REG - Emmerson PLC - 2023 Financial Results
24/05/2024 07:00
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RNS Number : 7478P Emmerson PLC 24 May 2024
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
24 May 2024
Emmerson PLC ("Emmerson" or the "Company")
2023 Financial Results
Emmerson, the Moroccan-focused potash development company, is pleased to
announce its 2023 audited results.
2023 Highlights:
* Publication of a Scoping Study for a novel processing route developed by the
Company, which has transformed the environmental and economic credentials of
the Khemisset Project
* Obtaining approval of Environmental and Social Impact Assessment ("ESIA")
remains the priority - updated study incorporating latest optimisations
submitted in Morocco
* · Fundraise in April 2024 (including oversubscribed retail offer) raised
US$2.5 million, providing the Company with additional funds to continue
progressing work at Khemisset while waiting for the ESIA approval
Graham Clarke, CEO, commented:
"Throughout 2023, our primary focus was on obtaining environmental approval,
and this remains our priority at the present time.
"Work undertaken during 2023 also enabled us to announce, in February 2024,
the results of our Scoping Study into a new processing route which we called
the Khemisset Multi-mineral Process. As previously announced, this enhancement
reduces the Khemisset Project's environmental impact by cutting water
consumption by 50% and by eliminating the need to dispose of brines (as well
as transforming the economics of the project).
"We updated our environmental assessment to incorporate these optimisations
and submitted the document during April 2024. We are currently awaiting the
outcome of the latest review, following the upholding of the Company's
referral which resulted in the matter being returned to the Commission
Régionale Unifiée d'Investissement for reconsideration, and will provide an
update as soon as we hear news."
**ENDS**
For further information, please visit www.emmersonplc.com
(http://www.emmersonplc.com/) , follow us on Twitter (@emmerson_plc), or
contact:
Emmerson PLC +44 (0) 207 138 3204
Graham Clarke / Jim Wynn / Charles Vaughan
Liberum Capital Limited (Nominated Advisor and Joint Broker) +44 (0)20 3100 2000
Scott Mathieson / Matthew Hogg
Shard Capital LLP (Joint Broker) +44 (0)20 7186 9927
Damon Heath / Isabella Pierre
BlytheRay (Financial PR and IR) +44 (0) 207 138 3204
Tim Blythe / Megan Ray / Said Izagaren
Notes to Editors
Emmerson is focused on advancing the Khemisset project ("Khemisset" or the
"Project") in Morocco into a low cost, high margin supplier of potash, and the
first primary producer on the African continent. With an initial 19-year life
of mine, the development of Khemisset is expected to deliver long-term
investment and financial contributions to Morocco including the creation of
permanent employment, taxation, and a plethora of ancillary benefits. As a
UK-Moroccan partnership, the Company is committed to bringing in significant
international investment over the life of the mine.
Morocco is widely recognised as one of the leading phosphate producers globally, ranking third in the world in terms of tonnes produced annually, and the development of this mine is set to consolidate its position as the most important fertiliser producer in Africa. The Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24% K2O, with significant exploration potential, and is perfectly located to support the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. The need to feed the world's rapidly increasing population is driving demand for potash and Khemisset is well placed to benefit from the opportunities this presents. The Feasibility Study released in June 2020 indicated the Project has the potential to be among the lowest capital cost development stage potash projects in the world and also, as a result of its location, one of the highest margin projects. Updated financial estimates published in February 2024 indicated a net present value of US$2.2 billion, with an internal rate of return of approximately 40%.
CHAIRMAN'S STATEMENT
It gives me great pleasure to present the 2023 financial results for Emmerson
PLC ("Emmerson" or "the Company").
During 2023 and into 2024, our key priority has remained securing the approval
of the Environmental and Social Impact Assessment ("ESIA") for Khemisset.
Whilst we have not yet received this critical approval, Graham and his team
have used this extended period of time constructively, most notably with the
development of the innovative Khemisset Multi-mineral Process ("KMP"). It is
my belief that this will be seen as a seminal period for the Company, once the
true environmental, commercial, and financial benefits of KMP are more widely
recognised.
In early April 2024, we submitted the latest, and we hope final, version of
the ESIA to the Commission Régionale Unifiée de l'Investissement (the
"CRUI"), the body responsible for granting environmental approval.
We very much hope that we are now at the final stages of the approval process,
which has taken far longer than initially envisaged, and involved considerable
additional work and iterations.
Environmental approvals in the mining sector have become more demanding in
recent years, with an increasing focus on Environmental, Social, and
Governance ("ESG") issues from both investors and regulators. We have never
shied away from our obligations in this area, incorporating the highest
possible standards of ESG into our design, and into our culture, from the
outset.
In Morocco, as in many countries, there are concerns regarding water. Climate
change has led to seasonal rains becoming less reliable, resulting in droughts
in recent years, and low water levels in reservoirs and aquifers.
In the context of this challenge, during 2023 our technical teams developed an
innovative new processing method which we have called the KMP. We announced
the results of our scoping study into KMP on 1 February 2024, and we have now
included KMP in our updated ESIA, along with various other optimisations made
in the past three years to the original design.
KMP arose from the investigation into a means of cleaning and recycling brines
as an alternative to Deep Well Injection ("DWI") and resulted in a solution
that not only eliminates DWI entirely, but in so doing reduces water
consumption by 50%. We believe that the KMP can unlock significant value in
other potash deposits and have filed a patent over the process.
The KMP brings more than environmental benefits, considerable though these
are. It also transforms the Project's economics, by producing two new saleable
fertiliser products: struvite and vivianite. The existing market for these is
relatively small, as current production levels are modest. However, there is a
huge potential demand for both products, as they are essentially slow-release
multi-nutrient fertilisers, containing macro-nutrients phosphates and ammonia,
and the micro-nutrients magnesium and iron in the case of struvite and
vivianite respectively.
As part of the scoping study into KMP, we updated our financial estimates for
the Project, based on the original design, as well as based on a design
incorporating the new process route. Cost inflation since the 2020 Feasibility
Study was mitigated by some efficiency savings, and the revised estimates for
the original design held up well. However, the design incorporating KMP has
far superior economics, with a Net Present Value at 8% ("NPV(8")) of US$2.2
billion, and an Internal Rate of Return ("IRR") of close to 40%.
