Annual Report 20212021
African Energy Resources Limited
Annual Report 2021
Corporate Directory
Directors
Alasdair Cooke
Charles (Frazer) Tabeart
Valentine Chitalu
Vincent Masterton-Hume
John Dean
Gregory Fry (Retired 15 July 2020)
Executive Chairman
Executive Director and CEO
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company Secretary
Daniel Davis
Registered Office
Granite House, La Grande Rue
St Martin, Guernsey GY1 3RS
Representative Office in Australia
Suite 1, 245 Churchill Avenue
Subiaco, Western Australia, 6008
Share Register
Stock Exchange Listing
Auditor
Solicitors
Bankers
Link Market Services Limited
Level 4 Central Park 152 St Georges
Terrace
Perth, Western Australia, 6000
Australian Securities Exchange (ASX:
AFR)
BDO Audit (WA) Pty Limited
38 Station Street
Subiaco, Western Australia, 6008
Fairweather Corporate Lawyers
595 Stirling Highway
Cottesloe, Western Australia, 6011
Westpac Banking Corporation
Level 6, 109 St Georges Terrace
Perth WA 6000
Website
www.africanenergyresources.com
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African Energy Resources Limited
Chief Executive’s Letter
Dear Shareholder,
Annual Report 2021
Over the last twelve months, your Company, African Energy Resources Limited, has accelerated its transition to become a mineral
explorer with a primary interest in copper and copper-gold projects in Tier 1 fiscal jurisdictions such as Australia. After taking an initial
investment in ASX-listed Caravel Minerals in 2017, African Energy has significantly expanded its own project portfolio of copper-gold
projects through applications for multiple exploration licences in Western Australia, and by securing an exclusive option over a major
porphyry copper project in SE Queensland.
Copper is a metal in high demand due to its increasingly important role in the global push for a decarbonised economy and sustainable
renewable power development. It remains the most cost-effective, efficient conductor of electricity known, and is unlikely to be
materially substituted by other materials in the foreseeable future.
Copper plays a vital role in renewable energy, electric vehicles, communication and consumer electronics. Furthermore, supply side
constraints at several giant copper mines in developing economies, coupled with fiscal uncertainty over tax regimes and royalty rates
suggest copper will remain in tight supply for several years to come, underpinning strong prices and stimulating investment in new
exploration and development projects.
Key assets now held by the Company reflect a strong focus on copper, and include:
An exclusive option over the Briggs and Mannersley copper project in SE Queensland (143Mt @ 0.29% Cu in inferred
mineral resource) for a staged earn-in joint venture where African Energy can earn up to 70% of the project.
Five exploration licences granted for Cu, Cu-Au, and Au in the SW Terrane of Western Australia.
Nine exploration licence applications submitted for large-scale sediment-hosted copper projects in the East Kimberley
district of Western Australia.
Liquid investments worth ~ A$7.7M in ASX-listed copper resources companies Caravel Minerals (CVV) and Canterbury
Resources (CBY).
As a result of these changes, our portfolio of African coal projects is no longer considered to be a core asset and, subject to
shareholder approval, will be divested via a spin-out and in-specie distribution to existing African Energy shareholders.
African Energy carries no debt and has low corporate overheads. With our new focus on copper exploration in stable Tier 1
jurisdictions such as Australia, the Company has been repositioned to take advantage of the strong long-term market for copper
underpinned by the push for global decarbonisation.
Your Company has multiple new opportunities in its portfolio and looks forward to a year of strong news flow as we explore on
several fronts.
Frazer Tabeart
Executive Director and CEO
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African Energy Resources Limited
Annual Report 2021
Briggs, Mannersley and Fig Tree Hill Porphyry Copper Project
Geology
Porphyry copper mineralisation at Briggs and at Mannersley is
associated with multi-phase phyllic and potassic altered
granodiorite to tonalitic stocks which form part of the Triassic
Galloway Plains Intrusive Complex, intruded into Silurian to
Devonian aged sediments and volcanic rocks within the Yarrol
Province of the northern New England Orogen (Figure 2). The
Project has been explored over a long period, but only 32 drill holes
have been drilled at Briggs, of which only nine have been deeper
than 150m, with only one hole drilled at Mannersley.
Figure 2 Regional geological setting of the Briggs and Mannersley
Project in SE Queensland
Porphyry Copper Mineralisation at Briggs
The Inferred Mineral Resource of 143Mt @ 0.29% Cu occurs in the
Central Porphyry at Briggs, a porphyritic granodiorite stock with
dimensions in excess of 500m x 200m and which has been drilled
to a depth of over 500m. It is one of at least three intrusive centres
which make up the Briggs prospect. Mineralisation occurs in
stockworks of quartz veins containing quartz, chalcopyrite, minor
molybdenite, potassium feldspars and locally anhydrite (see
Figures 3 and 4).
The Briggs and Mannersley Porphyry Copper Project comprises
three exploration permits for minerals (EPM’s) covering a total
area of approximately 241 km2, and contains a JORC compliant
Inferred Mineral Resource estimate of 143Mt @ 0.29% copper at
a 0.2% copper cut-off grade in the Central Porphyry zone of the
Briggs Copper Project.
The Project is located in a low risk, Tier 1 jurisdiction, close to key
including sealed roads, rail, grid power, gas
infrastructure,
pipelines and a deep-water port at Gladstone which
lies
approximately 50km to the east (Figure 1).
African Energy has secured an exclusive option over the project
until 31 July 2022 through an equity investment of $1M into ASX-
listed Canterbury Resources Limited. African Energy has
committed to fund a A$750k exploration programs during option
phase, which will include:
•
•
Detailed soil sampling over the Briggs Porphyry to refine
future drilling targets.
RC drilling program (~3,000m) to test immediate upside at
the Briggs Porphyry.
These programs have commenced, and are scheduled for
completion during the final quarter of 2021. After exercise of the
option, African Energy can spend up to a further $15.25M via a
three stage earn-in to reach 70%:
•
•
•
Stage 1 (AFR 30%): $2.25M within 2 years of exercising
option.
Stage 2 (AFR 51%): further $3M within 4 years of exercising
option.
Stage 3 (AFR 70%): further $10M within 9 years of
exercising option.
Figure 1. Location Map of the Briggs and Mannersley Copper
Project, SE Queensland
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African Energy Resources Limited
Annual Report 2021
Briggs, Mannersley and Fig Tree Hill Porphyry Copper Project
Figure 5. The Northern and Southern porphyry targets occur
along strike from the outcrop of the Briggs central Inferred
Mineral Resource along a >2km long trend
Figure 3. Outcropping stockwork of quartz-chalcopyrite veins in
porphyritic granodiorite at the Central Porphyry of the Briggs
copper deposit.
Limited drilling to date indicates that the highest copper grades are
associated with sub-vertical banded silica bodies at the contacts
between different intrusive phases, or in the volcanic sediments
immediately adjacent to the granodiorite intrusions. Significant
opportunity to increase average grades at the Central Porphyry is
present once these positions are drilled to a higher density.
The Northern and Southern Porphyry’s occur along strike from the
Central Porphyry and show evidence of porphyry vein stockworks
and banded silica bodies at surface similar to those seen at the
Central Porphyry, along with copper anomalism in soil sampling
(Figure 5). Limited drilling at both of these prospects has
intersected similar mineralisation with similar grades to the
Central Porphyry and represent immediate targets for further
drilling for resource delineation.
The overall intrusive centre appears to be at least 2,000m long, is
elongated along a prominent WNW to NW trending structural
corridor and extends into untested ground held in the Fig Tree Hill
EPM to the northwest, providing significant potential to increase
the overall size of the resource. African Energy intends to
undertake significant drilling programs during the earn-in phase of
the joint venture to increase the grade and size of the resource and
to underpin an initial scoping study.
Figure 4. Multi-phase porphyry veins with blebby chalcopyrite
mineralisation and associated potassic alteration overprinting
volcanoclastic sediments, drill hole BD019-003 Central Porphyry,
Briggs.
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Annual Report 2021
African Energy Resources Limited
Western Australian Copper Projects
SW Terrane
African Energy applied for six exploration licences in the SW
Terrane of Western Australia in 2020. Five of these tenements
were granted in May 2021, with the sixth expected to be granted
shortly. These applications cover three project areas which are
considered prospective for large porphyry-style Cu-Au deposits
or intrusion related orogenic Au deposits. Preliminary evaluation
of open file data indicates very limited historical exploration has
been undertaken in these areas.
Figure 7. Sunnyside and Mayanup licences on an image of
regional aeromagnetic data, also showing the location of CRC-
LEME laterite samples and copper assays for these samples
Tarin Rock Gold Project
The Tarin Rock project comprises a single exploration licence
(E70/5615), which occurs in an area of geological complexity
where regional aeromagnetic data indicates the presence of a
series of complex, nested felsic intrusive rocks to the immediate
north-east of a jog in a major NNE trending structure. The Griffins
Find intrusion related orogenic gold deposit occurs a further 5km
to the NE of the tenement application. Tarin Rock is considered
prospective for intrusion related orogenic gold deposits.
Figure 8. Tarin Rock licence outline on regional aeromagnetic
data showing a complex series of nested felsic intrusions near a
major jog in a NNE trending fault.
