TIDMIRON
RNS Number : 3768X
Ironveld PLC
20 December 2023
Ironveld Plc
("Ironveld" or the "Company")
Final Results for the year ended 30 June 2023
Ironveld plc, ("Ironveld" or the "Company"), the AIM traded
mining development company, and the owner of a High Purity Iron
("HPI"), Vanadium and Titanium project located on the Northern Limb
of the Bushveld Complex in Limpopo Province, South Africa (the
"Project") announces its final results for the 12 months ended 30
June 2023. Hard copies of these results will be posted to
shareholders by 31 December 2023.
Operational and Financial
-- Rustenburg smelter refurbished and mining activities
commenced during the period, marking Ironveld's first steps from
development to production; and
-- Initial production achieved at smelter, but operational
challenges and modifications delayed anticipated ramp up post
period end in late 2023.
Post Period End and Outlook
-- Following a fundraising post period end in October 2023, Dr
John Wardle was appointed Executive Chairman and commissioned full
review of strategy, overhead costs and priorities;
-- Decision taken to remove rented electrical generators and
replace with similar capacity, but significantly lower cost, units
on hire purchase in early 2024. Until these generators are
installed, the smelter has been placed on care and maintenance to
minimise costs and conserve cash; and
-- Direct institutional funding transaction is well advanced and
expected to close in early 2024 which, if concluded, will enable
substantial investment in all Group operations, including
transition to production of high purity iron powders.
For further information, please contact:
Ironveld plc c/o BlytheRay
+44 20 7138 3204
Martin Eales, Chief Executive Officer
Cavendish (Nomad and Broker)
Derrick Lee / Charlie Beeson / George Dollemore +44 20 7220 0500
Turner Pope (Joint Broker)
Andrew Thacker / James Pope +44 20 3657 0050
BlytheRay
Tim Blythe / Megan Ray +44 20 7138 3204
NOTES TO EDITORS
Ironveld (IRON.LN) is the owner of Mining Rights over
approximately 28 kilometres of outcropping Bushveld magnetite with
a SAMREC compliant ore resource of some 56 million tons of ore
grading 1.12% V2O5, 68.6% Fe2O3 and 14.7% TiO2.
In 2022 Ironveld agreed to acquire and refurbish a smelter
facility in Rustenburg, South Africa, in which it can process its
magnetite ore into the marketable products of high purity iron,
titanium slag and vanadium slag. This transaction became
unconditional in March 2023.
Ironveld is an AIM traded company. For further information on
Ironveld please refer to www.ironveld.com .
CHAIRMAN'S STATEMENT
Dear Shareholder,
I am pleased to present the Annual Report and the Financial
Statements for the year to 30 June 2023.
This is my first Chairman's Statement at Ironveld. I joined the
Board in November 2022 and was appointed to the role of Executive
Chairman in November 2023, taking over as Chairman from Giles
Clarke. I am delighted that Giles has remained on the Board as a
Non-Executive Director and will continue to share his invaluable
experience. As a long term substantial shareholder in the Company
my interests in seeing the project develop and maximise its
potential are fully aligned with all our stakeholders.
During the period, we undertook our first steps from being a
development project to becoming a producing company.
In May 2022, just prior to the end of the last financial year,
the Company announced that it had agreed terms with a business
rescue practitioner and a sole creditor to acquire an existing
smelter in Rustenburg, South Africa for a total of ZAR 116 million
(approximately GBP4.9 million), with ZAR 16 million (approximately
GBP675,000) payable following completion with the balance of ZAR
100 million (approximately GBP4.3 million) repayable from smelter
cashflows over 10 years. The Company then completed a Placing to
raise gross proceeds of GBP4.5 million in August 2022 and work
commenced to apply these proceeds to the costs of refurbishing the
smelter and commencing mining activities.
The Company was able to announce in January 2023 that the first
furnace of three at the smelter had been repaired and had
successfully test processed magnetite ore. A further GBP2.0 million
gross proceeds was raised in March 2023 by way of an equity placing
to assist with the ongoing repairs to the smelter and for working
capital purposes.
Some initial sales were recognised from the smelter just prior
to period end, both processed ore and non-core scrap items from the
facility.
Post period end the smelter operations had to address a number
of issues, including the repair of the granulator and securing
additional generator power, that impacted planned ramp up of
production from the facility. Around the same time a test project
to process third party ferro-silicon slag metal was successfully
completed which demonstrated the flexibility of the smelter
equipment. In November 2023, the Company completed a further
fundraising with gross proceeds of GBP1.0 million in which I again
participated. Following this fundraising I was appointed as
Executive Chairman.
In addition, the Company has formed a DMS Magnetite joint
venture with Pace SA, named IPace, which secured capital funding
from Sable Exploration and Mining in September 2023 to develop a
business to crush and magnetically separate ore directly from the
Company's mining operations for direct sale to end users. At the
time of writing, this project is well advanced but commencement of
activities has been impacted by extended delivery times for
critical electrical components and the first production is expected
late January.
The Board believes that the smelter facility, once fully
operational, represents the best opportunity for the Company to
maximise value from its magnetite ore as it allows for the
opportunity to process the ore into higher value metal products,
namely high purity iron, vanadium slag and titanium slag. Following
the initial refurbishment of the smelter, it was the Board's stated
intention to invest further in capital equipment which will enable
production of higher value iron powders. This is still the
intention and, as announced in September and October 2023, the
Company is engaged in direct funding discussions with a financial
institution which, if completed, would allow for the opportunity to
advance the project in this manner.
One of my key objectives since assuming the role of Executive
Chairman last month has been to analyse all of the Group's overhead
costs in the UK and South Africa and to make cost savings wherever
possible. Earlier this month we took the decision to suspend
operations at the Rustenburg smelter until all of the rented
electrical generation units delivered in September and October 2023
could be replaced by dual-fuel units on hire purchase basis. These
new units offer attractive benefits in terms of both cost and
efficiency, being less expensive than rental units whilst offering
a dual-fuel capability. Based on the hire purchase financing term
sheet received by the Company from the supplier, this should result
in annual savings of around ZAR 40 - 50 million (GBP1.7 - GBP2.1
million) compared with the rental costs of the previous units. The
smelter plant is now secure and operating with a reduced staff
headcount until the new generators are expected be delivered,
alongside the institutional financing transaction, early in 2024. I
believe that this exercise, alongside a similar review of UK
overheads, will realise material benefits to the Group's ongoing
cost levels in the second half of the current financial year.
We remain committed to operating responsibly, working closely
with stakeholders and local communities at grassroots level to
improve standards of living. Our local communities have been fully
involved in the process to establish the mining area and have
provided all necessary consents. As part of our Social Labour Plan
(approved by the Department of Mineral Resources ("DMR") in South
Africa) we have undertaken to implement water supply schemes,
electrification upgrades and roads and stormwater infrastructure to
the municipalities of our mining communities. In addition, Ironveld
has committed to provide training, bursaries and employment to the
members of the various host communities.
Dr John Wardle
Executive Chairman
19 December 2023
STRATEGIC REPORT
Financial
The Group recorded a loss before tax of GBP1.2 million (2022:
GBP0.8 million) in the Period. The Company does not plan to pay a
dividend for the year ended 30 June 2023. To date the board has
been focussed on bringing the Company to the point of production
and related activities. In future periods the directors expect that
KPIs for the business will be focussed more on operational matters
including production, revenue, profitability and the safe and
efficient operation of the smelter complex. Appropriate KPIs will
be included in future periods.
Going concern
As at the date of these Financial Statements the direct funding
transaction announced by the Company in September and October 2023
is well advanced but not yet concluded, however the Directors have
a reasonable expectation that it will do so in early 2024.
Taking account of the funds referred to above and the planned
investment into expanding operations at the smelter plant, these
Financial Statements have been prepared on a Going Concern
basis.
Outlook
The Company expects to close a significant financing transaction
early in 2024 which should provide the funding required to
materially develop current operations at the smelter, which has not
yet operated in line with initial expectations.
We would like to thank all of our shareholders for their
continuing support for both the Company and the project and we look
forward to providing further updates in the near future.
Principal risks and uncertainties
The Directors consider the following risks to be the most
material or significant for the management of the business. These
issues do not purport to be a complete list or explanation of all
the risks facing the Group. In particular the Group's performance
may be affected by changes in market and/or economic conditions,
changes in legal, regulatory or tax requirement legislation.
The Board of Directors monitors these risks and the Group's
performance on a regular basis.
Operational risks - The production of the Company's range of
metals involves a series of processes, from the mining of the ore
at the mine site, to the smelting of material at the Rustenburg
smelter. Mining and Smelting operations are subject to a number of
risks, including mechanical outages, supply issues (e.g. fuel),
interruptions due to weather and soil conditions, among many
others.
