TIDMZIOC
RNS Number : 1373N
Zanaga Iron Ore Company Ltd
28 September 2021
28 September 2021
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM:
ZIOC) is pleased to announce its unaudited interim results for the
six months ended 30 June 2021 and an update on post reporting
period end events to September 2021.
Highlights
-- Zanaga Iron Ore Project (the "Project" or the "Zanaga
Project") 30Mtpa staged development project (12Mtpa Stage One
("Stage One"), plus 18Mtpa Stage Two expansion ("Stage Two"))
o Initiative completed to update the cost estimates associated
with Stage One, as outlined in the 2014 Feasibility Study (the "FS
Review"), with results announced in May 2021
o External independent technical expert engineering firms
engaged by Jumelles Limited ("Jumelles"), the joint venture company
between ZIOC and Glencore, to oversee and provide input into the FS
Review
o Successfully ascertained potential capital and operating costs
associated with the construction of Stage One in the current market
environment
o FS review indicates that capital and operating cost estimates
for Stage One remain approximately within the guidance levels
outlined in the 2014 Feasibility Study ("2014 FS")
-- 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")
o Increased engagement underway 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
-- Ore Reserve estimate re-statement
o The Zanaga Project's updated 2.1 billion tonne Ore Reserve
estimate, announced in May 2021, re-stated by SRK and updated based
on market pricing as of 31 December 2020, and remains based on the
30Mtpa Feasibility Study and 6.9 billion tonne Mineral Resource
-- Strategic investor discussions
o Approaches continue to be received from a number of strategic
investors interested in investing in the Zanaga Project
o Discussions remain at a very early stage and there is no
certainty that these discussions will proceed or a transaction will
ultimately be entered into
Corporate
-- Funding update - Shard Merchant Capital Ltd ("SMC") equity subscription agreement
o In H1 2021 SMC subscribed for 14 million shares of no par
value in ZIOC, as part of the 21 million ordinary share facility
signed in 2020
o Proceeds of GBP1,134,946 has been received to date from SMC,
following 16,650,000 shares being placed by SMC, with a further
4,350,000 ordinary shares remaining to be placed at 27 September
2021
o Of the total amount received to date, mentioned above,
GBP613,620 was received by ZIOC from the SMC facility during the
first half of 2021 and GBP109,003 has been received since 30 June
2021 to date
o Proceeds applied to general working capital, including the
provision of further contributions to the Zanaga Project's
operations
-- Outbreak of COVID-19 has not had a material impact upon the
Group although the continuing prevalence of the pandemic constrains
a number of commercial activities
-- Cash balance of US$0.8m as at 30 June 2021 remained constant
at US$0.8m at 31 August 2021 following the receipt of funds from
the Subscription Agreement in July and August
-- Annual General Meeting to be held in November 2021, and
notice will be sent to shareholders shortly
Clifford Elphick, Non-Executive Chairman of ZIOC, commented:
"During the first half of 2021 the Zanaga Project Team have
continued to progress key initiatives at the Project. Significant
work is underway to evaluate options to move the Early Production
Project forward in a rapid manner, in order to capitalise on
current iron ore prices.
The iron ore market has experienced robust demand from China and
is benefitting from strong iron ore prices, despite a recent pull
back from previous highs. The Project Team have been working for
some time to evaluate potential avenues to bringing the project
into production, and continue to make every effort to work with
local stakeholders and partners in assessing these options. We hope
to report soon on the Project Team's findings".
Copies of the unaudited interim results for the six months ended
30 June 2021 are available on the Company's website at
www.zanagairon.com
The Zanaga Iron Ore Company Limited LEI number is
21380085XNXEX6NL6L23.
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 50% less one share in the Zanaga Iron
Ore Project based in the Republic of Congo (Congo Brazzaville)
through its investment in its associate 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.
