KAT Katoro Gold Plc

Condensed Consolidated Statement of Cash Flow

Condensed Consolidated financial results for the year ended 31 December 2023

Note 1              General Information

Katoro Gold PLC ("Katoro" or the "Company") is a Company incorporated in England & Wales as a public limited Company. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Company's registered office is located at 60 Gracechurch Street, London EC3V 0HR.

The principal activities of the Group are related to the evaluation and exploration studies within a licenced portfolio area with a view to generating commercially viable mineral resources.

The individual financial statements of the Company ("Company financial statements") have been prepared in accordance with the Companies Act 2006 which permits a Company that publishes its Company and Group financial statements together, to take advantage of the exemption in Section 408 of the Companies Act 2006, from presenting to its members its Company Income Statement and related notes that form part of the approved Company financial statements.

Note 2              Going Concern

In the past the Group has raised funds via equity contributions from new and existing shareholders, thereby ensuring the Group remains a going concern until such time that revenues are earned through the sale or development and mining of a mineral deposit. There can be no assurance that such funds will continue to be available on reasonable terms, or at all in future. The directors have not made any adjustments which could arise in the event that the Group is not a going concern.

The Directors regularly review cash flow requirements to ensure the Group can meet financial obligations as and when they fall due.  Due to funding constraints during the year, expenditure was managed and monitored with due care. The firm actions taken to address the current liability position that increased during the year under review are set out below. Actions include the fundraise that took place after year-end.  The Directors have evaluated the Group's liquidity risk and liquidity requirements to confirm whether the Group has adequate cash resources and working capital to continue as a going concern for the foreseeable future. The directors assessed available information about the future, possible outcomes of planned events, and the responses to such events and conditions that would be available to the Board.

There is a material uncertainty related to the events or conditions described below that may cast significant doubt on the entity's ability to continue as a going concern, and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.  

The Group currently generates no revenue and had a net liability position of £638,288 as at 31 December 2023 (31 December 2022: net liabilities of £230,908). As at year end, the Group had liquid assets in the form of cash and cash equivalents of £414 and no other financial asset balances receivable (2022: £49,596 and £nil).

Considering the net current liability position of £638,288, the Directors have reviewed the cash flow forecasts, based on the existing budget, and evaluated to prior year actuals. The forecast includes estimates and assumptions regarding future costs and the timing of these. The financial forecast does not include non-committed cash inflows or expenditure.

The Group has limited funds available post financial year end following from the continued exploration activities undertaken throughout the Group. In response to the above an external advisor, Value Generation Ltd was engaged to assist the Company with a business recovery plan and support the Company in the areas of funding, strategy, operational planning, communications and business administration. As a result, the Katoro Board finalised and announced a Business Recovery Plan, along with a capital placing fundraise on 12 February 2024. The proceeds from the fundraise was £825 000 which provided for settlement of creditors as well as a solid foundation for the business recovery plan.  The aim of Katoro now is to focus on a limited number of high impact exploration and development projects, rather than a diverse wide-ranging portfolio, enabling the allocation of working capital into a set of focused business interests. The cash flow forecast after the fundraise in February 2024 indicates a cash shortfall arising from January 2025. The fundraise provides a solid foundation for implementing the revitalisation plan and propelling the Company forward to a sustainable future. Based on the current forecast the Group still does not have sufficient cash to meet its liabilities and finance day to day operations for the next 12 months after the issue of this report.

The directors continue to review the Group's options to secure additional funding for its general working capital requirements. The Group and Company will also require additional finance in order to progress work on its current assets and bring them to commercial development and cash generation. Such development is dependent on successful exploration activity and technical reports, and then on securing further funding.  Additional capital raising will be required to finance potential acquisition targets and corporate development needs, as well as meeting its financial obligations as they become due.

The evaluation of the going concern considers that Katoro has a strong proven track record of being able to source funding on an ongoing basis, even in difficult market conditions, and it expects to be able to continue doing so.