Availability of finance - Expansion of current activities or
further development and production from the ore resources requires
significant further capital expenditure and the Group will need to
raise further finance. The terms on which future funds can be
raised may not be on terms which the Directors consider acceptable.
The Group is listed on the public markets which greatly assists in
the raising of additional finance.
Governance and Compliance - There are multiple governance-based
risks which may have an impact on the business. The Group operates
within a complex regulatory environment which focuses on
accountability. Failure to comply with regulations, including
applicable licences required for continuous operations, or failure
to follow expected social and business conduct could cause
potential interruption or stoppage of operations, potential
financial loss and reputational damage.
Health and Safety - Mining and Smelting operations by their very
nature are dangerous working environments which, if not managed,
could lead to serious injuries and a loss of life.
Commodity Markets - A significant decrease in commodity prices
for high purity iron, vanadium or titanium would negatively impact
Group revenues.
Inflation - The Group's cost base is highly susceptible to
inflationary pressures. In cycles of high commodity prices, input
costs, such as wages, consumables, diesel and energy often increase
at a rate higher than that of general inflation. Rising costs,
which could be triggered by and therefore offset by higher
commodity prices, have a direct impact on the Group's
profitability. In addition, inflationary pressures have an impact
on capital expenditure.
Political and Country risk - Substantially all of the Group's
business and operations are conducted in South Africa and the
political, economic, legal and social situation in South Africa
introduces a certain degree of risk with respect to the Group's
activities.
s172 Statement - Director's statement in performance of their
statutory duties in accordance with s172 (1) Companies Act 2006
During the year ended 30 June 2023 the Board of Directors
consider that they have acted in a way that would be most likely to
promote the success of the company for the benefit of its members
(having regard to the stakeholders and the matters set out in
s172(1)(a)-(f) of the Companies Act 2006).
The Board has elected to apply the Quoted Company Alliance
Corporate Governance Code as part of its commitment to high
standards of corporate governance in all of its activities and
complies with its requirements as far as is practicable and
appropriate for a company of its nature and size.
The Directors are aware of their responsibilities to take into
consideration the interests of all stakeholders in their decision
making process and to promote the success of the Company in
accordance with s172. The Directors continue to pay full regard to
the interests of the stakeholders.
The requirements of s172 are for the Directors to:
-- Consider the likely consequences of any decision in the long
term,
-- Act fairly between the members of the Company,
-- Maintain a reputation for high standards of business
conduct,
-- Consider the interests of the Company's employees,
-- Foster the Company's relationships with suppliers, customers
and others, and
-- Consider the impact of the Company's operations on the
community and the environment.
The Company is quoted on AIM and its members will be fully
aware, through detailed announcements, shareholder meetings and
financial communications, u pdate d on the website, of the Board's
broad and specific intentions and the rationale for its decisions.
When making decision, the Board of Directors, issues such as the
impact on the community and the environment have actively been
taken into consideration. The Company pays its employees and
creditors promptly and keeps its costs to a minimum to protect
shareholders funds. The Company recognises workers' representation
unions and complies with all local employment legislation.
The key decisions made in the year to promote this success are
explained in the Strategic Report above.
This report was approved by the Board on 19 December 2023 and
signed on its behalf by:
Dr John Wardle
Executive Chairman
CONSOLIDATED INCOME STATEMENT
2023 2022
Note GBP000 GBP000
Revenue 4 103 -
Cost of sales (29) -
Gross profit 74 -
Administrative expenses (1,310) (798)
Operating loss 5 (1,236) (798)
Other gains and losses 7 47 -
Investment revenues 8 34 4
Finance costs 9 (15) (17)
Loss before tax (1,170) (811)
Tax 10 711 -
Loss for the year (459) (811)
Attributable to:
Owners of the Company (435) (806)
Non-controlling interests (24) (5)
(459) (811)
Loss per share - Basic and diluted 11 (0.02p) (0.06p)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2023 2022
GBP000 GBP000
Loss for the period (459) (811)
Exchange difference on translation of foreign operations (4,387)
(199)
Total comprehensive loss for the year (4,846) (1,010)
Attributable to
Owners of the Company (4,250) (974)
Non-controlling interests (596) (36) (4,846) (1,010) In respect
of the exchange differences on translation of foreign operation,
the amounts charged/credited to other comprehensive income may be
reclassified to the income statement in future periods.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2023 2022
Note GBP000 GBP000
Non-current assets
Intangible assets 13 24,061 26,350
Property, plant and equipment 14 6,938 2
Investments 15 - -
Other receivables 17 130 3
31,129 26,355
Current assets
Inventories 16 45 -
Trade and other receivables 17 307 198
Cash and cash equivalents 25 19 17
371 215
Total assets 31,500 26,570
Current liabilities
Payables and contract liabilities 18 (1,862) (619)
Lease liabilities 19 (10) -
Borrowings 20 - (499)
(1,872) (1,118)
Non-current liabilities
Payables and contract liabilities 18 (4,162) -
Lease liabilities 19 (27) -
Deferred tax liabilities 21 (3,284) (4,730)
(7,473) (4,730)
Total liabilities (9,345) (5,848)
Net assets 22,155 20,722
Equity
Share capital 23 12,694 10,453
Share premium 24 25,324 21,379
Other reserve 24 94 12
Retained earnings 24 (8,845) (8,421)
Foreign currency translation reserve 24 (9,860) (6,045)
Equity attributable to owners of the Company 19,407 17,378
Non-controlling interests 29 2,748 3,344
Total equity 22,155 20,722
These financial statements were approved by the Board and
authorised for issue on 19 December 2023.
Signed on behalf of the Board
M Eales
Director Company Registration No: 04095614
PARENT COMPANY STATEMEMNT OF FINANCIAL POSITION
2023 2022
Note GBP000 GBP000
Non-current assets
Investments 15 30,854 26,017
Current assets
Trade and other receivables 17 57 60
Cash and cash equivalents 25 17 12 74 72
Total assets 30,928 26,089
Current liabilities
Trade and other payables 18 (267) (606)
Borrowings 20 - (499)
Total liabilities (267) (1,105)
Net assets 30,661 24,984
Equity
Share capital 23 12,694 10,453
Share premium 24 25,324 21,379
Other reserve 24 94 12
Retained earnings 24 (7,451) (6,860)
Total equity 30,661 24,984
(Attributable to owners of the Company)
The loss for the financial year dealt with in the financial
statements of the parent Company was GBP602,000 (2022 - loss
GBP693,000).
These financial statements were approved by the Board and
authorised for issue on 19 December 2023
Signed on behalf of the Board
M Eales
Director Company Registration No: 04095614
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the Company:
Foreign
Share Share Other Retained currency
Capital Premium Reserve earnings translation Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 July 2021 10,436 21,261 15 (7,618) (5,877) 18,217
Loss for the year - - - (806) - (806)
Exchange difference on
translation of foreign operations - - - - (168) (168)
Issue of share capital 17 118 - - - 135
Exercise of share warrants - - (3) 3 - -
At 30 June 2022 10,453 21,379 12 (8,421) (6,045) 17,378
Profit (loss) for the year - - - (435) - (435)
Exchange difference on
translation of foreign operations - - - - (3,815) (3,815)
Issue of share capital 2,241 3,945 - - - 6,186
Issue of share warrants - - 82 - - 82
Share based payments - - - 11 - 11
At 30 June 2023 12,694 25,324 94 (8,845) (9,860) 19,407
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Total equity:
Owners of Non-controlling Total
the Company Interest Equity
GBP000 GBP000 GBP000
At 1 July 2021 18,217 3,380 21,597
Loss for the year (806) (5) (811)
Exchange difference on
translation of foreign operations (168) (31) (199)
Issue of share capital 135 - 135
At 30 June 2022 17,378 3,344 20,722
Profit (loss) for the year (435) (24) (459)
Exchange difference on
translation of foreign operations (3,815) (572) (4,387)
Issue of share capital 6,186 - 6,186
Issue of share warrants 82 - 82
Share based payments 11 - 11
At 30 June 2023 19,407 2,748 22,155
COMPANY STATEMENT OF CHANGES IN EQUITY
Equity attributable to the equity holders of the Company:
Share Share Other Retained Total
Capital Premium Reserve Earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 July 2021 10,436 21,261 15 (6,170) 25,542
Loss for the year - - - (693) (693)
Issue of share capital 17 118 - - 135
Exercise of share warrants - - (3) 3 -
At 30 June 2022 10,453 21,379 12 (6,860) 24,984
Loss for the year - - - (602) (602)
Issue of share capital 2,241 3,945 - - 6,186
Issue of share warrants - - 82 - 82
Share based payments - - - 11 11
At 30 June 2023 12,694 25,324 94 (7,451) 30,661
CONSOLIDATED CASH FLOW STATEMENT
2023 2022
Note GBP000 GBP000
Cash used in operating activities 25 (672) (337)
Interest paid (3) -
Net cash used in operating activities (675) (337)
Investing activities
Purchases of property, plant and equipment (2,337) (1)
Purchase of exploration and evaluation assets (2,513) (396)
Interest received 34 4
Loans to Joint Venture (141) -
Loans received from Joint Venture 24 -
Net cash used in investing activities (4,933) (393)
Financing activities
Proceeds on issue of equity (net of costs) 5,755 -
Proceeds from new loans - 482
Repayment of loans (140) -
Payment of lease liabilities (4) -
Net cash generated by financing activities 5,611 482
Net increase/(decrease) in cash and cash equivalents 3 (248)
Cash and cash equivalents at beginning
of year 25 17 270
Effects of foreign exchange rates (1) (5)
Cash and cash equivalents at end of year 25 19 17
COMPANY CASH FLOW STATEMENT
2023 2022
Note GBP000 GBP000
Cash used in operating activities 25 (1,100) (230)
Net cash used in operating activities (1,100) (230)
Investing activities
Payments to acquire investments - loans (4,510) (495)
Net cash used in investing activities (4,510) (495)
Financing activities
Proceeds on issue of equity (net of costs) 5,755 -
Proceeds from new loans - 482
Repayment of loans (140) -
Net cash generated by financing activities 5,615 482
Net increase/(decrease) in cash and cash equivalents 5 (243)
Cash and cash equivalents at
beginning of year 25 12 255
Cash and cash equivalents at end of year 25 17 12
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Ironveld Plc is a public company incorporated and domiciled in
England and Wales under the Companies Act 2006 whose shares are
listed on the Alternative Investment Market of the London Stock
Exchange. The address of the registered office is given on page 2.