Business Review - Operations
Iron Ore Market
The iron ore market has experienced significant volatility in
recent months. Prices initially surged to record highs, providing
support to existing producers benefiting from existing production
and high cash flows. Robust demand from China continues to support
the iron ore price at high levels but prices have recently pulled
back from their highs and are experiencing a certain degree of
volatility. This is causing a challenge to development projects as
prices cannot easily be forecasted in such an unpredictable
environment. However, we expect that prices will ultimately
stabilise and establish a level at which potential investors can
more easily assess the long term potential of an iron ore project
like Zanaga.
Strategic investor discussions
Jumelles has received, this year, approaches from a number of
entities interested in investing in the Zanaga Project. However, it
is emphasized that any such discussions are at a very early stage
and there is no certainty that these discussions will proceed or
ultimately that a transaction will be entered into. Further updates
will only be provided as required by market rules.
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. After
careful consideration the team have concluded that a solution
contained within the Republic of Congo would be best for the Zanaga
Project and hence have dedicated significant time recently to
developing a clearer cost estimate and optimised engineering
solution on this basis.
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.
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.
12Mtpa Stage One project cost review
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.
In light of the current positive market environment for high
grade iron ore products, in late 2020 the Jumelles shareholders
considered it sensible to obtain a "high level" indicative review
of certain costs of the Project (including costs generated by
exchange rate movements) by leading external technical consultancy
firms without any re-engineering of the Project. Jumelles
commissioned a report, led by Coffey Geotechnics Ltd (a Tetra Tech
Company ("Tetra Tech")), to assess the potential capital and
operating costs associated with Stage One of the 30Mtpa staged
development project outlined in the 2014 Feasibility Study ("2014
FS"). Since the 2014 FS was produced, industry input costs dropped
initially and have now returned to approximately the same levels
seen in 2014. The initial review of the 2014 FS cost estimates
indicates that capital and operating costs associated with the
Stage One 12Mtpa project are broadly in line with the estimates
provided in 2014.
The review was announced in May 2021 and indicates that as
regards the costs of the 12 Mtpa Stage One Project, the capital
cost is estimated to be between 2.5% above and 2.9% below the
estimate provided in the 2014 FS. Operating costs are expected to
be approximately in line with the estimate provided in 2014, with
an estimated variance of + or - 2%.
It is encouraging to see that the costs estimated for the
construction of the Zanaga Project remain in broad alignment with
the costs outlined in the 2014 FS, especially as iron ore prices
have risen substantially beyond the levels seen in 2014, ultimately
providing the potential for significant improvement in the economic
returns of the Project. It is important to recognise that these
numbers have not yet been re-estimated to a high level of
definition and are only estimates as to the potential costs of
bringing the project into production in the current market. In
order to better define these estimates the Project Team would
require further work to be conducted ahead of considering a full
re-estimate of the 2014 FS.
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.
1) Overview of the process
Tetra Tech completed the high level, top-down review and update
of the Zanaga Iron Ore Stage One Feasibility Study capital and
operating cost estimates as contained in the 2014 FS.
The scope of the 2014 FS and the associated estimates is the
development of the Zanaga iron ore deposit, complete with
infrastructure for transport and seaborne loading. This update
review looked at the capital and operating costs of the front-end
engineering design (FEED) and Stage One 12Mtpa portions of the
total project.
Since the March 2014 FS study, an increase in global and
regional economic volatility, structural changes to the mining
equipment supply chain, changes in the contracting market and
changes in commodity consumption patterns have impacted the basis
of the capital and operating cost estimates with varying
effects.
The updating process relied on a variety of information sources
to define trends expressed as factored cost drivers. In some cases,
direct re-pricing of major line items were indicated. The updated
estimate is expressed in US dollars (USD), but was significantly
influenced by the exchange rate movements of the past decade,
including impacts of the Central African Franc (XAF), Euro (EUR)
and South African Rand (ZAR) rates of exchange to the USD.
The updated estimate is thus qualified and strongly impacted by
global economic insights and relative cost movements rather than
being a re-priced estimate.
2) Capital Cost
Capital expenditure is expected to range between -2.9% and +2.5%
of the 2014 Feasibility Study estimate, or between US$2,154m and
US$2,275m.