Figure 6. Location of the five new copper projects granted in the
SW Terrane of Western Australia
Sunnyside-Mayanup Copper Project
that may be prospective
These two exploration licences occur on flexures in regional
structures which are interpreted to represent old subduction
zones
for porphyry Cu-Au
mineralisation. The Sunnyside licence straddles a structure
which represents a sub-terrane boundary. On the northern side
of this structure, GSWA regional mapping indicates the presence
of hornblende-bearing quartz monzonites which are locally
porphyritic in nature. These types of rocks are considered
prospective for porphyry Cu-Au mineralisation.
This is supported by strong geochemical anomalism for copper
in the CSIRO-CRC-LEME Laterite Geochemical database in this
area, with anomalous samples (>100ppm Cu) containing up to
409ppm Cu over an area of ~14km x 3.5km. The Mayanup
application straddles two linear structures and contains copper
anomalism up to 352ppm Cu over an area of ~12km x 5km.
A program of roadside soil and laterite sampling over these two
licences is scheduled to commence in Q3 2021.
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Annual Report 2021
African Energy Resources Limited
Western Australian Copper Projects
Kondinin Gold Project
The Kondinin Project comprises two
licences, E70/5611
(Kondinin North) and E70/5612 (Kondinin South). The project
covers deformed felsic gneisses to the east of a major N-S
structure in which several elongate dome or “eye” structures are
present. Kondinin North is approximately 10km to the SW of
Ramelius Resources’ Tampia gold project. Limited aircore drilling
over Kondinin South is reported in open file data.
Figure 9. Kondinin EL application outlines on regional
aeromagnetic data showing a series of domed (“eye”)
structures immediately east of a N trending major fault.
Figure 10. East Kimberley copper licence applications plotted
over regional geology, showing copper occurrences in the Elgee
Siltstone and at the base of the Middle Pentecost Sandstones
East Kimberley Copper Projects
African Energy has submitted applications for nine maximum size
exploration licences in the East Kimberley District of Western
Australia, covering two project areas considered highly
prospective for stratiform copper mineralisation. The Cambridge
Gulf Project consists of five exploration licence applications
ranging from 50km to 100km to the north of Wyndham. The
Menuair Dome Project consists of four exploration licence
applications situated 80km to the south-west of Wyndham.
Both projects contain numerous copper occurrences hosted in
the Elgee Siltstone or at the base of the Middle Pentecost
Sandstone, both part of the Palaeo-Proterozoic Kimberley
Group, and both considered prospective for sediment-hosted,
stratiform copper mineralisation. No modern exploration for
copper in these project areas is noted in any open file data held
on record in Western Australia.
The Company has initiated a process to discuss land access and
commercial agreements with the traditional owners of these
lands. Upon successful completion of these discussions, and
subsequent granting of the tenements, the Company will
undertake a stream sediment sampling program to determine
high-priority areas for follow-up.
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Annual Report 2021
available for sale. After allowing for transmission losses, the
two power sales agreements noted above will consume the full
output of the first 300MW stage. The Company also intends
to submit a bid into a 300MW tender which has been flagged
for release in 2021 by the Botswana Government.
Mmamabula West Project, Botswana (AFR 100%)
The 2,935Mt Mmamabula West project contains high quality
coal in two 4m to 6m thick seams (A-Seam and K-Seam) which
are 100-150m below surface and are amenable
to
conventional underground mining. The project is situated
65km west of the main railway line in Botswana which provides
access to local and regional coal markets.
A prefeasibility study on the extraction of the high-quality
lower A-Seam was completed for the project in 2014 and
determined that conventional underground mining could
produce a variety of products for coal export or power
generation at highly competitive prices, and that this coal
could be readily trucked to a rail loading station on the main
Botswana railway line. African Energy has developed coal
specifications for several different coal products, including
high quality export coals and coal suitable for use in South
African power stations.
Mmamantswe Integrated Power Project, Botswana (AFR
100%)
Mmamantswe contains 1.24Bt of thermal coal close to the
South African border. Several studies on coal preparation and
power station design were completed by the previous project
owner, including grid integration studies for power sales into
the South African grid. These studies indicated that the coal
quality and coal geometry is suitable for the development of a
mine-mouth power station and integrated coal mine but
requires a large off-taker for ~600MW to be viable. The project
is only 20km from the South African border and is close to the
regional power transmission grid and planned grid expansions
into South Africa.
African Energy Resources Limited
African Coal Projects
Figure 11. Location of African Energy’s Botswana coal and
power projects and the existing and planned regional
transmission interconnectors
Sese Power Project
First Quantum Minerals Ltd (FQML) became a majority equity
partner at the Sese Joint Venture in 2014 and have since
directly invested >AUD $17m for a 67% project interest. FQML
is responsible for arranging the funds required to build the
Sese integrated power project and will loan carry African
Energy’s residual interest through to commercial production.
The Sese JV partners have completed several technical studies
covering mining, coal preparation and power generation.
These studies have also established the operating costs, capital
costs and a robust financial model for the development of a
power project in staged 225MW to 300MW increments.
Assessment of the associated coal mine and coal processing
facilities have demonstrated that power from Sese could be
delivered to the Zambian Copperbelt where FQML operates a
large copper mining and smelting business and to other large
power consumers in the region.
A Power Sales Agreement to deliver 100MW of power to
FQML’s Zambian copper operations has been executed, along
with a Term Sheet for a Power sales Agreement to deliver
150MW to Zimasco Ptv in Zimbabwe.
The Sese Joint Venture is engaged with prospective partners
for financing and construction of the project and is progressing
these negotiations. Negotiations to date have focussed on an
initial installed capacity of 300MW gross (2 x 150MW units),
which would produce approximately 260MW of net power
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African Energy Resources Limited
Annual Report 2021
Tenement Schedule
Project Name
Tenement Name
Tenement Holder
Licence
Number
Equity
Area
(sq km)
Date Granted
Current Expiry
Date
Briggs and Mannerly
Briggs
Canterbury Resources Limited
EPM19198
-% (70%)
9.4
16-Dec-11
15-Dec-21*
Porphyry Copper
Mannersley
Canterbury Resources Limited
EPM18504
-% (70%)
31.3
13-Oct-10
12-Oct-25
Project
Kondinin
Fig Tree Hill
Canterbury Resources Limited
EPM27317
-% (70%) 181.7
20-Aug-20
19-Aug-25
Kondinin North
AFR Australia Pty Ltd
E70/5611
100%
26.1
3-May-21
2-May-26
Kondinin South
AFR Australia Pty Ltd
E70/5612
100%
112.9
3-May-21
2-May-26
Mayanup
Mayanup
AFR Australia Pty Ltd
E70/5613
100%
114.0
3-May-21
2-May-26
Sunnyside
Sunnyside
AFR Australia Pty Ltd
E70/5614
100%
162.3
3-May-21
2-May-26
Tarin Rock
Tarin Rock
AFR Australia Pty Ltd
E70/5615
100%
201.2
3-May-21
2-May-26
Tonebridge
Tonebridge
AFR Australia Pty Ltd
E70/5671
100%
150.4
TBA
Helby River
AFR Australia Pty Ltd
E80/5634
100%
231.6
TBA
Lyne River
AFR Australia Pty Ltd
E80/5635
100%
231.4
TBA
Cambridge Gulf
Mt McMillan
AFR Australia Pty Ltd
E80/5636
100%
231.5
TBA
Mt Nicholls
AFR Australia Pty Ltd
E80/5637
100%
231.4
TBA
Thompson River
AFR Australia Pty Ltd
E80/5638
100%
231.2
TBA
Durack River
AFR Australia Pty Ltd
E80/5639
100%
230.5
TBA
Palmer Creek
AFR Australia Pty Ltd
E80/5640
100%
230.3
TBA
West Menuair
AFR Australia Pty Ltd
E80/5641
100%
230.4
TBA
Mt Edith
AFR Australia Pty Ltd
E80/5642
100%
230.5
TBA
Sese ML
Sese Power Subsidiary
ML2016/42L
33%
51
22-Mar-17
31-Jan-42
Sese
African Energy Resources Botswana PL 96/2005
33%
95
26-Jul-05
30-Sep-21*
Sese West
African Energy Resources Botswana PL197/2007
33%
131
01-Oct-07
30-Sep-21*
Foley North
African Energy Resources Botswana PL004/2013
33%
774
01-Jan-13
31-Dec-22
Menuair Dome
Sese
Mmamantswe
Mmamantswe
Mmamantswe Coal (Pty) Ltd
PL069/2007
100%
453
01-Jul-12
31-Dec 21*
Mmamabula West
Mmamabula West
Phokoje Power (Pty) Ltd
PL56/2005
100%
296
01-July-05
30-Sep-22
*Tenement renewal submitted to relevant authority.
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African Energy Resources Limited
Annual Report 2021
Annual Statement of Mineral Resources
The Company completed an annual review of the reported Mineral Resources for the year ending 30 June 2021.