The nature of the Group's operations and its principal activities
are set out in note 3 and in the Directors Report on page 6.
Adoption of new and revised Standards
In the current year, the Group has applied new or amended
standard for the first time which are mandatory for accounting
periods commencing on or after 1 July 2022. None of the standards
adopted had a material impact on the financial statements. The
significant new and amended standards adopted were as follows:-
Amendments to IFRS 9 in respect of the derecognition of
financial liabilities.
Amendments to IAS 16 in respect of proceeds before intended
use.
Amendments to IAS 37 in respect of onerous contracts.
At the date of authorisation of these financial statements,
amendments to existing standards and interpretations, applicable to
the group, are not yet effective and have not been adopted early by
the Group. The adoption of these standards, amendments and
interpretations is not expected to have a material impact on the
Group and Company's results or equity.
2.1 Significant accounting policies
The financial statements are based on the following policies
which have been consistently applied:
Basis of preparation
The financial statements of the Group and Parent Company have
been prepared in accordance with UK-adopted international
accounting standards (IFRSs) in conformity with the requirements of
the Companies Act 2006.
The financial statements have been prepared on the historical
cost basis. The financial statements are presented in pounds
sterling because that is considered to be the currency of the
primary economic environment.
The principal accounting policies are set out below:
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and all entities controlled by the
Company (its subsidiaries) made up to the year-end. Control is
achieved where the Company has power to govern the financial and
operating policies of an investee entity so as to obtain benefits
from its activities.
Subsidiaries are consolidated from the date of their
acquisition, being the date on which the Company obtains control
and ceases when the Company loses control of the subsidiary. Profit
or loss and each component of other comprehensive income are
attributed to the owners of the Company and to the non-controlling
interests. Total comprehensive income of the subsidiaries is
attributed to the owners of the Company and to the non-controlling
interests even if this results in the non-controlling interests
having a deficit balance.
Non-controlling interests in subsidiaries are identified
separately from the Group's equity therein. Those interests of
non-controlling shareholders are initially measured at their
proportionate share of the fair value of the acquiree's
identifiable net assets. Subsequent to acquisition, the carrying
value of the non-controlling interests is the amount of initial
recognition plus the non-controlling interests' share of the
subsequent changes in equity.
Changes in the Group's interests in subsidiaries that do not
result in a loss of control are accounted for as equity
transactions. The carrying amount of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in
their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received
is recognised directly in equity and attributed to the owners of
the Company.
Joint ventures
A joint venture (JV) is a type of joint arrangement in which the
parties with joint control of the arrangement have rights to the
net assets of the arrangement. A separate vehicle (not the parties)
will have the rights to the assets and obligations for the
liabilities, relating to the arrangement. The JV is not dependent
on the parties to the arrangement for funding and the parties to
the arrangement have no obligations for the liabilities of the
arrangement. The Group's investment in its JV is accounted for
using the equity method.
Under the equity method, the investment in the JV is initially
recognised at cost to the Group. In subsequent periods, the
carrying amount of the JV is adjusted to recognise changes in the
Group's share of net assets of the JV since the acquisition date.
Goodwill relating to the JV is included in the carrying amount of
the investment and is neither amortised nor individually tested for
impairment.
The statement of profit or loss and other comprehensive income
reflects the Group's share of the results of the operations of the
JV. In addition, when there has been a change recognised directly
in the equity of the JV, the Group recognises its share of any
changes, when applicable, in the statement of changes in equity.
Unrealised gains and losses resulting from transactions between the
Group and the JV are eliminated to the extent of the interest in
the JV.
The aggregate of the Group's share of profit or loss of the JV
is shown on the face of the statement of profit or loss and other
comprehensive income as part of operating profit and represents
profit or loss after tax and non-controlling interests in the
subsidiaries of JV. The financial statements of the JV are prepared
for the same reporting period as the Group. When necessary,
adjustments are made to bring the accounting policies in line with
those of the Group.
After application of the equity method, the Group determines
whether it is necessary to recognise an impairment loss on its
investment in the JV. At each reporting date, the Group determines
whether there is objective evidence that the investment in the JV
is impaired. If there is such evidence, the Group calculates the
amount of impairment as the difference between the recoverable
amount of the JV and its carrying value, then recognises the loss
as 'Share of profit of a joint venture' in the statement of profit
or loss and other comprehensive income.
On loss of joint control over the JV, the Group measures and
recognises any retained investment at its fair value. Any
difference between the carrying amount of the JV upon loss of joint
control and the fair value of the retained investment and proceeds
from disposal is recognised in the statement of profit or loss and
other comprehensive income.
Business combinations
Acquisitions of subsidiaries which are determined to be business
combinations under IFRS3 are accounted for using acquisition
accounting. The consideration for each acquisition is measured at
the fair value of assets given, liabilities incurred or assumed and
equity instruments issued by the Group in exchange for control in
the acquiree. Acquisition-related costs are recognised in the
income statement as incurred.
Acquisitions of subsidiaries which are determined not to be
business combinations under IFRS3 are accounted for on other bases,
taking into account the application guidance in Appendix B of
IFRS3. Where the directors consider it appropriate to do so the
directors will apply the concentration test permitted by para B7B
of IFRS3 and account for an acquisition of a subsidiary as an asset
acquisition.
Revenue from contracts with customers
The Group is principally engaged in the business of producing
Magnetite ore and speciality metals including High Purity Iron,
Vanadium slag and Titanium slag. Revenue is measured based on the
consideration specified in a contract with a customer and excludes
amounts collected on behalf of third parties. The Group recognises
revenue when it transfers control of a product or service to a
customer. If a customer pays consideration before the Group
transfers the goods or services to the customer a contract
liability is recognised when the payment is made or due (whichever
is earlier). Contract liabilities are recognised as revenue when
the Group performs under the contract.
Exploration and evaluation
Costs incurred prior to acquiring the rights to explore are
charged directly to the income statement.
Licence acquisition costs and all other costs incurred after the
rights to explore an area have been obtained, such as the direct
costs of exploration and appraisal (including geological, drilling,
trenching, sampling, technical feasibility and commercial viability
activities) are accumulated and capitalised as intangible
exploration and evaluation ("E&E") assets, pending
determination. Amounts charged to project partners in respect of
costs previously capitalised are deducted as contributions received
in determining the accumulated cost of E&E assets.
E&E assets are not amortised prior to the conclusion of the
appraisal activities. At completion of appraisal activities, if
financial and technical feasibility is demonstrated and commercial
reserves are discovered then, following development sanctions, the
carrying value of the relevant E&E asset will be reclassified
as a development and production asset in intangible assets after
the carrying value has been assessed for impairment and, where
appropriate adjusted. If after completion of the appraisal of the
area it is not possible to determine technical and commercial
feasibility or if the legal rights have expired or if the Group
decide to not continue activities in the area, then the cost of
unsuccessful exploration and evaluation are written off to the
income statement in the relevant period.