Various other sources of funding are being considered, most notably:

·     Capital placing

·     Credit loan notes

·     Exercise of outstanding warrants

Katoro also enjoys strong support, with specific reference to funding, from its corporate broker, SI Capital Ltd, which also has a proven track record of being able to facilitate ongoing funding.

The Directors continue to monitor and manage the Company's cash and overheads carefully in the best interests of its shareholders. Whilst the Directors continue to consider it appropriate to prepare the financial statements on a going concern basis, the above constitutes a material uncertainty that the shareholders should be aware of.

Note 3              Audited results

These condensed consolidated financial results have been extracted from the audited financial statements but are not in itself audited.

Note 4              Basic and dilutive loss per share

The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following:

The Company had warrants in issue as at 31 December 2023 and 2022 though the inclusion of such warrants in the weighted average number of shares as possible dilutive instruments in issue during 2023 and 2022 would be anti-dilutive and therefore they have not been included for the purpose of calculating the loss per share.

During the year 209,085,100 shares were issued.

The Company performed a share capital subdivision subsequent to year end, whereby each existing ordinary share was split into one ordinary share of £0.001 and one deferred share of £0.009. The issued ordinary shares did not change as a result of this transaction and there was no effect on the weighted average number of ordinary shares.

Note 5              Exploration and evaluation assets

Exploration and evaluation assets consist solely of separately identifiable prospecting assets held by Kibo Nickel and its subsidiaries.

The following reconciliation serves to summarise the composition of intangible prospecting assets as at period end:

Exploration and evaluation assets are not amortised, due to the indefinite useful life, which is attached to the underlying prospecting rights, until such time that active mining operations commence, which will result in the exploration and evaluation asset being amortised over the useful life of the relevant mining licences.

Exploration and evaluation assets with an indefinite useful life are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount, the Group measures, presents and discloses any resulting impairment loss in accordance with IAS 36.

One or more of the following facts and circumstances indicate that the Group must test exploration and evaluation assets for impairment (the list is not exhaustive):

a)     the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future and is not expected to be renewed.

b)     substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned.

c)     exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area.

d)     sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

Management have considered indicators of impairment in relation to the exploration and evaluation assets and have identified potential indicators as at period end. The following factors were considered by management:

·      The period for which the entity has the right to explore in the specific area;

·      Substantive expenditure required on further exploration for and evaluation of mineral resources in the specific area which is neither budgeted nor planned;

·      Whether the exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and

·      Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

Management has performed an assessment of the projects and has maintained its view that the carrying value is £Nil (2022: £Nil) as there has been insignificant changes to the status of the projects since the prior year. Subsequent to year end, management has implemented a full review of all projects as part of a restructuring process it is currently undertaking.

Refer to the accounting policy relating to the use of estimates and judgements for exploration and evaluation assets for further detail relating to the determination of the key estimates and judgements.

Note 6              Other financial assets

Lake Victoria Gold Receivable

Following various administrative difficulties in transferring ownership of Reef Miners Limited from Kibo Gold Limited to Lake Victoria Gold Limited, both parties concluded on 07 March 2022 to cancel the previous Sale of Share Agreement by mutual consent.

As per the cancellation agreement, the Reef Transaction was cancelled by mutual agreement between the parties, with neither party having any claim against another party following specifically from the cancellation agreement.

On the same day Katoro Gold plc and Lake Victoria Gold Limited entered into a "Joint Venture Agreement". Under the terms and conditions of the "Joint Venture Agreement", Lake Victoria Gold Limited became the 80% shareholder of Kibo Gold Limited, Cypriot subsidiary of Katoro Gold plc, on the date of the Agreement with Katoro Gold plc owning the remaining 20%.

Prior to the implementation of the above "Joint Venture Agreement", Katoro Gold plc held 200 ordinary shares in the equity of Kibo Gold Limited, constituting 100% of the issued share capital in the company.

On the effective date, Lake Victoria Gold Limited subscribed for 800 new shares in Kibo Gold Limited, equal to 80% of the total issued share capital of the company on conclusion of the "Joint Venture Agreement", for the subscription amount of €88,000.