The lower estimate includes adjustments to the cost estimates
for particular items which were viewed to be overstated in the 2014
FS, or possible to reduce based on optimised procurement and
contracting to find lower costs without compromising quality.
Furthermore, the piping estimate for the process plant had been
factorised and appears significantly overstated, for which a
further adjustment of 40% reduction was made. The other adjustments
were limited to 80% of the adjustment percentage that was made in a
review conducted in 2017, since the 2020 review already includes
some consideration of the current market conditions.
Once the opportunity adjustments are applied, the estimate is
that there would be a 2.9% reduction in the capital cost estimate
provided by the 2014 FS.
It should be noted that any potential savings identified by the
Project Team through the implementation of a floating port
solution, as announced in May 2020, have not been factored into the
lower estimate provided above.
3) Operating Cost
The outcome of Tetra Tech's analysis showed that overall
operating cost is likely to fall within the range of -2% to +2%
when compared to the March 2014 estimate as contained in the 2014
FS. As such, Jumelles regards the operating costs of the 12Mtpa
Stage One project to be approximately in line with the estimate
provided in the 2014 FS.
Ore Reserve Statement Update
The Project Team completed a process to update the Ore Reserve
estimate. The Zanaga Project's 2.1 billion tonne Ore Reserve
estimate has been re-stated by SRK Consulting (UK) Limited ("SRK")
and updated based on market pricing as of 31 December 2020, and is
based on the 30Mtpa Feasibility Study and 6.9 billion tonne Mineral
Resource (announced by the Company on 8 May 2014). The restatement
exercise confirmed that the Ore Reserves, reported in May 2021, are
reported in accordance with the terms and definitions of the JORC
Code and are restated to be so with an effective date of 31
December 2020.
Cash Reserves and Project Funding
As already reported in the Company's annual results published on
30 June 2021, Glencore and ZIOC agreed a 2021 Project Work
Programme and Budget for the Zanaga Project of US$1.2m plus US$0.1m
of discretionary spend, dependent on certain workstreams requiring
capital. ZIOC agreed to contribute towards the work programme and
budget an amount comprising US$0.6m plus 49.99% of all
discretionary items approved jointly with Glencore. Ignoring any
entitlement to savings, ZIOC's potential contribution to the Zanaga
Project in 2021 is expected to be US$0.7m in total.
We are pleased to report that the Zanaga Project's activities
are currently running in line with the 2021 budget forecast.
As at 31 August 202, ZIOC had cash reserves of US$0.8m and the
Board continues to take a very prudent approach to the management
of the business and its cash reserves.
Outlook
During 2021 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.
.
Financial review
Results from operations
The financial statements contain the results for ZIOC for the
first half of 2021. ZIOC made a loss in the half-year of US$0.7m
compared to a loss of US$1.8m in the full year ended December 2020.
The loss for the 2021 half-year period comprised:
1 January to 1 January to 1 January to
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
US$000 US$000 US$000
-------------------------------------------------------------------- ------------ ------------ ------------
General expenses (383) (458) (1,074)
Net foreign exchange (loss)/gain 3 (35) (25)
Share of loss of associate (353) (288) (724)
Interest income - 1 -
(Loss)/Gain before tax (733) (780) (1,823)
Tax - 8
Currency translation - (10)
Share of other comprehensive income of associate - foreign exchange 3 (4) 3
-------------------------------------------------------------------- ------------ ------------ ------------
Total Comprehensive income (730) (794) (1,812)
-------------------------------------------------------------------- ------------ ------------ ------------
General expenses of US$0.4m (2020: US$0.5m), consisting of:
Directors' fees of US$Nil (2020: US$Nil), professional fees of
US$Nil (2020: US$Nil), LTIP charge of US$0.3m (2020 US$0.3m) and
US$0.1m (2020: US$0.2m) of other general operating expenses.
The share of loss of associate of US$0.4m (2020: US$0.3m)
relates to ZIOC's investment in Jumelles Limited ("Jumelles"), the
joint venture company in respect of the Zanaga Project. From May
2014, as a result of the completion of the Feasibility Study and
thus consideration to complete the Glencore share option, only 50%
(less one share) of the Jumelles results are now included
above.
