REG - Andrada Mining Ltd - Audited Financial Results for Year End 29 Feb 2024
30/08/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240830:nRSd3011Ca&default-theme=true
RNS Number : 3011C Andrada Mining Limited 30 August 2024
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information will be in the public domain.
Andrada Mining Limited
("Andrada" or the "Company")
Annual Report and Audited Financial Statements for the year ended 29 February 2024
& Notice of Annual General Meeting
Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), the African critical raw
materials producer with a portfolio of mining and exploration assets in
Namibia, is pleased to announce the release of its audited financial results
for the 2024 financial year ended 29 February 2024 ("FY2024").
Financial highlights
· Revenue increased by 83% to £17.9 m (FY 2023: £9.8 m) due to
increased tin metal volumes.
· Gross profit increased by over 100% to £1.7m (FY 2023: loss £0.7m).
· C1¹ operating costs decreased by 11% to US$17 870 per tonne of
contained tin (FY 2023: US$19 762).
· C2² operating costs decreased by 9% to US$20 796 per tonne of
contained tin (FY 2023: US$22 287).
· All-in sustaining cost³ at US$26 223 per tonne of contained tin (FY
2022: US$24 939) was within guidance.
· Cash and cash equivalents at year end at £14.5m.
· Unaudited cash balance at 27 August 2024 was £10.1m.
Highlights
· Annual tin concentrate tonnage increased 54% to 1 474 tonnes (FY2023:
960 tonnes).
· Annual tin metal tonnage increased 51% to 885 tonnes (FY2023: 587
tonnes).
· Exports increased to 56 shipments compared to 33 shipments in FY
2023.
· Produced saleable petalite bulk sample at 4.16% lithium oxide
("Li₂O").
· Produced laboratory- scale spodumene concentrate at 6.8% Li₂O.
· Renewal of the Thaisarco supply agreement for tin concentrate.
· Renewal of the Afrimet supply agreement for tantalum concentrate.
· Constructed and commissioned the bulk sample processing facility and
tantalum circuit.
Post-period highlights
· Enhanced the UTMC operating model by providing local partners, the
Small Miners of Uis, exposure to Andrada's future growth prospects through
owning shares at group level whilst streamlining operational decision making.
· Conclusion of the NAD175 million Bank Windhoek funding.
· Concluded a tin price hedge instrument at USD 33 000 per tonne
C1¹ refers to operating cash cost per unit of production, excluding selling
expenses and sustaining capital expenditure associated with Uis Mine
C2² refers to operating cash cost (C1) plus selling expenses including
logistics, smelting and royalties
All-in sustaining cost (AISC³) incorporates all costs related to sustaining
production, capital expenditure associated with developing and maintaining the
Uis operation, and pre-stripping waste mining costs
ANNUAL REPORT
The Annual Report including the Annual Financial Statements for the 2024
financial year ended 29 February 2024 is now available on the Company's
website at the following link: https://andradamining.com/media/reports/
(https://andradamining.com/media/reports/)
Physical copies of the Annual Report will also be posted today to shareholders
who elected to receive them.
ANNUAL GENERAL MEETING
A Notice of Annual General Meeting ("AGM") will be distributed to shareholders
today and is now available on the Company's website:
https://andradamining.com/media/reports/
(https://andradamining.com/media/reports/)
The AGM will be held at 11.00am on 30 September 2024, at PO Box 282, Oak
House, Hirzel Street, St Peter Port, Guernsey GY1 3RH.
CONTACT
Andrada Mining +27 (11) 268 6555
Anthony Viljoen, CEO
Sakhile Ndlovu, Investor Relations
NOMINATED ADVISOR & BROKER
Zeus Capital +44 (0) 203 829 5000
Katy Mitchell
Harry Ansell
Andrew de Andrade
CORPORATE BROKER & ADVISOR
H&P Advisory Limited +44 (0) 20 7907 8500
Andrew Chubb
Jay Ashfield
Matt Hasson
Berenberg +44 (0) 20 3753 3040
Jennifer Lee
Natasha Ninkov
FINANCIAL PUBLIC RELATIONS
Tavistock (United Kingdom) +44 (0) 207 920 3150
Jos Simson
andrada@tavistock.co.uk
Charles Vivian
Josephine Clerkin
About Andrada Mining Limited
Andrada Mining Limited is listed on the London Stock Exchange (AIM) with
mining assets in Namibia, a top-tier investment jurisdiction in Africa.
Andrada strives to produce critical raw materials from a large resource
portfolio, to contribute to a more sustainable future, improved lives and the
upliftment of communities adjacent to its operations. Leveraging its strong
foundation in Namibia, Andrada is on a strategic path to becoming a leading
African producer of critical metals including lithium, tin and tantalum. These
metals are important enablers of the green energy transition, being essential
for components of electric vehicles, solar panels and wind turbines.
CHAIRMAN'S STATEMENT
Andrada Mining transformed itself into a multi-mineral producer during FY 2024
("the Year") We achieved a remarkable double-digit increase in tin concentrate
production and successfully produced our first commercial batch of tantalum,
solidifying our position as a key player in the critical metals space.
While navigating challenging market conditions, we focused on building a
sustainable future. We implemented a water recycling programme that reduced
our environmental impact. We also maintained a 99% Namibian workforce,
demonstrating our commitment to the local community. Andrada's vision is
deeply intertwined with our identity as a proudly Namibian company with
significant future growth and value potential.
OVERVIEW
What differentiates Andrada from its peers is the solid foundation created by
our fully operational flagship Uis Mine. The Company managed to unlock
additional value through exploration milestones at Lithium Ridge and Spodumene
Hill. By continuing to focus on validating the resource potential of our
portfolio through phased exploration, we aim to drive and entrench long-term
shareholder value creation. This development approach has enabled the
production of tantalum and lithium concentrates, establishing additional
revenue streams that will significantly mitigate single product price and
demand volatility risks. Multi-mineral production at Uis Mine will also drive
down overall costs to the benefit of the bottom line. The ability to increase
revenue and cash flow while managing costs remains imperative to improving
profitability.
KEY ACHIEVEMENTS
Increased tin production and commencement of tantalum production
We achieved over 50% annual volume increases in both tin concentrate and tin
metal production. This was mainly due to the plant expansion implemented
towards the end of the prior financial year. The expanded plant is now in
stable production. Furthermore, we successfully produced our first consignment
of tantalum at the end of FY 2024. This proved our ability to meet the AfriMet
supply agreement and marked a key milestone in Andrada's goal of being a
multi-mineral producer.
Established robust financial partnerships
During the year, we forged new global and local funding partnerships with the
Development Bank of Namibia, Bank Windhoek, and Orion Resource Partners while
nurturing existing relationships. These partnerships, together with support
from our shareholders, enabled us to achieve our objectives of expanded
production and supply of tin concentrate, tantalum commercial production, and
lithium pilot production. Looking forward, our aim is to achieve an annualised
rate of 1 650 tonnes of contained tin. We are confident that the ring-fenced
US$12.5m Orion tin royalty, combined with the Continuous Improvement Programme
launched during the year at Uis Mine, will enable us to realise this
objective. We value our shareholders' and funders' support as we continue to
execute our strategy.
STRATEGIC PROCESS
During the year, we decided to accelerate the growth of our lithium offering
through a strategic partnership process. Launched in May 2023, this process
involves a rigorous review of multiple potential partnership opportunities
with the objective of ensuring value accretion to shareholders. I am pleased
with the thoroughness of the process and confident that it will secure the
right partner - one that has specialised lithium expertise tailored to our
unique project dynamics. Simultaneously, we continue to build our internal
capabilities to deliver lithium to both the technical and chemical markets
while expanding our tin and tantalum production. This comprehensive approach
underscores our commitment to becoming a leading and sustainable African
producer of critical metals.
Leading international organisations within the lithium value chain have
visited the Company's assets in Namibia, conducted mineralogy testwork and
implemented detailed due diligence, all demonstrating their interest in the
potential of Andrada's assets.
At the time of writing this report, discussions with interested parties are at
an advanced stage, and we are encouraged by the keen interest that has been
shown. A further update will be provided in due course as appropriate.
SUSTAINABILITY
Governance and sustainability best practices are integrated across our
business model. Host communities are vital to our operations, and Andrada
seeks to develop and maintain mutually beneficial relationships and trust with
all key stakeholders through open and constructive engagement. Additionally,
the Board has ensured we have a strong ESG Committee that advises on
strategies to improve operational safety. We are committed to creating a safe
working environment where our employees can thrive and contribute to the
achievement of their goals as well as the Company's strategic objectives.
Importantly, we continue to support and contribute to the regional and
national economy through local procurement expenditure and royalty. In the
year under review, I am pleased to report that Andrada spent just over N$505
million (US$27 million) through procurement from Namibian suppliers in FY
2024.
As Andrada operates in a water-constrained country, on-site water management
is a key focus area. We strive to maximise reuse and recycling while
preventing unnecessary water loss to the environment. We also support local
water projects that drive community growth. In September 2024, we will release
the Sustainability Report on the Company's practices, detailing the challenges
and successes on our journey and the impact on all our stakeholders.
RISK MANAGEMENT
Commodity markets were challenging during the year, posing risks to the
business. We have implemented a detailed enterprise risk management ("ERM")
strategy to manage such risks. This includes a defined risk management
framework for identifying, interrogating, monitoring and mitigating risks at
every level. Implementing the ERM strategy has had a profound impact on our
operations, resulting in Company-wide ownership of the strategy.
OUTLOOK
I thank the Board of Directors for their hard work during a challenging but
successful year in which we reached significant milestones. I also thank
Anthony Viljoen, our CEO, and his dedicated management team for steadfastly
driving the strategy and positioning Andrada as an emerging producer of
critical metals.
With a strong leadership team and solid business foundations in place, we look
forward to similar success in FY 2025. Specifically, we will strengthen our
production capabilities and bring our lithium offering to market as we advance
towards initial production of petalite concentrate through the integration of
the current plant.
Finally, I extend my gratitude to our staff and contractors, who continue to
propel Andrada forward on our journey to becoming a leading supplier of
critical metals to the global market.
GLEN PARSONS
CHAIRMAN
29 August 2024
CHIEF EXECUTIVE OFFICER'S STATEMENT
The 2024 financial year was extremely productive on all fronts for Andrada,
and I am proud to reflect on the progress made over the period.
LITHIUM DEVELOPMENT STRATEGY
Metallurgy
Bringing a lithium concentrate to market will be the first step to validating
the lithium potential of the Erongo Region and unlocking the significant
potential of the Company's large mineral resource. In May 2023, we announced
the production of a high-purity bulk sample of petalite concentrate with 4.16%
Li₂O or 85% petalite content. This further proved the economic potential of
the pegmatites in our mineral licence areas around Uis.
In December, we announced production of high-grade (6.8% Li₂O) spodumene
concentrate from the Lithium Ridge exploration drill chips. It is encouraging
that the test work yielded battery-grade spodumene concentrate at attractive
lithium recovery rates. We will proceed with the next phase of exploration
drilling, metallurgical test work and mineralogical characterisation to boost
geological and metallurgical confidence. The goal is to declare a maiden
mineral resource estimate for Lithium Ridge. Potential off-take partners have
indicated interest in our lithium products. This has opened us up to the next
stage of the lithium value chain, including possible test work for conversion
to battery-viable lithium hydroxide.
Strategic process
The most important decision we made during the year was to embark on a
strategic process to identify a partner with appropriate technical and
financial capabilities to accelerate Andrada's lithium strategy. In CY 2022,
Andrada received several unsolicited approaches from international entities
seeking to partner in accelerating the Company's lithium strategy. In May
2023, Andrada launched the strategic process to undertake a structured
assessment of the unsolicited approaches. This process has provided us with a
number of high quality opportunities involving some of the industry's most
respected names. Since the launch of the process, leading international
organisations in the lithium value chain have visited our assets in Namibia,
conducted mineralogical test work, and implemented detailed due diligence.
While we are aware of shareholders' expectations to expedite the process, we
are focused on securing the best possible partner and terms to create value
for shareholders. At the time of this report, our business development team is
working tirelessly to thoroughly consider all opportunities, and we look
forward to announcing the outcome of the process in due course.
OPERATIONAL REVIEW
Safety performance
Safety remains paramount for Andrada. I am therefore proud to confirm that we
continued to improve our safety record during the period. Three lost time
injuries were recorded (FY 2023: 3), resulting in a lost time injury frequency
rate ("LTIFR") of 2.26 (FY 2023: 3.04). The lower LTIFR was due to the higher
number of exposure hours at 1 328 712 compared to 988 389 in the previous
year. We recognise that we still have areas of improvement, such as for
medical treatment injuries and high-potential incidents.
We saw an improvement in optimal plant equipment functionality which reduced
the likelihood of malfunctions that could lead to safety incidents. This
resulted in a safer working environment and enhanced employee health and well
being. The Maintenance Wednesdays initiative ensured that our operations
remained compliant with safety regulations and standards, thereby minimising
the risk of violations and penalties. We further supported the safety drive
through a range of complementary initiatives, including externally managed
audits, over 1 200 hours of training, 8 200 toolbox talks and visible
leadership engagements.
Tin production performance
Thanks to the diligence of the operations team and the FY 2023 expansion, the
plant performed exceptionally well throughout the year. The volume of ore
processed, and of tin concentrate and contained tin produced, increased by
over 50%. The higher tonnage coupled with our optimisation initiatives also
meant that all our unit costs were at the lower end of guidance, decreasing by
as much as 14% in the fourth quarter due to the enhanced efficiencies. Annual
ore processing now stands at approximately 1 million tonnes, and tin
concentrate production at approximately 1 500 tonnes. This takes us a step
closer to our goal of producing 2 600 tonnes of tin concentrate (1 600 tonnes
of contained tin), in line with the Orion royalty agreement.
FUNDING SUPPORT
Aside from headline operational success, Andrada also enjoyed support from its
key funding partners. In September 2023, we concluded the N$100m (c. US$5.5m)
funding agreement ring-fenced for the CI2 Programme.
The CI2 Programme was established following the modular expansion of the
crushing and tin concentration circuits in the third quarter of FY 2023. The
expansion aimed at increasing production tonnage to reduce costs through
economies of scale. Approximately 70% increased capacity was achieved.
However, the enhanced plant performance revealed bottlenecks that had to be
eliminated to ensure the increased output and higher production rates were
sustainable. Therefore, the CI2 Programme aims to improve processing
efficiencies to maximise the tin concentrate recovery rate, establish business
sustainability through the enhancement of operational support infrastructure,
and to reduce operating costs.
In November 2023, Orion Mine Finance provided a combined US$25m (incorporating
share, convertible and warrant issue) funding package with US$12.5m allocated
for accelerating the lithium and tantalum revenue streams.
EXPLORATION REVIEW
We received results of significant lithium mineralisation from the Lithium
Ridge and Spodumene Hill drilling programmes throughout the year and commenced
exploration drilling in the Brandberg West licence area. Work across all our
mining assets and multiple metal profiles demonstrates that we are
strategically unlocking our resource.
At the beginning of the 2023 calendar year, we announced the results of our
V1/V2 pegmatite drilling programme at Uis. These results aligned with our
existing geological model and brought our resource to approximately 138 Mt,
moving us closer to our target of 200 Mt. We received results from the Lithium
Ridge drilling programme in September 2023, confirming that the 6 km of
mineralisation at surface continues at depth, indicating intersections at
higher lithium grades than those recorded at Uis. These results are
commensurate with similar hard-rock resources globally.
Brandberg West, historically a prolific producer of tin and tungsten, shows
strong indications of copper mineralisation. In October 2023, we began a
3 000 metre exploration drilling programme to determine the extent of the
mineralisation in and around the historic mine. Brandberg West could
potentially double the volume of tin concentrate currently produced at Uis,
while adding tungsten to the growing list of critical metals produced by
Andrada.
POST-PERIOD ACTIVITY
Tantalum supply
I am pleased to confirm that we have supplied tantalum concentrate to AfriMet,
in line with the off-take agreement that was renewed in December 2023. The
12-month agreement will see AfriMet purchasing all the production from the
tantalum circuit at Uis Mine on a quarterly basis. Pricing is linked to Argus
Metals tantalum prices. At the date of this report, we had supplied 15 tonnes
and received provisional payment on the initial 5-tonne consignment. The
second 10 tonne consignment was still at port awaiting shipping.
Tin expansion
We initiated the expansion plan to increase tin concentrate production at Uis
Mine from 1 500 tpa to 2 600 tpa, in line with the Orion royalty agreement.
The scope of the expansion entails improvements and additions to both the dry
and wet processing sections of the plant. The dry section will be expanded
through the installation of a crusher and XRT ore-sorters to constitute the
pre-concentration circuit. The expected net effect of the ore-sorters is an
increase of approximately 50% in the tin content feed to the wet processing
plant.
Restructuring of Uis Tin Mining Company (PTY) Ltd ("UTMC")
On 26 June 2024, the Company executed a legally binding agreement to
restructure UTMC, the operational Namibian entity that holds the Company's
licences to ensure a more efficient corporate structure. The Company sought to
increase its ownership interest in UTMC, from 85% to 100% through the
acquisition of the 15% interest held by the Small Miners of Uis.
The rationale of the restructuring was to consolidate the ownership of Uis and
Lithium Ridge licences, to provide Andrada the ability to target and expedite
the development of these individual mining licences through full operational
and strategic control. Subsequently, on 2 August 2024 following the fulfilment
of the precedent conditions, the restructure of the ownership of UTMC was
completed resulting in Andrada taking full ownership of the Uis and Lithium
Ridge licences in lieu of Spodumene Hill which is now fully owned by the SMU.
OUTLOOK
We look forward to concluding the strategic process. This will enable us to
push ahead with our development plans on multiple fronts. We will expand our
existing tin processing operations, develop our highly prospective lithium
assets, and progress our exploration programmes.
There are several milestones Andrada is focusing on for the next few years,
including construction of the pre-concentration circuit, completion of the CI2
Programme, completion of the feasibility studies, and implementation of the
lithium integration circuit. Furthermore, we have several exploration
programmes planned for FY 2025, designed to enhance understanding of the
mineralisation on the Company's mining licences. The exploration team has
completed the plans to advance the resources as follows:
Uis Mine
Resource validation drilling over the northern and central pegmatites clusters.
The objective is to enhance the current MRE classification of tin and to
establish the mineral potential for lithium.
Lithium Ridge
A high-density drilling campaign at the historical TinTan mine area.
The objective is to develop a maiden MRE and enhance understanding of the
lithium mineralisation within the high-priority pegmatites identified.
Brandberg West
Exploration drilling will continue to assess the licence's potential.
