses and amortisations deemed deferred) have been set
off against taxable profits.
(iii) in the course of which the SEM achieves a taxable profit.
An additional period of complete exemption from corporate income
tax for a period of 5 years. However this exemption will only apply
to 50% of the taxable profit and will be applicable from the First
Financial Year of the Second Exemption Period which refers to the
financial year of the SEM as:
(i) after the year, in the course of which the date of
Commercial Production Stage 2 occurs.
(ii) in relation to which it is established that the tax
deficits previously reported (ordinary losses and amortisations
deemed deferred) have been previously imputed in their totality to
taxable profits.
(iii) in the course of which the SEM achieves a taxable profit.
6a Property, Plant and Equipment
Motor Right of Fixtures Exploration Total
vehicles use asset and fittings assets
US$000 US$000 US$000 US$000 US$000
------------------------------------ -------- --------- ------------ ----------- ------
Cost
Balance at 1 January 2021 43 - - - 43
------------------------------------ -------- --------- ------------ ----------- ------
Additions on account of acquisition
of assets (refer note 6b) - 100 603 85,300 86,003
------------------------------------ -------- --------- ------------ ----------- ------
Balance as at 31 December 2022 43 100 603 85,300 86,046
------------------------------------ -------- --------- ------------ ----------- ------
Depreciation
Balance at 1 January 2021 43 - - - 43
Charge for period - - - - -
------------------------------------ -------- --------- ------------ ----------- ------
Balance at 31 December 2022 43 - - - 43
------------------------------------ -------- --------- ------------ ----------- ------
Net book value
Balance at 31 December 2022 - 100 603 85,300 86,003
------------------------------------ -------- --------- ------------ ----------- ------
Balance at 31 December 2021 - - - - -
------------------------------------ -------- --------- ------------ ----------- ------
The Right-of-use assets consist of office space and
airstrip.
6b Investment in Associate
US$000
---------------------------------------------------------- --------
Balance at 1 January 2021 37,354
Additions 604
Share of profit or loss (672)
Share of currency translation reserve (17)
Balance at 31 December 2021 37,269
---------------------------------------------------------- --------
Balance at 1 January 2022 37,269
Share of profit or loss (436)
Share of currency translation reserve 61
Additional investment during the year 95
Disposal - on account of acquisition of controlling stake (36,988)
Balance at 31 December 2022 -
---------------------------------------------------------- --------
As at 1 January 2022, the investment in associate comprises of
2,000,000 shares, which accounts for 50% minus one share of the
total share capital of 4,000,001 shares. Initially recorded at
cost, this investment has been adjusted to reflect changes in the
Company's share of the net assets of Jumelles, taking into account
impairment losses. The investment has been historically impaired
based on Company's proportionate share of the impaired value of the
Project as declared in Jumelles's previous years' accounts.
The additions to the investment are made in accordance with the
2022 Funding Agreement amounting to US$0.95m (2021 US$0.60m).
During the current year, on 16 December 2022, the Company
acquired the remaining stake in Jumelles from Glencore, thereby
gaining control, with 100% stake in Jumelles. The consideration for
this acquisition was made by issuing ordinary shares of the
Company.
Summarised financial information of the associate as on the date
of acquisition is set out below.
15 December 2022 2021
US$000 US$000
---------------------------------------- ---------------- ---------
Non-current Assets:
Property, plant and equipment 703 828
Exploration and other evaluation assets 85,300 80,000
Total non-current assets 86,003 80,828
---------------------------------------- ---------------- ---------
Current assets 125 202
Non-current liabilities (100) (117)
---------------------------------------- ---------------- ---------
Current liabilities (944) (469)
---------------------------------------- ---------------- ---------
Net assets 85,084 80,444
---------------------------------------- ---------------- ---------
Share capital 293,103 293,103
Additional paid in capital 41,242 41,052
Translation reserve (6,112) (4,846)
Accumulated deficit (243,149) (248,865)
---------------------------------------- ---------------- ---------
85,084 80,444
---------------------------------------- ---------------- ---------
The acquisition has been determined to involve assets that do
not qualify as a business, therefore the purchase is an asset
acquisition and not a business combination This is primarily due to
the absence of a skilled workforce and contracts for development or
extraction activities. As a result, the Company has allocated the
consideration paid to the acquired assets and liabilities based on
their respective fair values. These fair values are deemed equal to
their existing carrying values as at the acquisition date.
The main assumptions used for the valuation were using a
discounted flow model (DCF) using a discount rate of 18%.
In addition, the Company has revalued its investment in the
associate and recorded a gain in statement of comprehensive income
in amount of US$ 5,603,000 in accordance with the accounting
policies outlined in Note 2.