During the half year period, the Company's share of Jumelles'
project expenditure was US$0.4m including the effects of currency
translation of $0.07m loss. Capitalised exploration assets remain
at US$80.0m.
Financial position
ZIOC's net asset value ("NAV") of US$38.7m is comprised of a
US$37.3m investment in Jumelles, US$0.8m of cash balances and
US$0.6m net current assets.
30 June 2021 30 June 2020 31 December 2020
Unaudited Unaudited Audited
US$ m US$ m US$m
--------------------------------------- ------------ ------------ ----------------
Investment in associate 37.3 37.4 37.4
Fixed assets -
Cash 0.8 0.4 0.4
Other net current assets/(liabilities) 0.6 0.4 (0.2)
--------------------------------------- ------------ ------------ ----------------
Net assets 38.7 38.2 37.6
--------------------------------------- ------------ ------------ ----------------
Cost of investment
The investment in associate relates to the carrying value of the
investment in Jumelles, which as at 30 June 2021 owned 50% less one
share of the Project. The carrying value of this investment is
unchanged in 2021 due to:
-- Company funding per the Funding Agreement of US$0.3m; and
-- The Company's US$0.35m share of the comprehensive loss US$
0.7m made by Jumelles during the half-year.
As at 30 June 2021, Jumelles had aggregated assets of US$81.3m
(June 2020: US$81.2m) and aggregated liabilities of US$0.7m (June
2020: US$0.5m). Non-current assets consisted of US$80.0m (June
2020: US$80.0m) of capitalised exploration assets and US$1.0m (June
2020: US$1.0m) of other fixed assets including property, plant and
equipment. Cash balances amounted to US$0.3m (June 2020: US$0.2m)
and other current assets were US$Nil (June 2020: US$Nil).
Cash flow
Cash balances have increased by US$0.4m since 31 December 2020.
Additional investment in Jumelles required under the Funding
Agreement (details set out in note 1 to the financial statements)
utilised US$0.3m, operating activities US$0.1m. The Shard facility
provided funds of US$0.8m.
30 June 2021 30 June 2020 31 December 2020
Unaudited Unaudited Audited
US$000 US$000 US$000
------------------------------ ------------ ------------ ----------------
GBP Balances 0.6 0.3 0.3
USD value of GBP balances 0.8 0.4 0.4
USD value of other currencies - - -
USD balances - - -
------------------------------ ------------ ------------ ----------------
Cash Total 0.8 0.4 0.4
------------------------------ ------------ ------------ ----------------
Consolidated Statement of Comprehensive Income for the six
months ended 30 June 2020 1
1 January 1 January 1 January
to to to
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Note US$000 US$000 US$000
-------------------------------------------------- ---- ---------- ---------- ------------
Administrative expenses (380) (493) (1,099)
Share of (loss)/profit associate (353) (288) (724)
-------------------------------------------------- ---- ---------- ---------- ------------
Operating loss (733) (781) (1,823)
Interest Income - 1 -
(Loss) before tax (733) (780) (1,823)
Taxation 5 - -
-------------------------------------------------- ---- ---------- ---------- ------------
(Loss) for the period (733) (780) (1,823)
Foreign exchange translation - foreign operations - (10) 8
Share of other comprehensive (loss)/income
of associate - foreign exchange translation 3 (4) 3
-------------------------------------------------- ---- ---------- ---------- ------------
Other comprehensive (loss)/gain 3 (14) 11
-------------------------------------------------- ---- ---------- ---------- ------------
Total comprehensive (loss)/gain (730) (794) (1,812)
-------------------------------------------------- ---- ---------- ---------- ------------
(Loss)/Earnings per share (Cents)
Basic 7 (0.2) (0.3) (0.6)
Diluted 7 (0.2) (0.3) (0.6)
All other comprehensive income may be classified as profit and
loss in the future.