With a focus on investigating the northern extension mineralisation. The
Company will also evaluate mineralisation in the historical pit.
ANTHONY VILJOEN
CHIEF EXECUTIVE OFFICER
29 August 2024
CHIEF FINANCIAL OFFICER'S REVIEW
Andrada recorded solid financial results while delivering on its key strategic
objectives during FY 2024 The positive impact of the FY 2023 expansion project
was fully reflected in the FY 2024 financial results.
PROFIT AND LOSS STATEMENT OVERVIEW
The Company's revenue increased to £17.9m (FY 2023: £9.8m) mainly due to a
51% increase in tin concentrate tonnage to 1 474 (FY 2023: 960 tonnes)
combined with a marginal 2% increase in the effective average tin price to
US$25.6k (FY 2023: US$25.1k). Andrada exported 56 shipments (FY 2023: 33) of
tin concentrate to the Company's off-take partner, Thaisarco.
Therefore, the Company's gross profit significantly improved to £1.7m from a
loss of £0.7m in FY 2023. However, administrative expenses increased to
£9.9m (FY 2023: £7.5m). This was mainly due to expanded operations and
higher headcount ahead of the increased tin production. Furthermore, the
multiple workstreams and special skills needed to achieve the potential
lithium production, continue to necessitate an increase in recruitment. The
Group's earnings before interest, tax, depreciation and amortisation
("EBITDA") * marginally improved to a loss of £4.8m (FY 2023: loss of £5.9m)
due to the higher revenue.
Net finance costs increased to £0.7m (FY 2023: £0.6m), mainly due to the
increase in total finance expenses to £1.7m (FY 2023: £0.7m) resulting from
interest on the convertible loan notes and transaction costs on the royalty
debt that were not charged in the prior period. The loss before tax remained
the same at £8.9m (FY 2023: £8.9m) however the loss for the for the year was
higher at £8.9m (FY 2023: loss of £8.1 m) resulting in the basic loss per
share of 0.54 pence (FY 2023: loss of 0.60 pence). The tax asset credit of
approximately £0.9m in FY 2023 improved the relative loss position in the
prior year.
The higher production volumes resulted in a reduction in C1 costs to US$17 870
per tonne of contained tin from US$19 762 in the comparative period. The
all-in sustaining unit cost was 7% higher YoY at US$26 809 (FY 2023: US$24
939) because of a higher stripping ratio charge resulting from an escalated
mining push-back. In open pit mining operations, it is necessary to incur
stripping costs to remove overburden and other mine waste materials to enable
access to the ore body. The Group has elected to capitalise the costs of
accelerated waste stripping activities as these are necessary to allow
improved access to the ore and, therefore, will result in future economic
benefits. The costs of drilling, blasting and load and haul of waste material
is capitalised until such time that the underlying ore is used in production.
These costs are then expensed on a proportional basis.
The capitalised costs are included in the mining asset in property, plant and
equipment and are expensed back into the statement of comprehensive income as
depreciation. Costs incurred for regular waste removal that do not give rise
to future economic benefits are considered costs of sales. The C2 operating
costs were 9% lower YoY at US$20 796 (FY 2023: US$22 287). The expansion of
the Uis Mine plant coupled with the CI2 Programme is expected to reduce
operational costs by 10%.
FINANCIAL POSITION STATEMENT OVERVIEW
Total assets increased by 39% to £66.2m, mainly through a £3.2m increase in
intangible assets, £5.4m increase in PPE and a £6.3m increase in cash and
cash equivalents. Increase in the PPE was due to the costs relating to the
construction of the bulk sample processing facility. The facility was
initially recognised as part of the mining asset under construction but was
subsequently transferred to exploration and evaluation. The value of
non-current assets increased to £42.7m (FY 2023: £34.0m), while current
assets increased by approximately £10m to £23.5m, mainly due to a 22%
increase in available cash to £14.5m (FY 2023: £8.2m) from debt proceeds.
Financial liabilities and borrowings increased to £25.3m (FY 2023: £6.2m),
mainly due to proceeds from Orion, DBN and shareholders, the latter through
convertible loans. The US$12.5m Orion royalty is allocated to increasing tin
production at Uis Mine. The royalty funding, coupled with the ongoing CI2
Programme, targets an increase in tonnage. All debt proceeds net of the tin
royalty were utilised for the CI2 Programme, working capital, lithium pilot
plant and tantalum circuit construction. The value of equity decreased to
£32.1m (FY 2023: £35.7m), mainly due to higher accumulated losses and an
increase of 81% in the foreign translation loss.
The inventory balance increased to £2.9m (FY 2023: £2.7m) due to higher run
of mine ("ROM") stockpile and consumables. At year end, 112 tonnes (FY 2023:
157 tonnes) of tin concentrate was in stock, valued at £1.1m (FY 2023:
£1.4m). Trade and other receivables were valued at £6.1m at year end (FY
2023: £2.6m), mainly due to pre-payments and deposits that were paid on
equipment necessary for ongoing capital projects. The trade and other payables
increased to £7.0m (FY 2023: £3.7m) due to accruals related to the expanded
operations. All payables are settled within the agreed credit terms, and no
interest has been charged by any supplier because of late payment of invoices
during the year. Total liabilities increased by £22.3m to £34.1m, mainly due
to the increased borrowings. Further details on assets and liabilities can be
found in the notes to the Annual Financial Statements.
CASH FLOW STATEMENT OVERVIEW
Fundraising proceeds supported cash flows during the year as the Company
constructed the lithium pilot plant and tantalum circuit and implemented the
drilling campaigns as well as the CI2 Programme at Uis Mine. The material
changes YoY were on the financing activities resulting in a 32% increase in
cash inflows.
FUNDING OVERVIEW
Convertible loan notes
In July 2023, Andrada raised £7.7m (c. US$10m) through the issue of 77
unsecured, convertible loan notes of £100 000 each to new and existing
investors. The proceeds were utilised for the construction and commissioning
of the lithium pilot plant and the tantalum circuit. In addition, the funds
were channelled towards the exploration programme and a lithium feasibility
study.
Orion Global Resource Fund
On 22 November 2023, Andrada concluded the transaction and received funds from
Orion following the fulfilment of conditions precedent, including shareholder
approval. The combined US$25m funding comprises a US$12.5m (c. £10.2m)
unsecured tin royalty, a US$2.5m (c. £1.95m) equity subscription for 30 505
755 ordinary shares, and a US$10m (c. £8.2m) unsecured convertible loan note.
In addition, the convertible loan accrues interest at 12% annually on a four
year tenure to 18 July 2027. The conversion price is 9.45p, the same as the
Convertible Loan Notes issued in July 2023.
Andrada has the option to convert the loan at any time after 18 July 2024 if
the shares trade at 200% or more of the conversion price. In addition, Andrada
issued OMF III (Mauritius) LTD 15.4 million warrants on 21 July 2024 which
enable OMF Limited to acquire ordinary shares in Andrada at an exercise price
of 9.45p at a ratio of 1:1. The US$12.5m royalty is allocated to increasing
tin production at the Uis Mine, and coupled with the ongoing CI2 Programme, it
will enable Andrada to achieve targeted tonnage.
The balance of US$12.5m net of costs was utilised to accelerate the lithium
and tantalum revenue streams following the exploration drilling results. These
workstreams included the expansion of the resource at Uis and exploration
drilling across all licences. Furthermore, there were metallurgical testing
campaigns at the pilot facility and on-site laboratory. Finally, Andrada
initiated various studies to gauge the feasibility of additional revenue
streams across the Company's portfolio.
Development Bank of Namibia
On 5 September 2023, Andrada concluded the DBN funding. The funding is
ring-fenced for the implementation of the Uis Mine CI2 Programme. The terms
are:
· Tenure of 10 years ranked as senior secured debt pari passu to the
Standard Bank Namibia loan.
· No interest or capital repayments for the initial 12 months after
execution.
· Interest will accrue at the Namibian prime lending rate plus 2.5% per
annum.
By the end of the financial year, the balance still to be drawn was N$50m
(£2.1m). These funds are being used to expedite the implementation of the CI2
Programme.
Tin hedge
In view of recent tin price volatility, and to minimise financial risk, the
Company concluded a hedging instrument with Standard Bank Namibia Limited in
respect of the first 20 tonnes of contained tin shipped every month from June
2024 to May 2025. The price under this agreement is fixed at US$33 000 per
tonne.
A tin price rally started in April 2024 due to a combination of supply
tightness resulting from decreased exports from Myanmar and Indonesia as well
as declining inventory in China. Speculative interest also contributed to the
rally, with experts cautioning against an excessively bullish view of future
pricing. The LME tin spot price was US$25 450 on 2 January 2024, increasing to
above US$30 000 on 10 April and peaking at US$35 275 on 22 April 2024. The
average daily price from April 2024 to the date of writing was approximately
US$32 700. The uncertainty in pricing informed the decision to enter into the
hedging agreement. Based on contained tin production in FY 2024, the hedge
covers approximately 30% of quarterly production.
POST-PERIOD ACTIVITY
Bank Windhoek
On 5 August 2024, UTMC concluded the N$175m (c.£7.5m) funding agreements with
Bank Windhoek Limited ("BWL"). The funding is constituted of a N$100m term
loan on a 6 year tenure, with interest at the Namibian Prime Rate plus 1%. BWL
will also refinance the Company's working capital facilities totalling N$50m
(c.£2.1m). These facilities, which are for 12 months from the date of
drawdown, will incur the prime rate minus 0.5%. These working capital
facilities will be ranked as senior secured debt pari passu with other debt
holders.
CONCLUSION
GOING CONCERN
The main estimates considered as part of management's going concern assessment
are production profiles, tin, lithium and tantalum prices, exchange rates and
committed capital. The production profile is based on the Group's current
achieved production post the completion of the expansion project, as well as
the additional production on successful completion of the continuous
improvement capital project and ore sorter projects. In addition, the Group
successfully raised £7.1m through the funding from Bank Windhoek, with the
possibility of future funding through a strategic partner. This further
supports the Group's liquidity requirements and its ability to meet its
obligations in the ordinary course of business until February 2026. Based on
the forecasts, additional funding will be required within the next 12 months
for the purpose of envisaged capital and exploration projects without a
strategic partner. As the Group is also entering a new market with reference
to lithium sales, which are close to near-term production, the cash flow
forecast has assumed the successful completion of the lithium pilot plant and
the tantalum circuit to deliver the business strategy. Further details on the
going concern are in the Annual Financial Statements on page xx.
HITEN OOKA
CHIEF FINANCIAL OFFICER
29 August 2024
* EBITDA refers to earnings before interest, taxation, depreciation and
amortisation. Calculated by adding back the depreciation and amortisation
charges of approximately £3.4 million to the operating loss of approximately
£8.1m disclosed in the cashflow statement and P&L respectively.
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF ANDRADA MINING
OPINION ON THE FINANCIAL STATEMENTS
In our opinion the financial statements:
· give a true and fair view of the state of the Group's affairs as at
29 February 2024 and of its loss for the year then ended;
· have been properly prepared in accordance with UK adopted
international accounting standards; and
· have been prepared in accordance with the requirements of the
Companies (Guernsey) Law 2008.
We have audited the financial statements of Andrada Mining Limited (the
'Parent Company') and its subsidiaries (together the 'Group') for the year
ended 29 February 2024 which comprise the consolidated statement of
comprehensive income, the consolidated statements of financial position, the
consolidated statement of changes in equity, the consolidated statement of
cash flows and notes to the consolidated financial statements, including a
summary material accounting policy information.
The financial reporting framework that has been applied in the preparation of
the financial statements is applicable law and UK adopted international
accounting standards.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing
(UK) ('ISAs (UK)') and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We remain independent of the Group in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these
requirements.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to the Going concern section in Note 2 to the financial
statements, which indicates that the Group is reliant on additional funding
which is not guaranteed. As stated in note 2, these events or conditions,
along with other matters as set out in the Going concern section in Note 2 to
the financial statements, indicate that a material uncertainty exists that may
cast significant doubt on the Group's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Given the material uncertainty noted above and our risk assessment we
considered going concern to be a key audit matter.
Our evaluation of the Directors' assessment of the Group's ability to continue
to adopt the going concern basis of accounting and our audit procedures in
response to the key audit matter included the following:
· We discussed with the Directors their assessment of the potential
risks and uncertainties, forecast commodity prices and production and the
availability of financing that are relevant to the Group's business model and
operations to assess the going concern assumption. We formed our own
assessment of risks and uncertainties based on our understanding of the
business and mining sector and considered these in performing sensitivities.
· We assessed the latest board approved budgets and cash flow forecasts
for the Group to February 2026. We challenged the Directors' assumptions in
respect of the production profiles, forecast tin, lithium and tantalum prices,
operating costs and committed capital. In doing so, we considered factors such
as the Group's operational performance, recent cost profile and market analyst
commentary regarding forecast commodity prices.
· We recalculated forecast covenant compliance calculations and
assessed the consistency of such calculations with the ratios stated in the
relevant lender agreements.
· We assessed the sensitivity analysis performed by management in
respect of key assumptions underpinning the forecasts and considered
Directors' conclusions as to whether such scenarios are reasonably possible
based on our knowledge of the business and operating environment.
· We recalculated the forecast covenant compliance calculations to
assess arithmetical accuracy and assessed the consistency of such calculations
with the ratios stated in the relevant lender agreements.
· We discussed the Group's strategy to access the funds required, with
the Directors to assess the timing of cashflows. We read the draft agreements
and term sheets from potential investors in connection with the planned
project financing. We checked the post year end funding received by the Group
by tracing it to the bank statements.
· We considered and assessed the adequacy of the disclosures relating
to the Directors' assessment of the going concern basis of preparation within
the notes to the financial statements against the requirements of the
financial reporting framework, our understanding of the business and the
Directors' going concern assessment.
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
OVERVIEW
Coverage 100% (FY 2023: 99%) of Group revenue
93%
(FY
202
3:
90%
)
of
Gro
up
tot
al
ass
ets
Key audit matters FY 2024 FY 2023
Carrying value of mining assets Yes Yes
Going concern Yes Yes
Valuation and accounting for convertible loan notes and revenue royalty Yes No
arrangement
Materiality Group financial statements as a whole
£620 000 (FY 2023: £470 000) based on 1% of total assets (FY 2023: 1% of
total assets)
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
In approaching the Group audit, we considered how the Group is organised and
managed.
Andrada Mining Limited is a company registered in Guernsey and listed on AIM
in the United Kingdom, the Namibian Stock Exchange ('NSX') in Namibia and has
qualified to trade on the OTCQB (also called 'The Venture Market') in the
United States. from 5 June 2023. The Group's principal operations are located
in Namibia.
Our Group audit scope focused on the Group's producing and exploration assets
to gain sufficient coverage over the Group's total assets, total revenue and
loss before tax while considering the audit risks identified. As a result, we
determined the Parent Company and two subsidiary entities, AfriTin Mining
(Namibia) Pty Limited and Uis Tin Mining Company Pty Limited which operate the
Uis Mine, to be significant components of the Group and were subject to full
scope audits. The audits of each of the significant components were
principally performed in the United Kingdom, Namibia and South Africa. All the
audits were conducted by either the group audit team or BDO network member
firms. The remaining components of the Group were considered non-significant,
and these components were principally subject to analytical review procedures,
together with specified audit procedures over exploration and evaluation
related assets. This work was conducted by BDO network member firms. We
performed a detailed review of the work performed by the component auditors
under ISA (UK) 600.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of
involvement needed in order to be able to conclude whether sufficient
appropriate audit evidence has been obtained as a basis for our opinion on the
Group financial statements as a whole. Our involvement with component auditors
included the following:
· We held planning meetings with the component auditors and local
management.
· Detailed Group reporting instructions were sent to the component
auditors, which included the principal areas to be covered by the audits
(including areas that were considered to be key audit matters as detailed
below) and set out the information to be reported to the Group audit team. The
Group audit team was actively involved in the direction of the audits
performed by the component auditors for Group reporting purposes, along with
the consideration of findings and determination of conclusions drawn.
· The Group audit team was actively involved in the direction of the
audits performed by the component auditors for Group reporting purposes, along
with the consideration of findings and determination of conclusions drawn.
· The Group audit team was actively involved in the direction of the
audits performed by the component auditor for Group reporting purposes, along
with the consideration of findings and determination of conclusions drawn. We
performed our own additional procedures in respect of the significant and
elevated risk areas that represented key audit matters in addition to the
procedures performed by the component auditor.
· We received and reviewed Group reporting submissions and performed a
review of the component auditors' files. Our review was performed remotely
using our online audit software.
· We held clearance meetings remotely with the component auditors and
local management to discuss significant audit and accounting issues and
judgements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In addition to the matter described in the material uncertainty related to
going concern section above, we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key audit matter How the scope of our audit addressed the key audit matter
Carrying value of mining assets We reviewed and challenged management's impairment indicator assessment and
(See note 2: Critical accounting estimates and judgements and Note 12 testing performed on the underlying LoM valuation model for the Uis mining
Property, Plant and Equipment) assets which was carried out in accordance with relevant accounting standards.
Our audit procedures in this regard included:
As disclosed in Note 2 Critical accounting estimates and judgements,
management have reviewed the Uis Mine for indicators of impairment and have · Reviewing the Competent Person's Report to support the mineral
considered among other factors, the operations to date at Uis Mine including reserve and performed an assessment of the independence and competence of
production from the lithium pilot plant and tantalum circuit, forecast management's expert.
commodity prices, production profile, inflation rate, post-tax real discount
rate and market capitalisation of the Group. · Critically reviewing LoM forecast by making enquiries of operational
management, evaluating it against our understanding of the operations and
As set out in Note 2, Management have identified the reduction in the tin historic performance, and evaluating the consistency of available reserves
price as an indicator of impairment. In undertaking the impairment review, with the Competent Person's Report.
management have also reviewed the underlying Life of Mine ("LoM") valuation
model for Uis. The LoM valuation model is on a fair value less cost to develop · Obtaining management's LoM valuation model to confirm that sufficient
basis and includes assessments of different scenarios associated with capital headroom existed over the asset carrying value as part of our assessment of
improvements and expansion opportunities. The impairment testing performed by potential impairment indicators.
management did not result in an impairment.
· Checking the mathematical accuracy of management's LoM valuation
The assessment of the recoverable value of the Uis mining assets requires model.
significant judgement and estimates to be made by management - in particular
regarding the inputs applied in the models including future tin, tantalum and · Challenging the significant inputs and assumptions used in the
lithium prices, ore production and reserves, operating and development costs management's LoM valuation model and whether these were indicative of
and discount rates. The estimation of future tin price is subject to potential bias. This included comparing forecast commodity prices to a range
uncertainty considering the volatility of market. The carrying value of the of third-party independent market outlook reports and historical actual data,
Uis mining assets is therefore considered a key audit matter given the level comparing the forecast production to third party feasibility and resource
of judgement and estimation involved. studies. We compared forecasted costs against the expected production profiles
in the mine plans and recent historical performance.