Sese JV Project (AFR 33.3%, FQML 66.7%): Resource Summary (Raw coal on an air-dried basis)
Resource Zone
In-Situ
Tonnes*
CV
(MJ/kg)
CV
(kcal/kg)
MEASURED
(Bk-C)
MEASURED
(Bk-B)
INDICATED
INFERRED
TOTAL
325 Mt
304 Mt
1,663 Mt
126 Mt
2,418 Mt
17.6
16.0
15.4
14.2
4,200
3,820
3,700
3,400
Ash
%
30.1
34.8
38.4
41.4
IM%
VM%
FC%
7.9
7.4
6.8
6.4
20.6
20.3
18.7
18.8
Sese West Project (AFR 33.3%, FQML 66.7%): Resource Summary (Raw coal on an air-dried basis)
Resource Zone
In-Situ
Tonnes*
CV
(MJ/kg)
CV
(kcal/kg)
MEASURED
INDICATED
INFERRED
TOTAL
35 Mt
7 Mt
1,935 Mt
1,977 Mt
17.7
17.2
15.2
4,225
4,110
3,630
Ash
%
32.5
32.8
39.5
IM%
VM%
6.4
6.9
6.0
19.4
19.9
19.8
Mmamabula West Project (AFR 100%): Resource Summary (Raw coal on an air-dried basis)
Resource Zone
In-Situ
Tonnes*
CV
(MJ/kg)
CV
(kcal/kg)
MEASURED
INDICATED
INFERRED
TOTAL
17 Mt
1,061 Mt
1,858 Mt
2,935 Mt
22.2
20.4
20.3
5,300
4,875
4,850
Ash
%
19.6
24.4
24.7
IM%
VM%
7.3
6.1
5.8
24.8
26.5
26.2
Mmamantswe Project (AFR 100%): Resource Summary (Raw coal on an air-dried basis)
Resource Zone
MEASURED
INDICATED
INFERRED
In-Situ
Tonnes*
978 Mt
265 Mt
N/A
TOTAL
1,243 Mt
CV
(MJ/kg)
9.5
7.9
CV
(kcal/kg)
2,270
1,890
Ash
%
56.5
62.3
IM%
VM%
3.9
3.3
15.8
14.2
FC%
21.8
18.1
* In-Situ tonnes have been derived by removing volumes for modelled intrusions, burnt coal and weathered coal and then
applying geological loss factors to the remaining Gross In-Situ Tonnes
ASX Listing Rule 5.21 disclosure
5.21.1
5.21.2
Results of the annual review of the reported Mineral Resources at 30 June 2021 are disclosed in the
table above.
The Company’s financial year end is 30 June 2021 and mineral resources held at year end are
disclosed in in the table above.
5.21.3
The Company has no reported Ore Reserves
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41.5
37.6
34.1
31.2
FC%
41.8
40.7
34.0
FC%
48.2
43.1
43.4
S
%
2.1
1.6
2.0
2.2
S
%
2.5
2.6
2.1
S
%
1.6
1.5
1.6
S
%
2.0
2.1
African Energy Resources Limited
Annual Report 2021
Annual Statement of Mineral Resources
There has been no material change to the Mineral Resources in the period from 30 June 2020 to 30
June 2021.
Resource governance arrangements are disclosed on page 11 of the Company’s annual report that
was released to ASX on 30 September 2021.
5.21.4
5.21.5
JORC Statement
The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the ‘JORC Code’) sets out minimum
standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore
Reserves. The information contained in this announcement has been presented in accordance with the JORC Code (2012 edition) and
references to “Measured, Indicated and Inferred Resources” are to those terms as defined in the JORC Code (2012 edition).
Competent Persons Statements
Information in this report relating to Exploration results, Mineral Resources or Ore Reserves is based on information compiled by Dr
Frazer Tabeart (an employee of African Energy Resources Limited) who is a member of The Australian Institute of Geoscientists. Dr
Tabeart has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person under the 2012 Edition of the Australasian Code for reporting of
Exploration Results, Mineral Resources and Ore Reserves. Dr Tabeart consents to the inclusion of the data in the form and context in
which it appears.
The Coal Resources quoted for the Mmamantswe Project in the table above have been defined in accordance with the practices
recommended by the Joint Ore Reserves Committee (2004 edition of the JORC Code). The coal resources quoted for Sese, Sese West and
Mmamabula West are reported as per the 2012 edition. There have been no material changes to any of the Sese, Sese West and
Mmamantswe resources since they were first announced. Mineral Resources & Ore Reserve Governance A summary of the governance
and internal controls applicable to African Energy’s Mineral Resources and Ore Reserves processes are as follows:
•
•
•
•
•
•
Review and validation of drilling and sampling methodology and data spacing, geological logging, data collection and
storage, sampling and analytical quality control;
Geological interpretation – review of known and interpreted structure, lithology and weathering controls;
Estimation methodology – relevant to mineralisation style and proposed mining methodology;
Comparison of estimation results with previous mineral resource models, and with results using alternate modelling
methodologies;
Statistical and visual validation of block model against raw composite data; and
Use of external Competent Persons to assist in the preparation of JORC Mineral Resources updates.
Forward Looking Statements This document may include forward looking statements. Forward looking statements include, but are not
necessarily limited to, statements concerning Caravel Minerals planned exploration programmes, studies and other statements that are
not historic facts. When used in this document, the words such as “could”, “indicates”, “plan”, “estimate”, “expect”, “intend”, “may”,
“potential”, “should” and similar expressions are forward looking statements. Such statements involve risks and uncertainties, and no
assurances can be provided that actual results or work completed will be consistent with these forward looking statements.
11 | P a g e
African Energy Resources Limited
ARBN 123 316 781
Financial Report
30 June 2021
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African Energy Resources Limited
Directors’ Report
Annual Report 2021
Your Directors present their report on the Consolidated Entity consisting of African Energy Resources Limited (Company) and its
controlled entities for the financial year ended 30 June 2021.
1. Directors and Company Secretary
The Directors and the Company Secretary of the Company at any time during or since the end of the financial year are as follows.
Alasdair Cooke BSc (Hons), MAIG – Executive Chairman
Mr Cooke has served as Chairman of the Board since its incorporation. Mr Cooke is a geologist with over 30 years’ experience in the
resource exploration industry throughout Australia and internationally. For the past 20 years Mr Cooke has been involved in mine
development through various private and public resource companies, prior to which he held senior positions in BHP Billiton plc’s
international new business and reconnaissance group.
Mr Cooke is a founding director of Mitchell River Group, which over the past seventeen years has established a number of successful
ASX listed resources companies, including Panoramic Resources, operating the Savannah and Lanfranchi nickel projects in Australia;
Albidon, operating the Munali Nickel Mine in Zambia, Mirabela Nickel, operating the Santa Rita nickel project in Brazil; Exco
Resources, developing copper and gold resources in Australia; and EVE Investments.
Other current directorships
EVE Investments Limited
Caravel Minerals Limited
Special responsibilities
Executive Chairman
Former directorships in the last three years
Anova Metals Limited
Interests in shares and options
50,003,682 shares
Charles (Frazer) Tabeart PhD, BSc (Hons) ARSM, MAIG – Executive Director and CEO
Dr Tabeart is a graduate of the Royal School of Mines with a PhD and Honours in Mining Geology. He has over 30 years’ experience
in international exploration and mining projects, including 16 years with WMC Resources. Whilst at WMC, Dr Tabeart managed
exploration portfolios in the Philippines, Mongolia and Africa, gaining considerable experience in a wide variety of commodities and
operating with staff from diverse cultural backgrounds.
Dr Tabeart was appointed Managing Director of the Company in November 2007 after serving two years as General Manager. Under
his stewardship the Company discovered and delineated the coal resource at the Sese Coal & Power Project and has since managed
the strategic direction of company to focus upon the delivery of multiple coal-fired power stations, captive coal-mines and an export
coal mine. He has overseen the acquisition of Mmamantswe and Mmamabula West Coal Projects that has grown the resource
inventory of the Company to 8.7Bt of thermal coal. In the last twelve months he has led the transition to copper exploration in
Australia.
Other current directorships
PolarX Limited
Arrow Minerals Ltd
Special responsibilities
Executive Director and CEO
Non-executive Chairman
Former directorships in the last three years
nil
Interests in shares and options
4,744,100 shares
Valentine Chitalu MPhil, BAcc, FCCA – Non-Executive Director
Mr Chitalu, a Zambian national and resident, is a Chartered Certified Accountant, Fellow of the Association of Chartered Certified
Accountants (UK) and holds a practicing certificate from the Zambia Institute of Certified Accountants. He also holds a Masters Degree
in Economics, Finance and Politics of Development and a Bachelor’s Degree in Accounting and Finance.
Mr Chitalu has been a Non-Executive Director of African Energy Resources since listing and has assisted African Energy through his
extensive business and Government contacts in the region.
13 | P a g e
African Energy Resources Limited
Directors Report (continued)
Annual Report 2021
Other current directorships
CDC Group
Special responsibilities
nil
Former directorships in the last three years
nil
Interests in shares and options
2,251,425 shares
Vincent Ian Masterton-Hume - Non-Executive Director
Mr Hume's career in the resources industry stretches back several decades, primarily in the fields of managed fund investments,
capital raising and project development. He currently sits on the boards of TSX-listed Golden Minerals and ASX-listed Iron Road. He
is a former Director of ASX and TSX-listed Marengo Mining.