Consolidated Statement of changes in equity
for the six months ended 30 June 2021
Foreign
currency
Share Retained translation Total
capital earnings reserve Equity
US$000 US$000 US$000 US$000
-------------------------------------------------------- -------- ---------- ----------- -------
Balance at 1 January 2020 267,592 (232,794) 3,322 38,120
-------------------------------------------------------- -------- ---------- ----------- -------
Consideration for share-based payments - other services 321 - - 321
Issued Capital 564 - - 564
Loss for the period - (780) - (780)
Other comprehensive (loss)/ income - - (14) (14)
-------------------------------------------------------- -------- ---------- ----------- -------
Total comprehensive (loss)/income - (780) (14) (794)
-------------------------------------------------------- -------- ---------- ----------- -------
Balance at 30 June 2020 268,477 (233,574) 3,308 38,211
-------------------------------------------------------- -------- ---------- ----------- -------
Consideration for share-based payments - other services 386 - - 386
Issued Capital 1 - - 1
Loss for the period - (1,043) - (1,043)
Other comprehensive (loss)/income - - 25 25
-------------------------------------------------------- -------- ---------- ----------- -------
Total comprehensive (loss)/income (1,043) 25 (631)
-------------------------------------------------------- -------- ---------- ----------- -------
Balance at 31 December 2020 268,864 (234,617) 3,333 37,580
-------------------------------------------------------- -------- ---------- ----------- -------
Consideration for share-based payments - other services 278 - - 278
Issue of shares 1,525 - - 1,525
Loss for the period - (733) - (733)
Other comprehensive (loss)/income - - 3 3
-------------------------------------------------------- -------- ---------- ----------- -------
Total comprehensive loss - (733) 3 (730)
-------------------------------------------------------- -------- ---------- ----------- -------
Balance at 30 June 2021 270,667 (235,350) 3,336 38,653
-------------------------------------------------------- -------- ---------- ----------- -------
Consolidated Balance sheet
as at 30 June 2021
30 June 31 December
30 June 2020 2020
2021 Unaudited Unaudited Audited
Note US$000 US$000 US$000
----------------------------------------- ---- --------------- ---------- -----------
Non-current asset
Property, plant and equipment - -
Investment in associate 6 37,285 37,402 37,354
----------------------------------------- ---- --------------- ---------- -----------
37,285 37,402 37,354
----------------------------------------- ---- --------------- ---------- -----------
Current assets
Other receivables 787 612 58
Cash and cash equivalents 765 364 352
----------------------------------------- ---- --------------- ---------- -----------
1,552 976 410
----------------------------------------- ---- --------------- ---------- -----------
Total Assets 38,837 38,378 37,764
----------------------------------------- ---- --------------- ---------- -----------
Current liabilities
Trade and other payables (184) (167) (184)
----------------------------------------- ---- --------------- ---------- -----------
Net assets 38,653 38,211 37,580
----------------------------------------- ---- --------------- ---------- -----------
Equity attributable to equity holders of
the parent
Share capital 270,667 268,477 268,864
Retained earnings (235,350) (233,574) (234,617)
Foreign currency translation reserve 3,336 3,308 3,333
----------------------------------------- ---- --------------- ---------- -----------
Total equity 38,653 38,211 37,580
----------------------------------------- ---- --------------- ---------- -----------
These financial statements were approved by the Board of
Directors on 28 September 2021.