The Group's definition of commercial reserves for such purposes
is proved and probable reserves on an entitlement basis. Proved and
probable reserves are the estimated quantities of minerals which
geological, geophysical and engineering data demonstrate with a
specified degree of certainty to be recoverable in future years
from the known reserves and which are considered to be commercially
producible.
Such reserves are considered commercially producible if
management has the intention of developing and producing them and
such intention is based upon:
- a reasonable expectation that there is a market for substantially all of the expected production;
- a reasonable assessment of the future economics of such production;
- evidence that the necessary production, transmission and transportation facilities are
available or can be made available; and
- agreement of appropriate funding; and
- the making of the final investment decision.
On an annual basis a review for impairment indicators is
performed. If an indicator of impairment exists an impairment
review is performed. The recoverable amount is then considered to
be the higher of the fair value less costs of sale or its value in
use. Any identified impairment is written off to the income
statement in the period identified.
Taxation
The tax expense represents the sum of the tax payable and
deferred tax.
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 base used in
the calculation of the taxable profit and is accounted for using
the statement of financial position liability method. Deferred tax
liabilities are generally recognised on all appropriate taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which the deductible timing differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each
statement of financial position date.
Deferred tax is calculated at the tax rates that are expected to
be applicable in the period when the liability or asset is realised
and is based on tax laws and rates substantially enacted at the
statement of financial position date. Deferred tax is charged in
the income statement except where it relates to items
charged/credited in other comprehensive income, in which case the
tax is also dealt with in other comprehensive income.
Leases
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
Property, plant and equipment
Tangible fixed assets are stated at cost less depreciation.
Depreciation is provided at rates calculated to write off the cost
less the estimated residual value of each asset over its expected
useful life, as follows:
Plant and machinery Between 2 and 6 years straight line basis
Motor vehicles 6 years straight line basis
Assets under construction Not depreciated until brought into use
Leased assets are depreciated in a consistent manner over the
shorter of their expected useful lives and the lease term.
Inventories
Inventories are measured at the lower of cost and net realisable
value on the first-in-first-out basis.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
The cost of inventories comprises of all costs of purchase,
costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
The cost of inventories of items that are not ordinarily
interchangeable and goods or services produced and segregated for
specific projects is assigned using specific identification of the
individual costs.
The cost of inventories is assigned using the formula. The same
cost formula is used for all inventories having a similar nature
and use to the entity.
When inventories are sold, the carrying amount of those
inventories are recognised as an expense in the period in which the
related revenue is recognised. The amount of any write-down of
inventories to net realisable value and all losses of inventories
are recognised as an expense in the period the write-down or loss
occurs. The amount of any reversal of any write-down of
inventories, arising from an increase in net realisable value, are
recognised as a reduction in the amount of inventories recognised
as an expense in the period in which the reversal occurs.
Foreign currencies
The individual financial statements of each group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purposes of
the consolidated financial statements, the results and financial
position of each group company are expressed in pounds sterling,
which is the functional currency of the Company, and the
presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency are recognised at the rates of exchange
prevailing on the dates of the transactions. At each statement of
financial position date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the
rates prevailing at the date the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated. Exchange differences are
recognised in the income statement in the period in which they
arise.
When presenting the consolidated financial statements, the
assets and liabilities of the Group's foreign operations are
translated at the exchange rates prevailing at the statement of
financial position date. Income and expense items are translated at
average exchange rates for the period, unless exchange rates have
fluctuated significantly in which case the rates at the date of the
transactions are used. Exchange differences arising are recognised
in other comprehensive income and accumulated in equity (attributed
to non-controlling interests where appropriate).
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated using the closing rate.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Other receivables
Other receivables are measured at initial recognition at fair
value, and are subsequently measured at amortised cost using the
effective interest rate method except for short-term receivables
when recognition of interest would be immaterial. The Group
recognises appropriate allowances for expected credit losses in the
income statement based on a historical credit loss experience,
adjusted for factors that are specific to the debtors and general
economic conditions.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, and other short term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of change in value.
Financial liability and equity
Interest bearing bank and other loans and bank overdrafts are
recorded at the proceeds received, net of direct issue costs.
Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accrual
basis in the income statement using the effective interest rate
method and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they
arise.
The Group classifies financial instruments, or their component
parts, on initial recognition as a financial asset, financial
liability or an equity instrument in accordance with the substance
of the contractual arrangement. Financial instruments are initially
recognised at fair value and are subsequently amortised using the
effective interest method. Fair value is estimated from available
market data and reference to other instruments considered to be
substantially the same.
Trade and other payables
Trade payables and other financial liabilities are initially
measured at fair value, and are subsequently measured at amortised
cost, using the effective interest rate method.
The Group's activities expose it primarily to the financial
risks of changes in interest rates on borrowings and foreign
exchange risk.
Investments
Investments in subsidiaries are stated at cost less any
provision for impairment.
Share-based payments
The Group issues equity-settled share-based payments to certain
employees and other parties. Equity settled share-based payments
are measured at fair value at the date of grant. In respect of
employee related share based payments, the fair value determined at
the grant date is expensed on a straight-line basis over the
vesting period, based on the Group's estimate of shares that will
eventually vest. In respect of other share based payments, the fair
value is determined at the date of grant and recognised when the
associated goods or services are received.
Operating segments
The Group considers itself to have one operating segment in the
year and further information is provided in note 3.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
has adequate resources to continue in operating existence for the
foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing the financial statements. Further
details are provided in the note 2.2 and in the Strategic Report on
pages 5 to 6. The financial statements therefore do not include the
adjustments that would result if the Group and Company were unable
to continue as a going concern.
Cost of sales
When inventories are sold, the carrying amount of those
inventories is recognised as an expense in the period in which the
related revenue is recognised. The amount of any write-down of
inventories to net realisable value and all losses of inventories
are recognised as an expense in the period the write-down or loss
occurs. The amount of any reversal of any write-down of
inventories, arising from an increase in net realisable value, is
recognised as a reduction in the amount of inventories recognised
as an expense in the period in which the reversal occurs.
2.2 Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Going concern
As at the date of approval of these Financial Statements the
Rustenburg smelter project has been temporarily placed on care and
maintenance following a decision to cease renting electrical
generators and put in place a hire purchase agreement for similar
power generation for approximately 25% of the monthly cost. The
proposed new generator units are available in South Africa and the
intention is that the Company will coincide the delivery and
installation of these new units with the anticipated direct funding
transaction, which is expected to be concluded early in 2024.
Whilst some revenues have been generated during 2023 from the
operations at the smelter, when operating at a level below full
capacity - particularly during periods of non-operation due to
power supply or critical repairs - the overheads incurred by the
facility have consumed more cash than revenues earned. The Company
therefore took the decision earlier this month to conserve cash by
returning rented generator units and to temporarily suspend
production, also reducing headcount at the smelter to a level
commensurate with care and maintenance activities. As at the date
of approval of these Financial Statements the Company had not
signed definitive transaction documents, but the Board has
reasonable expectations that a significant funding transaction with
a financial institution in South Africa, which has been in process
for a number of months, will be concluded early in 2024.
Taking into account existing cash resources, and the assumed
receipts of funding detailed above the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future, being twelve
months from the date of the approval of the financial statements.
For this reason, the Board continues to adopt the going concern
basis in the preparation of these financial statements.
Should the agreed funding transaction not be completed or be
materially delayed the Company will seek alternative funding
arrangements and those arrangements are not yet committed. This
represents a material uncertainty in relation to the Company's
funding arrangements.
Exploration and evaluation assets
The Group has adopted a policy of capitalising the costs of
exploration and evaluation and carrying the amount without
impairment assessment until impairment indicators exist (as
permitted by IFRS 6). The directors consider that as at the Period
end the Group remained in the exploration and evaluation phase and
therefore, under IFRS 6, the directors have to make judgements as
to whether any indicators of impairment exist and the future
activities of the Group. No such indicators of impairment were
identified and therefore, in accordance with IFRS 6, no impairment
review has been carried out. The Directors remain committed to
development of the asset.
Acquisition of Ferrochrome Furnaces (Pty) Limited ("FCF")
On 24 May 2022 the Company announced that it had agreed Heads of
Terms and on 31 August 2022 further announced that it had signed a
share purchase agreement to acquire 100% of the share capital of
FCF, which would provide the Group with an existing smelting
facility (the Rustenburg Smelter) which, following refurbishment,
would provide the Group with the opportunity to commence processing
the ore. The acquisition by subsidiary Ironveld Smelting
(Proprietary) Limited, reflected an agreement with the shareholders
and the Business Rescue Practitioner of FCF to acquire the entire
share capital for a nominal amount but at the date of these
accounts the agreement remained subject to contract. Under the
agreed terms, the Group will be required to enter into a debt
purchase agreement with the sole creditor of FCF for a total of
R116 million (approximately GBP4.8 million). Since the transaction
becoming unconditional the Group has incurred GBP2 million on
refurbishing the smelter complex.