· Recalculating the discount rate and utilising BDO valuation experts
to assist us in assessing management's discount rate by recalculating it in
reference to external data.
· Review of management's sensitivity analysis and performance of our
own sensitivity analysis over individual key inputs including tin prices,
discount rate and plant recovery.
Key observation:
Based on the procedures performed, we found that the key judgements and
estimates applied by management in their LoM valuation model to be within an
acceptable range and found their conclusion that there was no impairment as of
29 February 2024 to be reasonable.
Valuation and accounting for the convertible loan notes and revenue royalty Our specific audit testing regarding this included the following:
arrangement
(See note 2 and 17 for details relating to this key audit matter) · We reviewed the terms of the revenue royalty arrangement and
convertible loan notes agreements to understand the accounting implications.
As disclosed in Note 17 Other financial liabilities, in November 2023, the
Group finalised a financing contract for its mine expansion with Orion Mining · We evaluated the competence, independence and objectivity of the
Finance III LTD ("Orion"), for a USD25m package consisting of: management expert who compiled the report with respect to the accounting and
valuation of the revenue royalty arrangement and convertible loan notes.
· convertible loan notes that have been issued by Andrada Mining
Limited to Orion to the value of USD10m; Revenue Royalty Arrangement:
· an equity investment of USD2.5m in Andrada Mining Limited; and · We obtained Management's assessment on the accounting treatment and
with the assistance of our valuation experts, we assessed Management's
· revenue royalty arrangement of USD12.5m with Uis Tin Mining Company conclusion that the revenue royalty arrangement should be recognised as a
(Pty) Ltd. financial liability and accounted for at fair value through profit or loss,
against the requirements of the relevant accounting standard.
Management involved an expert to assist with the accounting implications of
the arrangement. · We recalculated the fair value of the revenue royalty arrangement to
confirm the accuracy of inputs considered in the model and evaluated the
Revenue Royalty arrangement: As disclosed in Note 2 Critical accounting suitability of Management's valuation methodology used to value the royalty by
estimates and judgements, the Group's obligations under the revenue royalty involving our valuation experts.
arrangement is accounted for as a financial liability at fair value through
profit or loss. · We evaluated the revenue royalty arrangement model and checked the
reasonableness of forecasted production volumes based on reserve report
The revenue royalty arrangement is a financial instrument for which the obtained during the audit and our understanding of the mining industry.
accounting and valuation can be complex, with key estimates and judgements
such as applying the correct accounting policy, determining the appropriate · We compared the discount rates used by management to rates provided
discount rate, and forecasting production volumes and commodity prices. by our valuation experts.
Convertible loan note: As disclosed in Note 2 Material accounting policy · We benchmarked forecast commodity prices to current price curves,
information, the loan notes are classified as a hybrid financial liability, empirical data and market analysis.
consisting of the loan note as the host and an embedded derivative measured
separately. · We also performed data integrity and arithmetical checks on the
model.
Convertible loan note:
The convertible loan note is a financial instrument for which the accounting
can be complex, with key estimates and judgements such as credit spread and · We read and assessed the work of management's expert on the
volatility. convertible loan notes with respect to the requirements of applicable
accounting standards which were used to assess whether it should be recognised
Due to these complexities and the key estimates and judgements required, we as a hybrid financial liability, consisting of the loan note as the host and
therefore considered the valuation and accounting for revenue royalty an embedded derivative measured separately.
arrangement and convertible loan note to be a key audit matter.
We confirmed the inputs used and checked the calculation of the convertible
loan notes and derivative liability by involving our valuation experts, to
evaluate the volatility and credit spread associated with the convertible loan
notes and derivative liability.
We have assessed the changes and performed a sensitivity analysis of the
credit spread between the issue date and the reporting date to identify any
material change.
· We checked the calculation of the implied credit spread of the
royalty to par as at the issue date. We further checked if the credit spread
used in arriving at the fair value of the royalty at the issue date matches
the fair value at the transaction date.
Key observation:
Based on the procedures performed, we found key estimates and judgements made
by Management to not be unreasonable.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements
FY 2024 FY 2023
Materiality £620 000 £470 000
Basis for determining materiality 1% of total assets 1% of total assets
Rationale for the benchmark applied We consider total assets to be the most significant determinant of the Group's
financial performance used by members given the nature of Group. The Group has
invested significant sums on its production and non-production mining assets
and these are considered to be the key value driver for the Group as its
assets are an indicator of future value to shareholders.
Performance materiality £465 000 £352 000
Basis for determining performance materiality 75% of the above materiality level 75% of the above materiality level
Rationale for the percentage applied for performance materiality We considered several factors, including the expected total value of known and
likely misstatements, and management's attitude towards proposed adjustments
and our knowledge of the Group's internal controls.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each
significant component of the Group based on a percentage of between 18% and
71% (FY 2023: 21% and 66%) of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that component. Component
materiality ranged from £110 000 to £465 000 (FY 2023: £97 000 to £310
000). In the audit of each component, we further applied performance
materiality levels of 75% (FY 2023: 75%) of the component materiality to our
testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £31 000 (FY 2023: £23 000). We also agreed to
report differences below this threshold that, in our view, warranted reporting
on qualitative grounds.
OTHER INFORMATION
The Directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements, or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing
to report in this regard.
OTHER COMPANIES (GUERNSEY) LAW, 2008 REPORTING
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
· proper accounting records have not been kept by the Company; or
· the financial statements are not in agreement with the accounting
records; or
· we have failed to obtain all the information and explanations which,
to the best of our knowledge and belief, are necessary for the purposes of our
audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors' responsibilities statement, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of noncompliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
· Our understanding of the Group and the industry in which it operates;
· Obtaining and understanding of the Group's policies and procedures
regarding compliance with laws and regulations; and
· Discussion with management, the Audit Committee and the Component
auditors.
We considered the significant laws and regulations to be the UK adopted
international accounting standards, the Companies (Guernsey) Law, 2008, the
listing rules of AIM, NSX and OTCQB, the various Mining Regulations in
Namibia, the terms and conditions included in the Group's exploration, the
evaluation licenses and the mining licences.
The Group is also subject to laws and regulations where the consequence of
non-compliance could have a material effect on the amount or disclosures in
the financial statements, for example through the imposition of fines or
litigations. We identified such laws and regulations to be Environmental and
health and safety legislation, Anti-bribery legislation, Electronic
Communications and Transactions Act, 2002, Environment Conservation Act, 1989,
Compensation for Occupation Injuries and Disease Act, 1993, Labour Relations
Act, 1995, Skills Development Act, 1998, Environment Protection Act, 2002,
Companies Act 28 of 2004 (Namibia), Occupational Health and Safety Act 85 of
1993, Labour Act 11 of 2007 (Namibia), Employment legislation (local South
African employment legislation), Minerals Act 33 of 1992 (amended in 2008).
Our procedures in respect of the above included:
· Review of RNS announcements and minutes of meeting of those charged
with governance for any instances of non-compliance with laws and regulations;
· Review of management's correspondence with regulatory and tax
authorities for any instances of noncompliance with laws and regulations;
· Holding discussions with Management and the Audit Committee to
consider any known or suspected instances of non-compliance with laws and
regulations, or fraud;
· Review of financial statement disclosures and agreeing to supporting
documentation; and
· Review of legal expenditure accounts to understand the nature of
expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material
misstatement, including fraud. Our risk assessment procedures included:
· Enquiry with management and those charged with governance regarding
any known or suspected instances of fraud;
· Obtaining an understanding of the Group's policies and procedures
relating to;
o Detecting and responding to the risks of fraud; and
o Internal controls established to mitigate risks related to fraud.
· Review of minutes of meeting of those charged with governance for any
known or suspected instances of fraud;
· Discussion amongst the engagement team as to how and where fraud
might occur in the financial statements;
· Performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material misstatement due
to fraud; and
· Considering remuneration incentive schemes and performance targets
and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to
fraud to be revenue recognition and management override of controls.
Significant judgements related going concern and management was regarding the
following key accounting estimates and judgements:
· Impairment review of Uis mine
· Fair valuation of year end receivables balance
· Capitalisation of waste stripping costs
· Going concern
· Rehabilitation provision
· Ore stockpile and tin concentrate
· Cost capitalisation
· Carrying value of exploration and evaluation assets
· Gross royalty arrangement - Forecasted commodity price, risk-free
rate and projected production inputs
· Convertible Loan Notes (CLN) - volatility and credit spread
Our procedures in respect of the above included:
· Addressing the fraud risk in relation to revenue recognition tracing
revenue transactions to supporting documentation, including testing that
revenue was recorded in the correct period by testing revenue transactions in
the period proceeding and preceding year end;
· Addressing the risk of fraud through management override of internal
controls, by testing the appropriateness of journal entries made throughout
the year by applying specific criteria to select journals which may be
indicative of possible irregularities or fraud;
· Holding meeting with forensic specialists to understand industry
specific susceptible areas;
· Assessing the susceptibility of the Group's financial statements to
material misstatement, including how fraud might occur by making enquiries of
the Directors and the Audit Committee during the planning and execution phases
of our audit to understand where they considered there to be susceptibility to
fraud, considering the risk of management override of controls and relevant
controls established to address risks identified to prevent or detect fraud;
· Agreeing the financial statement disclosures to underlying supporting
documentation;
· Making enquiries with management and those charged with governance
regarding any known or suspected instances of fraud;
· Reviewing of minutes of meeting of those charged with governance for
any known or suspected instances of fraud;
· Selecting journals by applying specific criteria to detect possible
irregularities and fraud and agreed them to the supporting documents to test
the appropriateness of journal entries;
· Performing a detailed review of the group's year end adjusting
entries an investigating any that appear unusual as to nature or amount and
agreeing to supporting documentation;
· Making enquiries of Directors as to whether there was any
correspondence from regulators in so far as the correspondence related to the
financial statements;
· Assessing the judgements made in respect of going concern (see
section on Material uncertainty relating to going concern above) and note 2 to
the financial statements; and
· Assessing whether the judgements made in accounting estimates were
indicative of a potential bias (refer to key audit matters above and note 2 to
the financial statements).
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members including component engagement
teams who were all deemed to have appropriate competence and capabilities and
remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit. For component engagement teams, we also
reviewed the result of their work performed in this regard.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
USE OF OUR REPORT
This report is made solely to the Company's members, as a body, in accordance
with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Parent Company's members those
matters we are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Parent Company and the Parent
Company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
BDO LLP
Chartered Accountants
London, UK
29 August 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 29 February 2024
Year ended Year ended
Notes
29 February 28 February
2024 2023
£ £
Revenue 4 17 967 889 9 827 474
Cost of Sales 5 (16 247 748) (10 509 418)
Gross profit/(loss) 1 720 141 (681 944)
Administrative expenses 6 (9 959 549) (7 451 352)
Idle plant costs - (258 177)
Other income 97 415 52 196
Operating loss (8 141 993) (8 339 277)
Finance income 8 955 940 39 054
Finance expenses 8 (1 684 506) (669 824)
Loss before tax (8 870 559) (8 970 047)
Income tax expense - 866 203
9
Loss for the year (8 870 559) (8 103 844)
Other comprehensive loss
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of share-based payment reserve (410) (441)
Exchange differences on translation of foreign operations (3 074 742) (2 298 674)
Exchange differences on non-controlling interest 24 785 19 395
Total comprehensive loss for the year (11 920 926) (10 383 564)
Loss for the year attributable to:
Owners of the parent (8 438 465) (7 753 819)
Non-controlling interests 24 (432 094) (350 025)
(8 870 559) (8 103 844)
Total comprehensive loss for the year attributable to:
Owners of the parent (11 513 617) (10 052 933)
Non-controlling interests (407 309) (330 631)
(11 920 926) (10 383 564)
Loss per ordinary share
Basic loss per share (in pence) (0.54) (0.60)
10
The notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 29 February 2024
NOTES 29 February 28 February
2024£ 2023£
ASSETS
NON-CURRENT ASSETS
Intangible assets 11 10 519 937 7 279 593
Property, plant and equipment 12 32 170 329 26 723 218
TOTAL NON-CURRENT ASSETS 42 690 266 34 002 811
CURRENT ASSETS
Inventories 13 2 948 618 2 667 193
Trade and other receivables 14 6 050 465 2 592 770
Cash and cash equivalents 15 14 505 800 8 205 705
TOTAL CURRENT ASSETS 23 504 883 13 465 668
TOTAL ASSETS 66 195 149 47 468 479
EQUITY AND LIABILITIES
EQUITY
Share capital 21 59 247 558 56 883 908
Accumulated deficit (26 623 617) (18 334 115)
Warrant reserve 482 199 50 307
Share-based payment reserve 1 831 764 1 049 663
Convertible Loan Note Reserve 4 579 427 -
Foreign currency translation reserve (6 907 976) (3 833 234)
Equity attributable to the owners of the parent 32 609 355 35 816 529
Non-controlling interests 24 (554 739) (147 430)
TOTAL EQUITY
NON-CURRENT LIABILITIES
Environmental rehabilitation provision 19 1 152 121 965 578
Borrowings 16 9 888 216 3 287 121
Other financial liabilities 17 10 386 425 -
Lease liability 20 478 523 707 355
TOTAL NON-CURRENT LIABILITIES 21 905 285 4 960 054
CURRENT LIABILITIES
Trade and other payables 18 6 972 743 3 655 126
Borrowings 16 4 061 447 2 915 917
Other financial liabilities 17 966 519 -
Lease liability 20 234 539 268 283
TOTAL CURRENT LIABILITIES 12 235 248 6 839 326
TOTAL EQUITY AND LIABILITIES 66 195 149 47 468 479
The notes form an integral part of these financial statements.
The financial statements were authorised and approved for issue by the Board
of Directors on 29 August 2024.
Glen Parsons
Hiten Ooka
Board Chairman and Non-Executive Director Chief
Financial Officer and Executive Director
29 August 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 29 February 2024
Share capital Convertible loan reserve Accumulated deficit Warrant reserve Share-based payment reserve Foreign currency translation reserve Total Non-controlling interests Total equity
£ £ £ £ £ £ £ £ £
Total equity at 28 February 2022 38 655 078 - (10 739 321) 192 632 704 828 (1 534 560) 27 278 657 183 200 27 461 857
Loss for the year - - (7 753 819) - - - (7 753 819) (350 025) (8 103 844)
Other comprehensive income/loss - - - - (441) (2 298 674) (2 299 115) 19 395 (2 279 720)
Transactions with owners:
Issue of shares 19 801 083 - - - - - 19 801 083 - 19 801 083
Share issue costs (1 962 253) - - - 345 276 - (1 962 253) - (1 962 253)
Share-based payments - - - (159 025) - - 345 276 - 345 276
Warrants exercised in the year 390 000 - 159 025 16 700 - - 390 000 - 390 000
Warrants modified in the year - - - 192 632 704 828 - 16 700 - 16 700
Total equity at 28 February 2023 56 883 908 - (18 334 115) 50 307 1 049 663 (3 833 234) 35 816 529 (147 430) 35 669 099
Loss for the year - - (8 438 465) - - - (8 438 465) (432 094) (8 870 559)
Other comprehensive income/loss - - - - (410) (3 074 742) (3 075 152) 24 785 (3 050 367)
Transactions with owners: - (60 500) -
Issue of shares 2 097 000 - - - - - 2 036 500 - 2 036 500
Share issue costs (99 300) - - - 18 000 - (99 300) - (99 300)
Share-based payments - - - - - - 18 000 - 18 000
Issue of convertible loan notes - 4 835 481 - - - - 4 835 481 - 4 835 481
Convertible loan note issue costs - (256 054) - - - - (256 054) - (256 054)
Issue of warrants - - - 431 892 - - 431 892 - 431 892
Share options raised in the year - - - - 973 974 - 973 974 - 973 974
Share options exercised in the year 365 950 - 148 963 - (148 963) - 365 950 - 365 950
Total equity at 29 February 2024 59 247 558 4 579 427 26 623 617 482 199 1 831 764 (6 907 976) 32 609 355 (554 739) 32 054 616
The notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASHFLOWS
As at 29 February 2024
Year ended Year ended
NOTES
29 February 2024 28 February 2023
£ £
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation (8 870 559) (8 970 047)
Adjustments for:
Fair value adjustment to customer contract 4 (58 941) 261 689
Depreciation of property, plant and equipment 12 3 363 011 2 377 349
Amortisation of intangible assets 11 16 370 10 290
Share-based payments 710 523 345 276
Equity-settled transactions - 16 700
Finance income (955 939) (39 054)
Finance expenses 1 684 506 669 824
Changes in working capital:
Decrease/(increase) in receivables 14 (1 322 157) 869 458
Increase in inventory 13 (530 596) (1 471 706)
Increase in payables 18 2 226 900 997 469
Net cash used in operating activities (3 736 882) (4 932 752)
Cash flows from investing activities
Purchase of intangible assets (3 348 698) (2 580 267)
Purchase of property, plant and equipment (11 782 638) (10 677 505)
Finance income 211 974 -
Net cash used in investing activities (14 919 362) (13 257 772)
Cash flows from financing activities
Finance income - 39 054
Finance expenses 8 (890 945) (499 621)
Lease payments 20 (375 660) (363 959)
Warrant Reserve 143 296
Net proceeds from issue of shares 2 303 150 18 228 830
Proceeds from issue of July convertible loan notes (equity) 4 868 023 -
Proceeds from issue of July convertible loan notes (debt) 16 2 446 977 -
Proceeds from issue of November convertible loan notes (debt) 16 5 359 794 -
Proceeds from issue of November convertible loan notes (derivative liability) 17 2 155 674 -
Proceeds from November royalty debt 17 9 522 780 -
Proceeds from bank borrowings 16 2 127 221 1 729 454
Repayment of bank borrowings 16 (2 438 797) (89 014)
Net cash generated from financing activities 25 221 513 19 044 744
Net increase in cash and cash equivalents 6 565 269 854 220
Cash and cash equivalents at the beginning of the year 8 205 705 7 365 379
Foreign exchange differences (265 174) (13 894)
Cash and cash equivalents at the end of the year 15 14 505 800 8 205 705
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 29 February 2024
1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES
Andrada Mining Limited ("Andrada") was incorporated and domiciled in Guernsey
on 1 September 2017 and admitted to the AIM market in London on 9 November
2017. The Company's registered office is PO Box 282, Oak House, Hirzel Street,
St Peter Port, Guernsey GY1 3RH, and it operates from Illovo Edge Office Park,
Ground Floor, Building 3, Corner Harries and Fricker Road, Illovo,
Johannesburg, 2116, South Africa.