Previously accumulated Foreign currency translation reserve on
this investment of US$ 3,447,000 was also processed through the
statement of comprehensive income.
7 Other receivables
2022 2021
US$000 US$000
----------------------------------------------------------------------------- ------ ------
Prepayments and receivables 103 199
Prepayments and receivales acquired as acquisition of assets (refer note 6b) 10 -
Amounts receivable from the Jumelles group - 34
----------------------------------------------------------------------------- ------ ------
Other receivables 113 233
----------------------------------------------------------------------------- ------ ------
8 Cash and cash equivalents
2022 2021
US$000 US$000
-------------------------------------------------- ------ ------
Cash and cash equivalents 195 387
-------------------------------------------------- ------ ------
Acquired as acquisition of assets (refer note 6b) 115 -
-------------------------------------------------- ------ ------
310 387
-------------------------------------------------- ------ ------
9a Lease liability
2022 2021
US$000 US$000
-------------------------------------------------- ------ ------
Acquired as acquisition of assets (refer note 6b)
-------------------------------------------------- ------ ------
Current portion 11 -
-------------------------------------------------- ------ ------
Non-current portion 104 -
-------------------------------------------------- ------ ------
9b Loans and borrowings
2022 2021
US$000 US$000
-------------------------------------------------- ------ ------
Acquired as acquisition of assets (refer note 6b)
-------------------------------------------------- ------ ------
Loan from Glencore 385 -
-------------------------------------------------- ------ ------
9c Trade and other payables
2022 2021
US$000 US$000
-------------------------------------------------- ------ ------
Accounts payable 279 153
Acquired as acquisition of assets (refer note 6b)
Other payables 445 -
724 153
-------------------------------------------------- ------ ------
No amounts payable are due in more than 12 months (31 December
2021: US$nil).
10 Share capital
Ordinary Ordinary
In thousands of shares Shares Shares
2022 2021
In issue at 1 January 307,034 293,034
------------------------ -------- --------
Shares issued 286,340 14,000
In issue at 31 December 593,374 307,034
------------------------ -------- --------
The Company is able to issue an unlimited number of no par value
shares. The holders of ordinary shares are entitled to receive
dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company. No dividends have been
paid or declared in 2022 or in the prior year (2021: US$nil).
Share capital changes in 2022
286,340,379 shares were issued to Glencore International AG in
2022 as part of the Jumelles transaction as described in note 6b .
There were no share repurchases .
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve comprises of all
foreign currency differences arising from translation of the
financial statements of foreign operations.
11 Share-based payments
Employees
There are no new awards that have been issued during the current
and previous years ended 31 December 2022 and 31 December 2021
respectively.
The following fully vested awards are currently in
operation:
Award 6 (2014) Award 8 (2014) Award 9 (2014) Total
--------------------------- --------------------- -------------------------------- -------------------- ---------- ---------
Weighted Weighted Weighted Weighted
Average Average Average Average
Exercise Exercise Exercise Exercise
Price Price Price Price
(GBP) Number (GBP) Number (GBP) Number (GBP) Number
At 1 January 2021 * 0.01 1,002,771 0.01 1,013,418 0.01 2,000,000 GBP0.01 3,002,771
(US$0.04)
Granted N/A Nil N/A Nil N/A Nil N/A Nil
Forfeited N/A Nil N/A Nil N/A Nil N/A Nil
Exercised N/A Nil N/A Nil N/A Nil N/A Nil
Lapsed N/A Nil N/A Nil N/A Nil N/A Nil
--------------------------- ---------- --------- --------- --------------------- --------- --------- ---------- ---------
At 31 December 2021 * 0.01 1,002,771 N/A 1,013,418 0.01 Nil GBP0.01 Nil
At 1 January 2022 * 0.01 1,002,771 0.01 1,013,418 0.01 2,000,000 GBP0.01 3,002,771
(US$0.04)
Granted N/A Nil N/A Nil N/A Nil N/A Nil
Forfeited N/A Nil N/A Nil N/A Nil N/A Nil
Exercised N/A Nil N/A Nil N/A Nil N/A Nil
Lapsed N/A Nil N/A Nil N/A Nil N/A Nil
--------------------------- ---------- --------- --------- --------------------- --------- --------- ---------- ---------
At 31 December 2022 * 0.01 1,002,771 0.01 1,013,418 0.01 2,000,000 GBP0.01 3,002,771
Award 6 (2014) Award 8 (2014) Award 9 (2014) Total
--------------------------- --------------------- -------------------------------- -------------------- ---------------------
GBP0.00-GBP0.01 GBP0.01 GBP0.01 GBP0.00 - GBP0.02
Range of exercise prices * (US$0.00-US$0.02) (US$0.02) (US$0.02) (US$0.00-US$0.04)
Weighted average fair value N/A) N/A) N/A N/A
of share awards granted in
the period *
Weighted average share N/A N/A N/A N/A
price at date of exercise
(GBP)
Total share awards vested 1,137,338 1,013,418 4,000,000
39 Nil Nil
Weighted average remaining
contractual life (Days) N/A
Expiry date 29 July 2024** 29 July 2024 29 July 2024 N/A
--------------------------- --------------------- -------------------------------- -------------------- ---------------------
* Sterling amounts have been converted into US Dollars at the
grant dates exchange rates of: Awards 1,2, US$1.547:GBP1.00,
Subsequent awards US$ 1.6944:GBP1.00.