This results in the directors making two critical judgements in
preparing these financial statements.
Acquisition of Ferrochrome Furnaces (Pty) Limited ("FCF")
(continued)
Nature of the acquisition - The directors have considered
application notes of IFRS3 and elected to apply the optional test
set out in paragraph B7B of IFRS 3 (the 'concentration test') which
permits a simplified assessment of whether an acquired set of
activities and assets is not a business. Having determined that the
concentration test is met and the set of activities and assets is
not a business no further assessment is considered necessary. The
acquisition of FCF will therefore be accounted for as an asset
acquisition and not a business combination.
Recognition of assets under construction and related debt
obligations - The directors have considered the definition of an
asset set out in Chapter 4 of the Conceptual Framework for
Financial Reporting issued by the International Accounting
Standards Board. In their consideration the directors have had
regard to the Group's unencumbered use of the smelter, including
the right to use it to generate revenue, management's actions in
refurbishing the smelter complex for long term use, the status of
the Business Rescue process and consents obtained from the sole
creditor of FCF and the probability of a range of possible outcomes
and of inflows or outflows of economic benefits. The directors have
also considered IAS 16 para 7 in relation to recognition criteria,
in particular paragraph 7 (a) which refers to whether it is
probable that future economic benefits will flow to the group.
Based on the nature of the facts and the actions of management the
directors consider that the 'probable' threshold has been passed
and therefore it is appropriate to recognise the asset as an asset
under construction at the year end.
As a consequence of their determination the directors have
recognised the Rustenburg smelter complex in assets under
construction (see note 14) and also the deferred and contingent
debt obligations under the Debt Purchase Agreement (see note
18)
Until the Business Rescue process in South Africa is fully
concluded in all respects the acquisition remains subject to
contract and there is an element of uncertainty over this
accounting treatment. If for any reason, the likelihood of which
the directors consider to be remote, final closure of the Business
Rescue process does not take place it is probable that asset under
construction of GBP6.9 million and associated deferred and
contingent debt obligations of GBP4.8 million would be derecognised
and capitalised refurbishment expenditure of GBP2.3 million would
be expensed.
Investment impairment indicators
The Company statement of financial position includes an
investment in subsidiary companies of GBP30,854,000 which is
underpinned and reflects the underlying subsidiary exploration and
evaluation assets discussed above. At the reporting date the
group's market capitalisation was less than the carrying value of
the investment, which is an indicator of impairment under IAS36. An
impairment review has been carried out in the period - see note
15.
Deferred tax assets
The directors must judge whether the future profitability of the
Group is likely in making the decision whether or not to recognise
a deferred tax asset in respect of taxation losses. No deferred tax
assets have been recognised in the year.
3. Business and geographical segments
Information reported to the Group Directors for the purposes of
resource allocation and assessment of segment performance is
focused on the activity of each segment and its geographical
location. The directors consider that there is only one business
segment, which is the activity of prospecting, exploration and
mining based in South Africa.
4. Revenue
2023 2022
GBP000 GBP000
Revenue from contracts with customers - disaggregated revenue
information
Sale of goods - Magnetite Ore 18 -
Sale of goods - Other sales 85 -
103 -
All revenue represented the sale of goods and was recognised at
a point in time.
5. Operating loss
2023 2022
Operating loss for the year is shown after charging: GBP000
GBP000
Depreciation on tangible assets 17 1
Short term payments under leases 32 14
Share based payment charge 11 -
Foreign exchange loss/(gain) 5 (2)
Cost of inventories recognised as expense 29 -
Auditors' remuneration
Fees payable to the auditors for the audit of the Company's
accounts 40
38
6. Staff costs
Group
2023 2022
GBP000 GBP000
Wages and salaries 2,042 377
Social security costs 48 22
Pension costs 84 14
Share based payments 11 -
Directors other fees 134 74
2,319 487
The average monthly number of employees, including Directors,
during 2023
2022
the period was as follows: Number Number
Administration and management 22 12
Mining and smelting 77 -
99 12
2023 2022
GBP000 GBP000
Directors remuneration and other fees 468 339
Pension 15 14
Share based payments 7 -
490 353
6. Staff costs (continued)
2023 2022
GBP000 GBP000
The aggregate remuneration and fees paid to the highest paid
Director was 193
175
Pension 15 14
Share based payments
3 -
211 189
Further details of the Directors' remuneration are given in the
Directors' Remuneration Report on page
11.
Company
2023 2022
GBP000 GBP000
Wages and salaries 334 265
Social security costs 41 21
Share based payments 3 -
Pension costs 15 14
393 300
The average monthly number of employees, including Directors,
during 2023
2022
the period was as follows: Number Number
Administration and management 6 4
7. Other gains and losses
2023 2022
GBP000 GBP000
Gain on settlement of financial liabilities with equity 47 -
8. Investment revenues
2023 2022
GBP000 GBP000
Interest on financial deposits 34 4
9. Finance costs
2023 2022
GBP000 GBP000
Loan interest and similar charges 11 17
Interest on lease liabilities 2 -
Other finance costs 2 -
15 17
10. Tax
2023 2022
a) Tax charge/(credit) for the period GBP000 GBP000
Corporation tax:
Current period - -
Deferred tax (note 21) (711) -
(711) -
b) Factors affecting the tax charge for the period
Loss on ordinary activities for the period before taxation
(1,170) (811)
Loss on ordinary activities for the period before taxation
multiplied by
effective rate of corporation tax in the UK of 19% (2022 - 19%)
(222)
(154)
Effects of:
Expenses not deductible for tax purposes 1 5
Tax losses not recognised 118 149
Tax losses not previously recognised (451) -
Change in tax rates (157) -
Tax charge/(credit) for the period (711) -
c) Factors that may affect future tax charges - The Group has
estimated unutilised tax losses amounting to GBP6,078,000 (2022 -
GBP5,149,000) the values of which are not recognised in the
statement of financial position. The losses represent a potential
deferred taxation asset of GBP1,524,000 (2022 - GBP1,287,000) based
on the enacted future tax rate of 25% in the United Kingdom and 27%
in South Africa, which would be recoverable should the Group make
sufficient suitable taxable profits in the future.
In addition, the Group has pooled exploration costs incurred of
GBP9,610,000 (2022 - GBP8,901,000) which are expected to be
deductible against future trading profits of the Group.
11. Loss per share
2023 2022
GBP000 GBP000
Loss attributable to the owners of the Company (435) (806)
Loss per share - Basic and diluted
Continuing operations (0.02p) (0.06p)
The calculation of basic earnings per share is based on
2,963,582,067 (2022 - 1,322,831,729) ordinary shares, being the
weighted average number of ordinary shares in issue during the
year. Where the Group reports a loss for the current period, then
in accordance with IAS 33, the share options are not considered
dilutive. Details of such instruments which could potentially
dilute basic earnings per share in the future are included in note
23.
12. Loss attributable to owners of the parent Company
As permitted by Section 408 of the Companies Act 2006, the
profit and loss account of the parent Company is not presented as
part of these accounts. The parent Company's loss for the financial
year amounted to GBP602,000 (2022 - GBP693,000).
13. Intangible assets
Exploration
and evaluation
assets GBP000
Group
Cost:
At 1 July 2021 26,191
Additions 396
Exchange differences (237) At 30 June 2022 26,350
Additions 2,513
Exchange differences (4,802) At 30 June 2023 24,061
Impairment and amortisation:
At 1 July 2021, 30 June 2022 and at 30 June 2023 -
Net book value at 30 June 2023 24,061
Net book value at 30 June 2022 26,350
The Group's exploration and evaluation assets all relate to
South Africa.
In respect of the exploration and evaluation assets which remain
in the appraisal phase, the Group has performed a review for
impairment indicators, as required by IFRS 6 and in the absence of
such indicators no impairment review was carried out.
14. Property, plant and equipment
Assets under Motor Plant and
Group construction vehicles machinery Total
GBP000 GBP000 GBP000 GBP000
Cost:
At 1 July 2021 - - 39 39
Additions - - 1 1
At 30 June 2022 - - 40 40
Additions 7,132 58 22 7,212
Exchange differences (252) (6) (9) (267)
At 30 June 2023 6,880 52 53 6,985
Depreciation:
At 1 July 2021 - - 37 37
Charge for the period - - 1 1
At 30 June 2022 - - 38 38
Charge for the period - 12 5 17
Exchange differences - (1) (7) (8)
At 30 June 2023 - 11 36 47
Net book value at 30 June 2023 6,880 41 17 6,938
Net book value at 30 June 2022 - - 2 2
The asset under construction represents the cost of
refurbishment of the Rustenburg smelter and includes GBP4,829,000
deferred costs which at the balance sheet date were unconditional
but remained subject to contract.