These financial statements are for the year ended 29 February 2024 and the
comparative figures are for the year ended 28 February 2023.
The Andrada Group comprises Andrada Mining Limited, and its subsidiaries as
noted below.
Andrada Mining Limited ("AML") is an investment holding company and holds 100%
of Guernsey subsidiary, Greenhills Resources Limited ("GRL").
GRL is an investment holding company that holds investments in resource-based
tin and tantalum exploration companies in Namibia, South Africa and Rwanda.
The Namibian subsidiary is Andrada Mining (Namibia) Pty Limited ("Andrada
Namibia"), in which GRL holds 100% equity interest. The South African
subsidiaries are Mokopane Tin Company Pty Limited ("Mokopane") and Pamish
Investments 71 Pty Limited ("Pamish 71"), in which GRL holds 100% equity
interest. The Rwandan subsidiary is Uis Tin Mining Rwanda Limited ("UTMR"), in
which GRL holds 100% equity interest.
Andrada Namibia owns an 85% equity interest in Uis Tin Mining Company Pty
Limited ("UTMC"). The minority shareholder in UTMC is The Small Miners of Uis
who own 15%.
Mokopane owns a 74% equity interest in Renetype Pty Limited ("Renetype") and a
50% equity interest in Jaxson 641 Pty Limited ("Jaxson").
The minority shareholders in Renetype are African Women Enterprises
Investments Pty Limited and Cannosia Trading 62 CC who own 10% and 16%
respectively.
The minority shareholder in Jaxson is Lerama Resources Pty Limited who owns a
50% interest in Jaxson. Pamish 71 owns a 74% interest in Zaaiplaats Mining Pty
Limited ("Zaaiplaats"). The minority shareholder in Zaaiplaats is Tamiforce
Pty Limited who owns 26%.
AML holds 100% of Tantalum Investment Pty Limited, a company holding Namibian
exploration licences EPL5445 and EPL5670 for the exploration of tin, tantalum
and associated minerals.
As at 29 February 2024, the Andrada Group comprised:
Company Equity holding and voting Country of incorporation Nature of activities
rights
Andrada Mining Limited N/A Guernsey Ultimate holding company
Greenhills Resources Limited(1) 100% Guernsey Holding company
Andrada Mining Pty Limited(1) 100% South Africa Group support services
Tantalum Investment Pty Limited(1) 100% Namibia Tin & tantalum exploration
Andrada Mining (Namibia) Pty Limited(3) 100% Namibia Tin, tantalum & lithium operations
Uis Tin Mining Company Pty Limited(2) 85% Namibia Tin, tantalum & lithium operations
Mokopane Tin Company Pty Limited(3) 100% South Africa Holding company
Renetype Pty Limited(1) 74% South Africa Tin exploration
Jaxson 641 Pty Limited(4) 50% South Africa Tin exploration
Pamish Investments 71 Pty Limited(2) 100% South Africa Holding company
Zaaiplaats Mining Pty Limited(3) 74% South Africa Property owning
Uis Tin Mining Rwanda Limited(2) 100% Rwanda Tin & tantalum exploration
1 Held directly by Andrada Mining Limited
2 Held by Greenhills Resources Limited
3 Held by Andrada Mining (Namibia) Pty Limited
4 Held by Mokopane Tin Company Pty Limited
5 Held by Pamish Investments 71 Pty Limited
These financial statements are presented in Pound Sterling (£) because that
is the currency in which the Group has raised funding on the AIM market in the
United Kingdom. Furthermore, Pound Sterling (£) is the functional currency of
the ultimate holding company, Andrada Mining Limited.
The Group's key subsidiaries, Andrada Namibia and UTMC, use the Namibian
Dollar (N$) as their functional currency. The year-end spot rate used to
translate all Namibian Dollar balances was £1 = N$24.33 and the average rate
for the financial year was £1 = N$23.50.
2. MATERIAL ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The consolidated financial statements have been prepared in accordance with UK
Adopted International Accounting Standards. The consolidated financial
statements also comply with the AIM Rules for Companies, NSX Listing
Requirements and the Companies (Guernsey) Law, 2008 and show a true and fair
view.
The material accounting policies applied in preparing these consolidated
financial statements are set out below. These policies have been consistently
applied throughout the period. The consolidated financial statements have been
prepared under the historical cost convention except as where stated.
GOING CONCERN
The Group closely monitors and manages its liquidity risk and day-to-day
working capital requirements. Cash forecasts are regularly produced,
considering the global logistical challenges around sales to ensure that there
is sufficient cash within the Group to meet its obligations. The Group runs
sensitivities for different scenarios, including but not limited to changes in
commodity prices and exchange rates. The Group also routinely monitors the
covenants associated with the borrowing facilities and proactively engages
with Standard Bank, the lender, where there is any risk. Although the lender
granted the Group a waiver on all covenants on the 29 February 2024
measurement date, based on the year-to-date production profile and latest
forecast, the Group will be able to meet its covenant obligations for the
testing period to February 2025. For the purpose of assessing going concern,
the Directors have prepared forecasts to February 2026.
The main estimates considered as part of the Directors' going concern
assessment are production profiles, tin, lithium and tantalum prices, exchange
rates and committed capital. The production profile is based on the Group's
current achieved production post the completion of the expansion project, as
well as the additional production on the successful completion of the
continuous improvement capital project and ore sorter projects. In addition,
the Group successfully raised £7.1m through the funding of Bank Windhoek,
with the possibility of future funding through a strategic partner. This
further supports the liquidity requirements of the Group and its ability to
meet its obligations in the ordinary course of business until February 2026.
The Group also retains the ability to flex its ongoing exploration and
metallurgical capital expenditures in line with cash availability as well as
macro-economic circumstances.
Based on the forecasts, additional funding will be required within the next 12
months for the purpose of envisaged capital and exploration projects without a
strategic partner. As the Group is also entering a new market with reference
to lithium sales, which are close to near-term production, the cash flow
forecast has assumed the successful completion of the lithium pilot plant and
the tantalum circuit in order to deliver the business strategy. The need for
further funding would be required for additional exploration and capital
projects as well as studies related to the feasibility of the future growth
phases. The Group believes it has several options available to it, including
but not limited to, use of the overdraft facility, restructuring of the debt,
additional debt or equity, cost reduction strategies as well as potential
offtake arrangements. The Directors are already at an advanced stage of
securing additional funding through the bank mentioned above as well as other
finance for the next 12 months. However, this is yet to be finalised as at the
date of approval of the financial statements. Thus, the Group is reliant on
additional funding which is not guaranteed. This indicates the existence of a
material uncertainty which may cast significant doubt on the Group's ability
to continue as a going concern and, therefore, the Group may be unable to
realise its assets and discharge its liabilities in the ordinary course of
business.
As a result of their review, and despite the aforementioned material
uncertainty, the Directors have confidence in the Group's forecasts and that
additional funding will be forthcoming. Accordingly, the Directors continue to
adopt the going concern basis in preparing the consolidated financial
statements.
The financial statements do not include any adjustments that would result if
the Group were unable to continue as a going concern.
BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when 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 over 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. Inter-company transactions, balances and unrealised gains/losses on
transactions between Group companies are eliminated. When necessary, amounts
reported by subsidiaries have been adjusted to conform with the Group's
accounting policies.
Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that
present ownership interests entitling their holders to a proportionate share
of the net assets upon liquidation are initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total comprehensive income
is attributed to non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the management
steering committee that makes strategic decisions.
The Group previously reported a Namibian and a South African operating
segment. In the 2021 financial year, the Group made the decision to impair the
full value of the South African mining licences as it chose to focus on
developing its Namibian assets and it did not intend to incur any further
expenditure on its South African licences. The Group now has a single
operating segment consisting of the Namibian operations. During the financial
year, the Namibian operations earned £17 922 216 revenue from the sale of tin
concentrate to the Group's customer, Thailand Smelting and Refining Company
("Thaisarco"). The Namibian operating segment has a non-current asset balance
of £34 582 425 (consisting of property, plant and equipment of £27 055 343
and intangible assets of £7 527 083). The Group will continue to monitor
their operating segments and provide the necessary disclosure going forward.
FOREIGN CURRENCIES
Functional and presentation currency
The individual financial statements of each Group company are prepared in the
currency of the primary economic environment in which that company operates
(its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group company are
expressed in Pound Sterling, which is the functional currency of the Group,
and the presentation currency for the consolidated financial statements.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation date where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement.
REVENUE RECOGNITION
IFRS 15 "Revenue from Contracts with Customers" establishes a comprehensive
framework for determining whether, how much, and when revenue is recognised.
The core principle is that an entity recognises revenue to depict the transfer
of promised goods and services to the customer of an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
goods or services. The Group generates revenue from its primary activity, the
sale of tin concentrate, and it continued to generate immaterial revenue from
the sale of sand.
The Group produces and sells tin concentrate from its Uis Tin Mine in Namibia.
Once concentrate has been produced at the Uis plant, it is sampled, bagged and
loaded into containers for transportation to the port in Walvis Bay for
shipment.
The Group currently has an offtake agreement with its customer, Thailand
Smelting and Refining Company ("Thaisarco"), which was signed on 1 August
2019. This contract was renewed on 1 December 2023 for a further 3 years. As
per the contract, Thaisarco pays the Group on the basis of actual tin content
in the concentrate per Thaisarco's analysis, at the London Metal Exchange
price less treatment charges, unit deductions and impurity charges.
The Group can elect for the sale of each shipment to occur under the following
terms:
Previous contract applicable from 1 March 2023 to 30 November 2023:
Option 1: Standard provisional payment
Thaisarco shall pay 90% provisional payment on the basis of actual tin content
as per their own analysis. Payment is to be made within 10 working days after
the arrival of concentrate at Thaisarco's works. Title shall pass to Thaisarco
when the concentrate arrives at the Songkhla Port in Thailand.
Option 2: Provisional payment option against original bill of lading
Thaisarco shall pay 90% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and an original bill of lading. Title
shall pass to Thaisarco when UTMC receives the 90% provisional payment.
Option 3: Provisional payment option against warehouse holding certificate
Thaisarco shall pay 70% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and an original warehouse holding
certificate. Thaisarco shall pay an additional 20% provisional payment upon
presentation of the original bill of lading. Title shall pass to Thaisarco
when UTMC receives the 70% provisional payment.
Updated contract applicable from 1 December 2023 to 29 February 2024:
Option 1: Standard provisional payment
Thaisarco shall pay 90% provisional payment on the basis of actual tin content
as per their own analysis. Payment is to be made within 10 working days after
the arrival of concentrate at Thaisarco's works. Title shall pass to Thaisarco
when the concentrate arrives at the Songkhla Port in Thailand.
Option 2: Provisional payment option against warehouse holding certificate
Thaisarco shall pay 80% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and an original warehouse holding
certificate. Thaisarco shall pay an additional 10% provisional payment upon
presentation of the sea waybill. Title shall pass to Thaisarco when UTMC
receives the 80% provisional payment.
Option 3: Provisional payment option against sea waybill
Thaisarco shall pay 90% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and a sea waybill. Title shall pass to
Thaisarco when UTMC receives the 90% provisional payment.
During the financial year, the Group concluded sales under Option 3 of the
previous contract and Option 2 of the updated contract.
Revenue is recognised at a point in time when title and control of the goods
has transferred to the customer, which is when the concentrate arrives at
Songkhla Port in Thailand under Option 1 or when provisional payment is
received by UTMC under Option 2 and Option 3. There is limited judgement
needed to identify the point at which control passes: once physical delivery
of the products to the agreed location has occurred, the Group no longer has
physical possession of the products. At this point, the Group will have a
present right to payment and retains none of the significant risks and rewards
of the goods in question.
Pricing for the provisional payment is determined by the published tin price
on the date that title and control passes. Pricing for the final payment shall
be declared within 20 market days after arrival at Thaisarco's works. The
lower of the four LME cash official bid and offer prices and the LME 3-months
official bid and offer prices on the agreed date is used in these
calculations.
Variable consideration relating to final assay results is constrained in
estimating revenue unless it is highly probable that there will not be a
future reversal in the amount of revenue recognised when the final assay has
been determined.
Revenue from the sale of sand is recognised at the point in time when
control of the goods has transferred to the customer, which is when the sand
leaves the Group's premises. At this point, the Group will have a present
right to payment and retains none of the significant risks and rewards of the
goods in question.
TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax charge is based on taxable profit for the period. The Group's
liability for current tax is calculated by using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the "balance sheet liability" method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Deferred tax is calculated at the tax rates that
are expected to apply to the year when the asset is realised, or the liability
is settled based upon rates enacted and substantively enacted at the reporting
date. Deferred tax is charged or credited to profit or loss, except when it
relates to items credited or charged to other comprehensive income, in which
case the deferred tax is also dealt with in other comprehensive income.
EXPLORATION AND EVALUATION ASSETS
All costs associated with mineral exploration and evaluation are capitalised
as intangible exploration and evaluation assets and subsequently measured at
cost. These include the costs of: acquiring prospecting licences; mineral
production licences and annual licence fees; rights to explore; topographical,
geological, geochemical and geophysical studies; and exploratory drilling,
trenching, sampling and other activities to evaluate the technical feasibility
and commercial viability of extracting a mineral resource.
If an exploration project is successful, the related expenditures will be
transferred at cost to property, plant and equipment and depreciated over the
estimated life of the commercial ore reserves on a unit of production basis
(with this charge being taken through profit or loss). Where capitalised costs
relate to both development projects and exploration projects, the Group
reclassifies a portion of the costs which are considered attributable to
near-term production based on a percentage of the ore resource expected to be
mined in the relevant phase. Where a project does not lead to the discovery of
commercially viable quantities of mineral resources and is relinquished,
abandoned, or is considered to be of no further commercial value to the Group,
the related costs are recognised in the income statement.
The recoverability of deferred exploration costs is dependent upon the
discovery of economically viable ore reserves, the ability of the Group to
obtain necessary financing to complete the development of ore reserves and
future profitable production or proceeds from the extraction or disposal
thereof.
In 2023, the Group completed the construction of its on-site pilot plant that
enables the mine to expedite bulk pilot test work and increase pilot
production of lithium concentrate. Both the pilot plant and day to day running
costs have been accounted for in accordance with IFRS 6.
IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS
Intangible exploration and evaluation assets are reviewed regularly for
indicators of impairment following the guidance in IFRS 6 "Exploration for and
Evaluation of Mineral Resources" and tested for impairment where such
indicators exist.
In accordance with IFRS 6, the Group considers the following facts and
circumstances in their assessment of whether the Group's exploration assets
may be impaired:
· whether the period for which the Group has the right to explore
in a specific area has expired during the period or will expire in the near
future, and is not expected to be renewed; or
· whether substantive expenditure on further exploration for and
evaluation of mineral resources in a specific area is neither budgeted for nor
planned for; or
· whether exploration for and evaluation of mineral resources in a
specific area have not led to the discovery of commercially viable deposits
and the Group has decided to discontinue such activities in the specific area;
or
· whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying amount of
the exploration and evaluation assets is unlikely to be recovered in full from
successful development or by sale.
If any such facts or circumstances are noted, the Group, as a next step,
performs an impairment test in accordance with the provisions of IAS 36
"Impairment of Assets". In such circumstances, the aggregate carrying value of
the mining exploration and evaluation assets is compared to the expected
recoverable amount of the cash-generating unit. The recoverable amount is the
higher of value in use and the fair value less costs to sell.
SHARE CAPITAL AND RESERVES
i) Warrant reserve
The warrants issued by the Group are recorded at fair value on initial
recognition net of transaction costs. The fair value of warrants granted is
recognised as an expense or as share issue costs based on their nature, with a
corresponding increase in equity. The fair value of the warrants granted is
measured using the Black Scholes valuation model, taking into account the
terms and conditions under which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number of warrants
that vest.
ii) Share-based payment reserve
Where equity-settled share options are awarded to Directors or employees, the
fair value of the options at the date of grant is charged to the statement of
comprehensive income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest. Non-vesting conditions and market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the statement of comprehensive
income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the
statement of comprehensive income is charged with the fair value of goods and
services received.
iii) STIP and LTIP Equity Schemes
The Group operates an STIP scheme which runs a calendar year basis, with
employees receiving either cash or shares subsequent to year end based on
their performance during the year. An option pricing model is used to measure
the Group's liability at each reporting date, taking into account the terms
and conditions on which the bonus is awarded and the extent to which employees
have rendered their service. Movement in the liability (other than cash
payments) are recognised in the consolidated statement of comprehensive
income.
The LTIP scheme is a share based scheme that applies to permanent employees at
Global 13 and above. The intention of the scheme is to get management to
behave like owners through owning shares, driving Company performance. The
Group is still in the process of implementing the scheme.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at historical cost less accumulated
depreciation.
Depreciation is provided at rates calculated to write off the cost less the
estimated residual value of each asset over its expected useful economic life.
The applicable rates are:
· The mining assets are depreciated using the units of production
method from the point that commercial production was achieved. This reflects
the production activity in the period as a proportion of the total mining
reserve. Where the units of production method is used, the assets are
depreciated based on a rate determined by the tonnes of ore processed divided
by the estimate of the mineral reserve.
· Short-lived assets which are used in the mining and processing
plant are depreciated over a period of between one and ten years.
· Right-of-use assets are depreciated over the period of the lease
contract.
· Computer equipment is depreciated over three years.
· Furniture is depreciated over five years.
· Vehicles are depreciated over four years.
· Mobile equipment is depreciated over ten years.
· Buildings are depreciated over twenty years.
Land and mining assets under construction are not depreciated.
The estimated useful lives, residual values and depreciation methods are
reviewed at each year end and adjusted if necessary.
Gains or losses on disposal are included in profit or loss.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
MINING ASSET - STRIPPING
In open pit mining operations, it is necessary to incur costs to remove
overburden and other mine waste materials in order to access the ore body
("stripping costs").
During the development of a mine, stripping costs are capitalised and included
in the carrying amount of the related mining property. During the production
phase of a mine, stripping costs will be recognised as an asset only if the
following conditions are met:
· it is probable that the future economic benefit (improved access
to the ore body) associated with the stripping activity will flow to the
entity;
· the entity can identify the component of the ore body (mining
phases) for which access has been improved; and
· the costs relating to the stripping activity associated with that
component can be measured reliably.