Mr Hume was a Founding Partner of The Sentient Group (“Sentient”), an independent private equity investment firm that specialises
in the global resource industry. Prior to the founding of Sentient, Mr Hume was a consultant to AMP’s Private Capital Division, working
on the development of a number of Chilean mining investment joint ventures, as well as advising on a number of specific investments
across a range of commodities and locations.
Other current directorships
Golden Minerals Limited
Iron Road Limited
Special responsibilities
nil
Former directorships in the last three years
nil
Interests in shares and options
4,157,606 shares
John Dean - Non-Executive Director
Mr Dean is an employee of First Quantum Minerals (FQM). Since joining FQM in 2011 he has fulfilled various roles within their mining
operations including at FQM’s Sentinel Copper Mine, its new flagship mine in Zambia. Prior to joining FQM, Mr Dean worked as an
analyst in the energy and natural resource industries, possessing expertise in the valuation and commercial analysis of upstream oil
and gas projects, as well as experience in electricity, natural gas, and crude oil markets.
Mr Dean graduated with honours from the University of Louisville in the United States with a Bachelor of Science in Business
Administration, and was later awarded a Masters of Business Administration with distinction from the University of Oxford.
In addition to the Directorship, Mr Dean is a part of the team responsible for the development of power generation projects at the
Sese Coal & Power Project under the joint venture with FQM.
Current directorships
nil
Former directorships in the last three years
nil
Special responsibilities
nil
Interests in shares and options
nil
Daniel Davis – Company Secretary
Mr Davis is a qualified accountant who has fifteen years-experience in senior accounting and corporate roles for resources businesses
in all stages from exploration to development, construction and mining.
1.1 Directors’ Meetings
There was one Director’s meeting during the Year which was attended by all Directors.
2. Remuneration Report - Audited
This Remuneration Report outlines the remuneration arrangements which were in place during the year and remain in place as at the date
of this report, for the Directors and key management personnel (“KMP”) of African Energy Resources Limited.
The information provided in this remuneration report has been Audited as required by section 308(3c) of the Corporations Act 2001.
14 | P a g e
African Energy Resources Limited
Directors Report (continued)
3.1 Principles of Compensation
Annual Report 2021
The objective of the Company’s executive reward framework is to ensure reward for performance is competitive and appropriate for the
results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders
and conforms with market practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for
good reward governance practices:
•
•
•
•
•
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation;
transparency; and
capital management.
Alignment to shareholders’ interests:
•
•
•
has economic profit as a core component of plan design;
focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant
return on assets as well as focusing the executive on key non-financial drivers of value; and
attracts and retains high calibre executives.
Alignment to program participants’ interests:
rewards capability and experience;
reflects competitive reward for contribution to growth in shareholder wealth;
provides a clear structure for earning rewards; and
provides recognition for contribution.
•
•
•
•
The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As executives gain seniority with the
Company, the balance of this mix shifts to a higher proportion of ''at risk'' rewards.
The following table shows key performance indicators for the group over the last five years:
Profit / (loss) for the year attributable to owners
Basic earnings / (loss) per share (cents)
Dividend payments
Dividend payment ratio (%)
Increase / (decrease) in share price (%)
Total KMP incentives as percentage of profit / (loss)
for the year (%)
2021
2020
2019
2018
(4,053,299)
(0.65)
-
-
50%
(3,372,977)
(0.54)
-
-
(7%)
(927,792)
(0.15)
-
-
(187%)
(4,013,178)
(0.64)
-
-
(304%)
Restated (1)
2017
(1,618,702)
(0.27)
-
-
209%
-
-
-
-
-
(1)
Prior to 30 June 2017, the Group capitalised, accumulated exploration and evaluation expenditure and carried forward to the
extent that they were expected to be recouped through the successful development of the area or where activities in the area
have not yet reached a stage which permits reasonable assessment or the existence or economically recoverable reserves. From
1 July 2017, Exploration and evaluation expenditure is stated at cost and is accumulated and carried forward to the extent
that they are expected to be recouped through the successful development of the area or where activities in the area have
not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. The
result of this accounting change meant that the Group expensed exploration and evaluation expenditure as incurred in respect of
each Identifiable area of interest until a time where an asset Is In development.
3.2 Remuneration governance
The Remuneration Committee provides advice on remuneration and incentive policies and practices and specific recommendations on
remuneration packages and other terms of employment for Executive Directors, other senior executives and Non-Executive Directors. The
Corporate Governance Statement provides further information on the role of the Board.
3.3 Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non-
Executive Directors’ fees and payments are reviewed annually by the Board.
The current base remuneration was last reviewed with effect from 1 July 2020 and was set at US$18,826 (AU$25,000) per annum (2020:
US$17,168).
15 | P a g e
African Energy Resources Limited
Directors Report (continued)
3.4 Executive Directors
Base Pay
Annual Report 2021
Base pay is structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial
benefits at the Remuneration Committee’s discretion.
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for executives is reviewed
annually to ensure the executive’s pay is competitive with the market. There is no guaranteed base pay increases included in any executives’
contract.
Long-term incentives
The award of options to Directors, provides an opportunity for Directors to participate in the Company's growth and an incentive to
contribute to that growth. The Remuneration Committee determines performance hurdles that will apply to each option issued. No new
options were issued to Directors during the year ended 30 June 2021.
Service Contracts
On appointment to the Board, Executive Directors enter into an executive service agreement with the Company. The agreement details the
Board policies and terms, including compensation, relevant to the office of Director.
The Company currently has service contracts in place with Alasdair Cooke and Charles Tabeart. All contracts with Executive Directors are for
a two-year term but can be terminated by either party with three months’ notice. Details of the service agreements are listed below.
Alasdair Campbell Cooke - Executive Chairman, the Company
•
•
•
•
•
Commencement date: 1 January 2021
Term: 1 year
Base annual salary is US$64,009 (AU$85,000)
Consulting Fee of US$1,506 (AU$2,000) per day when the executive works more than one day per week
Termination payment is the equivalent of three months consulting fees
Charles Frazer Tabeart - Executive Director, the Company
•
•
•
•
•
Commencement date: 1 January 2021
Term: 1 year
Base annual salary is US$120,488 (AU$160,000)
Consulting Fee of US$1,506 (AU$2,000) per day when the executive works more than two and a half days per week
Termination payment is the equivalent of three months consulting fees
No other key management personnel have service contracts in place with the Consolidated Entity.
3.5 Comments made at the Company’s 2020 Annual General Meeting
The Company did not receive any specific feedback at the AGM held on 19 November 2020 or throughout the year on its remuneration
practices.
3.6 Directors and Executive Officers’ Remuneration (Consolidated Entity)
Details of the remuneration of the Directors of the Consolidated Entity (as defined in AASB 124 Related Party Disclosures) of the Consolidated
Entity are set out in the following tables.
The key management personnel of the Consolidated Entity are the Directors of African Energy Resources Limited.
16 | P a g e
African Energy Resources Limited
Directors Report (continued)
Annual Report 2021
The following tables set out remuneration paid to key management personnel of the Consolidated Entity during the year.
Short term
employee
benefits
Cash salary &
fees
Post-
employment
benefits
Superannuation
Share based
payments
Performance
based
Total
US$
US$
US$
%
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,734
18,735
788
18,734
56,991
119,900
63,697
183,597
240,588
23,505
23,505
33,578
23,505
104,093
107,450
87,974
195,424
299,517
Key Management Personnel
remuneration - 2021
Non-Executive Directors
Valentine Chitalu
Vincent Masterton-Hume
Gregory Fry
John Dean
Total Non-Executive Directors
Executive Directors
Charles Tabeart
Alasdair Cooke
Total Executive Directors
Total Key Management Personnel
Key Management Personnel
remuneration - 2020
Non-Executive Directors
Valentine Chitalu
Vincent Masterton-Hume
Gregory Fry
John Dean
18,734
16,955
788
18,734
55,211
119,900
63,697
183,597
238,808
23,505
21,272
33,578
23,505
-
1,780
-
-
1,780
-
-
-
1,780
-
2,233
-
-
Total Non-Executive Directors
101,860
2,233
Executive Directors
Charles Tabeart
Alasdair Cooke
Total Executive Directors
Total Key Management Personnel
107,450
87,974
195,424
297,284
-
-
-
2,233
The Group did not engage a remuneration consultant during the year.
3.7 Share-based compensation
The Company did not issue share-based compensation during the year.
17 | P a g e
African Energy Resources Limited
Directors Report (continued)
3.8 Directors’ and Executives Interests - Shares
Non-executive Directors
Valentine Chitalu
Vincent Masterton-Hume
John Dean
Executive Directors
Alasdair Cooke
Charles Tabeart
Gregory Fry
Annual Report 2021
Balance at
30/06/2020
Purchases
(Sales)
Balance at
30/06/2021
2,251,425
4,157,606
-
50,003,682
4,774,100
5,869,610
67,056,423
-
-
-
-
-
-
-
2,251,425
4,157,606
-
50,003,682
4,774,100
5,869,610
67,056,423
There are no other equity interests held by Directors
3.9 Directors’ and Executives Interests - Other related party transactions
The terms and conditions of the transactions with Directors, key executives and associates and their related entities were no more favourable
than those available, or which might reasonably be expected to be available, on similar transactions to non-Director related entities on an
arm’s length basis.