All non-current assets in 2023, 2022 and 2021 were located in
South Africa.
15. Investments
Group - Loans to other entities
2023 2022
GBP000 GBP000
Cost:
At 1 July 352 355
Exchange differences (61) (3)
At 30 June 291 352
Impairment:
At 1 July 352 355
Exchange differences (61) (3)
At 30 June 291 352
Book value at 30 June - -
The investment represented the R7 million refundable deposit to
Siyanda Smelting and Refining Proprietary Limited which the Group
paid in exchange for a period of exclusivity to conclude a
potential acquisition of the company. The period of exclusivity
expired in 2017. The deposit is interest free and becomes
refundable should the acquisition not proceed. The investment was
fully impaired as at 30 June 2023 whilst the directors pursued
other alternative opportunities.
Company - Subsidiary undertakings
Loans Equity Total
GBP000 GBP000 GBP000
Cost:
At 1 July 2021 5,168 20,334 25,502
Additions 515 - 515
At 30 June 2022 5,683 20,334 26,017
Additions 4,837 - 4,837
At 30 June 2023 10,520 20,334 30,854
Net book value at 30 June 2023 10,520 20,334 30,854
Net book value at 30 June 2022 5,683 20,334 26,017
The loans represent loans to Ironveld Holdings (Propriety)
Limited of GBP10,342,000 (2022 - GBP5,525,000) which incur interest
at a rate not exceeding the base lending rate applicable in England
and Wales. Under the initial terms of the loan, GBP2,500,000 was
repayable 31 December 2019 with the remainder due 31 December 2020
however further agreement has extended the loan period until
project finance is agreed. Also included in loans are working
capital loans to Ironveld Mauritius Limited of GBP178,000 (2022 -
GBP158,000) which are interest free.
At the reporting date the Group's market capitalisation was less
than the carrying value of the Company's investments in
subsidiaries, which is an indicator of impairment under IAS36. An
impairment review has been carried out in the period.
Company - Subsidiary undertakings (continued)
The Company's investments in subsidiary undertakings of
GBP30,854,000 is underpinned and reflects the underlying
exploration and evaluation assets and the expected future cash
flows from the Rustenburg smaller complex once fully operational.
These have been treated as a single cash generating unit for the
purposes of the review. Impairment was tested by discounting the
expected cash flows of a pilot scale operation of the smelter
complex over a 10 year period. Cash flows, net of acquisition debt
repayments, were discounted using an industry standard appraisal
rate of 10% and sensitised for reasonably possible alternative
scenarios, including discount rate. The Company's investment on
subsidiaries is not impaired on the base case or in any of the
reasonably possible alternative scenarios applied.
The Company has investments in the following subsidiaries.
Proportion of Nature of
Name of company Shares voting rights business
and shares held
Subsidiary undertakings
Ironveld (Mauritius) Ordinary *100% Holding Company
Ironveld Holdings (Proprietary) Limited Ordinary 100% Holding Company
Ironveld Mining (Proprietary) Limited Ordinary 100% Mining and
exploration
Ironveld Energy (Proprietary) Limited Ordinary 100% Ore
processing and smelting
Ironveld Smelting (Proprietary) Limited Ordinary 74% Ore
processing and smelting
HW Iron (Proprietary) Limited Ordinary 68% Prospecting and mining
Lapon Mining (Proprietary) Limited Ordinary 74% Prospecting and
mining
Luge Prospecting and
Mining (Proprietary) Limited Ordinary 74% Prospecting and mining
Joint venture
Ipace Proprietary Limited Ordinary 50% Sale of Magnetite ore
* Held directly by Ironveld Plc all other holdings are
indirect.
All subsidiary undertakings are incorporated and domiciled in
South Africa, other than Ironveld Mauritius Limited, which is
incorporated and domiciled in Mauritius.
The registered office of all subsidiaries with the exception of
Ironveld (Mauritius) was Gartner House, 33 Wessel Road, Rivonia
2128, South Africa.
The registered office of Ironveld (Mauritius) is - C/o Rogers
Capital Corporate Services Limited, 3(rd) Floor, Rogers House, No.
5 President John Kennedy Street, Port Louis, Republic of
Mauritius.
Further details of non-wholly owned subsidiaries of the Group
are provided in note 29.
16. Inventories Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
Ore stockpile 45 - - -
45 - - -
Due within 12 months (45) - - -
Due after more than 12 months - - - -
17. Trade and other receivables Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
Trade receivables 7 - - -
Other receivables 222 134 6 2
Amounts owed by related parties 5 3 - -
Amounts owed by joint ventures 125 - - -
Prepayments 78 64 51 58
437 201 57 60
Due within 12 months (307) (198) (57) (60)
Due after more than 12 months 130 3 - -
Amounts owed by related parties represent expenses paid on
behalf of the non-controlling interest shareholders by the company
and are expected to be recovered in more than 12 months. The
amounts are unsecured and interest free.
Credit risk
The Group's principal financial assets are bank balances, cash
balances, amounts due from joint ventures and other receivables.
The Group's credit risk is primarily attributable to its other
receivables of which GBP107,000 (2022 - GBP107,000) is due from a
third party financial institution and further information is
provided in note 22. The remaining other receivable relates to
recoverable VAT. The amounts presented in the balance sheet are net
of allowances for doubtful receivables.
18. Payables and contract liabilities Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
Trade payables 753 132 134 132
Taxation and social security costs 10 4 10 3
Other payables 4,852 5 5 5
Contract liabilities 195 - - -
Amounts owed to joint ventures 21 - - -
Accruals 193 478 118 466
6,024 619 267 606
Due within 12 months (1,862) (619) (267) (606)
Due after more than 12 months 4,162 - - -
Other payables includes GBP4,829,000 (R116,000,000) in respect
of the proposed Rustenburg smelter acquisition which was
unconditional at the year end but which remained subject to
contract. On completion, GBP4,163,000 (R100,000,000) will be due
after 12 months with the remainder anticipated to be due within 12
months.
Contract liabilities at both 1 July 2022 and at 1 July 2021 were
GBPNil.
19. Leases
The Group has lease contracts for certain items of motor
vehicles with lease terms of six years. In addition, the Group uses
short-term leases (less than 12 months term) where considered
appropriate to its requirements and takes advantage of the
recognition exemptions for such leases.
Right-of-use assets Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
Cost:
At 1 July - - - -
Additions 47 - - -
Exchange differences (6) - - -
At 30 June 41 - - -
Depreciation:
At 1 July - - - -
Charge for the period 10 - - -
Exchange differences (1) - - -
At 30 June (9) - - -
Net book value at 30 June 32 - - -
Lease liabilities Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
At 1 July - - - -
Additions 47 - - -
Interest expense 2 - - -
Payments (6) - - -
Exchange differences (6) - - -
37 - - -
Due within 12 months (10) - - -
Due after more than 12 months 27 - - -
19. Lease liabilities (continued)
Maturity analysis Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
On demand - - - -
Within 1 year 10 - - -
Between 1 to 2 years 10 - - -
Between 2 to 5 years 30 - - -
Over 5 years 6 - - -
Total undiscounted liabilities 56 - - -
Future finance charges and other adjustments (19) - - -
Lease liabilities in the financial statements 37 - - -
Amounts recognised in the income statement as an expense during
the period in respect of lease arrangements are as follows:
Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
Expense relating to short-term leases 32 14 - -
Depreciation 10 - - -
Interest 2 - - -
20. Borrowings Group Company
2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
Other loans - 499 - 499
Due within 12 months - 499 - 499
Due after more than 12 months - - - -
The others loans represented amounts due to a consortium of high
net worth investors and existing shareholders and were repaid in
the year. The loans attracted a fixed interest rate of between 7%
and 8% per annum.
The financing of the group comprises the contingent
consideration (note 18) and the leases (note 19), both of which are
detailed in their respective note.
21. Deferred tax
Group
2023 2022
GBP000 GBP000
Balance at 1 July 4,730 4,774
Change in tax rates (157) -
Relating to origination and reversal of temporary differences
(554)
-
Exchange differences (735) (44)
Balance at 30 June 3,284 4,730
The Group has unrelieved tax losses carried forward which
represent a deferred tax asset of GBP1,524,000 (2022 -
GBP1,287,000) based on current tax rates. This asset is not
recognised in these financial statements.