In what have been challenging financial markets, with modest potash prices, it
is important that new greenfield projects stand out. Khemisset incorporates an
innovative, patent-pending processing method, which allows mixed potash ore
types to be processed in a highly efficient manner, creating multi-nutrient
fertilisers as by-products. No other potash project in the world can make such
a claim, nor be as efficient with freshwater usage.
Furthermore, Khemisset has an advantageous geographical location, being
located close to the Atlantic ports of Morocco. It is also likely to be
Africa's first potash operation since the mid-1970s, which is significant as
Africa is where the challenges of food security and self-reliance are most
pressing. With the bulk of global population growth in the next 20 years,
together with fertiliser application rates that are a fraction of those in the
developed world, Africa needs to be able to feed itself and then the rest of
the world.
Obtaining our environmental approval has taken time, and we are extremely
grateful to our shareholders for their patience. I was delighted that Global
Sustainable Minerals and Gold Quay Capital supported our recent fundraise so
strongly and that we continue to enjoy a constructive partnership.
Khemisset is an outstanding potash development project and the benefits of KMP
leave Emmerson well positioned to become a uniquely sustainable source of
multi-nutrient fertiliser products, in a country which is already a major
global fertiliser hub, and a gateway to the continent with the most
identifiable growth over the medium term.
I look forward to updating you on our progress in 2024, which we hope will be
a transformational year for Emmerson.
James Kelly
Chairman
23 May 2024
CHIEF EXECUTIVE OFFICER'S STATEMENT
During 2023, the Company faced challenges, notably in respect of the progress
towards obtaining the environmental approval, but was also able to develop a
new, innovative processing route that not only dramatically improves the
environmental credentials of the Khemisset Project, but also transforms its
economics. We believe Khemisset is a genuinely unique project that will
produce, from one processing plant, fertilisers containing potash, phosphates,
and ammonia, as well as magnesium and iron.
The ESIA Approval
The primary focus for the Company in 2023 remained obtaining the approval of
its ESIA.
Some of Morocco's most significant environmental sensitivities relate to
water. Climate change has impacted the country by making seasonal rainfall
less reliable. Winter rains in recent years have been lower than historic
averages, resulting in droughts and low water levels in reservoirs, and
threatening agriculture and availability of potable water. In 2023, His
Majesty King Mohammed VI directed a series of national measures to address
this issue, which remains a focal point of government policy.
Taking into account these concerns, the Company has invested significant
efforts in this area, engaging in iterative consultations with authorities.
The work has led in many cases to concrete improvements such as switching to
dry stack tailings instead of wet, and sourcing grey water from the Khemisset
Waste Water Treatment Plant, rather than drawing from nearby rivers or
reservoirs as had previously been discussed, in addition to the substantial
improvements by the KMP.
In July 2023, we announced that the CRUI had been unable to approve our ESIA,
and the matter was referred up to the national level for review by the
Commission Ministérielle de Pilotage (The "Ministerial Committee"). This
Committee is a national body chaired by the Head of Government and is composed
of a number of ministers in government.
The Ministerial Committee was unable to sit before late January 2024;
government priorities were impacted in the intervening period by more pressing
matters such as the tragic earthquake in September 2023.
Emmerson has always maintained that the Khemisset Project has adhered to the
highest international standards in terms of environmental compliance,
including its water use, and the responsible management of waste brines and
tailings. However the Company has continued to explore optimisations to reduce
further the Project's environmental footprint, and the KMP arose from this
work.
In March 2024, the Company was informed that the Ministerial Committee had
upheld its appeal and referred the matter back to the CRUI for
reconsideration, inviting the Company to include optimisations into its latest
ESIA submission.
In April 2024, the Company submitted an updated ESIA, including the
optimisations from the KMP related to water usage and waste management.
Although the environmental and economic benefits of the KMP are considerable
(as outlined below), the changes to the processing plant are relatively
modest. The elimination of equipment and infrastructure related to DWI means
that the KMP results in a net reduction in capex and the overall footprint of
the Project, and therefore the modifications to the ESIA were straightforward.
Khemisset Multi-mineral Process ("KMP")
During 2023, the Company began to explore innovative solutions to the
management of waste brines, which, under the original design set out in the
2020 Feasibility Study (the "2020 FS"), were proposed to be safely disposed of
deep underground in porous/permeable rock structures in a process known as
DWI. DWI is an established process in many other projects, but was new to
Morocco, and while technical studies supported the robustness of the method,
it remained a point of sensitivity.
In February 2024, the Company was able to announce the results of a Scoping
Study which outlined a process enhancement, whereby magnesium and iron
chlorides in the brines would be precipitated out as struvite and vivianite
respectively, after reaction with phosphates and ammonia.
This process would then allow the brines to be recycled back into the plant,
instead of disposed of through DWI. The recirculation of brines yields a
number of benefits, notably a reduction in the overall consumption of raw
water by 50% compared with the 2020 FS, and an improvement in potash
recoveries from 85% to around 91%.
Both struvite and vivianite are slow-release multi-nutrient fertilisers, that
are expected to attract a premium price above their nutrient value. Updated
financial estimates completed as part of the KMP Scoping Study pointed to
these new products more than doubling the NPV of the Project compared to the
original design, based on relatively conservative pricing estimates from third
party market consultants.
By being slow-release, struvite and vivianite also address one of the
environmental challenges facing farmers applying phosphates. Most sources of
phosphate are highly soluble, and susceptible to being washed away by rainfall
in a process known as phosphate run-off. Not only does this result in the loss
of the nutrient benefits to farmers (who either reapply or suffer lower crop
yields), but it causes eutrophication of water courses, and algal blooms,
which can be damaging to aquatic life.
By contrast, struvite and vivianite are less soluble, releasing their
nutrients in line with demand from plants. This allows less frequent
application (a benefit for farmers), while keeping the nutrient in the fields
where it is needed, and not in rivers and lakes where it is not.