Mitchell River Group Pty Ltd
Charges from
Charges to
2021
US$
2020
US$
2021
US$
2020
US$
36,668
70,475
-
-
At 30 June 2021 the company had a payable outstanding to Mitchell River Group of US$1,205 (30 June 2020: US$2,184).
This is the end of the Audited remuneration report.
3. Principal Activities
The principal activity of the Consolidated Entity during the course of the financial year was the development of power projects in southern
Africa.
4. Events Subsequent to Reporting Date
On 18 August 2021, African Energy announced that it had increased its focus on copper by signing a binding term sheet by which it is granted
an exclusive option to commence an earn-in to obtain up to a 70% interest in the Briggs, Mannersley and Fig Tree Hill Porphyry Copper
Project in South East Queensland.
The Company subscribed for 8,333,333 Canterbury Shares at 12c each for a total investment of $1,000,000 to secure the option until 31 July
2022 before which it must have spent a minimum of $750,000 on RC drilling and soil sampling programme.
The Company has undertaken a placement of 70,000,000 new shares at 2 cents per share to raise A$1,400,000 to fund the option
expenditure commitment. Directors, Frazer Tabeart (1,250,000 shares) and Alasdair Cooke (5,000,000 shares), are seeking to participate in
the placement subject to shareholder approval at an upcoming shareholder meeting.
To facilitate the Company's increased focus on copper, the Company proposes to undertake a restructure so that its interest in Sese Coal
Project, Mmamantswe Coal Project and Mmamabula West Coal Project will be spun-out of the Company by way of an in-specie distribution.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the entity's
operations, the results of those operations, or the entity's state of affairs in future financial years.
5. Likely Developments and Expected Results
The Group will continue to pursue activities within its corporate objectives. Further information about likely developments in the operations
of the Group and the expected results of those operations in the future financial years has not been included in this report because disclosure
would likely result in unreasonable prejudice to the Group.
18 | P a g e
African Energy Resources Limited
Directors Report (continued)
6. Significant Changes in the State of Affairs
Annual Report 2021
In the opinion of the Directors, other than stated under Review of Operations, and Events Subsequent to Reporting Date, there were
no significant changes in the state of affairs of the Group that occurred during the financial year under review and subsequent to the year
end.
7. Environmental Regulations
The Consolidated Entity’s operations are not subject to any significant environmental regulations under the legislation of countries in
which it operates. However, the Board believes there are adequate systems in place for the management of its environmental
requirements and is not aware of any breach of those environmental requirements as they apply.
The Company is not subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the National
Greenhouse and Energy Reporting Act 2007.
8.
Indemnification and Insurance of Officers and Auditors
An indemnity agreement has been entered into with each of the Directors and Company Secretary of the Company named earlier in this
report. Under the agreement, the Company has agreed to indemnify those officers against any claim or for any expenses or costs which
may arise as a result of work performed in their respective capacities to the extent permitted by law. There is no monetary limit to the
extent of this indemnity.
During the financial year, the Company has taken out an insurance policy in respect of Directors’ and officers’ liability and legal expenses for
Directors and officers.
9. Corporate Structure
African Energy Resources Limited is a Company limited by shares that is incorporated and domiciled in Guernsey. The Company is listed on
the Australian Securities Exchange and Botswana Stock Exchange under code AFR.
10. Non-Audit Services
During the year, there were no non-Audit services provided by BDO Audit (WA) Pty Limited (2020: nil).
11. Loans to key management personnel
No loans to key management personnel were provided during the period or up to the date of signing this report.
12. Lead Auditor’s Independence Declaration
The lead Auditor’s Independence Declaration is set out on page 24 and forms part of the Directors’ report for the financial year ended 30
June 2021.
Charles Frazer Tabeart
Managing Director
Perth, 30 September 2021
19 | P a g e
African Energy Resources Limited
Directors’ Report
African Energy Resources Limited and its Controlled Entities
The Directors of the Company declare that:
Annual Report 2021
1
The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and
accompanying notes, are in accordance with the Corporations Act 2001; and
(a)
comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(b) give a true and fair view of the financial position as at 30 June 2021 and of the performance for the year ended on that
date of the Consolidated Entity.
2
3
4
In the Directors opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The Consolidated Entity has included in the notes to the financial statements an explicit and unreserved statement of compliance
with International Financial Reporting Standards.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed on behalf of the Directors by:
Charles Frazer Tabeart
Managing Director
Perth, 30 September 2021
20 | P a g e
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of African Energy Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of African Energy Resources Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
June 2021, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial report, including a summary of significant accounting policies
and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1.4 in the financial report which describes the events and/or conditions
which give rise to the existence of a material uncertainty that may cast significant doubt about the
group’s ability to continue as a going concern and therefore the group may be unable to realise its
assets and discharge its liabilities in the normal course of business. Our opinion is not modified in
respect of this matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying Value of Investment in Associate
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 2.1, the Group’s investment in
Our procedures included, but were not limited to the
associate (Sese Power Project) has a significant
following:
carrying value as at 30 June 2021.
The company is required to assess whether any
impairment indicators are present in accordance with
ASAB 128 Investments in Associates and Joint Ventures
(“AASB 128”) which may indicate the Group’s
investment in associate is impaired.
We have determined this is a key audit matter given its
financial significance to the Group and the judgements
and estimates required in assessing the carrying value
of the investment.
•
•
Considering the existence of any indicators of
impairment in accordance with AASB 128;
Reviewing ASX Announcements, Board of
Directors meetings minutes, joint venture
minutes and considering management’s
assessment of impairment indicators;
•
Assessing impairment recognised by
management and considering the
appropriateness of management’s valuation
methodology applied; and
•
Assessing the adequacy of related disclosures in
Note 2.1 and Note 1.6 to the Financial
Statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2021, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 18 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of African Energy Resources Limited, for the year ended 30
June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 30 September 2021
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF AFRICAN ENERGY
RESOURCES LIMITED
As lead auditor of African Energy Resources Limited for the year ended 30 June 2021, I declare that, to
the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of African Energy Resources Limited and the entities it controlled during
the period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 30th September 2021
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
African Energy Resources Limited
Annual Report 2021
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2021
Government grants
Interest received
Personnel expenses
Professional & administration expense
Exploration & evaluation expensed
Share based payment reversal
Gain / (loss) on derivative
Share of Loss in Sese JV
Impairment
Foreign currency gain / (loss)
Loss before tax
Income tax expense
Loss after income tax for the year
Attributable to:
Equity holders of the Company
Loss for the year
Other comprehensive income will not be reclassified to profit or loss.
Gain on financial assets
Other comprehensive items that may be reclassified to profit or loss
Foreign currency translation reserve
Total other comprehensive income / (loss) for the year
Total comprehensive income (loss) attributable to the ordinary equity
holders of the Company:
Total comprehensive Income (loss) for the year
Note
3.2
3.3
3.3
2.1, 4.6
3.4
2021
US$
16,102
5,977
(198,632)
(251,342)
(186,116)
-
-
(98,510)
(3,340,647)
(131)
(4,053,299)
-
(4,053,299)
2020
US$
24,783
18,814
(150,552)
(192,161)
(91,372)
9,699
(53,120)
(408,704)
(2,500,000)
(30,364)
(3,372,977)
-
(3,372,977)
(4,053,299)
(4,053,299)
(3,372,977)
(3,372,977)
5,181,459
12,535
140,917
5,322,376
(36,718)
(24,183)
1,269,077
(3,397,160)
Loss per share for loss attributable to the ordinary equity holders of the
Company:
Basic and diluted loss per share (cents per share)
3.5
(0.65)
(0.54)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying
notes.
26 | P a g e
African Energy Resources Limited
Consolidated Statement of Financial Position
As at 30 June 2021
Annual Report 2021
Assets
Current assets
Cash & cash equivalents
Financial assets at FVOCI
Trade & other receivables
Total current assets
Non-current assets
Investment in Sese Joint Venture
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade & other payables
Total current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings (Accumulated losses)
Total equity attributable to shareholders of the Company
Note
2021
US$
2020
US$
4.1
4.3
4.4
2.1
4.5
1,109,154
5,294,379
61,832
6,465,365
3,478,882
3,478,882
9,944,247
81,004
81,004
81,004
1,013,017
631,257
19,229
1,663,503
7,077,471
7,077,471
8,740,974
146,808
146,808
146,808
9,863,243
8,594,166
5.1
X4.7
64,134,977
(103,438)
(54,168,296)
9,863,243
64,134,977
(5,425,814)
(50,114,997)
8,594,166
The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
27 | P a g e
African Energy Resources Limited
Consolidated Statement of Changes in Equity
for the year ended 30 June 2021
Annual Report 2021
For the twelve months ended 30
June 2021
Contributed
Accumulated
losses
Foreign
Currency
Translation
Reserve
Other
Comprehensive
Income Reserve
(FVOCI)
Share-
Based
Payments
Reserve
Total
equity
US$
US$
US$
US$
US$
equity
US$
At 30 June 2020
64,134,977
(50,114,997)
(5,255,307)
(170,507)
-
8,594,166
Net earnings for the year
Effect of translation of foreign
operations to group presentation
currency
Movement in fair value of
financial assets at FVOCI
Total comprehensive income for
the year
-
(4,053,299)
-
-
-
(4,053,299)
-
-
-
-
140,917
-
-
140,917
-
5,181,459
-
5,181,459
-
(4,053,299)
140,917
5,181,459
-
1,269,077
At 30 June 2021
64,134,977
(54,168,296)
(5,114,390)
5,010,952
-
9,863,243
For the twelve months ended 30
June 2020
At 30 June 2019
64,134,977
(51,721,316)
(5,218,589)
(183,042)
4,988,996
12,001,026
Net earnings for the year
Effect of translation of foreign
operations to group presentation
currency
Movement in fair value of
financial assets at FVOCI
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners:
-
(3,372,977)
-
-
-
(3,372,977)
-
-
-
-
(36,718)
-
-
(36,718)
- 12,535
-
12,535
-
(3,372,977)
(36,718)
12,535
-
(3,397,161)
-
4,979,297
-
-
(4,979,297)
-
Share based payments
-
-
-
-
(9,699)
(9,699)
At 30 June 2020
64,134,977
(50,114,997)
(5,255,307)
(170,507)
-
8,594,166
The Consolidated Statements of Changes in Equity are to be read in conjunction with the accompanying notes.