The deferred tax liability is made up as follows: Group
2023 2022
GBP000 GBP000
Exploration and evaluation assets 3,777 4,730
Temporary timing difference on foreign exchange gains and losses
(440)
-
Other temporary timing differences (53) -
Balance at 30 June 3,284 4,730
22. Financial instruments
The Group's policies as regards derivatives and financial
instruments are set out in the accounting policies in note 2. The
Group does not trade in financial instruments.
Capital risk management
The Company and the Group manages its capital to ensure that
they will be able to continue as a going concern whilst maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The Group's overall strategy remains unchanged from
2022.
The capital structure of the Group consist of equity
attributable to equity holders of the parent Company. The Company
and the Group are not subject to any externally imposed capital
requirements.
Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Company. The Company and the Group have adopted a policy of only
dealing with creditworthy counterparties as a means of mitigating
the risk of financial loss from defaults. The Group's exposure and
the credit ratings of its counterparties are continuously monitored
and the aggregate value of the transactions concluded is spread
where possible.
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has established an appropriate
liquidity risk management framework for the management of the
Company and the Group's short, medium and long term funding and
liquidity management requirements. The Company and the Group manage
liquidity risk by assessing required reserves and banking
facilities by continuously monitoring forecast and actual cash
flows, and by matching the maturity profiles of financial assets
and liabilities. At the year end the Group has no undrawn bank
facilities. The Company is in the process of negotiating a
significant funding transaction with a financial institution in
South Africa which is expected to be concluded in early 2024.
Interest rate risk profile
The Company and the Group is exposed to interest rate risk
because the Group borrows funds for working capital at fixed and
variable rates. The Group exposure to interest rates on financial
assets and liabilities are detailed in the liquidity risk
management section of this note.
Financial assets
The Group has no financial assets, other than short-term
receivables and cash deposits of GBP19,000 (2022 - GBP17,000). The
cash deposits attract variable rates of interest. At the year end
the effective rate was 0.36% (2022 - 0.35%). The cash deposits held
were as follows:-
2023 2022
GBP000 GBP000
Sterling - United Kingdom banks 16 12
USD - Mauritius banks - 1
South African Rand - United Kingdom banks 2 -
South African Rand - South African banks 1 4
19 17
Financial liabilities - Lease liabilities
Lease liabilities of GBP37,000 (2022 - GBPNil) attract interest
at a variable rate of 2.49% above the First National Bank Prime
lending rate which was 12.99% at the year end.
Sensitivity analysis - As the interest bearing liabilities are
not significant to the overall Group then an increase of 1% in
interest rates in South Africa at the balance sheet date would not
have a significant effect on the profit and loss of the group.
Currency exposures
The Group undertakes transactions denominated in foreign
currencies and is consequently exposed to fluctuations in exchange
rates. The carrying amounts of the Group's foreign currency
denominated monetary assets and monetary liabilities were as
follows:-
As at 30 June 2023 Assets Liabilities
GBP000 GBP000
British Pound Sterling (GBP) 17 257
USD ($) - 6
South African Rand (R) 258 5,594
275 5,857
As at 30 June 2022 Assets Liabilities
GBP000 GBP000
British Pound Sterling (GBP) 12 1,102
USD ($) 1 10
South African Rand (R) 119 2
132 1,114
Financial commitments and guarantee
Rehabilitation guarantees of GBP1,157,000 (R 27,797,984) have
been issued to the Department of Mineral Resources for three
subsidiaries, HW Iron Proprietary Limited, Lapon Mining Proprietary
Limited and Luge Prospecting and Mining Company Proprietary Limited
in order to comply with Section 41 of the Mineral and Petroleum
Resources Development Act, 2002 (Act 28 of 2002). Under this
agreement the Group will pay deposits to a third-party financial
institution to be held pending discharge of any potential claim on
this guarantee. At 30 June 2023 GBP107,000 (R 2,581,388) (2022 -
GBP107,000 (R 2,123,000)) had been deposited in respect of this
agreement and is included in other receivables. This receivable
represents a concentration of credit risk and the Group is exposed
to currency risk on these amounts. As the project had not yet
commenced then no liability is considered to have arisen under this
guarantee at the reporting date.
23. Share capital
Group and Company
2023 2022
GBP000 GBP000
Allotted, called up and fully paid
3,574,996,887 (2022 - 1,333,668,130) Ordinary shares of 0.1p
each 3,574
1,333
322,447,158 (2022 - 322,447,158) deferred shares of 1p each
3,224
3,224
5,894,917,569 (2022 - 5,894,917,569) deferred shares of 0.1p
each 5,896
5,896
12,694 10,453
On 2 August 2022, a further 1,559,460,724 ordinary shares were
issued and admitted to trading to settle existing liabilities and
raise gross working capital of GBP4,400,000 for the Group.
On 1 March 2023, a further 280,000,000 ordinary shares were
issued and admitted to trading to raise gross working capital of
GBP840,000 for the Group.
On 14 March 2023, a further 386,666,666 ordinary shares were
issued and admitted to trading to raise gross working capital of
GBP1,160,000 for the Group.
On 6 June 2023, a further 15,201,367 ordinary shares were issued
and admitted to trading to settle existing liabilities.
Unlike ordinary shares, the deferred shares have no voting
rights, no dividend rights and on a return of capital or winding up
are entitled to a return of amounts credited as paid. The deferred
shares are not transferrable and beneficial interests in the
deferred shares can be transferred to such persons as the Directors
may determine as custodian for no consideration without sanction of
the holder. For this reason the deferred shares are excluded from
any Earnings per share calculations.
Further information on the issue of shares after the period end
is provided in note 30.
Share options
The Company has a share option scheme for certain employees and
former employees of the Group. The share options in issue during
the year were as follows:
As at As at
Date Exercise 1 July Granted Exercised Lapsed/ 30 June
granted price 2022 in year in year Cancelled 2023
No. No. No. No. No.
16 August 2012 1p 4,283,682 - - (4,283,682) -
14 November 2012 1p 6,663,505 - - ( 6,663,505) -
16 April 2013 1p 33,334 - - - 33,334
7 November 2013 1p 2,086,667 - - - 2,086,667
1 May 2014 1p 200,000 - - - 200,000 1 October 2015 1p 2,500,000
- - - 2,500,000
10 January 2020 1p 27,400,000 - - - 27,400,000
27 February 2023 0.3p - 50,000,000 - (1,750,000) 48,250,000
At the year-end, 31,220,001 options were exercisable (2022 -
42,167,188) as follows.
As at As at
Date Exercise 30 June Granted Exercised Lapsed/ 30 June
granted price 2022 in year in year Cancelled 2023
No. No. No. No. No.
16 August 2012 1p 4,283,682 - - (4,283,682) -
14 November 2012 1p 6,663,505 - - ( 6,663,505) -
16 April 2013 1p 33,334 - - - 33,334
7 November 2013 1p 2,086,667 - - - 2,086,667
1 May 2014 1p 200,000 - - - 200,000 1 October 2015 1p 1,500,000
- - - 1,500,000
10 January 2020 1p 27,400,000 - - - 27,400,000
The exercise period of the options is as follows:
Date
granted Expiry date Exercise period
16 April 2013 16 April 2023 *
7 November 2013 7 November 2023 *
1 May 2014 1 May 2024 *
1 October 2015 1 October 2025 *
10 January 2020 9 January 2030 **
27 February 2023 27 February 2033 *
Exercise period
* - 1/3 on the first anniversary of grant, 1/3 on the second
anniversary of grant and the final 1/3 on the third anniversary of
grant.
** - 1/2 on grant and the remaining 1/2 one year after the grant
date.
Of the options granted on 1 October 2015, 1,000,000 are
exercisable following first commercial production from the proposed
15 MW smelter.
The Group recognised a share based payment expense of GBP11,000
(2022 - GBPnil) in the year. No options were exercised in the
year.
Share warrants
Pursuant to the share placing on 14 December 2020 Turner Pope
were appointed as joint broker to the Placing and in addition to
3,333,333 ordinary shares were issued with 95,833,333 broker
warrants, exercisable at 0.3p (the placing price) for a period of
36 months from the date of admission. The broker warrants were
transferrable and on 4 March 2021 17,500,000 warrants were
exercised for GBP52,500. At the year-end, there were 78,333,333
broker warrants in issue.
Pursuant to the loan facilities agreement, dated 19 May 2022,
the Company issued share warrants to the lenders over 13,000,000
shares at 1 pence per share. The warrants had a 3 years life and
the lender was able to use the outstanding balances under the loan
facilities to exercise the warrants. The loans were repaid in the
year. In accordance with the agreement, the price was adjusted
downwards to the subsequent placing price of 0.3p per share. At the
year end, there were 13,000,000 lender warrants in issue.