Stripping costs incurred and capitalised during the development and production
phase are depreciated using the unit-of-production method over the reserves
and, in some cases, a portion of resources of the area that directly benefit
from the specific stripping activity. Costs incurred for regular waste removal
that do not give rise to future economic benefits are considered as costs of
sales.
RIGHT-OF-USE ASSET
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset, for a period of time, in
exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses whether:
· the contract involves the use of an identified asset. The asset
may be specified explicitly or implicitly and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset. If
the supplier has a substantive substitution right, then the asset is not
identified;
· the Group has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of use; and
· the Group has the right to direct the use of the asset. The Group
has the right when it has the decision-making rights that are most relevant to
changing how and for what purposes the asset is used. In rare cases where the
decision about how and for what purposes the assets is used is predetermined,
the Group has the right to direct the use of the asset if either:
o the Group has the right to operate the asset; or
o the Group designed the asset in a way that predetermines how and for
what purposes it will be used.
At inception or on reassessment of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of its relative stand-alone price.
The right-of-use asset is initially measured at the present value of the
remaining lease payments, discounted using the incremental borrowing rate.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term. In addition,
the right-of-use asset is annually assessed for impairment and will be
adjusted for certain re-measurements of the lease liability.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each statement of financial position date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss, if any. Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible
impairment in a cash-generating unit, the recoverability of the net book value
relating to that unit is assessed by comparison with the estimated discounted
future cash flows based on management's expectations of future commodity
prices and future costs.
The recoverable amount is determined on the fair value less cost to develop
basis. In assessing the recoverable amount, the expected future post-tax cash
flows from the asset are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. The Life of Mine ("LoM") plan is
the approved management plan at the reporting date for ore extraction and its
associated capital expenditure. The capital expenditure included in the
impairment model does not include capital expenditure to enhance the asset
performance outside of the existing LoM plan. The ore tonnes included in the
LoM plan are those as per the Reserve Statement, which management considers
economically viable.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried
at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease to the extent that it reverses gains previously
recognised in other comprehensive income.
Where conditions giving rise to impairment subsequently reverse, the effect of
the impairment charge is also reversed as a credit to the income statement,
net of any depreciation that would have been charged since the impairment.
INVENTORIES
Inventory consists of tin concentrate on hand, the run of mine stockpile, and
consumable items.
The tin concentrate is carried at the lower of cost or net realisable value.
The cost of the concentrate includes direct materials, direct labour,
depreciation, and overhead costs relating to processing and engineering
activities. Net realisable value is the estimated selling price net of any
estimated selling costs in the ordinary course of business.
The run of mine stockpile is carried at the lower of cost or net realisable
value. The cost of the stockpile includes direct materials, direct labour,
depreciation and overhead costs relating to mining activities. Net realisable
value is the estimated selling price net of necessary processing costs and any
estimated selling costs in the ordinary course of business, including both
government and Orion royalties.
Consumables are valued at the lower of cost (determined on the weighted
average basis) and net realisable value. Cost comprises all costs of purchase,
costs of conversion, and other costs incurred in bringing the inventories to
their present location and condition. Replacement cost is used as the best
available measure of net realisable value.
FINANCIAL INSTRUMENTS
Financial instruments are recognised in the Group's statement of financial
position when the Group becomes a party to the contractual provisions of the
instrument.
FINANCIAL ASSETS
The Group has the following financial assets:
· Trade and other receivables
· Cash and cash equivalents
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
Financial assets are classified as at amortised cost only if the asset is held
to collect the contractual cash flows and the contractual terms of the asset
give rise to cash flows that are solely payments of principal and interest. At
subsequent reporting dates, financial assets at amortised cost are measured at
amortised cost less any impairment losses.
For assets measured at fair value, gains and losses will be recorded in profit
or loss.
IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses on a forward-looking basis the expected credit loss,
defined as the difference between the contractual cash flows and the cash
flows that are expected to be received, associated with its assets carried at
amortised cost. The impairment methodology applied depends on whether there
has been a significant increase in credit risk.
For trade receivables only, the simplified approach permitted by IFRS 9
"Financial Instruments" is applied, which requires expected lifetime losses to
be recognised from initial recognition of the receivables. Losses are
recognised in the income statement. When a subsequent event causes the amount
of impairment loss to decrease, the decrease in impairment loss is reversed
through the income statement.
To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a
period of 24 months before 29 February 2024 and the corresponding historical
credit losses experienced within this period. The historical loss rates are
adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of our customer to settle the receivables
balance.
FINANCIAL LIABILITIES
Financial liabilities include trade and other payables, borrowings and other
financial liabilities classified into one of the following categories:
· Fair value through profit or loss ("FVTPL"): The liabilities are
carried in the statement of financial position at fair value with changes in
fair value recognised in the income statement. The Group currently has no
financial liabilities carried at fair value through profit or loss.
· Financial liabilities carried at amortised cost.
Borrowings and other financial liabilities are classified as either financial
liabilities or as equity in accordance with the substance of the contractual
agreement.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability
is: (i) a contingent consideration that may be paid by an acquirer as part of
a business combination;
(ii) held for trading; or (iii) designated as at FVTPL. Financial liabilities
at FVTPL are stated at fair value, with any gains and losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in
profit or loss incorporates any interest paid on the financial liability and
is included in the fair value adjustment line item in the statement of
comprehensive income.
Financial liabilities at amortised cost
After initial recognition at fair value, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the effective interest rate
("EIR") method. Gains and losses are recognised in the statement of
comprehensive income when the liabilities are derecognised as well as through
the EIR amortisation process. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in finance costs.
Borrowings
Interest-bearing debt is initially recorded at fair value less transaction
costs, and is subsequently measured at amortised cost, calculated using the
effective interest rate method.
Borrowing costs are expensed as incurred except where they relate to the
financing of construction or development of qualifying assets in which case
they are capitalised up to the date when the qualifying asset is ready for its
intended use.
Compound debt
Upon issuance, the fair value of the compound financial instrument is
established. The liability component is assessed at the fair value of a
comparable liability that lacks an equity conversion feature. The equity
component is calculated as the remaining amount after subtracting the fair
value of the liability component from the total fair value of the instrument.
Any transaction costs are distributed between the liability and equity
components based on their respective fair values. The liability component is
subsequently evaluated at amortised cost using the effective interest method.
The equity component remains unchanged after initial recognition.
Hybrid debt
The proceeds received on the issue of the Group's convertible debt are
allocated to their debt and derivative liability components. The amount
initially attributable to debt component equals the discounted cash flows
using a market rate of interest that would be payable on a similar debt
instrument that does not include as option to convert. Subsequently, the debt
component is accounted for as a financial liability measured at amortised cost
until extinguished on conversion or maturity of the debt. The remainder of the
proceeds is allocated to the conversion option and recognised as a derivative
liability.
DERECOGNITION
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised when:
· the rights to receive cash flows from the asset have expired; or
· the Group has transferred its right to receive cash flows from
the asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party, and either:
o the Group has transferred substantially all the risks and rewards of the
asset; or
o the Group has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
A financial liability (in whole or in part) is derecognised when the Group has
extinguished its contractual obligations, it expires, or it is cancelled.
Any gain or loss on derecognition is taken to the profit or loss.
REHABILITATION PROVISION
The net present value of estimated future rehabilitation costs is provided for
in the financial statements and capitalised within property, plant and
equipment on initial recognition. Rehabilitation will generally occur on or
after closure of a mine.
Initial recognition is at the time that the construction or disturbance
occurs, and thereafter as and when additional construction or disturbances
take place. The estimates are reviewed annually to take into account the
effects of inflation and changes in the estimated cost of the rehabilitation
works and are discounted using rates that reflect the time value of money.
Annual increases in the provision due to the unwinding of the discount are
recognised in the statement of comprehensive income as a finance cost. The
present value of additional disturbances and changes in the estimate of the
rehabilitation liability are recorded to mining assets against an
increase/decrease in the rehabilitation provision.
The rehabilitation asset is amortised over the life of the mine once
commercial production commences using the straight-line method. Rehabilitation
projects undertaken, included in the estimates, are charged to the provision
as incurred. Environmental liabilities, other than rehabilitation costs, which
relate to liabilities arising from specific events, are expensed when they are
known, probable and may be reasonably estimated.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates. Information about significant areas
of estimation uncertainty considered by management in preparing the financial
statements is provided below.
Estimates and judgements are continually evaluated. Revisions to accounting
estimates are recognised in the year in which the estimates are revised if the
revision affects only that year, or in the year of revision and in future
years if the revision affects both current and future years.
i) Going concern and liquidity
Significant estimates were required in forecasting cash flows used in the
assessment of going concern including tin and tantalum prices, the levels of
production, operating costs, and capital expenditure requirements. For further
details, refer to going concern considerations laid out earlier in Note 2.
ii) Decommissioning and rehabilitation obligations
Estimating the future costs of environmental and rehabilitation obligations is
complex and requires management to make estimates and judgements, as most of
the obligations will be fulfilled in the future and contracts and laws are
often not clear regarding what is required. The resulting provisions (see Note
19) are further influenced by changing technologies, and by political,
environmental, safety, business, and statutory considerations.
The Group's rehabilitation provision is based on the net present value of
management's best estimates of future rehabilitation costs. Judgement is
required in establishing the disturbance and associated rehabilitation costs
at period end, timing of costs, discount rates, and inflation. In forming
estimates of the cost of rehabilitation which are risk adjusted, the Group
assessed the Environmental Management Plan and reports provided by internal
and external experts. Actual costs incurred in future periods could differ
materially from the estimates, and changes to environmental laws and
regulations, life of mine estimates, inflation rates, and discount rates could
affect the carrying amount of the provision.
The carrying amount of the rehabilitation obligations for the Group at 29
February 2024 was £1 152 121 (FY 2023:
£965 578). In determining the amount attributable to the rehabilitation
liability, management used a discount rate of 12.3% (FY 2023: 13%), an
inflation rate of 4.8% (FY 2023: 5.3%) and an estimated mining period of 12.56
years (FY 2023: 13.4 years), being the Phase 1 expansion life of mine.
The decrease in the mining period is as a result of the increased mining
volumes post the Phase 1 Expansion. A 1% increase or decrease in the inflation
rate used would result in a £130 831 difference in the liability. A 2%
increase or decrease in the discount rate used would result in a £207 909
difference in the liability.
iii) Impairment indicator assessment for exploration and
evaluation assets
Determining whether an exploration and evaluation asset is impaired requires
an assessment of whether there are any indicators of impairment, including
specific impairment indicators prescribed in IFRS 6 "Exploration for and
Evaluation of Mineral Resources". If there is any indication of potential
impairment, an impairment test is required based on value in use of the asset.
The valuation of intangible exploration assets is dependent upon the discovery
of economically recoverable deposits which, in turn, is dependent on future
tin prices, future capital expenditures, environmental and regulatory
restrictions, and the successful renewal of licences.
The Directors have concluded that there are no indications of impairment in
respect of the carrying value of Namibian intangible assets at 29 February
2024 based on planned future development of the Namibian projects, and current
and forecast tin prices. Exploration and evaluation assets are disclosed fully
in Note 11.
iv) Impairment assessment for property, plant and
equipment
Management have reviewed the Uis mine for indicators of impairment and have
considered, among other factors, the operations to date at the Uis Tin Mine,
forecast commodity prices, production profile, inflation rate, post- tax
discount rate and market capitalisation of the Group. Management identified
the reduction in the tin price as an indicator of impairment. In undertaking
the impairment review, management have also reviewed the underlying LoM
valuation model for Uis. The LoM valuation model is on a fair value less cost
to develop basis and includes assessments of different scenarios associated
with capital improvements and expansion opportunities. The impairment testing
performed by management did not result in an impairment.
The forecasts require estimates regarding forecast tin, tantalum and lithium
prices, ore resources, production, operating and capital costs. Under the base
case forecast scenario, management used a forecast tin price of
$30 000, tantalum price of $175 000, lithium price of $1 120, discount rate of
11.75% post tax real rate and inflation rate of 6% The forecast indicates
sufficient headroom as at 29 February 2024.
The complex judgement in determining the recoverable amount of mining assets
is an estimation of the future tin price. The estimation of future tin price
is subject to uncertainty considering the volatility of market. Management has
therefore compared the forecast tin price with the economic consensus
estimates. Furthermore, a sensitivity analysis was performed by lowering the
forecast tin prices by 5% which also indicated sufficient headroom as at 29
February 2024.
As an additional test, management performed certain sensitivity calculations.
These included raising the discount rate to 13.1% post tax real rate, lowering
plant recovery by 5% and increasing operating costs by 5%. In each of these
circumstances, the forecast indicated sufficient headroom as at 29 February
2024.
v) Depreciation
Judgement is applied in making assumptions about the depreciation charge for
mining assets when using the unit- of-production method in estimating the ore
tonnes held in reserves. The relevant reserves are those included in the
current approved LoM plan which relates to the Phase 1 expansion. Judgement is
also applied when assessing the estimated useful life of individual assets and
residual values. The assumptions are reviewed at least annually by management
and the judgement is based on consideration of the LoM plan, as well as the
nature of the assets. The reserve assumptions included in the LoM plan are
evaluated by management.
vi) Capitalisation and depreciation of waste stripping
The Group has elected to capitalise the costs of waste stripping activities as
these are necessary to allow improved access to the ore and, therefore, will
result in future economic benefits. The costs of drilling, blasting and load
and haul of waste material is capitalised until such time that the underlying
ore is used in production. These costs are then expensed on a proportional
basis. The capitalised costs are included in the mining asset in property,
plant and equipment and are expensed back into the statement of comprehensive
income as depreciation. Capitalisation of waste stripping requires the Group
to make judgements and estimates in determining the amounts to be capitalised.
These judgements and estimates include, amongst others, the expected life of
mine stripping ratio for each separate open pit, the determination of what
defines separate pits, and the expected volumes to be extracted from each
component of a pit for which the stripping asset is depreciated.
vii) Determination of ore reserves
The estimation of ore reserves primarily impacts the depreciation charge of
evaluated mining assets, which are depreciated based on the quantity of ore
reserves. Reserve volumes are also used in calculating whether an impairment
charge should be recorded where an impairment indicator exists.
The Group estimates its ore reserves and mineral resources based on
information, compiled by appropriately qualified persons, relating to
geological and technical data on the size, depth, shape, and grade of the ore
body and related to suitable production techniques and recovery rates.
The estimate of recoverable reserves is based on factors such as tin prices,
future capital requirements and production costs, along with geological
assumptions and judgements made in estimating the size and grade of the ore
body.
There are numerous uncertainties inherent in estimating ore reserves and
mineral resources. Consequently, assumptions that are valid at the time of
estimation may change significantly if or when new information becomes
available.
viii) Valuation of inventories
Judgement is applied in making assumptions about the value of inventories and
inventory stockpiles, including tin prices, plant recoveries and processing
costs, to determine the extent to which the Group values inventory and
inventory stockpiles. The Group uses forecast tin prices to determine the net
realisable value of the ROM stockpile and the tin concentrate inventory on
hand at year end. Inventory stockpiles are measured using actual mining and
processing costs.
ix) Determining the fair value of royalty debt
The Group entered into a royalty agreement during the financial year. The
measurement of the royalty obligation factored in numerous key inputs and the
use of a technical expert. These inputs include the forecast of the tin
production and price over a period of 30 years, the risk-free rate and the
credit spread. The tin price forecast was based on estimates provided by the
Group as of November 2023. The risk-free rate was based on the United States
Constant Maturity Treasury rates commensurate with the terms as of the
valuation date, as reported on the Federal Reserve website. The Group used a
credit spread of 10.58% computed by backsolving the convertible notes to par
and further adjusted down 3.5% to account for the lower risk factor as a
result of the ongoing operations at the Uis Tin Mining Company (operating
subsidiary). The operating subsidiary attracts a lower risk factor due to it
being closely aligned to the underlying Tin mining operation and its
performance since commissioned, relative to the holding company, which is
implicitly subordinated. The royalty obligation is measured at fair value
through profit and loss.
3. ADOPTION OF NEW AND REVISED STANDARDS
The following amendments standards and interpretations were adopted by the
group from 1 March 2023:
· Amendments to IAS 12 - International Tax Reform - Pillar Two
Model Rules
· Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
Leases
· Classification of liabilities as Current or Non-Current and
Non-current Liabilities with Covenants - Amendments to IAS 1 Presentation of
Financial Statements
· Amendments to IAS 7 - Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures - Supplier Finance Arrangements
· Amendments to IAS 12 Income Taxes - Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
· Amendments to IAS 1 - Presentation of Financial Statements and
IFRS Practice Statement 2 Making Materiality Judgements - Disclosure of
Accounting Policies
These amended standards and interpretations have not had a significant impact
on the consolidated financial statements.
ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET APPLIED
The following standards, interpretations and amendments are effective for the
period beginning 1 March 2024:
· Lack of Exchangeability - Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates
· Amendments to the Classification and Measurement of Financial
Instruments - Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial
Instruments: Disclosures
· Annual improvements to IFRS 1 (first time adoption of
International Financial Reporting Standards), IFRS 7 financial instruments:
disclosures and its accompanying guidance on implementing IFRS 7), IFRS 9
(financial instruments), IFRS 10 (consolidated financial statements) and IAS 7
(statement of cash flows).
· Amendments to IAS 1 - Classification of liabilities as Current or
Non-current and Non-current liabilities with Covenants.
The updated standards, interpretations and amendments may have a significant
impact on the consolidated financial statements in the future as the Group
holds financial instruments recognised under IFRS 9 and IFRS 7.
4. REVENUE
Year ended 29 February 2024 Year ended 28 February 2023
£ £
Revenue from the sale of tin 17 863 275 10 024 487
Revenue from the sale of sand 45 673 64 676
Total revenue from customers 17 908 948 10 089 163
Revenue - change in fair value of customer contract 58 941 (261 689)
Total revenue 17 967 889 9 827 473
The revenue from the sale of tin and sand is recognised at the point in time
at which control transfers.
Other revenue relates to the change in the fair value of amounts receivable
under the offtake agreement between the date of initial recognition and the
period end resulting from forecast market prices at the estimated final
pricing date. Refer to Note 2 for further details.