** Excepting 199,076 share options with expiry date 7 July
2023
The following information is relevant for determination of fair
value of options granted :
Award 6 (2014) Award 8 (2014) Award 9 (2014)
---------------------------------------------- ---------------------- ---------------------- ----------------------
Option pricing model used Black-Scholes Black-Scholes Black-Scholes
GBP0.19 GBP0.19 GBP0.19
Weighted average share price at date of grant (US$$0.31) (US$$0.31) (US$$0.31)
Weighted average expected option life 5.0 years 4.0 years 4.6 years
Expected volatility (%) 91% 91% 91%
Dividend growth rate (%) Zero Zero Zero
Risk-free interest rate (%) 1.75% for 1.75% for 1.75% for
12 month expected life 12 month expected life 12 month expected life
2.25% in excess 2.25% in excess 2.25% in excess
24 month expected life 24 month expected life 24 month expected life
---------------------------------------------- ---------------------- ---------------------- ----------------------
* Sterling amounts have been converted into US Dollars at the
grant dates exchange rates of: Awards 1,2, US$1.547:GBP1.00,
Subsequent awards US$ 1.6944:GBP1.00.
Non-employees
In August 2019 the Group entered into a new incentive plan which
granted share options in the Group to two non-employee individuals
and Harris Geoconsult Limited who provide consulting services to
the Group. On 29 August 2019, 13,633,335 options were granted under
this scheme. The scheme will be settled in equity instruments of
the Group and is therefore treated as an equity-settled share-based
payment arrangement. The options vest in multiple tranches based on
the Group achieving key performance milestone including:
(a) The approval by Jumelles of the Early Production Project
(EPP), including its potential technical and financial feasibility,
as the basis for advancing the development of the Zanaga
Project;
(b) Raising finance either for the Group or separately for the
development phase of the Zanaga Project; or
(c) The completion of a significant merger or acquisition
involving the Group or any member of the Jumelles Group acquiring a
material interest (as determined by the Group board) in a third
party or a third party acquiring a material interest (as determined
by the Group board) in the Group or a member of the Jumelles
Group.
All unvested options will also vest on the occurrence of certain
events, such as a change of control of the Company, which has now
occurred. Once vested all options are exercisable within seven
years of the grant date of award. The options have a nominal
exercise price of 0.01p (one hundredth of one penny). The number of
share options are as follows:
Number of Number
options of options
In number of shares 2022 2021
----------------------------------- ---------------- -----------
Granted during the year - -
Exercised during the year - -
Outstanding at the end of the year 13,633,335 13,633,335
Exercisable at the end of the year 13,633,335 -
----------------------------------- ---------------- -----------
The services to be provided in exchange for the options are
unidentifiable at the date of the grant and therefore the Group has
measured the fair value of the services with reference to the fair
value of the options granted. The fair value is measured using a
Black Scholes model. Measurement inputs and assumptions as
follows:
2022
------------------------------------------------------ ----------------
Fair value at grant date 0.09
Share price at valuation date 0.09
Exercise price Nominal
Expected volatility (weighted average) N/A
Option life (weighted average life in years) 2.4
Expected dividends Nil
Risk-free interest rate (based on national government N/A
bonds)
------------------------------------------------------- ----------------
As the options are effectively nil-cost options, the expected
volatility and risk-free rate does not impact the fair value under
the Black Scholes model and therefore has been excluded from the
inputs into the model. The share options are granted with a number
of non-market performance conditions that relate to achievement of
specific performance milestones for the Group as set out above. In
addition, the option holders must continue to provide consulting
services to the Group as at the vesting date. Such conditions are
not considered in the fair value measurement on the grant date but
to estimate the expected vesting period over which the
equity-settled share-based payment charged to profit or loss. As at
year end the expected vesting date of each tranche of options is
between 30 June 2020 and 31 December 2021 resulting in a weighted
average option life of 2.4 years.