Pursuant to the share placing on 2 August 2022 Turner Pope were
appointed as sole broker to the Placing and were issued with
375,000,000 broker warrants, exercisable at 0.3p (the placing
price) for a period of 3 years from the date of admission. At the
year-end, there were 375,000,000 broker warrants in issue.
Pursuant to the share placing in March 2023, the Company issued
to subscribers to the Placing with warrants to subscribe for new
ordinary shares on the basis of one (1) warrant for every two (2)
Placing Shares. The investor warrants are exercisable at 0.50 pence
for a period of two years from the date of their grant. At the year
end, there were 333,333,333 investor warrants in issue. In
addition, the Company issued TPI, the sole broker to the Placing,
with 135,000,000 broker warrants, exercisable at 0.3p (the placing
price) for a period of three years from the date of admission. At
the year-end, there were 135,000,000 broker warrants in issue.
24. Reserves
Group and Company
Other reserves represent the equity component of share options
and share warrants issued in the year.
The balance classified as share premium is the premium on the
issue of the Group's equity share capital, less any costs of
issuing the shares.
The foreign currency translation reserve accumulates the foreign
currency gains and losses on the translation of foreign
operations.
Retained earnings is made up of cumulative profits and losses to
date, share based payments, adjustments arising from changes in
non-controlling interests and exchange differences on translation
of foreign operations.
25. Cash used in operations
Group 2023 2022
GBP000 GBP000
Operating loss (1,236) (798)
Depreciation on property, plant and equipment 17 1
Share based payment charge 11 100
Foreign exchange (117) -
Operating cash flows before movements in working capital (1,325)
(697)
Movement in inventories (51) -
Movement in receivables (203) (8)
Movement in payables and contract liabilities 907 368
Cash used in operations (672) (337)
Cash and cash equivalents 2023 2022 GBP000 GBP000
Cash and bank balances 19 17
Company 2023 2022
GBP000 GBP000
Operating loss (911) (696)
Share based payment charge 3 100
Foreign exchange adjustments - -
Operating cash flows before movements in working capital
(908)
(596)
Movement in receivables (45) (1)
Movement in payables (147) 367
Cash used in operations (1,100) (230)
Cash and cash equivalents 2023 2022
GBP000 GBP000
Cash and bank balances 17 12
26. Significant non-cash transactions
The company settled liabilities and paid for services by the
issue of shares. The value of the shares issued was as
follows:-
2023 2022 GBP000 GBP000
Loan repayments 360,000 -
Accrued directors fees 192,000 -
Services provided 45,000 135,000
27. Related party transactions
Group
During the year the Group incurred GBP134,000 (2022 - GBP74,000)
for consultancy services to Goldline Global Consulting (Pty)
Limited, a company in which P Cox is materially interested. At 30
June 2022, GBPNil (2022 - GBPNil) remained unpaid in accruals.
Group and Company
The key management personnel of the Group are the directors.
Directors' remuneration is disclosed in Note 6.
During the year the Company paid GBP59,000 (2022 - GBP48,000)
for accounting services to Westleigh Investments Limited, a company
in which G Clarke and N Harrison are materially interested.
Included in other loans at 30 June 2023 was a short term loan
due to G Clarke of GBPNil (2022 - GBP100,000) and accrued interest
of GBPNil (2022 - GBP2,827). The loan attracted interest at 7% per
annum and a loan arrangement fee of 2.5% of the facility amount and
was repaid in the year.
Included in other loans at 30 June 2023 was a short term loan
due to N Harrison of GBPNil (2022 - GBP100,000) and accrued
interest of GBPNil (2022 - GBP2,827). The loan attracted interest
at 7% per annum and a loan arrangement fee of 2.5% of the facility
amount and was repaid in the year.
Included in other loans at 30 June 2023 was a short term loan
due to M Eales of GBPNil (2022 - GBP38,500) and accrued interest of
GBPNil (2022 - GBP667). The loan attracted interest at 7% per annum
and a loan arrangement fee of 2.5% of the facility amount and was
repaid in the year.
Further directors' remuneration of GBP12,000 (2022 - GBP344,936)
was unpaid at the year-end and is included in accruals. During the
year GBP192,000 (2022 - GBP Nil) of director's fees were settled by
the issue of shares.
28. Financial commitments
At the year end the Group had no financial commitments under
operating leases (2022 - GBPNil).
On 24 May 2022, the Group announced that it had signed Heads of
Terms to acquired 100% of the share capital of Ferrochrome Furnaces
(Pty) Limited ("FCF") which will provide the Group with an existing
smelting facility and the opportunity to commence mining and
processing in the short term. The share capital was to be acquired
for a nominal fee but debt was to be acquired of R116m
(approximately GBP4.8m) repayable over a 10 year period. At the
year end the acquisition was unconditional but remained subject to
contract and the R116m was accrued in these financial statements.
The Group commenced plans during the Period to bring the smelter
back in to production with overall costs estimated to be between
R40m to R65m (GBP2m to GBP3.2m).
29. Non-controlling interest
2023 2022
GBP000 GBP000
At 1 July 3,344 3,380
Exchange adjustments (572) (31)
Share of loss for the period (24) (5)
At 30 June 2,748 3,344
The table below shows details of non-wholly owned subsidiaries
of the Group that have material non-controlling interests:
Profit/ (loss)
Proportion of allocated to Accumulated
voting rights non-controlling non-controlling
and shares held interests interests
2023 (2022) 2023 2022 2023 2022
GBP000 GBP000 GBP000 GBP000
HW Iron (Proprietary) Limited (32%) (32%) 14 - 896 1,067
Lapon Mining (Proprietary) Limited (26%) (26%) 6 - 1,903
2,291
Other non-controlling interests (44) (5) (51) (14)
(24) (5) 2,748 3,344
29. Non-controlling interest (continued)
Summarised financial information in respect of each of the
Group's subsidiaries that have material non-controlling interests
is set out below. The summarised financial information below
represents amounts before intragroup eliminations. The accounts of
the subsidiaries have been translated from their presentational
currency of South African Rand (R) using the R: GBP exchange rate
prevailing at 30 June 2023 of 24.023 (2022 - 19.896).
HW Iron (Proprietary) Limited
2023 2022
GBP000 GBP000
Non-current assets 6,011 6,913
Current assets 5 -
Current liabilities (5) -
Non-current liabilities (3,212) (3,579)
2,799 3,334
Equity attributable to owners of the Company 1,903 2,267
Non-controlling interest 896 1,067
Revenue - -
Expenses (1) (1)
Tax 43 -
Profit/(loss) for the year 42 (1)
Attributable to the owners of the Company 28 (1)
Attributable to the non-controlling interests 14 -
Net cash (outflow)/inflow from operating activities (1) 2
Net cash outflow from investing activities (317) (99)
Net cash inflow from financing activities 318 97
Net cash inflow - -
Net cash flow - Attributable to the non-controlling interests -
-
29. Non-controlling interest (continued)
Lapon Mining (Proprietary) Limited
2023 2022
GBP000 GBP000
Non-current assets 12,248 14,158
Current assets 10 -
Current liabilities (172) -
Non-current liabilities (4,768) (5,347)
7,318 8,811
Equity attributable to owners of the Company 5,415 6,520
Non-controlling interest 1,903 2,291
Revenue 18 -
Expenses (108) (1)
Tax 114 -
Profit/(loss) for the year 24 (1)
Attributable to the owners of the Company 18 (1)
Attributable to the non-controlling interests 6 -
Net cash inflow from operating activities 91 3
Net cash outflow from investing activities (446) (85)
Net cash inflow from financing activities 355 82
Net cash flow - -
Net cash flow - Attributable to the non-controlling interests -
-
30. Events arising after the reporting period
On 18 September 2023 the Company first announced that it was in
direct funding discussions with an institution. As at the date of
these financial statements this transaction is well advanced and
the Board has reasonable expectations that a satisfactory
transaction will be concluded early in 2024. On the same date the
Company announced that certain Directors had agreed to put in place
a working capital facility of up to GBP500,000.
On 26 October 2023, the Company announced an equity fund raising
of GBP1.0m representing a placing of 360,000,000 ordinary shares at
a price of 0.278 pence. The Company issued Warrants alongside the
new ordinary shares to subscribe for 360,000,000 ordinary shares at
0.29 pence for a period of 36 months from Admission. The share
proceeds were raised to fund ongoing working capital requirements
of the operations. Following the Placing Dr John Wardle was
appointed as Executive Chairman of the Company.
31. Control
The Directors consider that there is no overall controlling
party.
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FR KZMMZRLRGFZM
(END) Dow Jones Newswires
December 20, 2023 02:00 ET (07:00 GMT)
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