28 | P a g e
African Energy Resources Limited
Consolidated Statement of Cash Flows
Cash flows from operating activities
Interest received
Payment for exploration and evaluation
Payment to suppliers and employees
Net cash (outflow) from operating activities
Cash flows from investing activities
Investment in Sese JV
Receipts from sale of listed investments
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Issue of Shares
Net cash inflow/(outflow) from financing activities
Cash and cash equivalents at the beginning of the year
Net (decrease) / increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
Annual Report 2021
Note
2021
US$
2020
US$
6,128
(132,411)
(471,235)
(597,518)
34,401
569,334
603,735
-
-
1,013,017
6,217
89,920
1,109,154
20,302
(86,058)
(364,893)
(430,649)
(447,286)
-
(447,286)
-
-
1,941,739
(877,935)
(50,787)
1,013,017
4.2
4.1
4.1
The Consolidated Statements of Cash Flows are to be read in conjunction with the accompanying notes
29 | P a g e
African Energy Resources Limited
Notes to the Financial Statements
1.
Basis of Preparation
1.1 Statement of Compliance
Annual Report 2021
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards (‘AASBs’)
(including Australian Interpretations) adopted by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act
2001. The financial report of the Consolidated Entity also complies with IFRSs and interpretations as issued by the International
Accounting Standards Board. African Energy Resources Limited is a for-profit entity for the purposes of preparing financial
statements.
The financial report was authorised for issue by the Directors on 30 September 2021.
1.2 Basis of measurement
The financial report is prepared under the historical cost convention.
1.3 Functional and presentation currency
These consolidated financial statements are presented in US dollars (‘US$’).
The functional currency of the Company and each of the operating subsidiaries is US$ which represents the currency of the
primary economic environment in which the Company and each of the operating subsidiaries operates.
Subsidiaries denominated in Australian dollars (‘AU$’) are translated at the closing rate on reporting date. Profit or loss items
are translated on the prevailing rate on the date of transaction.
1.4 Going concern
This report is prepared on the going concern basis which assumes the continuity of normal business activity and the realisation
of assets and settlement of liabilities in the normal course of business.
The Group incurred a net loss of $4,053,299 during the year ended 30 June 2021 (2020: $3,372,977) and as of that date the
Group had net current assets of $9,863,243 (30 June 2020: $1,516,695) including cash and cash equivalents of $1,109,154 (30
June 2020: $1,013,057). Additionally, the Group held an investment in Caravel Minerals shares worth $5,294,379 (30 June 2020:
$631,257) which it may sell to replenish cash reserves. Net cash used in operating activities for the period was $597,518 (2020:
$430,649).
These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Group to continue as a
going concern. The ability of the Group to continue as a going concern is principally dependent upon its ability to secure funds
by raising capital from equity markets or by other means, and by managing cash flows in line with available funds, and/or the
successful development of its exploration assets.
The Directors are confident of the ability of the Company to potentially raise capital as and when required. The Directors are
satisfied there are sufficient funds to meet the Group’s working capital requirements as at the date of this report.
The directors are uncertain of the duration of the COVID-19 pandemic and of the potential consequential impact that may flow
through to the Group’s future operating costs and exploration activities. The directors believe there are reasonable prospects
the Group can continue operations through the COVID-19 pandemic and are committed to the long term development and
growth of the Company on behalf of its shareholders, employees and the communities in which it operates.
The Directors have reviewed the business outlook and the assets and liabilities of the Group and are of the opinion that the
going concern basis of accounting is appropriate as they believe the Group will continue to be successful in securing additional
funds as and when the need to raise funds arises. Should the Group not be able to continue as a going concern, it may be
required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ
from those stated in the financial statements and that the financial report does not include any adjustments relating to the
recoverability and classification of recorded asset amounts or liabilities that might be necessary should the entity not continue
as a going concern.
30 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
1.5 Reporting entity
Annual Report 2021
African Energy Resources Limited (referred to as the ‘Parent Entity’ or the ‘Company’) is a company domiciled in Guernsey. The
consolidated financial statements of the Company as at and for the year ended 30 June 2021 comprise the Company and its
subsidiaries (together referred to as the ‘Consolidated Entity’ or the ‘Group’). The Group is primarily involved in power and coal
development in southern Africa.
1.6 Use of estimates and judgments
The preparation of a financial report in conformity with Australian Accounting Standards requires management to make
judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates. These accounting policies have been consistently applied by each entity in the Consolidated Entity.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods. In particular, information about significant areas of estimation
uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount
recognised in the financial statements are described in the following notes:
•
•
Note 2.1 – Investments in Associates – The Group assesses the carrying amount of investment in associates at each
reporting period in accordance with AASB 128. If impairment indicators are identified, the Group tests the
investments for impairment in accordance with AASB 136. In assessing the recoverability of investments in associates,
management applies their estimates and judgements as to the recoverability.
Note 7 – Share-based payments arrangements - The Group values options issued at fair value at the grant date using
the black scholes option pricing model taking into account the exercise price, the term of the option, the impact of
dilution, the share price at grant date, the expected volatility of the underlying share, the expected dividend yield and
risk free interest rate for the term of the option. Performance rights are valued at face value of the share on the date
of issue. At each reporting period management assess the probability of the vesting of options and performance
rights where applicable in accordance with AASB 2 – Share based payments (non-market conditions). The probability
is assessed to either be less likely or more likely (0% or 100%) and a vesting expense is recorded accordingly.
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on
the company based on known information. This consideration extends to the nature of the products and services offered,
customers, supply chain, staffing and geographic regions in which the company operates. Other than as addressed in specific
notes, there does not currently appear to be either any significant impact upon the financial statements or any significant
uncertainties with respect to events or conditions which may impact the company unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
2.
Non-Current Assets
2.1
Investments in Associates
Associates are entities over which the Group has significant influence but not control or joint control. Associates are accounted
for in the parent entity financial statements at cost and the consolidated financial statements using the equity method of
accounting. Under the equity method of accounting, the group's share of post-acquisition profits or losses of associates is
recognised in consolidated profit or loss and the group's share of post-acquisition other comprehensive income of associates is
recognised in consolidated other comprehensive income. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investment. Dividends received from associates are recognised in the parent entity's profit or loss, while
they reduce the carrying amount of the investment in the consolidated financial statements.
Subsidiaries are all entities over which the group has control. Control is determined with reference to whether the group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Where the group loses control of a subsidiary but retains significant
influence, the retained interest is re-measured to fair value at the date that control is lost and the difference between fair value
and the carrying amount is recognised in profit or loss. There is judgement involved in determining whether control has been
lost and determining the fair value of the investment held.
31 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
(a) Movements in carrying amounts
Balance at the beginning of the year
Investments in Sese JV
Refund of Prior Year contributions to Sese
Impairment
Share of Losses after income tax
Carrying amount at 30 June
Annual Report 2021
2021
US$
7,077,471
-
(159,432)
(3,340,647)
(98,510)
3,478,882
2020
US$
6,924,616
561,559
-
(408,704)
7,077,471
Due to change in focus, directors of the Group impaired the value of its investment in Sese JV down to its recoverable amount.
(b) Share of the results of its associates
(c) The groups share of the results of its associates and its aggregated assets and liabilities are as follows.
Ownership
Interest %
African Energy Holdings SRL
30.3
Company's share of:
Assets
US$
4,661,379
Liabilities
US$
95,747
Revenues
US$
-
(Loss)
US$
(98,510)
(d) Summarised financial information of associate - African Energy Holdings SRL
Summarised statement of financial position
Current Assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current Assets
Exploration & evaluation
Property, plant & equipment
Total non-current assets
Total assets
Current Liabilities
Trade and other payables
Total current liabilities
Non-current Liabilities
Rehabilitation Provision
Total non-current liabilities
Total liabilities
Net assets
Summarised statement of comprehensive income
Total Operating Expense
Loss from operating activities
Other comprehensive income
Total comprehensive income
2021
US$
2020
US$
163,165
29,712
192,877
15,190,400
813
15,191,212
15,384,089
119,720
32,152
151,872
14,972,208
-
14,972,208
15,124,080
65,996
65,996
76,607
76,607
250,000
250,000
315,996
15,068,093
2021
US$
285,753
285,753
9,777
295,530
250,000
250,000
326,607
14,797,473
2020
US$
1,216,335
1,216,335
9,777
1,226,112
There were no contingent assets or liabilities in African Energy Holdings SRL at 30 June 2021. There were no commitments at
30 June 2021.
32 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
Annual Report 2021
3.