The KMP is at a Scoping Study level, but the changes to the process plant are
relatively simple and use well-established processes. It is therefore now
being adopted as the assumed production route, and while further testwork
remains (particularly around crop-specific agronomic trials), it will be
included in the planned updated Bankable Feasibility Study ("BFS") which will
be completed once environmental approval has been obtained.
Updated Financial Estimates
As part of the KMP Scoping Study, the financial estimates for the Project,
which had been last calculated as part of the 2020 Feasibility Study, were
updated on two bases: the "Original Design", assuming substantially the
original design (without KMP but including various other optimisations); and
incorporating KMP into the process route ("KMP Process Solution").
Cost inflation which has affected all capital projects inevitably led to an
increase in the capex estimate for the Project, which rose by 31% for the
Original Design, and 28% for the KMP Process Solution. Updated opex estimates,
including revised pricing assumptions for costs such as electricity, staff
costs, fuel, and transport were also factored in.
A summary of the key financial metrics of the Original Design and the KMP
Process Solution, as compared with those in the 2020 Feasibility Study, is
shown below. Further details can be found in the announcement of 1 February
2024.
Parameter (real unless stated) 2020 Feasibility Study 2023 Updates
Original Design updated KMP Process Solution
Capex US$411m US$539m US$525m
MOP Cash Cost FOB Casablanca US$147/t US$164/t US$156/t
MOP Cash Cost CFR Brazil net of salt credit US$110/t US$139/t US$133/t
All-in-Sustaining Cash Cost CFR Brazil net of salt credit US$136/t US$171/t US$163/t
Annual EBITDA (nominal) US$286m US$258m US$440m
Post Tax Cash Flow (nominal) US$3.8bn US$3.0bn US$5.9bn
Post Tax NPV(8) (nominal) US$1.4bn US$1.0bn US$2.2bn
Post Tax IRR (nominal) 40% 26% 40%
Khemisset Basic Engineering
The basic engineering work, which commenced in 2022, was largely completed
during 2023. Two engineering firms, Barr Engineering of the US, and Reminex
S.A of Morocco, lead the workstreams for the processing plant, and the balance
of the Khemisset potash project scope, respectively. At the time of writing,
the only remaining deliverables are the final reports.
Financing
In 2022, the Company announced that it had signed mandates with a syndicate of
international and Moroccan banks for a debt facility initially expected to be
US$310 million, of which US$230 million would be a tranche covered by a UK
Export Finance guarantee.
These mandates were renewed in December 2023 for a further year. This facility
will be subject to the usual due diligence and credit committee approvals, and
work will commence once the ESIA approval has been completed and the BFS
updated.
Other discussions with equity and royalty/offtake financiers have continued
but at a background level, awaiting the ESIA approvals before full engagement
is expected.
In April 2024, we announced the results of a successful share placing,
bringing in gross proceeds of US$2.5 million. Of this, Global Sustainable
Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd ("GQC") (together the
"Strategic Investors") contributed US$2.0 million and US$0.2 million
respectively, at a price of 1.75 pence per share. The Strategic Investors also
received 1:1 warrants at 3 pence per share, expiring on 31 December 2024.
In addition, we also raised US$0.3 million from our wider shareholder base at
the same price, through the REX retail platform. This offering was
significantly oversubscribed.
These funds strengthen the Company's balance sheet and will be used to
continue our work on the KMP, the ESIA process, and for general working
capital. The funds are sufficient to meet all existing obligations for over 12
months.
The further contribution from our Strategic Investors underlines their ongoing
confidence in the Project. We expect them to form a key part of the
construction funding package in due course, once we have received EIA
approval.
Potash Market
After increasing during 2021 on the back of transportation issues during the
pandemic, potash prices rose sharply during 2022 following the invasion of
Ukraine. However, this increase led to fertilisers becoming unaffordable,
despite crop prices also rising, and demand dropped off, leading to a fall in
global MOP prices which continued during 2023 and into 2024. Potash production
from sanctioned operations in Russia and Belarus also began to find ways into
new markets, particularly in Asia, alleviating supply side constrictions.
By April 2024, MOP prices had recovered to around US$315 per tonne CFR Brazil,
relatively low in the context of historic prices but improving since the start
of the year. This led to demand returning, but weather patterns in 2023
affected agriculture which moderated the impact this had on prices.
The longer-term demand story for potash remains compelling: global population
growth, changing dietary habits, and pressure on arable land usage, are all
expected to increase the demand for potash, as well as other nutrients.
New sources of potash, not least the BHP Jansen project, are expected to come
online in the next 5-10 years, but the most advanced of these are located in
the traditional production centres of central Canada, Russia, and Belarus.
Given transportation distances and ongoing sanctions, these are more likely to
serve the markets of North America and Asia, with Europe, South America, and
Africa (Khemisset's target markets) likely to remain undersupplied for the
foreseeable future.
Outlook for 2024
The priority for 2024 is to obtain approval for our updated ESIA,
incorporating the KMP optimisations, which we submitted to the Moroccan
authorities for approval in April 2024.
Depending on the outcome of the next reviews, we expect to hear from the CRUI
shortly thereafter. In view of the level of optimisations now incorporated
into the ESIA, we very much hope that approval will be forthcoming soon.
Upon receipt of this approval, we will move forwards with completing the
remaining studies on the KMP, such that it can then be incorporated into an
updated BFS, based on the original 2020 Feasibility Study, but including all
optimisations and improvements, and revised estimates, completed in the
intervening years including the workstreams completed under the Basic
Engineering. Due diligence with financiers will commence in parallel as far as
possible but will need to await the completion of the BFS, and review of its
findings, before it can be concluded.
I look forward to providing updates in 2024.