5. COST OF SALES
Year ended 29 February Year ended 28 February
2024 2023
£ £
Costs of production 14 178 153 9 334 142
Smelter charges 1 328 387 757 459
Logistics costs 154 932 106 626
Government royalties 484 976 311 191
Orion royalties 101 300 -
16 247 748 10 509 418
6. ADMINISTRATIVE EXPENSES
The profit/(loss) for the year has been arrived at after charging/(crediting):
Year ended 29 February Year ended 28 February
2024 2023
£ £
Staff costs 4 261 360 3 025 406
Depreciation of property, plant & equipment 452 769 366 190
Professional fees 1 972 100 1 201 984
Travelling expenses 459 919 350 884
Uis administration expenses 1 259 206 916 238
Auditor's remuneration 240 000 190 000
Foreign exchange losses 260 061 375 931
IT costs 356 396 285 408
Listing costs 530 677 696 621
Other costs 167 061 42 690
9 959 549 7 451 352
Other costs are mainly comprised of corporate overheads necessary to run the
South African head office.
7. STAFF COSTS
Year ended 29 February Year ended 28 February
2024 2023
£ £
Staff costs capitalised under property, plant and equipment 814 709 1 044 009
Staff costs capitalised under intangible assets 416 871 413 939
Staff costs recognised as administrative expenses 3 543 336 2 680 130
Staff costs included in cost of sales 2 008 142 1 796 229
Share-based payment charge capitalised under property, 213 042 -
plant and equipment
Share-based payment charge capitalised under intangible assets 68 410 -
Share-based payment charge recognised as administrative expenses 710 523 345 276
7 775 033 6 279 583
Key management personnel have been identified as the Board of Directors, Frans
van Daalen (Chief Strategy Officer of the Group), Hiten Ooka (Chief Financial
Officer of the Group) and Chris Smith (Chief Operating Officer of the Group).
Details of key management remuneration are shown in Note 26.
The average number of staff during the period was 283 (FY 2023: 219) with an
average total cost per employee for the year of £24 015 (FY 2023: £23 102).
Emoluments of £341 199 including £53 652 of share options and shares to be
issued (FY 2023: £305 270 including £90 081 of share options and shares to
be issued) were paid in respect of the highest-paid Director during the year.
8. FINANCE INCOME & EXPENSE
Recognised in the statement of comprehensive income
Year ended 29 February Year ended 28 February
2024 2023
£ £
Finance expense
Interest on lease liability 98 923 156 118
Interest on environmental rehabilitation provision 118 694 14 085
Interest on bank facilities 275 807 338 812
Interest on convertible loan note 488 383 -
Transaction costs on royalty debt 456 062 -
Fair value loss on royalty debt 87 561 -
Other interest 159 076 160 809
Total finance expense 1 684 506 669 824
Finance income
Fair value gain on derivative liability - held at fair value through profit or 743 965 -
loss
Interest on bank deposit 211 975 39 054
Total finance income 955 940 39 054
The above financial income and expense include the following in respect of
assets/ (liabilities) not at fair value through profit or loss:
Total interest income on financial assets 211 975 39 054
Total interest expense on financial liabilities 1 021 976 655 739
TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax.
Year ended 29 February Year ended 28 February
2024 2023
£ £
Factors affecting tax for the year: (8 870 559) (8 970 048)
The tax assessed for the year at the Guernsey company standard rate of 0%, as
explained below:
Loss before taxation
Loss before taxation multiplied by the Guernsey company standard rate of 0%
Effects of:
Differences in tax rates (overseas jurisdictions) - -
(2 125 662) (1 791 238)
Tax losses carried forward 2 125 662 1 791 238
Derecognition of previously recognised deductible temporary difference 866 203
Tax for the year - 866 203
Accumulated losses in the subsidiary undertakings for which there is an
unrecognised deferred tax asset are £13 903 618 (FY 2023: £8 100 173).
A deferred tax asset of £592 166 (FY 2023: £1 694 362) was not recognised in
the Namibian entities. Due to the sizeable assessed losses that have
accumulated in these entities, management has decided not to raise the
deferred tax asset in the 2024 financial year as the timing of future taxable
profits is not certain at this stage.
9. LOSS PER SHARE
The calculation of a basic loss per share of 0.54 pence (FY 2023: loss per
share of 0.60 pence), is calculated using the total loss for the period
attributable to the owners of the Company of £8 438 465 (FY 2023: £7 753
819) and the weighted average number of shares in issue during the period of 1
551 422 631 (FY 2023: 1 291 331 804).
Due to the loss for the period, the diluted loss per share is the same as the
basic loss per share. The number of potentially dilutive ordinary shares, in
respect of share options, warrants and shares to be issued as at 29 February
2024 is 165 625 801 (FY 2023: 77 636 918). These potentially dilutive ordinary
shares may have a dilutive effect on future earnings per share.
10. INTANGIBLE ASSETS
Cost Exploration and evaluation Computer software
assets £ Total
£ £
As at 28 February 2022 5 055 729 120 172 5 175 901
Additions for the year - other expenditure 2 580 267 - 2 580 267
Exchange differences (431 234) (7 858) (439 092)
As at 28 February 2023 7 204 762 112 314 7 317 076
Additions for the year - other expenditure 3 742 889 33 864 3 776 753
Exchange differences (512 959) (7 636) (520 595)
As at 29 February 2024 10 434 692 138 542 10 573 234
Accumulated depreciation Exploration Computer Total
and evaluation software £
assets £
£
As at 28 February 2022 - 28 119 28 119
Charge for the period - 10 290 10 290
Exchange differences - (926) (926)
As at 28 February 2023 - 37 483 37 483
Charge for the period - 16 370 16 370
Exchange differences - (556) (556)
As at 29 February 2024 - 53 297 53 297
Exploration and evaluation Computer Total
£ Software £
£
Net book value
As at 29 February 2024 10 434 692 85 245 10 519 937
As at 28 February 2023 7 204 762 74 831 7 279 593
As at 28 February 2022 5 055 729 92 053 5 147 782
Additions to exploration and evaluation assets represents costs incurred on
active exploration projects, day to day costs of running the lithium pilot
plant, staff costs and share based payments charges (refer to Note 7 for
additional details on staff costs and share based payments charges).
Each year, management performs a review of intangibles to identify potential
impairment triggers in line with IFRS 6. For the year ending 2024 and 2023, no
such triggers were identified for exploration and evaluation assets.
The Directors have concluded that there are no indicators of impairment in
respect of the carrying value of the Namibian exploration and evaluation
assets at 29 February 2024 based on planned future development of the projects
and current and forecast tin prices.
11. PROPERTY, PLANT AND EQUIPMENT
Land Mining Mining Mining asset - Decom- Right-of-use Computer Furniture Vehicles Mobile Buildings Exploration Total
asset under asset stripping missioning asset equipment equipment and
construction asset (crane) evaluation
Cost
As at 28 February 2022 12 312 3 583 853 15 609 768 1 332 128 268 704 655 530 197 472 179 330 65 851 175 780 - - 22 080 728
Additions for the year - 7 264 184 984 390 1 531 721 750 363 1 121 536 112 496 99 371 294 699 303 356 284 733 - 12 746 849
Disposals for the year - - (309 259) - - (61 435) - - - - - - (370 694)
Transfer between categories of assets - (9 532 184) 9 532 184 - - - - - - - - - -
Foreign exchange differences (1 051) (74 979) (2 154 393) (251 622) (90 495) (156 934) (26 928) (24 209) (32 154) (42 317) (25 635) - (2 880 717)
As at 28 February 2023 11 261 1 240 874 23 662 690 2 612 227 928 572 1 558 697 283 040 254 492 328 396 436 819 259 098 - 31 576 167
Additions for the period - 3 953 298 2 776 006 4 240 985 161 029 92 459 99 972 138 420 84 986 - - - 11 547 155
Disposals for the period - - - - - (278 342) - - - - - - (278 342)
Transfer between categories of assets - (4 539 480) 655 489 - - - - - - - - 3 883 991 -
Foreign exchange differences (977) 71 397 (2 192 451) (370 759) (85 943) (124 651) (27 866) (26 708) (31 346) (37 858) (22 455) (131 864) (2 981 481)
As at 29 February 2024 10 284 726 089 24 901 734 6 482 453 1 003 658 1 248 163 355 146 366 204 382 036 398 961 236 643 3 752 127 39 863 500
Accumulated depreciation
As at 28 February 2022 - - 1 859 775 488 004 9 435 332 624 117 605 65 091 54 878 3 224 - - 2 930 636
Charge for the year - - 964 857 967 435 15 542 254 667 50 928 43 556 35 297 35 930 9 137 - 2 377 349
Foreign exchange differences - - (225 323) (128 759) (2 205) (62 451) (14 656) (9 447) (7 862) (3 511) (823) - (455 037)
As at 28 February 2023 - - 2 599 309 1 326 680 22 772 524 840 153 877 99 200 82 313 35 643 8 314 - 4 852 948
Charge for the year - - 1 728 156 1 242 349 65 302 78 175 75 243 67 438 60 713 33 387 12 248 - 3 363 011
Foreign exchange differences - - (260 671) (157 158) (4 191) (59 438) (15 922) (10 856) (9 195) (4 223) (1 136) - (522 790)
As at 29 February 2024 - - 4 066 794 2 411 871 83 883 543 577 213 198 155 782 133 831 64 807 19 426 - 7 693 169
Net book value
As at 29 February 2024 10 284 726 089 20 834 940 4 070 582 919 775 704 586 141 948 210 422 248 205 334 154 217 216 3 752 127 32 170 329
As at 28 February 2023 11 261 1 240 874 21 063 381 1 285 548 905 800 1 033 857 129 163 155 292 246 083 401 176 250 783 - 26 723 218
As at 28 February 2022 12 312 3 583 853 13 749 993 844 124 259 269 322 906 79 867 114 239 10 973 172 556 - - 19 150 092
Additions to the mining asset under construction consisted of the costs to
complete the tantalum circuit which was commissioned during the year and
transferred to the mining asset.
Additions to the mining asset consist of costs incurred as part of the
continuous improvement project as well as capitalised labour and travel costs.
Interest capitalised against the mining asset is as follows:
Year ended 29 February Year ended 28 February
2024 2023
£ £
Standard Bank 409 127 440 054
Development Bank of Namibia 222 012 -
Total 631 139 440 054
Interest on the Standard Bank loan is calculated at the 3-month JIBAR plus a
margin of 4.5% and interest on the Development Bank of Namibia loan is
calculated at the Namibian prime rate plus a margin of 2.5%.
Additions to explorations and evaluation assets represents costs incurred to
construct the lithium pilot plant which is treated as a tangible asset. The
lithium pilot plant is accounted for in accordance with IFRS 6.
The Group has elected to capitalise the costs of waste stripping activities as
these are necessary to allow improved access to the ore and, therefore, will
result in future economic benefits. The costs of drilling, blasting and load
and haul of waste material is capitalised until such time that the underlying
ore is used in production.
Please refer to Note 20 for further information on the right-of-use asset.
The total depreciation charge for the current financial year was split between
administrative expenses and cost of sales. £452 769 (FY 2023: £336 190) was
included in administrative expenses, while the balance of £2 910 242 (FY
2023: £2 071 856) was included in cost of sales as it was a cost that was
incurred for mining and processing purposes.
12. INVENTORIES
Year ended 29 February Year ended 28 February
2024 2023
£ £
Tin concentrate on hand 1 119 710 1 364 286
Run of mine stockpile 954 059 589 725
Consumables 874 849 713 182
2 948 618 2 667 193
13. TRADE AND OTHER RECEIVABLES
Year ended 29 February Year ended 28 February
2024 2023
£ £
Trade receivables 192 829 27 678
Trade receivables at fair value through profit or loss 485 235 126 125
Other receivables 3 519 565 1 369 867
VAT receivables 1 852 836 1 069 100
6 050 465 2 592 770
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value due to their short-term nature. No allowance
for any expected credit losses against any of the trade receivables is
provided due to a history without default or non-payment from any of the
Group's customers.
Trade receivables at fair value through profit or loss relates to the change
in the fair value of trade receivables under the offtake agreement between the
date of initial recognition and the period end resulting from forecast market
prices at the estimated final pricing date.
Other receivables primarily consist of prepayments that the Group has made and
deposits that have been paid on items of equipment that are necessary for the
various capital projects currently underway. The total trade and other
receivables denominated in South African Rand amount to £315 981 (FY 2023:
£164 427), denominated in Namibian Dollars amount to £5 175 445 (FY 2023:
£2 221 827) and denominated in US Dollars amount to £485 235 (FY 2023: £126
125).
14. CASH AND CASH EQUIVALENTS
Year ended 29 February Year ended 28 February
2024 2023
£ £
Cash on hand and in bank 14 505 800 8 205 705
15. BORROWINGS
Year ended 29 February Year ended 28 February
2024 2023
£ £
Standard Bank term loan facility 2 559 845 4 083 503
Standard Bank VAT 307 206 336 357
Standard Bank working capital facility - 1 298 805
Standard Bank vehicle asset financing facility 517 982 484 373
Development Bank of Namibia term loan facility 2 269 475 -
Convertible loan note debt component 8 295 155 -
13 949 663 6 203 038
Up to 3 months 2 824 695 560 908
Between 3 and 12 months 1 236 752 2 355 009
Between 1 and 2 years 1 218 474 1 226 338
Between 2 and 5 years 8 669 742 2 060 783
13 949 663 6 203 038
On 18 November 2021, a term loan facility of N$90 000 000 (c. £3 699 000), a
VAT facility of N$8 000 000 (c. £329 000) and a working capital facility of
N$35 000 000 (c. £1 439 000) was entered into between the Group's subsidiary,
Uis Tin Mining Company (Pty) Ltd and Standard Bank Namibia. During 2022, a
vehicle asset financing facility to the value of N$15 000 000 (c. £617 000)
was provided.
Standard Bank was informed of a covenant breach on the term loan facility
before year-end, however, the bank only issued a covenant waiver post the
reporting date. As a result of the covenant breach, the non-current portion of
the Standard Bank term loan facility was transferred to current liabilities.
The maturity date of the term loan facility is November 2026 and the capital
balance of the loan together with accrued interest will be repaid in quarterly
instalments over the next 5 years. Interest is charged on the outstanding
capital balance of the loan at a rate of 3-month JIBAR plus a margin of 4.5%.
The VAT facility is secured by assessed/audited VAT returns (refunds) which
have not been paid by Namibia Inland Revenue. Standard Bank Namibia provides a
facility amounting to the unpaid refund. Any drawdowns against this facility
are repaid to the bank upon the receipt of cash from Namibia Inland Revenue.
The VAT facility and the working capital facility have no fixed monthly
maturity date but are both renewed on an annual basis. Interest accrues on
these facilities at the Namibian prime rate less 1%.
Standard Bank Namibia have provided a N$5 956 100 (c. £245 000) guarantee to
the Namibia Power Corporation PTY Limited in relation to a deposit for the
supply of electrical power. As a result of the guarantee provided by Standard
Bank, no cash was paid over for the deposit.
On 21 July 2023, the Group issued 77 unsecured convertible loan of £100 000
each to new and existing investors. The notes have a term of 3 years, bears
interest at a rate of 12% per annum and can be redeemed at the option of the
Group or convertible into ordinary shares at a fixed price of 9.45 by mutual
agreement between the Group and the note holders. As per IAS 32 and IFRS 9,
the fair value of the proceeds of the notes consisted of a liability and an
equity component, Refer to the Statement of Changes in Equity for the equity
portion of this instruments.
On 5 September 2023, the Development Bank of Namibia ("DBN") served notice
confirming that all conditions had been fulfilled or waived and that financial
close had occurred. Accordingly, the Group received the 1st drawdown of N$50
million (c. £2 055 000) of a total N$100 million (c. £4 110 000). These
Funds are being used to expedite the implementation of the Uis Mine Stage II
Continuous Improvement Programme.
On 22 November 2023, a US$25 000 000 (c. £19.750 000) funding packing was
concluded with Orion Resource Partners. This includes US$2 500 000 (c. £1 975
000) equity, a US$10 000 000 (c. £7 900 000) Convertible Loan Note and a
US$12.5m (c. £9 875 000) unsecured tin royalty. The equity and loan note will
be used to accelerate Andrada's overall strategy of achieving commercial
production of its lithium, tin and tantalum revenue streams. The royalty funds
will be used for the sole purpose of increasing Andrada's tin production as it
ramps up its capital programmes over the next 2 years.
Reconciliation of net cash flow to movement in borrowings
Balance as at 28 February 2022 5 120 141
Incoming cash flows 1 729 454
Proceeds from Vehicle Asset Financing Facility 532 296
Proceeds from working capital facility 1 197 158
Outgoing cash flows (184 917)
Repayment of capital balance of term loan (89 014)
Interest paid on the term loan (95 903)
Non-cash flows (461 640)
Interest accrued on term loan 125 832
Foreign exchange differences (587 472)
Balance as at 28 February 2023 6 203 038
Incoming cash flows 9 933 992
Proceeds from DBN facility 2 127 221
Proceeds from July convertible loan notes 2 446 977
Proceeds from November convertible loan notes 5 359 794
Outgoing cash flows (2 438 797)
Repayment of capital balance of term loan (1 102 611)
Interest paid on the term loan (108 255)
Repayment of working capital facility (1 227 931)
Non-cash flows 251 430
Foreign exchange differences (529 672)
Interest accrued on DBN facility 214 475
Additions to vehicle asset financing 78 244
Interest on July convertible loan notes 108 455
Interest on November convertible loan notes 379 928
Balance as at 29 February 2024 13 949 663
16. OTHER FINANCIAL LIABILITIES
Year ended 29 February Year ended 28 February
2024 2023
£ £
Held at fair value through profit and loss
Derivative liability 1 411 709 -
Royalty debt 9 941 235 -
11 352 944 -
On 22 November 2023, the Group entered into an agreement with Orion Resource
Partners (royalty holder) whereby the holder purchased a gross revenue royalty
for US$12 500 000 from the Group. In exchange for the gross revenue royalty,
the Group is required to make quarterly royalty payments to the holder based
on the tin mined and sold by the group. At initial recognition, the royalty
transaction was measured at fair value of US$12 560 000 (c. £9 853 674). In
determining the fair value, management used a credit spread rate of 10.58% and
a risk-free rate of 5.54%. At year end, the fair value of the royalty
transaction was fair valued at £9 941 235.
The transaction also included the issue of one hundred (100) unsecured
convertible loan notes of $100 000 each. The loan notes are redeemable in 4
years from the issue date. Written consent from the note holders is required
in the event that the loan notes are redeemed prior the maturity date. The
interest accrues quarterly at 12% per annum. The noteholders may at any time
before the redemption date convert the loan notes into Andrada ordinary shares
in tranches of a minimum of US$100 000 at a conversion price of 9.45 pence per
share. At initial recognition date, a derivative liability was recognised at a
fair value of £2 155 674. The derivative liability was subsequently measured
to £1 411 709. In determining the fair value of the derivative, management
used a credit spread of 16.12%.