Consolidated Cash flow statement
for the six months ended 30 June 2021
1 January 1 January 1 January
to to To
30 June 30 June 31 Dec
2021 2020 2020
Unaudited Unaudited Audited
US$000 US$000 US$000
------------------------------------------------- ---------- ---------- ---------
Cash flows from operating activities
Loss for the year (733) (780) (1,823)
Adjustments for:
Share based payments 278 321 707
Interest received - (1) -
Increase in other receivables (729) (565) (11)
Decrease in trade and other payables - (9) 9
Net exchange (profit)/loss (3) (10) 25
Share of Total Comprehensive income of associate 353 288 724
Net cash from operating activities (834) (756) (369)
Cash flows from financing activities
Issue of shares 1,525 564 564-
Net cash from financing activities 691 564 564
-------------------------------------------------- ---------- ---------- ---------
Cash flows from investing activities
Interest received 1 -
Acquisition of property, plant and equipment -
Investment in associate (284) (201) (578)
Net cash from investing activities (284) (200) (578)
Net decrease in cash and cash equivalents 407 (392) (383)
Cash and cash equivalents at beginning of period 352 755 755
Effect of exchange rate difference 4 1 (20)
-------------------------------------------------- ---------- ---------- ---------
Cash and cash equivalents at end of period 765 364 352
-------------------------------------------------- ---------- ---------- ---------
Notes to the financial statements
1. Business information and going concern basis of
preparation
In common with many exploration and development companies in the
mining sector, the Company raises funding in phases as its projects
develop.
Under the 2021 Funding Agreement entered into by the Company and
Glencore, the Company's funding obligations for the 2021 work
programme and budget are for a sum of US$0.6m, plus a percentage
share of discretionary costs. Such share for the Company would be
US$0.1m if all the discretionary costs were approved jointly by the
Company and Glencore. On current projections, it is estimated that
the cash amounts payable by the Company to Jumelles during 2021
will be between approximately US$0.6m and US$0.7m. As regards
ZIOC's corporate cash costs for the 2021 financial year, it is
estimated that such costs will be of the order of US$0.2m.
Based on the current cost base at the Zanaga Project, 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 in the future from the funding facility
established by the Subscription Agreement with SMC, 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 shares issued to SMC, and the timing
of this receipt, are dependent on SMC successfully selling the
shares prior to transferring funds to the Company, the board of
directors of ZIOC (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. Consequently, 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
for the foreseeable future, being a period of at least twelve
months from the date of approval of these half-yearly financial
statements.
The Company continues to review the costs of its operational
activities with a view to conserving its cash resources. As part of
such ongoing review, and in order to preserve the cash position of
the Company, it has been agreed with the Directors and management
that fees are deferred. Additionally, the Directors and management
have indicated to the Company that they will assist the cash
preservation plan of the Company, by re-negotiating contractual
arrangements so as to provide for payments of fees in shares and/or
options in lieu of cash. If this course of action is determined to
be necessary, it is expected that this will take effect by the end
of Q4 2021.
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.
3. Basis of preparation
The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU.
In accordance with the AIM Rules for Companies, the condensed
set of financial statements has been prepared in applying the
accounting policies and presentation that were applied in the
preparation of the Company's published consolidated financial
statements for the year ended 31 December 2020. The comparative
figures for the financial year ended 31 December 2020 are not the
Company's statutory accounts for that financial year. The 2020
accounts have been reported on by the Company's auditors. The
report of the auditors was (i) unqualified and (ii) did not include
a reference to any matter to which the auditors drew attention by
way of emphasis without qualifying their report.
Up until 30 April 2014, the Company accounted for 100% of the
Jumelles group Comprehensive Income. From May 2014, as a result of
completion of the Feasibility Study (note 1 above) and thus
consideration to complete the Call Option, the Company has
accounted for 50% less one share shareholding portion of that
Comprehensive Income.
4. Segmental reporting
The Company has one operating segment, being its investment in
the Zanaga Project, held through Jumelles. Financial information
regarding this segment is provided in note 6.
5. Taxation
The Company is exempt from most forms of taxation in the British
Virgin Islands ("BVI"), provided the Company 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 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 0.00% (December 2020:
0.00%).
6. Investment in associate
US$000
---------------------------- ------
Balance at 1 January 2020 37,492
Additions 202
Share of comprehensive loss (292)
---------------------------- ------
Balance at 30 June 2020 37,402
---------------------------- ------
Additions 376
Share of comprehensive loss (432)
Balance at 31 December 2020 37,354
---------------------------- ------
Additions 284
Share of comprehensive loss (353)
---------------------------- ------
Balance at 30 June 2021 37,285
---------------------------- ------
From 30 April 2014, the investment represents a 50% less one
share shareholding (previously 100%) in Jumelles for 2,000,000
shares of 4,000,001 total shares in issue.