Katoro Gold plc indemnifies Lake Victoria Gold Limited against any claims resulting from the cancellation of the Sale of Share Agreement. The position of ownership of Reef Mining Limited was completely returned to Katoro Gold plc, and no contingent amounts are due and payable by Lake Victoria Gold Limited in this regard.

As per the "Joint Venture Agreement", the Conditions Precedent for the conclusion of the Share Issue have been met on the 7th of March 2022 and that the "effective date" of transfer of ownership of 80% of the shareholding is on the 7th of March 2022, as the issued shares to Lake Victoria Gold Limited rank Pari-Passu with the issued shares.

The "Joint Venture Agreement" furthermore details the following requirements:

•    Lake Victoria Gold Limited will contribute capital to Kibo Gold plc in the form of a shareholder's loan amounting to €792,000;

•    Lake Victoria Gold Limited will be obliged to declare a preference dividend to Katoro Gold Plc in the amount of €792,000 which is payable in any number of instalments by the earlier of 31 December 2023 and the date it ceases to be a shareholder in the company; and

•    In the event that the preference dividend has not been declared and paid by Kibo Gold Limited to Katoro Gold plc by 31 December 2023, the outstanding balance owing will be paid by Lake Victoria Gold Limited to Katoro Gold plc directly.

The investment in Kibo Gold plc was as of 7 March 2022 recognised as an associate to reflect the terms of the "Joint Venture Agreement".

The receivable in Lake Victoria Gold has been fully impaired at 31 December 2022 due to the credit risk of LVG, which is as a result of previous payments not being received as they became due.

Blyvoor Joint Operations

On 30 January 2020, the Group entered into a Joint Venture Agreement with Blyvoor Gold Mines (Pty) Ltd, whereby Katoro Gold plc and Blyvoor Gold Mines (Pty) Ltd would become 50/50 participants in an unincorporated Joint Venture.

In accordance with the requirements of the Joint Venture Agreement, the Katoro Group was to provide a ZAR15.0 million loan (approximately £790,000) to the JV ('the Katoro Loan Facility'), which will fund ongoing development work on the Project.

As at year end, the Group has advanced funding in the amount of £1,136,661 (2022: £1,287,686) of which 100% relate to expenditure allocated to the Joint Venture operations, carried by the Katoro Gold plc Group. The funding advanced during the year amounted to £Nil (2022: £7,560) and the remainder of the balance of £151,025 relates to change in translation rate during the year.

The Katoro Loan Facility would have formed part of the development capital project financing that Katoro was required to procure in accordance with its obligations contained in the Acquisition Agreement, provided that:

·      the balance of the Katoro Loan Facility then outstanding shall be subordinated to third party creditors participating in the development capital project financing.

·      the Katoro Loan Facility will bear interest at the 12-month London Inter Bank Offered Rate, or its successor; and

·      the Katoro Loan Facility will be repayable within 12 months after:

-       the last third-party creditor participating in the project financing shall have been paid;

-       or any earlier date on which the Parties may agree.

As at reporting period end, the counterparty to the Acquisition Agreement had failed to deliver all the required documentation to satisfy the last condition precedent, therefore the Group is considering its position and options in this matter.

Note 7              Investments in associates

Investment in associates consists of equity investments where the Group has an equity interest between 20% and 50% and does not exercise control over the investee.

The following reconciliation serves to summarise the composition of investments in associates as at year end.

Note 8              Share Capital and other equity reserves

The called-up and fully paid share capital of the Company is as follows:

All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right to transfer ownership of their shares.

The following share transactions took place during the period 1 January 2023 to 31 December 2023:

·      On 16 March 2023 Katoro underwent a capital reorganisation whereby each ordinary share of £0.01 was subdivided into an ordinary share of £0.001 and a deferred share of £0.009.

·      On 3 April 2023 130,000,000 shares in Katoro were issued at par value of £0.001 as part of a cash placement.