Financial Performance
3.1 Segment information
AASB 8 Operating Segments requires a ‘management approach’, under which segment information is presented on the same
basis as that used for internal reporting purposes. The segments are reported in a manner that is consistent with the internal
reporting provided to the chief operating decision maker.
(a) Description of Segments
The Company’s Board receives financial information across three reportable segments. These are Coal-fired Power Projects;
Power Investments and Unallocated.
(b) Segment Information
For the year ended 30 June 2021
Total segment revenue
Impairment
Profit (loss) before income tax
Segment Assets
Investment in Sese JV
Financial assets at FVOCI
Cash and short term receivable
Total Segment Assets
Segment Liabilities
Trade & other payables
Total Segment Liabilities
For the year ended 30 June 2020
Total segment revenue
Impairment
Profit (loss) before income tax
Segment Assets
Investment in Sese JV
Financial assets at FVOCI
Cash and short term receivable
Total Segment Assets
Segment Liabilities
Trade & other payables
Total Segment Liabilities
3.2 Revenue
(a) Revenue recognition
Coal-fired
Power
Development
Projects
Power
Investments
All other
segments
Consolidated
US$
US$
US$
US$
-
(186,116)
-
(3,340,647)
(3,439,157)
22,079
-
(428,026)
22,079
(3,340,647)
(4,053,299)
-
-
-
-
-
-
-
(2,591,372)
-
-
-
-
-
3,478,882
-
-
3,478,882
-
5,294,379
1,170,986
6,465,365
3,478,882
5,294,379
1,170,986
9,944,247
-
-
81,004
81,004
81,004
81,004
-
(2,500,000)
(408,704)
43,597
-
(372,901)
43,597
(2,500,000)
(3,372,977)
7,077,471
-
7,077,471
-
631,257
1,032,246
1,663,503
7,077,471
631,257
1,032,246
8,740,974
114,273
-
32,535
32,535
146,808
146,808
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can
be reliably measured.
33 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
(a) Government Grants
Annual Report 2021
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with
the costs that they are intended to compensate. This includes Job Keeper income received due to COVID-19 during the year
which has been net off with the associated salaries this year.
(b) Net financial income
Net financial income comprises interest payable on borrowings calculated using the effective interest method, interest
receivable on funds invested, dividend income and foreign exchange gains and losses.
Interest income is recognised in the profit or loss as it accrues, using the effective interest method. Management fees are
recognised in the profit or loss as the right to a fee accrues, in accordance with contractual rights.
2021
US$
5,977
5,977
2020
US$
18,814
18,814
2021
US$
62,130
5,729
240,589
(109,816)
198,632
98,453
113,189
21,738
2,825
1,093
-
14,044
251,342
2020
US$
89,191
7,710
297,232
(243,581)
150,552
63,387
61,283
23,533
7,551
8,352
7,628
20,427
192,161
2021
US$
2020
US$
-
-
-
-
-
-
-
-
Interest received
3.3 Expenses
Personnel expenses
Employee salaries
Superannuation
Directors fees
Recharge of director fees and employee salaries
Professional & administration expense
Audit Tax and Accounting
Compliance & Insurance
Occupancy
Travel
Marketing
Depreciation and Impairment of PP&E
Other
3.4
Income Taxes
(a) Income tax expense:
Current tax
Deferred tax
Overprovision in respect to prior years
34 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
(b) Reconciliation of income tax expense to prima facie tax payable:
Loss before income tax
Prima facie income tax at 30% (2019: 27.5%)
Tax effect of amounts not deductible in calculating taxable income:
Sundry items
Other
Difference in overseas tax rates
Tax loss not recognised
Income tax expense/(benefit)
(c) Tax losses:
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30% (2019: 27.5%)
Difference in overseas tax rates 10%
Potential tax benefit
(d) Unrecognised deferred tax assets arising on timing differences and losses
Timing
Losses - Revenue
Annual Report 2021
2021
US$
2020
US$
(4,053,299)
(1,053,858)
(3,372,977)
(1,011,893)
(4,114)
33,199
(1,024,772)
(2,674)
905,868
121,577
-
(7,387)
91,248
(928,032)
(4,321)
-
932,353
-
2021
US$
2020
US$
(598,527)
(155,617)
(2,674)
(152,306)
(511,187)
(153,356)
(4,321)
(157,677)
2021
US$
2020
US$
839,861
4,032,706
4,872,566
778,730
4,656,480
5,435,211
The tax benefits of the above deferred tax assets will only be obtained if:
i.
The Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable the
benefits to be utilised;
ii.
The Consolidated Entity continues to comply with the conditions for deductibility imposed by law;
iii. No changes in income tax legislation adversely affect the Consolidated Entity from utilising the benefits.
Income tax on the Statement of Profit or Loss and other Comprehensive Income for the periods presented comprises current
and deferred tax. Income tax is recognised in the Statement of Profit or Loss and other Comprehensive Income except to the
extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit
35 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
Annual Report 2021
will be realised, or to the extent that the Group has deferred tax liabilities with the same taxation authority. Additional income
taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.
3.5 Earnings per share
3.6 Basic loss per share
The calculation of basic loss per share at 30 June 2021 was based on the losses attributable to ordinary shareholders of
US$4,053,299 (2020: US$3,372,977) and a weighted average number of ordinary shares outstanding during the financial year
ended 30 June 2021 of 622,960,630 (2020: 622,960,630) calculated as follows:
Gain (Loss) attributable to ordinary shareholders
Issued number of ordinary shares at 1 July
Effect of shares issued during the period
Weighted average number of shares for year to 30 June
2021
US$
(4,053,299)
2020
US$
(3,372,977)
622,960,630
-
622,960,630
622,960,630
-
622,960,630
Basic loss per share (cents per share)
(0.65)
(0.54)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs
of servicing equity other than ordinary shares, by weighted average number of ordinary shares outstanding during the financial
year, adjusted for the bonus elements in ordinary shares issued during the year.
(a) Diluted loss per share
Potential ordinary shares are not considered dilutive, thus diluted loss per share is the same as basic loss per share.
4. Working Capital Management
4.1 Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances, short term bills and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Consolidated Entity’s cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.
Cash at bank and in hand
Short-term deposits
Refer to Note 5.2 for risk exposure analysis.
4.2 Reconciliation of loss after income tax to net cash flows from operating activities
Cash flows from operating activities
(Loss) for the year
Adjustments for:
Gain/(Loss) on Derivative
Equity-settled share-based payment expenses
Share of Loss in Sese JV
Impairment
Foreign exchange losses
Change in operating assets & liabilities
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
36 | P a g e
2021
US$
1,043,709
65,445
1,109,154
2020
US$
610,665
402,352
1,013,017
2021
US$
(4,053,299)
2020
US$
(3,372,977)
-
-
98,510
3,340,647
336
19,272
(2,984)
53,120
(9,699)
408,704
2,500,000
28,774
29,222
(67,793)
African Energy Resources Limited
Annual Report 2021
Notes to the Financial Statements (continued)
Net cash used in operating activities
(597,518)
(430,649)
There was no non-cash investing and financing activities during the year.
4.3 Financial Assets at Fair Value through Other Comprehensive Income (FVOCI)
Balance at the beginning of year
Additions
Movement in Fair Value of Financial assets at FVOCI
Effect of movements in foreign exchange
Disposals
Carrying amount at 30 June 2021
2021
US$
631,257
-
5,181,459
(98,170)
(420,167)
5,294,379
2020
US$
630,610
-
12,535
(11,888)
-
631,257
On 10 March 2021 the Company lodged a form notifying Caravel Minerals that it ceased to be a substantial shareholder. At the
balance date the Consolidated Entity held 15,283,872 Caravel Minerals shares.
The Group subsequently measures all equity investments at fair value. Where the Group's management has elected to present
fair value gains and losses on equity investments in the FVOCI reserve, there is no subsequent reclassification of fair value gains
and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be
recognised in profit or loss as other income when the group's right to receive payments is established.
4.4 Trade and other receivables
The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the market
rate of interest at the reporting date.
Trade debtors
Interest receivable
GST and VAT receivable
2021
US$
2020
US$
48,823
104
12,905
61,832
-
255
18,974
19,229
Trade and other receivables are recorded at amounts due less any allowance for any expected credit losses.
4.5 Trade and other payables
Trade and other payables are recognised when the related goods or services are received, at the amount of cash or cash
equivalent that will be required to discharge the obligation, gross of any settlement discount offered. Trade payables are non-
interest bearing and are settled on normal terms and conditions.
Trade creditors
Accrued expenses
Payroll liabilities
2021
US$
59,676
20,031
1,297
81,004
2020
US$
11,018
132,623
3,167
146,808
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of the
reporting date represent present obligations resulting from employees’ services provided to reporting date, are calculated at
undiscounted amounts based on remuneration wage and salary rates that the Consolidated Entity expects to pay as at reporting
date including related on-costs, such as workers compensation insurance and payroll tax.