The total expenses recognised for the year relating to
equity-settled share-based payments is US$547k.
In addition, there are 1,600,000 options outstanding which were
issued to a consultant in 2014 at 18.5p that have vested but have
not yet been exercised.
12 Earnings / (Loss) per share
2022 2021
--------------------------------------------------------------- ------------------- -------
Profit (Loss) (US$,000) 8,098 (1,898)
Weighted average number of shares (thousands)
Basic
Issued shares at beginning of period (a) 307,034 293,034
Shares issued during the year (b) 286,340 14,000
Weighted average of new shares issued (c) 11,767 14,000
Weighted average number of shares at 31 December - basic (a+c) 318,801 307,034
--------------------------------------------------------------- ------------------- -------
Loss per share
Basic (Cents) 0.3. (0.60)
Diluted (Cents) 0.3. (0.60)
--------------------------------------------------------------- ------------------- -------
13 Financial Risk Management and Fair value measurements
I. Financial Ris Management
The Group's activities expose it to a variety of financial
risks: credit risk, liquidity risk and market risk (comprising
currency risk and interest rate risk). The Group seeks to minimise
potential adverse effects of these risks on the Group's financial
performance. The Board has overall responsibility for managing the
risks and the framework for monitoring and coordinating these
risks. The Group's financial risk management policies are set out
below:
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group
receivables related parties. The Group has a credit policy in place
and exposure to credit risk is monitored on an ongoing basis. At 31
December, the Group's maximum exposure to credit risk was as
follows:
2022 2021
US$000 US$000
Cash and cash equivalents 310 387
--------------------------------------- ------ ------
Receivables 113 199
--------------------------------------- ------ ------
Amounts receivable from Jumelles Group - 34
--------------------------------------- ------ ------
Significant concentrations of credit risk manifest with the
Group's banking counterparties with which the cash and cash
equivalents are held, and accounts receivable from Jumelles.
(b) Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its
payment obligations when due, or that it is unable, on an ongoing
basis, to borrow funds in the market on an unsecured or secured
basis at an acceptable price to fund actual or proposed
commitments. Prudent liquidity risk management implies maintaining
sufficient cash and cash equivalents and availability of adequate
committed funding facilities.
The Group evaluates on a continuous basis, the amount of liquid
funds that may be required for business operations, in order to
secure funding needed for business activities.
The maturity profile of the Group's financial liabilities based
on the contractual terms is as follows:
$'000 Less 1 - 6 months Greater than 6 months Total
than
1 month
---------------------- --------- ------------- ------------------------ --------
2022
Borrowings - - 385 385
Lease liabilities 11 - 104 115
Accounts payable - 724 - 724
---------------------- --------- ------------- ------------------------ --------
Total 11 724 489 1,224
---------------------- --------- ------------- ------------------------ --------
2021
Accounts payable 83 - 70 153
---------------------- --------- ------------- ------------------------ --------
(c) Market risk
(i) Foreign currency risk
Foreign curreny risk is the risk that changes in foreign
exchange rates will affect the Group's income or value of its
holdings of financial instruments, if any.
The foreign currency denominated financial assets and
liabilities are not hedged, thus the changes in their value are
charged or credited to profit and loss.
The Group's exposure to foreign currency risk at the end of the
reporting period is as follows:
31/12/2022 31/12/2021
------------------- ------------ ------
XAF EURO GBP XAF EURO GBP
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Cash and cash equivalents 100 - 195 - - 387
Receivables 10 - 103 - - 233
Payables (55) (69) (279) - - (153)
Total 55 (69) (19) - - 605
The following significant exchange rates applied during the
year:
Reporting date Reporting date
Average rate spot rate Average rate spot rate
2022 2022 2021 2021
------------------- ------------ -------------- ------------ --------------
Against US Dollars US$ US$ US$ US$
Pounds Sterling 1.2369 1.2098 1.33680 1.3532
------------------- ------------ -------------- ------------ --------------
(ii) Sensitivity analysis
A 10% weakening of the following currencies against US Dollar at
the end of the reporting period would have increased/(decreased)
equity and profit or loss by the amounts shown below. This
calculation assumes that the change occurred at the end of each
reporting period and has been applied to risk exposures existing at
that date. This analysis further assumes that all other variables
remain constant.
Equity Profit or loss Equity Profit or loss
2022 2022 2021 2021
US$000 US$000 US$000 US$000
---------------- ------ -------------- ------ --------------
Pounds Sterling (29) (29) (35) (35)
---------------- ------ -------------- ------ --------------
A 10% strengthening of the above currencies against the US
Dollar at the end of the reporting period would have had the equal
but opposite effect on the above currencies to the amounts shown
above, on the basis that all other variables remain constant.