·      On 3 April 2023 20,000,000 shares in Katoro were issued at par value of £0.001 as part of directors' subscriptions.

·      On 3 April 2023 48,000,000 shares in Katoro were issued at par value of £0.001 in lieu of payment for Director's fees due.

·      On 11 April 2023 11,085,100 shares in Katoro were issued at par value of £0.001 in lieu of payment for Director's fees due.

A reconciliation of share capital is set out below:

All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right to transfer ownership of their shares. There have been no shares issued during the year.

Note 9              Board of Directors

There were no changes to the board of directors during the period, or any other committee's composition. There were changes to the board of directors after year-end refer to Note 11.

Note 10           Subsequent events

The Company raised  £825 000 through the issue of shares  in February 2024.

Since 12 February 2024, the Company has appointed Sean Wade as Non-executive Chairman, and Louis Coetzee has moved from the role of Executive Chairman into the role of Executive Director to continue the management of business operations. 

The appointment of a new Chief Executive Officer is expected in the near term and, as notified, on their appointment Mr Coetzee will step down from the Board of the Company into the role of business consultant until 31 July 2024 to again assist with transitional business operations.

As at the end of January 2024 the creditors of the Company included an amount of £91,000 in respect of outstanding Board fees from current Directors for the period April 2023 to January 2024, inclusive. This amount has been reduced with the agreement of the Board of directors to £63,617.88, which was settled through the issue of 63,617,880 Ordinary Shares as the issue price of 0.1p per share . Shares are subject to a "hard" lock-in.

The Company has settled invoices amounting to £38,305.00 due to Kibo Energy plc through the issue of 38,305,000 Ordinary Shares ("Service Shares") at the same issue price as the Financing Shares of 0.1p per share. Shares are subject to a "hard" lock-in.

Value Generation Limited has been appointed as an advisor to the Company to assist with business recovery and support the Company in the areas of strategy, operational planning, communications and business administration.

Note 11           Commitments and contingencies

The Group does not have identifiable material contingencies or commitments as at the reporting date.

Note 12           Segment report

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the Chief Operating decision maker. The Chief Executive Officer is the Chief Operating decision maker of the Group.

Management currently identifies two divisions as operating segments - Mining (Sub-holding Company and operating entities) and Corporate (Ultimate Holding Company). These operating segments are monitored, and strategic decisions are made based upon them together with other non-financial data collated from exploration activities. Principal activities for these operating segments are as follows:

Geographical segments

The Group operates in four principal geographical areas - United Kingdom, Cyprus, South Africa and Tanzania.

Directors, officers and professional advisers

Board of Directors                                               Louis Coetzee (Executive Director)

                                                                               Louis Scheepers (Non-Executive Director)

                                                                               Lukas Maree (Non-Executive Director)

                                                                               Sean Wade (Non-Executive Chairman)

Company Secretary:                                 Ben Harber

                                                                               Shakespeare Martineau LLP

                                                                               6^th Floor

                                                                               60 Gracechurch Street

                                                                               London

                                                                               EC3V OHR

Auditors:                                                               Crowe U.K. LLP

                                                                               55 Ludgate Hill

                                                                               London

                                                                               EC4M 7JW

Broker:                                                                  SI Capital Limited

                                                                               46 Bridge Street

                                                                               Godalming

                                                                               GU7 1HL

Nominated adviser:                                             Beaumont Cornish Limited

                                                                               Ninth Floor, Landmark

                                                                               St Peter's Square

                                                                               1 Oxford Street

                                                                               Manchester

                                                                               M1 4PB

Nominated Adviser

Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated Adviser and is authorised and regulated by the FCA. Beaumont Cornish's responsibilities as the Company's Nominated Adviser, including a responsibility to advise and guide the Company on its responsibilities under the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed solely to the London Stock Exchange. Beaumont Cornish is not acting for and will not be responsible to any other persons for providing protections afforded to customers of Beaumont Cornish nor for advising them in relation to the proposed arrangements described in this announcement or any matter referred to in it.