On 11 February 2011, Xstrata Projects (now renamed Glencore
Projects) exercised the Xstrata Call Option and from that date owns
50% plus one share of Jumelles and Jumelles is controlled at both a
shareholder and director level by Glencore Projects. However, as
the shares issued on exercise of the option were not considered to
vest until provision of the services relating to the Preliminary
Feasibility Study and the Feasibility Study had been completed, the
Group continued to account for a 100% interest in Jumelles until
the Feasibility Study was completed in April 2014. From May 2014
the Group has accounted for the reduction of its interest in
Jumelles. The Group's interest remains accounted for as an
associate using the equity method of accounting.
The Group financial statements account for the Glencore Projects
transaction as an in-substance equity-settled share-based payment
for the provision of services by Glencore Projects to Jumelles in
relation to the Preliminary Feasibility Study and the Feasibility
Study. These services largely were provided through third party
contractors and were measured at the cost of the services
provided.
As at 30 June 2021, Jumelles had aggregated assets of US$80.9m
(June 2020: US$80.7m) and aggregated liabilities of US$0.7m (June
2020: US$0.8m). For the 6 months ended 30 June 2021, Jumelles
incurred no taxation charge (June 2020: US$nil). A summarised
consolidated unaudited balance sheet of Jumelles for the 6 months
ended 30 June 2021, including adjustments made for equity
accounting, is included below:
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
US$000 US$000 US$000
---------------------------------------- ---------- ---------- ------------
Non-current assets
Property, plant and equipment 982 1,001 1,054
Exploration and other evaluation assets 80,000 80,000 80,000
Total non-current assets 80,982 81,001 81,054
---------------------------------------- ---------- ---------- ------------
Current assets 324 216 388
Current liabilities (748) (485) (828)
---------------------------------------- ---------- ---------- ------------
Net current liabilities (424) (269) (440)
---------------------------------------- ---------- ---------- ------------
Net assets 80,558 80,732 80,614
---------------------------------------- ---------- ---------- ------------
Share capital 293,103 293,103 293,103
Translation reserve 40,488 39,109 39,845
Translation reserve (4,805) (4,835) (4,812)
Accumulated deficit (248,228) (246,645) (247,522)
---------------------------------------- ---------- ---------- ------------
80,558 80,732 80,614
---------------------------------------- ---------- ---------- ------------
30 June 30 June
2021 2020 31 December 2020
Unaudited Unaudited Audited
7. Loss per share US$000 US$000 US$000
----------------------------------------------------------- ---------- ---------- ----------------
Profit/(Loss) (Basic and diluted) (US$000) (733) (780) (1,823)
Weighted average number of shares (thousands)
Basic and diluted
Issued shares at beginning of period 293,034 286,034 286,034
Effect of shares issued 14,000 7,000 7,000
Effect of share repurchase - -
Effect of own shares - -
Effect of share split - -
----------------------------------------------------------- ---------- ---------- ----------------
Weighted average number of shares at end of period - basic 307,034 293,034 293,034
----------------------------------------------------------- ---------- ---------- ----------------
(Loss)/Earnings per share (Cents)
Basic (0.2) (0.3)
Diluted (0.2) (0.3)
----------------------------------------------------------- ---------- ---------- ----------------
8. Related parties
The following transactions occurred with related parties during
the period:
Transactions for the period Closing balance
---------- ----------------------------- ----------- -----------------------
30 June 30 June 31 December 30 June 30 June 31 December
2021 2020 2020 2021 2020 2020
Unaudited Unaudited Audited Unaudited Unaudited Audited
US$000 US$000 US$000 US$000 US$000 US$000
--------------------- ---------- ------------- -------------- ----------- ---------- -----------
Funding:
To Jumelles Limited 284 201 578 34 33 34
--------------------- ---------- ------------- -------------- ----------- ---------- -----------
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END
IR UBAKRAOUKUAR
(END) Dow Jones Newswires
September 28, 2021 02:00 ET (06:00 GMT)
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