Graham Clarke
Chief Executive Officer
23 May 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Note US$'000 US$'000
Continuing operations
Administrative expenses 3 (2,664) (2,581)
Share-based payment expense 12 (335) (256)
Net foreign exchange gain/(loss) 18 (356)
Operating loss (2,981) (3,193)
Finance cost (11) -
Loss before tax (2,992) (3,193)
Income tax 5 - (5)
Loss for the year attributable to equity owners (2,992) (3,198)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange gain/(loss) on translating foreign operations 117 (45)
Total comprehensive loss attributable to equity owners (2,875) (3,243)
Earnings per share (cents)
Basic and diluted 6 (0.29) (0.34)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT
31 DECEMBER 2023
2023 2022
Note US$'000 US$'000
Non-current assets
Intangible assets 7 20,457 18,607
Property, plant and equipment 31 43
Total non-current assets 20,488 18,650
Current assets
Trade and other receivables 8 1,080 1,181
Cash and cash equivalents 1,937 6,670
Total current assets 3,017 7,851
Total assets 23,505 26,501
Current liabilities
Trade and other payables 9 (346) (1,032)
Total current liabilities (346) (1,032)
Net assets 23,159 25,469
Shareholders equity attributable to equity owners
Share capital 11 34,958 34,733
Share-based payment reserve 12 1,633 2,470
Reverse acquisition reserve 2,234 2,234
Retained earnings (15,451) (13,636)
Translation reserve (215) (332)
Total equity 23,159 25,469
These financial statements were approved by the Board on 23 May 2024 and
signed on their behalf by
Graham Clarke
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023
US$'000 Share Capital Share-based payment reserve Reverse Acquisition reserve Retained earnings Translation reserve Total equity
Balance at 1 January 2022 28,993 2,113 2,234 (10,489) (287) 22,564
Loss for the year - - - (3,198) - (3,198)
Other comprehensive income:
FX loss translating foreign operations - - - - (45) (45)
Total comprehensive loss - - - (3,198) (45) (3,243)
Fair value of share options - 256 - - - 256
Shares issued to settle obligations 25 - - - - 25
Shares issued for cash 6,106 - - - - 6,106
Cost of issuing shares - cash (267) - - - - (267)
Cost of issuing shares - warrants (283) 283 - - - -
Options/warrants exercised for cash 28 - - - - 28
Options exercised cashless 131 (131) - - - -
Transfer for options expired in 2021 - (51) - 51 - -
Balance at 31 December 2022 34,733 2,470 2,234 (13,636) (332) 25,469
Loss for the year - - - (2,992) - (2,992)
Other comprehensive income:
FX gain translating foreign operations - - - - 117 117
Total comprehensive loss - - - (2,992) 117 (2,875)
Fair value of share options - 335 - - - 335
Options/warrants exercised for cash 225 (62) - 60 - 223
Options exercised cashless - (187) - 187 - -
Warrants expired - (930) - 930 - -
Net adjustment for options cancelled - 7 - - - 7
Balance at 31 December 2023 34,958 1,633 2,234 (15,451) (215) 23,159
The nature of the share-based payment and reverse acquisition reserves are
described in note 12.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023
Notes 2023 2022
US$'000 US$'000
Cash flows from operating activities
Loss before tax (2,992) (3,193)
Adjustments
Foreign exchange 18 (205)
Taxation 5 - (5)
Share-based payment - fair value of options 12 335 256
Directors' remuneration settled in shares 12 - 25
Depreciation 3 19 (2)
Changes in working capital
Decrease/(increase) in trade and other receivables 101 (410)
Decrease in trade and other payables (719) (803)
Net cash flows used in operating activities (3,238) (4,337)
Cash flows from investing activities
Exploration expenditure 7 (1,726) (5,052)
Purchase of property, plant and equipment (7) -
Net cash flow used in investing activities (1,733) (5,052)
Cash flows from financing activities
Proceeds from issuing shares - 6,106
Cost of issuing shares - (267)
Proceeds from exercise of share options and warrants 11 225 28
Net cash flow generated from financing activities 225 5,867
Decrease in cash and cash equivalents (4,746) (3,522)
Cash and cash equivalents at beginning of year 6,670 10,032
Foreign exchange on cash and cash equivalents 13 160
Cash and cash equivalents at end of year 1,937 6,670
Significant non-cash transactions in respect of share issues are disclosed
within note 12.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023
1. General information
Emmerson PLC (the "Company") is a company incorporated and domiciled in the
Isle of Man, whose shares were admitted to the Standard Listing segment of the
Main market of the London Stock Exchange on 15 February 2017. On 27 April
2021, the Ordinary Shares of the Company were admitted to trading on AIM and
the listing of the Company's ordinary shares on the Official List and their
trading on the Main Market were cancelled.
The principal activity of the Group is the exploration, development and
exploitation of the Khemisset potash project in Morocco.
2. Basis of preparation
2.1. General
2.2. The Company and Group's Financial Statements have been prepared in accordance with UK-adopted international accounting standards ("IFRS"). The financial statements have been prepared under the historical cost convention except for the revaluation of certain financial instruments that are measured at fair value.
2.3. Functional and presentational currency
The financial information of the Group is presented in US dollars. The
functional currency of the Company changed on 1 January 2022 from GBP to US$,
reflecting the stage in development of activities whereby the cost base of the
Group changed from GBP to US$. The effect of a change in functional currency
was accounted for prospectively. All items were translated into the new
functional currency using the exchange rate at the date of the change.
The individual financial statements of each of the Company's wholly-owned
subsidiaries are prepared in the currency of the primary economic environment
in which they operate (functional currency), these being US dollar and
Moroccan Dirhams.
2.4. Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company and its subsidiaries.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over
the investee.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and profits and
losses resulting from intra-group transactions that are recognised in assets,
are eliminated in full.
All the Group's companies have 31 December as their year-end. Consolidated
financial statements are prepared using uniform accounting policies for like
transactions.
2.5. Going concern
The financial statements have been prepared on a going concern basis. The
Group has not yet earned revenues and is in the pre-construction phase of its
business. The operations of the Group are currently financed from funds raised
from shareholders and strategic investors. In common with many pre-production
entities, the Group will need to raise further funds in order to progress the
Group from the feasibility phase into construction and eventually into
production of revenues.