Reconciliation of closing balance Derivative liability Royalty Total
£ Debt £
£
Balance as at 28 February 2023 - - -
Additions 2 155 674 9 853 674 12 009 348
Repayments - - -
Fair value adjustment (743 965) 87 561 (656 404)
Balance as at 29 February 2024 1 411 709 9 941 235 11 352 944
Year ended 29 February Year ended 28 February
2024 2023
£ £
The split between current and non-current is as follows:
Non-current liabilities 10 386 425 -
Current liabilities 966 519 -
Total 11 352 944 -
Sensitivity analysis
Assuming that all the variables remain the same in the royalty debt
calculation, a 1% decrease in the credit spread would result in the value of
the royalty debt increasing by $923 183 and a 1% increase in the credit spread
would result in a decrease of US$821 509. For the convertible loan note, if
the Group applies a 10% volatility haircut, the value of the derivative
liability would decrease by £276 171 (from £1 411 709 to £1 135 538). This
would also result in the credit spread decreasing from 16.12% to 14.07%.
IFRS 13 sets out a fair value hierarchy under which the inputs to valuation
techniques used to measure fair value are categorised into three levels. The
three levels of the hierarchy are as follows:
· Level 1 inputs are quoted prices (unadjusted) in active markets
for identical assets or liabilities that the entity can access at the
measurement date.
· Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly
or indirectly.
· Level 3 inputs are unobservable inputs for the asset or
liability.
Royalty debt
The royalty debt is recorded at fair value through profit and loss. The inputs
include the following:
· Tin production forecast provided by management.
· Tin price forecast based on consensus estimates as of November
2023. The forecast was provided by management.
· Risk-free rate that is based on the United States Constant
Maturity Treasury rates commensurate with the term as of the Valuation Date,
as reported on the Federal Reserve website.
· Implied credit spread was based on the Sterling Overnight Index
Average. Based on the above sources of the inputs, the royalty debt is a level
2.
Derivative liability
The derivative liability is recorded at fair value through profit and loss.
The inputs include the following:
· The dividend yield was provided by management.
· The expected volatility based on the historical equity volatility
of the Group as of the valuation date.
· The stock price as of the valuation date was obtained from
Capital IQ. The exchange rate was derived as an average of 4 years Bid Ask GBP
USD spot Curve.
Based on the above-mentioned sources of inputs, the derivative liability is a
level 2.
Reconciliation of net cash flow to movement in other financial liabilities £
Balance as at 28 February 2023 -
Incoming cash flows 11 678 454
Proceeds from royalty debt 9 522 780
Proceeds from issue of derivative liability 2 155 674
Non-cash flows (325 510)
Fair value loss on royalty debt 87 561
Foreign exchange adjustment on royalty debt 330 894
Fair value gain on derivative liability (743 965)
Balance as at 29 February 2024 11 352 944
17. TRADE AND OTHER PAYABLES
Year ended 29 February Year ended 28 February
2024 2023
£ £
Trade payables 2 518 885 1 624 816
Other payables 1 875 733 202 127
Accruals 2 578 125 1 828 183
6 972 743 3 655 126
Trade payables principally comprise of amounts outstanding for trade purchases
and ongoing costs. The increase in this balance is due to expanded operations
at the Uis mine. Other payables principally comprise of amounts outstanding
for the purchase of capital items required for expansion and exploration
projects. The increase in this balance is due to increased spending on the
pilot plant and other open capital projects. The Group has financial risk
management policies in place to ensure that payables are paid within the
pre-arranged credit terms. No interest has been charged by any suppliers as a
result of late payment of invoices during the year. The Directors consider
that the carrying amount of trade and other payables approximates to their
fair value.
The total trade and other payables denominated in South African Rand amount to
£1 167 534 (FY 2023: £1 147 054) and £5 506 391 (FY 2023: £2 154 031) is
denominated in Namibian Dollars.
18. ENVIRONMENTAL REHABILITATION PROVISION
£
Balance as at 28 February 2022 295 151
Increase in provision 750 363
Interest expense 14 085
Foreign exchange differences (94 021)
Balance as at 28 February 2023 965 578
Increase in provision 161 029
Interest expense 118 694
Foreign exchange differences (93 180)
Balance as at 29 February 2024 1 152 121
Provision for future environmental rehabilitation and decommissioning costs
are made on a progressive basis. Estimates are based on costs that are
regularly reviewed and adjusted appropriately for new circumstances. The
environmental rehabilitation liability is based on disturbances and the
required rehabilitation as at 29 February 2024.
The rehabilitation provision represents the present value of decommissioning
costs relating to the dismantling and sale of mechanical equipment and steel
structures related to the Phase 1 Plant, the Tantalum Circuit, the Bulk
Samples Processing Facility and the demolishing of civil platforms and
reshaping of earthworks. A provision for this requires estimates and
assumptions to be made around the relevant regulatory framework, the magnitude
of the possible disturbance and the timing, extent and costs of the required
closure and rehabilitation activities. In calculating the appropriate
provision, cost estimates of the future potential cash outflows based on
current studies of the expected rehabilitation activities and timing thereof
are prepared. These forecasts are then discounted to their present value using
a risk-free rate specific to the liability. In determining the amount
attributable to the rehabilitation liability, management used a discount rate
of 12.3%, an inflation rate of 4.8% and an estimated mining period of 12.6
years. Actual rehabilitation and decommissioning costs will ultimately depend
upon future market prices for the necessary rehabilitation works and timing of
when the mine ceases operation.
19. LEASE LIABILITY
The Company assessed all rental agreements and concluded that the following
rentals fall within the scope of IFRS 16 "Leases" and therefore a lease
liability has been raised:
Office building Workshop Housing Mobile units Vehicles Total
£ £ £ £ £ £
Balance at 28 February 2022 170 821 35 572 108 328 45 082 - 359 803
Additions 534 606 43 507 153 388 - 208 892 940 393
Disposals (22 035) - - - - (22 035)
Interest expense 55 378 15 612 62 198 1 906 21 024 156 118
Lease payments (159 096) (59 332) (51 685) (37 147) (56 699) (363 959)
Foreign exchange differences (51 391) (3 018) (24 004) (676) (15 593) (94 682)
Balance at 28 February 2023 528 283 32 341 248 225 9 165 157 624 975 638
Additions - 45 029 47 430 - - 92 459
Interest expense 55 239 2 029 27 589 104 13 962 98 923
Lease payments (173 037) (47 118) (99 980) (8 769) (46 756) (375 660)
Foreign exchange differences (41 786) (2 800) (20 664) (500) (12 548) (78 298)
Balance at 29 February 2024 368 699 29 481 202 600 - 112 282 713 062
The following is the split between the current and the non-current portion of
the liability:
Year ended 29 February Year ended 28 February
2024 2023
£ £
Non-current liability 478 523 707 355
Current liability 234 539 268 283
713 062 975 638
Determining the incremental borrowing rate to measure lease liabilities
The interest rate implicit in leases is not available, therefore the Group
uses the relevant incremental borrowing rate (IBR) to measure its lease
liabilities. The IBR is estimated to be the interest rate that the Group would
pay to borrow:
· over a similar term;
· with similar security;
· the amount necessary to obtain an asset of a similar value to the
right-of-use asset; and
· in a similar economic environment.
The IBR, therefore, is considered to be the best estimate of the incremental
rate and requires management's judgement as there are no observable rates
available.
Reconciliation of net cash flow to movement in leases
£
Balance as at 28 February 2022 359 803
Outgoing cash flows (363 959)
Lease payments (363 959)
Non-cash flows 979 794
Additions 940 393
Disposals (22 035)
Interest expense 156 118
Foreign exchange differences (94 682)
Balance as at 28 February 2023 975 638
Outgoing cash flows (375 660)
Lease payments (375 660)
Non-cash flows 113 084
Additions 92 459
Interest expense 98 923
Foreign exchange differences (78 298)
Balance as at 29 February 2024 713 062
20. SHARE CAPITAL
Number of ordinary shares of no par value issued and fully paid Share capital
£
Balance at 28 February 2022 1 121 841 684 38 655 078
Capital raise - 16 September 2022 222 701 660 11 135 083
Capital raise - 10 October 2022 173 320 000 8 666 000
Share issue costs - (1 962 253)
Warrants exercised - 25 January 2023 20 000 000 390 000
Balance as at 28 February 2023 1 537 863 344 56 883 908
Shares issued in lieu of Directors' fees - 11 May 2023 1 092 189 60 500
Exercising of employee share options - 29 September 2023 3 473 684 117 237
Exercising of employee share options - 3 October 2023 7 315 786 248 713
Share issued to Orion - 22 November 2023 30 505 755 2 036 500
Share issue costs - (99 300)
Balance at 29 February 2024 1 580 250 758 59 247 558
Authorised: 1 658 895 987 ordinary shares of no par value
Allotted, issued and fully paid: 1 580 250 758 ordinary shares of no par value
On 16 September 2022, the Group completed an equity fundraising by way of a
placing and direct subscription of 222 701 660 ordinary shares of no par value
in the Group at a price of 5 pence per share. A further 173 320 000 660
ordinary shares of no par value in the Group at a price of 5 pence per share
were issued on 10 October 2022 as part of the same capital raise.
On 25 January 2023, warrant holders exercised 20 000 000 warrants at an
exercise price of 1.95.
On 11 May 2023, the Group issued 1 092 189 ordinary shares to Directors in
lieu of their fees for the financial years ended February 2022 and 2023. This
is in accordance with the terms of their contracts.
On 29 September 2023, the Company received notice from share option holders to
exercise 1 736 842 share options at an exercise price of 3 pence, 868 421
share options at an exercise price of 3.5 pence, and 868 421 share options at
an exercise price of 4 pence.
On 3 October 2023, the Company received notice from share option holders to
exercise 3 407 894 share options at an exercise price of 3 pence, 1 953 946
share options at an exercise price of 3.5 pence, and 1 953 946 share options
at an exercise price of 4 pence.
On 22 November 2023, the Group issued Orion Resource Partners with 30 505 755
ordinary shares, at a price of 6.39p. This equity issue was a part of the
US$25 million funding transaction that took place with Orion Resource
Partners.
21. WARRANTS
The following warrants were granted during the year ended 29 February 2024:
Date of grant 21 July 2023 2 November 2023
Number granted 15 400 000 16 043 638
Contractual life 2 years 2 years
Estimated fair value (pence) 1.874 0.700
Date of grant 21 July 2023 2 November 2023
Share price at grant date (pence) 7.7 5.5
Exercise price (pence) 9.45 9.45
Expected life 2 years 2 years
Expected volatility 49.5% 49.5%
Expected dividends Nil Nil
Risk-free interest rate 4.6 4.7
The warrants in issue during the year are as follows:
Outstanding at 28 February 2022 22 613 334
Exercisable at 28 February 2022 22 613 334
Granted during the year -
Expired during the year -
Exercised during the year (20 000 000)
Outstanding at 28 February 2023 2 613 334
Exercisable at 28 February 2023 2 613 334
Granted during the year 31 443 638
Expired during the year -
Exercised during the year -
Outstanding at 29 February 2024 34 056 972
Exercisable at 29 February 2024 34 056 972
On 21 July 2023, 15 400 000 warrants were issued as part of the convertible
loan note transaction. Each note holder received 2 warrants for every £1
subscribed for. Each warrant enables the holder to subscribe for one ordinary
share at a subscription price of 9.45p. The warrants are exercisable at any
time from the date of issue for a period of two years.
On 22 November 2023, 16 043 638 warrants were issued as part of the Orion
financing transaction. Orion received 2 warrants for every £1 subscribed for.
Each warrant enables the holder to subscribe for one ordinary share at a
subscription price of 9.45p. The warrants are exercisable at any time from the
date of issue for a period of two years.
22. SHARE-BASED PAYMENT RESERVE
Director share options
The following Director share options were granted during the year ended 28
February 2023:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Number granted 7 800 000 3 900 000 3 900 000
Vesting period 1 year 2 years 3 years
Contractual life 4 years 4 years 4 years
Estimated fair value per option (pence) 1.9130 2.6510 3.2010
The estimated fair values were calculated by applying the Black Scholes
pricing model. The model inputs were:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Share price at grant date (pence) 9.35 9.35 9.35
Exercise price (pence) 9.80 10.30 10.80
Date of first exercise 8 April 2023 8 April 2024 8 April 2025
Expiry Date 8 April 2027 8 April 2027 8 April 2027
Expected volatility 53% 53% 53%
Expected dividends Nil Nil Nil
Risk-free interest rate 3.70% 3.70% 3.70%
The following Director share options were granted during the period ended 29
February 2024:
Date of grant 1 May 2023 1 May 2023 1 May 2023
Number granted 2 342 908 2 342 908 2 342 908
Vesting period 3 years 3 years 3 years
Contractual life 10 years 10 years 10 years
Estimated fair value per option (pence) 1.7290 1.4820 1.2800
The estimated fair values were calculated by applying the Black Scholes
pricing model. The model inputs were:
Date of grant 1 May 2023 1 May 2023 1 May 2023
Share price at grant date (pence) 5.12 5.12 5.12
Exercise price (pence) 7.00 8.00 9.00
Date of first exercise 1 May 2026 1 May 2026 1 May 2026
Expiry Date 1 May 2033 1 May 2033 1 May 2033
Expected volatility 53% 53% 53%
Expected dividends Nil Nil Nil
Risk-free interest rate 3.93% 3.93% 3.93%
The Director share options in issue during the year are as follows:
Outstanding at 28 February 2022 25 850 000
Exercisable at 28 February 2022 23 850 000
Granted during the year 15 600 000
Forfeited during the year -
Exercised during the year -
Expired during the year -
Outstanding at 28 February 2023 41 450 000
Exercisable at 28 February 2023 23 850 000
Granted during the year 7 028 724
Forfeited during the year -
Exercised during the year -
Expired during the year -
Outstanding at 29 February 2024 48 478 724
Exercisable at 29 February 2024 33 650 000
The Director share options outstanding at the year end have an average
exercise price of £0.069, with a weighted average remaining contractual life
of 2.46. The Director must remain as a Director of the Company for the share
options to vest. In the event that a Director ceases to be a Director during
the vesting period, the Board reserves the right to determine whether the
share options will be terminated or not. There are no market-based vesting
conditions on the share options.
Employee share options
The following employee share options were granted during the period ended 28
February 2023:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Number granted 19 355 000 9 677 500 9 677 500
Vesting period 1 year 2 years 3 years
Contractual life 4 years 4 years 4 years
Estimated fair value per option (pence) 1.9130 2.6510 3.2010
The estimated fair values were calculated by applying the Black Scholes
pricing model. The model inputs were:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Share price at grant date (pence) 9.35 9.35 9.35
Exercise price (pence) 9.80 10.30 10.80
Date of first exercise 8 April 2023 8 April 2024 8 April 2025
Expiry date 8 April 2027 8 April 2027 8 April 2027
Expected volatility 49.5% 49.5% 49.5%
Expected dividends Nil Nil Nil
Risk-free interest rate 3.70% 3.70% 3.70%
The following employee share options were granted during the period ended 29
February 2024:
Date of grant 1 May 2023 1 May 2023 1 May 2023
Number granted 9 419 227 9 419 227 9 419 227
Vesting period 3 years 3 years 3 years
Contractual life 10 years 10 years 10 years
Estimated fair value per option (pence) 1.7290 1.4820 1.2800
The estimated fair values were calculated by applying the Black Scholes
pricing model. The model inputs were:
Date of grant 1 May 2023 1 May 2023 1 May 2023
Share price at grant date (pence) 5.12 5.12 5.12
Exercise price (pence) 7.00 8.00 9.00
Date of first exercise 1 May 2026 1 May 2026 1 May 2026
Expiry date 1 May 2033 1 May 2033 1 May 2033
Expected volatility 49.5% 49.5% 49.5%
Expected dividends Nil Nil Nil
Risk-free interest rate 3.93% 3.93% 3.93%
The employee share options in issue during the year are as follows:
Outstanding at 28 February 2022 27 371 229
Exercisable at 28 February 2022 27 371 229
Granted during the year 4 800 000
Forfeited during the year -
Exercised during the year -
Expired during the year -
Outstanding at 28 February 2023 32 171 229
Exercisable at 28 February 2023 27 371 229
Granted during the year 62 167 681
Forfeited during the year -
Exercised during the year (10 789 470)
Expired during the year -
Outstanding at 29 February 2024 83 549 440
Exercisable at 29 February 2024 35 936 753
The employee share options outstanding at the year end have an average
exercise price of £0.081, with a weighted average remaining contractual life
of 4.62 years.
The employee must remain in employment with the Company for the share options
to vest. There are no market-based vesting conditions on the share options.
23. NON-CONTROLLING INTERESTS
Non-controlling interest that is material in the Group relates to the Small
Miners of Uis ("SMU") who own 15% of UTMC. SMU is a non-profit association
incorporated in Namibia. The entity was set up by the Ministry of Mines and
Energy to act on behalf of small-scale miners across Namibia.
Other includes the following minority interests which are not material:
· Cannosia Trading 62 CC which own 16% of Renetype
· African Women Enterprise Investments (Pty) Ltd which own 10% of
Renetype
· Lerama Resources (Pty) Ltd which own 50% of Jaxson
· Tamiforce (Pty) Ltd which own 26% of Zaaiplaats
As at 29 February 2024 UTMC Other Total
Amount attributable to all shareholders:
Loss after tax (2 857 667) (12 793) (2 870 460)
Non-current assets 16 470 044 10 286 16 480 330
Current assets 14 796 928 - 14 796 928
Total assets 31 266 973 10 286 31 277 258
Non-current liabilities 17 770 728 - 17 770 728
Current liabilities 17 331 259 65 713 17 396 972
Total liabilities 35 101 987 65 713 35 167 700
Net liabilities (3 835 014) (55 427) (3 890 441)
Amount attributable to non-controlling interest:
Loss after tax (428 650) (3 444) (432 094)
Net liabilities (542 405) (12 334) (554 739)
As at 28 February 2023 UTMC Other Total
Amount attributable to all shareholders:
Loss after tax (2 321 500) (6 147) (2 327 647)
Non-current assets 10 508 167 11 262 10 519 429
Current assets 5 116 388 - 5 116 388
Total assets 15 947 534 11 262 15 635 817
Non-current liabilities 7 956 192 - 7 956 192
Current liabilities 8 839 733 58 417 8 898 150
Total liabilities 16 795 925 58 417 16 854 342
Net liabilities (1 171 370) (47 155) (1 218 525)
Amount attributable to non-controlling interest:
Loss after tax (348 224) (1 801) (350 025)
Net liabilities (173 406) (13 557) (186 963)
24. FINANCIAL INSTRUMENTS
The Group is exposed to the risks that arise from its use of financial
instruments. This note describes the objectives, policies and processes of the
Group for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout
these financial statements.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising returns to shareholders.