(iii) Capital management
The Board's policy is to maintain a stable capital base so as to
maintain investor and market confidence. Capital consists of share
capital and retained earnings. The Directors do not intend to
declare or pay a dividend in the foreseeable future but, subject to
the availability of sufficient distributable profits, intend to
commence the payment of dividends when it becomes commercially
prudent to do so.
The Company has a share incentive programme which is now
administered by the Board. The share incentive programme is
discretionary, and the Board will decide whether to make share
awards under the share incentive programme at any time. Fair value
of financials assets and liabilities
All the financial assets and liabilities are measured at
amortised cost. The carrying amounts of all financial assets and
liabilities are a reasonable approximation of their fair
values.
They are classified as Level 3 fair values in the fair value
hierarchy due to the use of unobservable inputs, including own
credit risk.
14 Commitments for expenditure
None.
15 Related parties
I. Subsidiaries
(a) Wholly-owned subsidiaries
- Zanaga UK Services Limited
- Jumelles Limited*
(b) Indirectly wholly-owned subsidiaries (held by Jumelles Limited)
- MPD Congo
- Jumelles M Limited
II. Entities that have significant influence
- Glencore International AG*
*Until 15 December 2022, Jumelles Limited was an associate of
the Company. The acquisition resulted in Jumelles Limited being a
wholly-owned subsidiary of the Company and Glencore International
AG exercising significant influence. Refer note 6b.
The following transactions occurred with related parties during
the period:
Closing balance
Transactions for the period (payable)/receivable
----------------------------- -----------------------
2022 2021 2022 2021
US$000 US$000 US$000 US$000
------------------------------- -------------- ------------- ----------- ----------
Funding:
Loan from Glencore to Jumelles 385 - 385 -
------------------------------- -------------- ------------- ----------- ----------
Non Executive Directors as at 31 December 2022 -
16 Transactions with key management personnel
2022 2021
US$000 US$000
--------------- ------ ------
Directors' fees - -
--------------- ------ ------
Total - -
--------------- ------ ------
The Directors have no material interest in any contract of
significance subsisting during the financial year, to which the
Group is a party.
17 Subsequent Events
On 1 July 2023, the Company entered into a new Subscription
Agreement (the 2023 ESA) with SMC.
Under the Subscription Agreement, the Company will issue and SMC
has subscribed for 36 million ordinary shares of no par value in
the Company ("Subscription Shares") in three tranches of 12 million
shares each (First tranche to be issued immediately).
*** End of Financial Statements ***
Glossary
AL(2) O(3) Alumina (Aluminium Oxide)
Fe Total Iron
JORC Code The 2004 or 2012 Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore
Reserves as published by the Joint Ore Reserves
Committee of the Australasian Institute of Mining
and Metallurgy, Australian Institute of Geoscientists
and Minerals Council of Australia.
LOI Loss on ignition
LOM Life of mine
Mineral Resource A concentration or occurrence of material of intrinsic
economic interest in or on the Earth's crust in
such form, quality and quantity that there are reasonable
prospects for eventual economic extraction. The
location, quantity, grade, geological characteristics
and continuity of a Mineral Resource are known,
estimated or interpreted from specific geological
evidence and knowledge. Mineral Resources are sub-divided,
in order of increasing geological confidence, into
Inferred, Indicated and Measured categories.
Mn Manganese
Ore Reserve The economically mineable part of a Measured and/or
Indicated Mineral Resource. It includes diluting
materials and allowances for losses, which may occur
when the material is mined. Appropriate assessments
and studies have been carried out, and include consideration
of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental,
social and governmental factors. These assessments
demonstrate at the time of reporting that extraction
could reasonably be justified. Ore Reserves are
sub-divided in order of increasing confidence into
Probable Ore Reserves and Proved Ore Reserves. A
Probable Ore Reserve has a lower level of confidence
than a Proved Ore Reserve but is of sufficient quality
to serve as the basis for a decision on the development
of the deposit.
P Phosphorus
PFS Pre-feasibility Study
SiO2 Silica
Beneficiation The process of improving (benefiting) the economic
value of the ore by removing the waste minerals,
which results in a higher grade product (concentrate)
Pelletisation The process of compressing or moulding a material
into the shape of a pellet
Mtpa Million Tonnes Per Annum
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END
FR RTMMTMTBMTIJ
(END) Dow Jones Newswires
July 03, 2023 02:00 ET (06:00 GMT)
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