The Group had cash and cash equivalents of US$3.1 million at 30 April 2024 and
the Directors are of the view this is sufficient to fund the Group's
non-discretionary expenditure and maintain good title to the exploration
licences over the next 12 months from the date of approval of these financial
statements. The Company will continue to work on advancing the Khemisset
project and to commence construction as soon as practicable, however the
timing of these activities will be dependent on availability of funds.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis of accounting in
preparing the financial statements.
2.6. Changes in accounting policies
Standards, interpretations and amendments to published standards effective
from 1 January 2023
There were no new standards or interpretations effective and adopted for the
first time for the year beginning on or after 1 January 2023 that had a
significant effect on the Group's or Company's financial statements.
Standards, interpretations and amendments to published standards not yet
effective
At the date of approval of these financial statements, the following standards
and interpretations, which have not been applied in these financial
statements, were in issue but not yet effective:
· Amendments to IAS 1: Classification of current or non-current
liabilities (effective 1 January 2024);
· Amendments to IAS 1: Presentation of Financial Statements -
Non-current liabilities with covenants (effective 1 January 2024).
The effect of these new and amended standards and interpretations, which are
in issue but not yet mandatorily effective, is not expected to be material.
2.7. Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that
are subject to risks and returns that are different from those of segments
operating in other economic environments.
The Directors are of the opinion that the Group is engaged in a single segment
of business being the exploration and development of potash in one
geographical area, being Morocco.
2.8. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another.
(a) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently
measured at amortised cost, fair value through other comprehensive income
("OCI"), or fair value through profit and loss.
The classification of financial assets at initial recognition that are debt
instruments depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them. The Group
initially measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost
or fair value through OCI, it needs to give rise to cash flows that are
'solely payments of principal and interest ("SPPI")' on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.
The Group's business model for managing financial assets refers to how it
manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in
four categories:
· Financial assets at amortised cost (debt instruments)
· Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
· Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments)
· Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial
assets at amortised cost if both of the following conditions are met:
· The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual cash flows;
and
· The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the
effective interest rate ("EIR") method and are subject to impairment. Interest
received is recognised as part of finance income in the statement of profit or
loss and other comprehensive income. Gains and losses are recognised in profit
or loss when the asset is derecognised, modified or impaired. The Group's
financial assets at amortised cost include trade receivables (not subject to
provisional pricing) and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised (i.e.,
removed from the Group's consolidated statement of financial position) when:
· The rights to receive cash flows from the asset have expired; or
· The Group has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a 'pass-through' arrangement;
and either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred
control of the asset.
Impairment of financial assets
The Group recognises an allowance for expected credit losses ("ECLs") for all
debt instruments not held at fair value through the profit and loss. For trade
receivables (not subject to provisional pricing) and other receivables due in
less than 12 months, the Group applies the simplified approach in calculating
ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in
credit risk, but instead, recognises a loss allowance based on the financial
asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are
90 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group.
A financial asset is written off when there is no reasonable expectation of
recovering the contractual cash flows and usually occurs when past due for
more than one year and not subject to enforcement activity. At each reporting
date, the Group assesses whether financial assets carried at amortised cost
are credit-impaired. A financial asset is credit-impaired when one or more
events that have a detrimental impact on the estimated future cash flows of
the financial asset have occurred.
(b) Financial liabilities
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs. The Group's financial liabilities
include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as
described below:
· Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative
financial instruments entered into by the Group that are not designated as
hedging instruments in hedge relationships as defined by IFRS 9. Separated
embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. Gains or losses on liabilities
held for trading are recognised in the statement of profit or loss and other
comprehensive income.
· Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings and trade and
other payables are subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in the statement of profit or loss and
other comprehensive income when the liabilities are derecognised, as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss
and other comprehensive income. This category generally applies to trade and
other payables.
Derecognition
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
profit or loss and other comprehensive income.
(c) Financial liabilities
Liabilities within the scope of IFRS 9 are classified as financial liabilities
at fair value through profit and loss or other liabilities, as appropriate.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised
initially at fair value and subsequently at amortised cost.
2.9. Taxation
Current taxes are based on the results shown in the financial statements and
are calculated according to local tax rules, using tax rates enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial
statements, determined using tax rates that are expected to apply when the
related deferred tax asset or liability is realised or settled. Deferred tax
assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can
be utilised.
2.10. Intangible assets - exploration and evaluation expenditure
Exploration expenditure comprises all costs which are directly attributable to
the exploration of a project area.
When it has been established that a mineral deposit has development potential,
all costs (direct and applicable overheads) incurred in connection with the
exploration and development of the mineral deposits are capitalised until
either production commences, or the project is not considered economically
viable.
In the event of production commencing, capitalised costs in respect of the
asset are transferred into Tangible Fixed Assets, and are depreciated over the
expected life of the mineral reserves on a unit of production basis. Other
pre-trading expenses are written off as incurred.
For the purposes of impairment testing, intangible assets are allocated to
specific projects with each licence and reviewed annually. Where a project is
abandoned or is considered to be of no further interest, the related costs are
written off.
Intangible assets are not subject to amortisation and are tested annually for
impairment, where indicators of impairment are considered to be present in
accordance with IFRS 6. The recoverability of all exploration costs, licenses
and mineral resources is dependent on the ability of the Group to obtain
necessary financing to complete the development of reserves and future
profitable production, or proceeds from the disposition thereof.
2.11. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash
equivalents includes cash on hand and deposits held at call with financial
institutions.
2.12. Foreign currencies
Assets and liabilities in foreign currencies are translated into US$ at the
rates of exchange ruling at the Statement of Financial Position date.
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of the transaction. Exchange differences are
taken into account in arriving at the operating result.
On consolidation of a foreign operation, assets and liabilities are translated
at the closing rate at the date of the Statement of Financial Position. Income
and expenses for each Statement of Comprehensive Income presented are
translated at average exchange rates. All resulting exchange differences are
recognised in other comprehensive income and accumulated in equity.
2.13. Share-based payment arrangements
The Group operates equity-settled, share-based compensation plans, under which
the entity receives services from employees as consideration for equity
instruments (options) of the Group. The fair value of employee services
received in exchange for the grant of share options are recognised as an
expense. The total expense to be apportioned over the vesting period is
determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance
vesting conditions; and
· including the impact of any non-vesting conditions.