In order to maintain or adjust the capital structure, the Group may issue new
shares or arrange debt financing.
The capital structure of the Group consists of cash and cash equivalents and
equity, comprising issued capital, borrowings and retained losses. The Group
is not subject to any externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted including
the criteria for recognition, the basis of measurement, and the bases for
recognition of income and expenses for each class of financial asset,
financial liability, and equity instrument, are disclosed in Note 2.
Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
· Borrowings
· Other financial liabilities
· Lease liability
Categories of financial instruments
The Group holds the following financial assets:
Year ended 29 February Year ended 28 February
2024 2023
£ £
Measured at amortised cost:
Trade and other receivables 3 712 394 1 397 545
Cash and cash equivalents 14 505 800 8 205 705
Measured at fair value through profit or loss:
Trade and other receivables 485 235 126 125
Total financial assets 18 703 429 9 729 375
Under its customer sale arrangement, the Group receives a provisional payment
upon satisfaction of its performance obligations based on the spot price at
that date. This occurs prior to the final price determination, with the Group
then subsequently receiving or paying the difference between the final price
and quantity and the provisional payment. As a result of the pricing
structure, the instrument is classified at fair value through profit or loss
and measured at fair value with resulting changes in fair value recorded as
other revenue.
Trade receivables at fair value through profit or loss fail the criteria for
being measured at amortised cost owing to the variability resulting from final
pricing adjustments. Financial instruments measured at fair value are
presented by level within which the fair value measurement is categorised. The
levels of fair value measurement are determined as follows:
· Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
· Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group's contract receivable at 29 February 2024 is recorded at fair value
through profit or loss and fair valued based on the estimated forward prices
that will apply under the terms of the sales contracts on the product reaching
the port of destination. The trade receivables fair value reflects amounts
receivable from the customer adjusted for forward prices expected to be
realised.
The forward price is based on the expected LME 3-month tin price on the date
of finalisation. Given the short period to final pricing, the time value of
money is not considered to be significant.
Fair value of this trade receivable at fair value through profit or loss is
categorised at Level 1. During the year there were no transfers between levels
of fair value hierarchy.
The Group holds the following financial liabilities:
Year ended 29 February Year ended 28 February
2024 2023
£ £
Measured at amortised cost:
Trade and other payables 6 972 744 3 655 126
Borrowings 13 949 663 6 203 038
Lease liability 713 062 975 638
Measured at fair value through profit or loss:
Other financial liabilities 11 352 944 -
Total financial liabilities 32 988 413 10 833 802
Maturity analysis of the contractual undiscounted cash flows:
As at 29 February 2024 Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total
Trade and other payables 6 972 744 - - - 6 972 744
Borrowings and other financial liabilities 1 126 574 4 445 123 6 280 427 9 603 673 43 112 278 64 568 075
Lease liability 78 626 226 136 287 472 253 459 - 845 693
8 177 944 4 671 259 6 567 899 9 857 132 43 112 278 72 386 512
As at 28 February 2023 Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total
Accounts payable & accrued liabilities 3 655 126 - - - 3 655 126
Borrowings 1 676 219 1 165 704 1 662 683 2 002 069 - 6 506 675
Lease liability 86 256 235 677 299 590 594 106 - 1 215 629
Other financial liabilities - - - - - -
5 417 601 1 401 381 1 962 273 2 596 175 - 11 377 430
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies. The Board receives reports through which
it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out below:
Credit risk
The Group's principal financial assets are bank balances and trade and other
receivables.
Credit risk arises principally from the Group's cash and trade and other
receivables balances. Credit risk is the risk that the counterparty fails to
repay its obligation to the Group in respect of amounts owed. The Group gives
careful consideration to which organisations it uses for its banking services
in order to minimise credit risk.
The concentration of the Group's credit risk is considered by counterparty,
geography and by currency. The Group has split its cash reserves across
multiple banks in an effort to mitigate credit risk. The Pound Sterling, US
Dollar and Rand accounts are held with a bank in South Africa which has a
rating of Baa1 (Moody's) and the Namibian Dollar account is held with a bank
in Namibia with a rating of B1 (Moody's). The banks chosen remain stable and
do not present any further risks.
The concentration of credit risk was as follows:
Currency Year ended 29 February Year ended 28 February
2024 2023
£ £
Sterling 487 924 1 759 404
USD 4 631 633 3 808 714
South African Rand 1 648 399 110 625
Namibian Dollars 13 779 095 2 526 962
20 547 051 8 205 705
Credit risk relating to trade receivables has also been considered. Credit
verification procedures are undertaken for all customers with whom we trade on
credit. This includes an assessment of the credit quality of the customer,
considering its financial position, past experience and other factors. The
trade account receivables comprise a limited customer base. Ongoing credit
evaluation of the financial position of customers is performed and compliance
with credit limits by customers is regularly monitored by management. Please
refer to Note 14 for the concentration of credit risk relating to trade
receivables.
At 29 February 2024, the Group held no collateral as security against any
financial asset. The carrying amount of financial assets recorded in the
financial statements, net of any allowances for losses, represents the Group's
maximum exposure to credit risk without taking account of the value of any
collateral obtained. The Group applies IFRS 9 to measure expected credit
losses for receivables and these are regularly monitored and assessed. No
expected credit losses have been recognised on financial assets during the
year. Management considers the above measures to be sufficient to control the
credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
its financial obligations as they are all due. Ultimate responsibility for
liquidity risk management rests with the Board of Directors. The Board manages
liquidity risk by regularly reviewing the Group's gearing levels, cash flow
projections and associated headroom and ensuring that excess banking
facilities are available for future use.
An analysis of the Group's liquidity analysis based on undiscounted cash flows
is as follows:
As at 29 February 2024 Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total
(£ '000)
Accounts payable & accrued liabilities 6 972 743 - - - 6 972 743
Borrowings 935 938 3 457 368 4 089 056 4 639 282 3 397 148 16 518 792
Lease liability 78 626 226 136 287 472 253 459 - 845 693
Other financial liabilities 150 259 987 754 2 191 371 4 964 391 39 715 130 48 008 905
1 164 823 4 671 258 6 567 899 9 857 132 43 112 278 65 907 344
As at 28 February 2023 Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total
Accounts payable & accrued liabilities 3 655 126 - - - 3 655 126
Borrowings 1 676 219 1 165 704 1 662 683 2 002 069 - 6 506 675
Lease liability 86 256 235 677 299 590 594 106 - 1 215 629
Other financial liabilities - - - - -
5 417 601 1 401 381 1 962 273 2 596 175 - 11 377 429*
The Group maintains good relationships with its banks and its cash
requirements are anticipated via the budgetary process. At 29 February 2024,
the Group had £14 505 800 (FY 2023: £8 205 705) of cash reserves.
* Prior year has been restated to correctly disclose the undiscounted
cash flows for borrowings and lease liabilities.
Market risk
The Group's activities expose it primarily to the financial risk of changes in
foreign currency exchange rates, interest rates and the commodity prices.
Interest rate risk
The Group has interest bearing assets in the form of cash and cash
equivalents. The Group does not earn significant interest on the cash
balances.
The Group is exposed to interest rate risk as entities in the Group borrow
funds at both fixed and variable interest rates.
· Fixed-rate instruments: £8 295 155 (FY 2023: £0)
· Variable-rate instruments: £5 654 509 (FY 2023: £6 203 038)
Sensitivity Analysis
A change of 100 basis points in interest rates at the reporting date would
have increased/(decreased) equity and profit or loss by the amounts shown
below. This analysis assumes that all other variables remain constant.
· Increase of 100 basis points: £139 497 impact on finance costs
(FY 2023: £62 030)
· Decrease of 100 basis points: £139 497 impact on finance costs
(FY 2023: £62 030)
Foreign exchange risk
The Group has foreign currency denominated assets and liabilities and is
therefore exposed to exchange rate fluctuations. The carrying amounts of the
Group's foreign currency denominated monetary assets and liabilities, all in
Pound Sterling, are shown below.
Year ended 29 February Year ended 28 February
2024 2023
£ £
Cash and cash equivalents 14 082 465 6 446 301
Other receivables 4 123 825 1 443 280
Trade and other payables (6 673 925) (3 301 085)
Borrowings (13 949 663) (6 203 038)
Other financial liabilities (11 352 944) -
(13 770 242) (1 614 542)
The Group operates on an international basis therefore, foreign exchange risk
exposures arise from transactions denominated in foreign currencies. The Group
is exposed to foreign currency risk on fluctuations related to financial
instruments that are denominated in British Pounds, US Dollars, South African
Rand and Namibian Dollars. The Group does not enter into any derivative
financial instruments to manage its exposure to foreign currency risk.
The following table details the Group's sensitivity to a 10% increase and
decrease in the Pound Sterling against the Rand and the Namibian Dollar. 10%
is the sensitivity rate used when reporting foreign currency risk internally
to key management personnel and represents management's assessment of the
reasonable possible change in foreign currency rates. The sensitivity analysis
includes only outstanding foreign currency denominated monetary items and
adjusts their translation at year end for a 10% change in foreign currency
rates.
29 February 2024 Rand denominated monetary items Rand currency impact Rand currency impact
£ Strengthening Weakening
£ £
Assets 1 366 770 1 503 447 1 230 093
Liabilities (1 167 534) (1 284 287) (1 050 781)
199 236 219 160 179 312
(2 940 282) (3 214 509) (2 630 053)
29 February 2024 Namibian Dollar denominated monetary items Namibian Dollar currency impact Strengthening Namibian Dollar currency impact
£ £ Weakening
£
Assets 12 207 887 13 428 676 10 987 098
Liabilities (21 102 135) (23 212 348) (18 991 921)
(8 894 248) (9 783 672) (8 004 823)
29 February 2024 US Dollar denominated monetary items US Dollar currency impact Strengthening US Dollar currency impact
£ £ Weakening
£
Assets 4 613 633 5 094 797 4 168 470
Liabilities (7 553 915) (8 309 306) (6 798 523)
(2 940 282) (3 214 509) (2 630 053)
28 February 2023 Rand Rand currency impact Strengthening Rand currency impact Weakening
denominated monetary items £ £
£
Assets 137 109 150 820 123 398
Liabilities (1 147 054) (1 261 760) (1 032 349)
(1 009 945) (1 110 940) (908 951)
28 February 2023 Namibian Dollar denominated monetary items Namibian Dollar currency impact Strengthening Namibian Dollar currency impact
£ £ Weakening
£
Assets 3 943 758 4 338 133 3 549 382
Liabilities (8 357 069) (9 192 776) (7 521 362)
(4 413 311) (4 854 643) (3 971 980)
28 February 2023 US Dollar denominated monetary items US Dollar currency impact Strengthening US Dollar currency impact Weakening
£ £ £
Assets 3 934 839 4 328 323 3 541 555
Liabilities - - -
3 934 839 4 328 323 3 541 555*
* The prior year figures have been restated to be consistent with the current
year as prior year disclosure was missing.
25. EVENTS AFTER REPORTING DATE
Restructuring of Uis Tin Mining Company (Pty) Ltd (UTMC)
On 26 June 2024, the Company executed a legally binding agreement to
restructure UTMC, the operational Namibian entity that holds the Company's
licences (ML133, ML134 and ML129) (the "Licences"), to ensure a more efficient
corporate structure, subject to certain conditions. The Company sought to
increase its ownership interest in UTMC, from 85% to 100% through the
acquisition of the 15% interest currently held by the Small Miners of Uis
("SMU"). The SMU is a not-for-gain (Section 21 of the Namibian Companies Act
2004) organisation established by the Minister of Mines and Energy of Namibia
to support the economic development of Namibians in historical mining areas.
UTMC was a joint venture between SMU and Andrada's wholly owned subsidiary
Andrada Mining (Namibia) (Pty) Ltd ("Andrada Namibia") to ensure the economic
development of the Licences. The rationale of the restructuring was to
consolidate the ownership of Uis and Lithium Ridge licences, to provide
Andrada the ability to target and expedite the development of these individual
mining licences through full operational and strategic control. As part of the
transaction, Andrada Namibia would dispose of its 85% interest in Licence
ML129 to SMU. Whilst Licence ML129 (known as Spodumene Hill) no longer aligned
with Andrada's current plans, it presented a valuable opportunity for the SMU
to drive immediate development and economic growth in the Erongo region.
The SMU approved as part of the transaction, the transfer of a 5% ownership
interest in UTMC, from its original 15% ownership interest in UTMC, to Sinco
Investments Five (Pty) Limited ("Sinco"), to fulfil its mandate to further
empower Namibians and enable access to the mining industry. Andrada Namibia
had the option to acquire this 5% interest in UTMC from Sinco, as Sinco had
expressed a preference to hold Andrada listed shares. Sinco is a locally owned
and managed investment company focussed on developing mining and construction
projects within Namibia. It works with partners across the mining value chain
to advance Namibian interests.
Subsequently, on 2 August 2024 following the fulfilment of the precedent
conditions, the restructure of the ownership of UTMC was completed with the
issue of ATM shares. The SMU were issued 13 651 560 ordinary shares for the
value of NAD12 million (c£515k) for the 10% ownership acquired by the Company
and would also receive NAD18 million (c£770k) in total cash payment to be
paid by Andrada Namibia by way of 240 monthly payments of NAD75 000. In
addition, Andrada was granted an option over the 5% shares that had been
transferred to Sinco. Andrada immediately exercised its option to acquire the
remaining 5% of UTMC held by Sinco thereby taking full ownership of the
Company's Lithium Ridge and Uis mining licences (ML133 and ML134). The
exercise consideration payable was the issue by Andrada of Ordinary Shares in
the Company for a total value of NAD24 million (c£1 029 000). Accordingly,
Sinco was issued 31 148 782 ordinary shares resulting in total of 44 800 342
shares issued in pursuit of Andrada's empowerment commitment in Namibia.
Funding from Bank Windhoek
On the 6th of August 2024, the Group was granted conditional financing of
N$175 000 000 (£7 100 000). The loan term is 6 years with interest accruing
at the Namibian Prime lending rate of 11.5%, plus 1% per annum. The loan is
ranked a senior secured debt, pari passu with other senior secured debt
holders.
Hedging of tin price
On the 15th of May 2024, the Group entered into a commodity swap transaction
with Standard Bank Namibia Limited where 20 tonnes of tin have been fixed at
$33 000 per tonne. The transaction is effective from 15 May 2024 until 31 May
2025.
26. RELATED-PARTY TRANSACTIONS
Balances and transactions between the Group and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note. The remuneration of the key management personnel of the Group,
which includes the Directors, and the senior management (C-suite) is set out
below and in the remuneration implementation report.
29 February 2024 (£) Share option charge Shares to be issued in relation to Director fees/salary Board fees/ Bonus payment & accruals Other fees Total
salary
Non-Executive Directors
Glen Parsons (Chairman) 20 293 - 55 000 - - 75 293
Gida Nakazibwe Sekandi(1) 3 502 - 31 210 - - 34 712
Laurence Robb 20 293 18 000 16 587 - 24 000(3) 78 880
Michael Rawlinson 20 293 - 45 000 - - 65 293
Terence Goodlace 20 293 - 45 834 - - 66 127
Executive Director
Anthony Viljoen (CEO) 53 652⁴ - 162 456 125 091 - 341 199
Hiten Ooka (CFO) 42 338⁴ - 129 562 63 237 - 235 137
Other key management personnel
Frans van Daalen (Chief Strategy Officer)(2) 42 338 - 143 957 66 485 - 252 780
Christoffel Smith 35 202 - 129 562 63 401 - 228 165
(Chief Operations Officer)(2)
Total 258 204 18 000 759 168 318 214 24 000 1 377 586
1. Appointed NED on 10 May 2023.
2. Appointed COO & CSO on 1 January 2023.
3. Exploration consulting fees. Laurence Robb is a seasoned geology
professor at Oxford University with vast knowledge of pegmatite mineralogy. He
has valuable input to the exploration strategy across all assets.
4. Share options vest on 1 May 2026 for a period of seven year. The
Executive Directors have a holding period after vesting to 1 May 2028 before
exercising subject to additional conditions being satisfied as determined by
the Remuneration Committee.
28 February 2023 (£) Share option charge Shares to be issued in relation to Director fees/salary Director fees/ salary including bonus payment Other fees Total
Non-Executive Directors
Glen Parsons (Chairman) 36 032 55 000 91 032
Terence Goodlace 36 032 44 778 80 810
Laurence Robb 36 032 18 000 17 000 24 000 95 032
Michael Rawlinson 36 032 21 000 24 000 81 032
Executive Director
Anthony Viljoen (CEO) 90 081 360 780 450 861
Hiten Ooka (CFO)(5) 72 065 198 042 270 107
Other key management personnel
Frans van Daalen (Chief Strategy Officer) 72 065 265 894 337 959
Total 378 339 39 000 965 494 24 000 1 406 833
5 Appointed Executive Director on 10 May 2023.
27. CAPITAL COMMITMENTS
Significant capital expenditure contracted for at the end of the reporting
period but not recognised as liabilities is as follows:
Year ended 29 February Year ended 28 February
2024 2023
£ £
Exploration and evaluation projects 584 681 1 246 195
Property, plant and equipment 2 163 018 954 192
2 747 699 2 200 387
28. RESERVES WITHIN EQUITY
Share capital
Ordinary shares are classified as equity. Incremental cost directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Convertible loan note reserve
The convertible loan note reserve represents proceeds on issue of convertible
loan notes relating to equity component plus accrued interest on the
convertible loan notes. These notes were settled in full during the financial
year.
Warrant reserve
The warrant reserve represents the cumulative charge to date in respect of
unexercised share warrants at the reporting date.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge to date in
respect on unexercised share options at the reporting date as well as
fees/salaries owed to Directors/employees to be settled through the issuing of
shares.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange
differences arising from the translation of entities with a functional
currency other than Pound Sterling.
Retained earnings/accumulated deficit
The retained earnings/accumulated deficit represent the cumulative profit and
loss net of distribution to owners.
-END-
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR WPURCRUPCUAURecent news on Andrada Mining
See all newsREG - Andrada Mining Ltd - Q2 operational update for period ended 31 Aug 24
AnnouncementREG - Andrada Mining Ltd - Brandberg West First Batch Drill Results
AnnouncementREG - Andrada Mining Ltd - Andrada partners with SQM to develop Lithium Ridge
AnnouncementREG - Andrada Mining Ltd - Audited Financial Results for Year End 29 Feb 2024
AnnouncementREG - AIM - AIM Notice - 08/08/2024
Announcement