Any non-market performance and service conditions are included in assumptions
about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each reporting
period the Group revises its estimate of the number of options that are
expected to vest.
The Group recognises the impact of the revision of original estimates, if any,
in profit or loss, with a corresponding adjustment to equity.
When options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
The fair value of goods or services received in exchange for shares is
recognised as an expense and included within administrative expenses.
2.14. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements, are disclosed below:
a) Recoverability of intangible assets
The Group tests annually for impairment or more frequently if there are
indications that the intangible assets might be impaired.
IFRS 6 requires entities recognising exploration and evaluation assets to
perform an impairment test on those assets when specific facts and
circumstances indicate an impairment test is required. The assessment involves
judgement as to the status of licenses and the likelihood of renewal of
exploration licenses which expire in the near future. Where impairment
indicators are present, the Group is required to evaluate the future cash
flows expected to arise from the cash-generating unit and the suitable
discount rate in order to calculate the present value.
The carrying value of Group's exploration and evaluation intangible assets at
31 December 2023 was US$20.5 million (2022: US$18.6 million), which relates to
the Khemisset project.
The Directors therefore undertook an assessment of the following areas and
circumstances that could indicate the existence of impairment in accordance
with IFRS 6:
· The Group's right to explore in an area has expired, or will expire
in the near future without renewal;
· No further exploration or evaluation is planned or budgeted for;
· A decision has been taken by the Board to discontinue exploration and
evaluation in an area due to the absence of a commercial level of reserves; or
· Sufficient data exists to indicate that the book value will not be
fully recovered from future development and production.
The Board has reviewed the project for indicators of impairment and is
satisfied that the prospects of deriving economic value are likely to be
considerably in excess of the carrying value of the asset in the accounts.
In arriving at this conclusion, the Directors considered the ongoing
commitment to the project, the economic metrics of the project as set out in
the 2020 Feasibility Study, as well as the valuation enhancements indicated by
the scoping study announced in February 2024 in relation to the new processing
route.
Following their assessment, the Directors concluded that no impairment charge
was necessary for the year ended 31 December 2023.
b) Share-based payments
The Group has made awards of options on its unissued share capital to certain
Directors and employees as part of their remuneration package.
The valuation of these options involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life of the
options and interest rates. These assumptions are described in more detail
in note 12.
There was a charge to the Statement of Comprehensive Income during the year in
relation to share based payments of US$335k (2022: US$256k).
d) Going concern
In their assessment of going concern, the Directors have prepared cash flow
forecast showing the Group's non-discretionary expenditure obligations, as
well as discretionary activities.
The Group has sufficient cash reserves to cover non-discretionary expenditure
beyond the Going Concern horizon of at least 12 months from the date of this
report, and accordingly the Board believe the Going Concern basis to be
appropriate for the preparation of the 2023 Financial Statements.
e) VAT recoverable in Morocco
Included in Trade and Other Receivables is a balance of 9.1 million MAD
(US$0.9 million) relating to VAT on exploration and other development
expenditure. Although there is no time limit on eligibility for reclaiming
VAT, this amount will not be recoverable until the Khemisset project is
revenue-generating. The Board is of the view that the Khemisset project will
be constructed and will generate more than sufficient revenues to allow this
balance to be recovered in full.
3. Expenses by nature
2023 2022
US$'000 US$'000
Directors' fees (note 4) 581 601
Depreciation 19 -
Travel and accommodation 30 99
Auditor's remuneration 51 48
Employment costs 837 627
Professional and consultancy fees 776 715
Other costs 370 491
Administrative expenses 2,664 2,581
4. Directors' remuneration
Details of Directors' remuneration during the year are as follows:
2023 2022
US$'000 US$'000
Graham Clarke 332 348
James Kelly 99 117
Rupert Joy 50 55
Hayden Locke 50 35
Robert Wrixon 50 46
Total 581 601
Robert Wrixon (and, in 2022, Hayden Locke) also received fees for consultancy
services which are disclosed within note 15. During 2022, certain Directors
received share options and shares as part of their remuneration (see note 12).
5. Income tax
2023 2022
US$'000 US$'000
Current tax:
Tax - (5)
Total taxation charge - (5)
Reconciliation of income
tax
2023 2022
US$'000 US$'000
Loss before tax (2,992) (3,193)
Loss before tax multiplied by domestic tax rates applicable to losses in the (573) (531)
respective countries
Effects of:
IFRS consolidation adjustments 11 (195)
Disallowed expenditures 3 21
Tax losses used up (14) (28)
Foreign tax attributes - -
Minimum tax charges - (5)
Losses on which no deferred tax is recognised 573 733
Total taxation charge - (5)
The weighted average applicable tax rate was 19.2% (2022: 16.6%). Emmerson PLC
is registered for taxation in the United Kingdom, where the corporation tax
rate was 19%. Morocco has a 20% tax rate applicable to mining companies,
including Emmerson's Moroccan subsidiaries, while the British Virgin Islands
have a tax rate of 0%.
A deferred tax asset has not been recognised in respect of deductible
temporary differences relating to certain losses carried forward at the year
end, as there is insufficient evidence that taxable profits will be available
in the foreseeable future against which the deductible temporary difference
can be utilised.
The unrecognised deferred tax asset for the Group was approximately US$2,361k
(2022: US$1,806K). The unrecognised deferred tax asset relating to Moroccan
tax losses amounted to approximately US$97k (2022: US$109k).
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
2023 2022
Loss from continuing operations for the year attributable to the equity (2,992) (3,198)
holders of the Company (US$'000)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and 1,021,272,676 939,716,598
diluted earnings per share
Basic and diluted loss per share 0.29 cents 0.34 cents
The potential number of shares which could be issued following the exercise of
options and warrants currently outstanding amounts to 73,163,000 (see note
12). Dilutive earnings per share equals basic earnings per share as, due to
the losses incurred, there is no dilutive effect from the existing share
options and warrants.
7. Intangible assets
The intangible assets consist of capitalised exploration and evaluation
expenditure in respect of the Company's potash interests in Morocco (the
Khemisset project).
2023 2022
US$'000 US$'000
Cost:
At the beginning of the year 18,607 13,555
Additions 1,726 5,052
FX 124 -
Total 20,457 18,607
Intangible assets are reviewed at each reporting date to determine whether
there is objective evidence of impairment. See note 2.13 detailing the
Company's judgement in this area.
8. Trade and other receivables
2023 2022
US$'000 US$'000
Other receivables 1,010 1,097
Prepayments 70 84
Total 1,080 1,181
Other receivables include recoverable VAT and other taxes.
9. Trade and other payables
2023 2022
US$'000 US$'000
Other payables 217 635
Accruals 129 397
Total 346 1,032
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business. Accounts payable are
classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised initially
at fair value, and subsequently measured at amortised cost using the effective
interest method. Other payables consist of supplier invoices for
administration expenses.
In addition to trade creditors, the Company also had contractual commitments
totalling US$0.3 million with Barr Engineering, and US$0.4 million (4 million
MAD) with Reminex. Both of these amounts relate to basic engineering contracts
signed in 2021, and which are yet to be completed.
10. Financial instruments
Categories of financial instruments
2023 2022
US$'000 US$'000
Financial assets measured at amortised cost
Other receivables 1,080 1,097
Cash and cash equivalents 1,937 6,670
3,017 7,767
Financial liabilities measured at amortised cost
Other payables 217 635
Financial risk management objectives and policies
The Company is exposed through its operations to credit risk and liquidity
risk. In common with all other businesses, the Company is exposed to risks
that arise from its use of financial instruments. This note describes the
Company's objectives, policies and processes for managing those risks and the
methods used to measure them. Further quantitative information in respect of
these risks is presented throughout this financial information.
General objectives, policies and processes
The Directors have overall responsibility for the determination of the
Company's risk management objectives and policies. Further details regarding
these policies are set out below:
Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The capital structure of the Group consists of issued capital, reserves and
retained earnings. The Directors reviews the capital structure on a
semi-annual basis. As a part of this review, the Directors consider the cost
of capital, the risks associated with each class of capital and overall
capital structure risk management through the new share issues and share
buy-backs as well as the issue of new debt or the redemption of existing debt.
The management's strategy remained unchanged from 2022.
Market price risk
The development and success of any project of the Group will be primarily
dependent on the future price of potash. Potash prices are subject to
significant fluctuation and are affected by a number of factors which are
beyond the control of the Company. Future production from the Khemisset
Project is dependent on potash prices that are adequate to make the project
economic. After increasing significantly following supply disruption in the
wake of the Russian invasion of Ukraine, potash prices fell during 2023.
Long-term demand for potash, as a fertiliser, is expected to continue to grow,
driven by population growth, changing dietary habits, and increasing pressure
on land usage, however short-term volatility remains possible.
Credit risk
The Company's credit risk arises from cash and cash equivalents with banks and
financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "A" are accepted.
Liquidity risk
Liquidity risk arises from the Directors' management of working capital. It is
the risk that the Company will encounter difficulty in meeting its financial
obligations as they fall due.
The Directors' policy is to ensure that the Company will always have
sufficient cash to allow it to meet its liabilities when they become due. To
achieve this aim, the Directors seek to maintain a cash balance sufficient to
meet expected requirements.
The Directors have prepared cash flow projections on a monthly basis through
to 31 December 2025. At the end of the period under review, these projections
indicated that the Group is expected to have sufficient liquid resources to
continue in operational existence and meet its obligations under all
reasonably expected circumstances.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures. Foreign exchange risk arises from
future commercial transactions, recognised monetary assets and liabilities and
net investments in foreign operations. The consolidated accounts use US$ as a
presentational currency, and from 1 January 2022, Emmerson PLC (the parent
company) determined that US$ was the appropriate functional. The Group's
Moroccan entities use MAD as their functional currency.
Net current assets denominated in MAD at the year-end amounted to US$1.0
million and net liability of US$0.18 million respectively.
2023 2022
US$'000 US$'000
Net current assets
Trade and other receivables 960 1,051
Prepayments 4 8
Cash and cash equivalents 53 52
1,017 1,111
Net current liabilities
Trade and other payables 119 169
Accrual 65 273
184 442
At 31 December 2023, had the exchange rate between the US$ and MAD increased
or decreased by 5% with all other variables held constant, the increase or
decrease respectively in net assets would amount to approximately US$42k.
The Group does not hedge against foreign exchange movements.
11. Share capital
The Ordinary Shares issued by the Company have no par value and are fully
paid. Each Ordinary Share carries one vote on a poll vote. The Company does
not have a limited amount of authorised capital.
Number of shares US$'000
As at 31 December 2022 1,014,493,224 34,733
Share options exercised in year for cash 6,000,000 225
Share options exercised in year cashless 6,250,000 -
As at 31 December 2023 1,026,743,224 34,958
12. Share-based payments
The following is a summary of the share options as at 31 December 2023:
Date of grant Expiry date Vesting date Exercise Price No of Options Share price at grant Risk Free rate Volatility Option Value
26-Mar-19 24-Mar-24 26-Mar-20 £0.035 3,900,000 £0.0400 2.10% 68% £0.0242
26-Mar-19 24-Mar-24 26-Mar-20 £0.050 3,000,000 £0.0400 2.10% 68% £0.0192
07-Aug-19 05-Aug-24 07-Aug-19 £0.050 1,500,000 £0.0375 2.10% 58% £0.0192
01-Aug-20 31-Jul-25 01-Aug-20 £0.060 9,500,000 £0.0435 1.10% 71% £0.0219
01-Aug-20 31-Jul-25 01-Aug-20 £0.100 9,250,000 £0.0435 1.10% 71% £0.0169
01-Aug-20 31-Jul-25 01-Aug-21 £0.001 500,000 £0.0435 1.10% 71% £0.0177
01-Aug-20 31-Jul-25 01-Aug-21 £0.050 1,000,000 £0.0435 1.10% 71% £0.0134
01-Aug-20 31-Jul-25 01-Aug-21 £0.060 7,000,000 £0.0435 1.10% 71% £0.0091
01-Aug-20 31-Jul-25 01-Aug-21 £0.070 2,000,000 £0.0435 1.10% 71% £0.0085
01-Aug-20 31-Jul-25 01-Aug-21 £0.100 10,083,333 £0.0435 1.10% 71% £0.0070
01-Aug-20 31-Jul-25 01-Aug-22 £0.001 1,000,000 £0.0435 1.10% 71% £0.0089
01-Aug-20 31-Jul-25 01-Aug-22 £0.050 1,000,000 £0.0435 1.10% 71% £0.0049
01-Aug-20 31-Jul-25 01-Aug-22 £0.070 2,000,000 £0.0435 1.10% 71% £0.0042
01-Aug-20 31-Jul-25 01-Aug-22 £0.100 3,333,333 £0.0435 1.10% 71% £0.0035
01-Aug-20 31-Jul-25 01-Aug-23 £0.100 3,333,334 £0.0435 1.10% 71% £0.0023
21-Jul-22 20-Jul-32 15-Mar-23 £0.070 1,000,000 £0.0700 2.05% 55% £0.0457
21-Jul-22 20-Jul-32 15-Mar-23 £0.100 1,500,000 £0.0700 2.05% 55% £0.0410
21-Jul-22 20-Jul-32 15-Mar-23 £0.150 1,333,333 £0.0700 2.05% 55% £0.0352
21-Jul-22 20-Jul-32 15-Mar-24 £0.070 1,000,000 £0.0700 2.05% 55% £0.0457
21-Jul-22 20-Jul-32 15-Mar-24 £0.100 1,500,000 £0.0700 2.05% 55% £0.0410
21-Jul-22 20-Jul-32 15-Mar-24 £0.150 1,333,333 £0.0700 2.05% 55% £0.0352
21-Jul-22 20-Jul-32 15-Mar-25 £0.150 1,333,334 £0.0700 2.05% 55% £0.0352
21-Jul-22 21-Jul-27 20-Jul-24 £0.070 1,500,000 £0.0700 2.05% 55% £0.0342
21-Jul-22 20-Jul-32 20-Jul-24 £0.070 4,263,000 £0.0700 2.05% 55% £0.0457
Total outstanding at 31 December 2023 73,163,000
Share options Warrants Total
At 1 January 2022 96,900,000 82,725,047 179,625,047
Issued in year 15,013,000 50,000,000 65,013,000
Exercised in year (13,500,000) (333,333) (13,833,333)
At 31 December 2022 98,413,000 132,391,714 230,804,714
Exercised in year (25,000,000) - (25,000,000)
Expired/cancelled in year (250,000) (132,391,714) (132,641,714)
At 31 December 2023 73,163,000 - 73,163,000
The weighted average remaining contractual life of the options at year-end was
2.74 years
The options and warrants issued were valued using the Black-Scholes valuation
method and the assumptions used are detailed above. The expected future
volatility has been determined by reference to the historical volatility.
The Group operates equity-settled, share-based compensation plans, under which
the entity receives services from Directors and employees as consideration for
equity instruments (options) of the Group.
During 2022, James Kelly and Rupert Joy received 218,406 and 66,371 shares
respectively at a VWAP of 7.1 pence (total value US$25k) as part of their
contractual remuneration. No shares were issued during 2023.
The total share-based payment recognised in the Statement of Changes in Equity
during the year was a US$335k (2022: US$256k), in respect of the fair value of
employee share options.
There were 47,263,000 (2022: 53,763,000) options at the year-end held by
current Directors and employees at year end. Vesting of the options is
subject to the option holder providing continuous service during the vesting
period and there are no other performance conditions attached to the options.
Share options 2023 2022
Number issued Expiry Number issued Expiry
Graham Clarke (Director) 19,321,000 1 to 8 years 19,321,000 2 to 9 years
Hayden Locke (Director) 10,000,000 1 year 10,000,000 2 years
Robert Wrixon (Director) 5,000,000 1 year 11,000,000 1 to 2 years
Jim Wynn (PDMR) 9,000,000 8 years 9,000,000 9 years
Other employees 3,942,000 1 to 8 years 4,442,000 2 to 9 years
Total 47,263,000 53,763,000
13. Reserves
The following table describes the nature and purpose of various reserves
within owner's equity:
Share-based payment reserve Credits related to share-based payment
Reverse acquisition reserve Values related to the reverse acquisition of Emmerson PLC by Moroccan Salts
Ltd in 2018
14. Future rental payments
The commitments arising from operating leases are largely rental payments for
buildings. The future minimum lease payments (payables) under non-cancellable
operating leases are:
2023 2022
US$'000 US$'000
Within one year 24 23
More than one year - -
As at end of year 24 23
15. Related party transactions
Directors' consultancy fees
Robert Wrixon is a Director of the Company and also provides consulting
services to the Company. During the year, Robert Wrixon received fees of
US$30K (2022: US$71k). The amount outstanding as at the year-end was US$ nil
(2022: US$ nil).
Hayden Locke is a Director of the Company and is a Director of Benson Capital
Limited, which provided consulting services to the Company during 2022. During
2023, Benson Capital Limited received no fees (2022: US$95k). There was no
amount outstanding as at the year-end (2022: US$9K).
Details of Directors' remuneration during the year are given in note 4.
There were no other related party transactions.
16. Ultimate controlling party
The Directors consider that there is no controlling or ultimate controlling
party of the Company.
17. Events after the reporting date
On 8 April 2024, the Company raised gross proceeds of US$2.5 million through
the placing of 121.3 million ordinary shares at a price of 1.75 pence per
share. US$2.2 million of this amount was placed through Global Sustainable
Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd ("GQC") (together the
"Strategic Investors"), who subscribed for US$2.0 million and US$175k
retrospectively. The Strategic Investors also received 1:1 share warrants at
an exercise price of 3 pence per share, expiring on 31 December 2024. The
balance of the funding (US$0.3 million) was raised with other shareholders
through the REX retail platform.
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