4.6
Impairment
The Group assesses at each reporting date whether there is objective evidence financial asset or group of financial assets is
impaired in accordance with AASB 9.
37 | P a g e
African Energy Resources Limited
Annual Report 2021
Notes to the Financial Statements (continued)
During the year the Group recorded an impairment of $3,340,647 on it’s investment in the Sese JV. Refer to note 2.1.
In the prior year, the Group recorded an impairment of $2,500,000 on the carrying value of Mmamabula West due to delays in
the renewal of tenure.
4.7 Reserves
Foreign Currency Translation Reserve
Other Comprehensive Income Reserve
2021
US$
(5,114,390)
5,010,952
(103,438)
2020
US$
(5,255,307)
(170,507)
(5,425,814)
The foreign currency translation reserve is used to record currency differences arising from the translation of the financial
statements of foreign operations.
Other Comprehensive Income Reserve is used to record gains or losses on a financial asset measured at fair value through other
comprehensive income.
5.
Funding and Risk Management
The Group's objectives when managing capital are to safeguard their ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in the proportion
to the number and amount paid on the shares held. Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are
not included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as a result of a share buy-back, those instruments are deducted
from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration
paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.
5.1 Contributed equity
Movement in share capital
Balance 30 June 2019
Balance 30 June 2020
Balance 30 June 2021
5.2 Financial risk management
Number of
shares
622,960,630
622,960,630
622,960,630
US$
64,134,977
64,134,977
64,134,977
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price
risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different
methods to measure different types of risk to which it is exposed.
Risk management is carried out by the Audit & Risk Committee under a charter approved by the Board of Directors. The Audit
& Risk Committee identifies, evaluates and hedges foreign currency risks by holding cash in the currency that it is budgeted to
be spent in.
(a) Market risk
i.
Foreign currency risk
38 | P a g e
African Energy Resources Limited
Annual Report 2021
Notes to the Financial Statements (continued)
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a
currency that is not the entity’s functional currency and net investments in foreign operations. Some exposure to foreign
exchange risk exists in respect to the Australian subsidiaries which provides administrative and technical support to the Group
and have transactions denominated in Australian Dollars. The risk is measured using sensitivity analysis and cash flow
forecasting.
ii. Price risk
The Group holds shares in Caravel Minerals and is exposed to equity securities price risk.
Price Risk
30 June 2021
Financial assets at FVOCI
30 June 2020
Financial assets at FVOCI
iii. Interest rate risk
Carrying
Amount
US$
5,294,379
+10%
Equity
US$
529,438
-10%
Equity
US$
(529,438)
631,257
63,126
(63,126)
The Group has significant interest-bearing assets; however, a change in interest rates would not have a material impact on the
results.
Carrying
Amount
$
- 1%
Profit
$
Interest Rate Risk
- 1%
+ 1%
Profit
Equity
$
$
+ 1%
-10%
Profit
Equity
$
$
-10%
Equity
$
+10%
Profit
$
+10%
Equity
$
Foreign Exchange Risk
1,109,154
(11,092)
(11,092)
11,092
11,092
(110,915)
(110,915)
110,915
110,915
61,832
(618)
(618)
618
618
(6,183)
(6,183)
6,183
6,183
1,013,017
(10,130)
(10,130)
10,130
10,130
(101,302)
(101,302)
101,302
101,302
19,229
(192)
(192)
192
192
(1,923)
(1,923)
1,923
1,923
30 June 2021
Cash and cash
equivalents
Other current
assets
30 June 2020
Cash and cash
equivalents
Other current
assets
•
Interest rate volatility was chosen to reflect expected short term fluctuations in market interest rates.
iv. Credit risk
The carrying amount of cash and cash equivalents, trade and other receivables (excluding prepayments), represent the Group’s
maximum exposure to credit risk in relation to financial assets. Cash and short term liquid investment are placed with reputable
banks, so no significant credit risk is expected. The Group does not have any material exposure to any single debtor or group
of debtors, so no significant credit risk is expected. The credit quality of financial assets that are neither past due nor impaired
can be assessed by reference to external credit rates:
v. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages
liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets
and liabilities. Due to the dynamic nature of the underlying businesses, management aims at maintaining flexibility in funding
by keeping committed credit lines available with a variety of counterparties. Surplus funds are only invested in instruments that
are tradeable in highly liquid markets.
The Company’s trade payables are due within the next six months
(b) Fair value estimation
39 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
Annual Report 2021
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The
quoted market price used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The
Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date.
Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques,
such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values
due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
5.3 Fair value measurement
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
•
•
•
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly
Level 3: Unobservable inputs for the asset or liability
30 June 2021
Financial assets at FVOCI
Total assets
30 June 2020
Financial assets at FVOCI
Total assets
Level 1
US$
5,294,379
5,294,379
631,257
631,257
Level 2
US$
Level 3
US$
-
-
-
-
Total
US$
5,294,379
5,294,379
631,257
631,257
-
-
-
-
There were no transfers between levels during the financial year.
Accounting policy for fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date; and assumes that the transaction will take place either: in the principal market;
or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best
use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
Fair value in active market (Level 1)
40 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
Annual Report 2021
The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and listed equity
securities) are based on quoted market prices at the close of trading at the end of the reporting period without any deduction
for estimated future selling costs.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm’s length basis.
Fair value in an inactive or unquoted market (Level 2 and Level 3)
The fair value of financial assets that are not traded in an active market is determined using valuation techniques. These include
the use of recent share price from capital raising and option pricing models that provides a reliable estimate of prices obtained
in actual market transactions.
For option pricing models, inputs are based on available market data. Fair values for unquoted equity investments are
estimated, using the latest share price from capital raising. Some of the inputs to these models may not be market observable
and are therefore estimated based on assumptions.
Group Structure
5.4 Basis of consolidation
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date that control ceases.
Investments in subsidiaries are carried at their cost of acquisition in the Company’s financial statements.
(b) Transactions eliminated on consolidation
Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are
eliminated in preparing the consolidated financial statements.
(c) Comparatives
Prior period comparative are for the year from 1 July 2019 to 30 June 2020.
5.5 Foreign currency
(a) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at the foreign exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to United
States dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised
in the Statement of Profit or Loss and other Comprehensive Income. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are stated at fair value are translated to US$ at foreign exchange
rates ruling at the dates the fair value was determined.
(b) Financial statements of foreign operations
The assets and liabilities of Australian subsidiaries, including goodwill and fair value adjustments arising on consolidation, are
translated to US dollars at foreign exchange rates ruling at the reporting date. The revenues and expenses of foreign operations,
excluding foreign operations in hyperinflationary economies, are translated to US dollars at rates approximating to the foreign
exchange rates ruling at the dates of the transactions.
41 | P a g e
African Energy Resources Limited
Annual Report 2021
Notes to the Financial Statements (continued)
Foreign exchange differences arising on translation are recognised directly in the foreign currency translation reserve (“FCTR”),
as a separate component of equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR
is transferred to profit or loss, as part of the gain or loss on sale where applicable.
(c) Net investment in foreign operations
Exchange differences arising from the translation of the net investment in foreign operations, and of related effective hedges
are taken to translation reserve and released into profit or loss upon disposal.
5.6 Parent Entity Disclosures
The parent entity within the Group is African Energy Resources Limited.
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Total Liabilities
Contributed equity
Reserves
Accumulated losses
Total Equity
Gain (loss) for the year
Other comprehensive income / (loss) for the year
Total comprehensive income / (loss) for the year
2021
US$
5,712,602
4,150,641
9,863,243
-
-
64,134,977
745,822
(55,017,556)
9,863,243
(3,439,157)
-
(3,439,157)
2020
US$
1,406,373
7,187,793
8,594,166
-
-
64,134,977
(126,300)
(55,414,511)
8,594,166
(2,951,523)
-
(2,951,523)
There were no commitments, contingent liabilities or contingent assets at the parent level at 30 June 2021.
5.7
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following principal subsidiaries in
accordance with the accounting policy described in note 6.1(a).
Country of incorporation
British Virgin Is.
Botswana
Barbados
Botswana
Australia
Ownership
interest
2021
100%
100%
100%
100%
100%
Ownership
interest
2020
100%
100%
100%
100%
100%
Botswana Energy Solutions Limited
Mmamantswe Coal (Pty) Ltd
African Energy Holdings SRL 2
Phokoje Power (Pty) Ltd
AFR Australia Pty Ltd
6.
Related parties
6.1 Key Management Personnel
US$240,588 (2020: US$299,517) was paid to Directors of the Company during the year. Disclosures relating to key management
personnel are set out in the Remuneration Report. During the prior year, there was a negative balance for equity compensation
benefits due to the reversal of share-based payment expenses.
Short-term employee benefits
42 | P a g e
2021
US$
238,808
2020
US$
297,284
African Energy Resources Limited
Notes to the Financial Statements (continued)
Post-employment benefits
Equity compensation benefits
6.2 Other related party transactions
Annual Report 2021
1,780
-
2,233
-
240,588
299,517
The terms and conditions of the transactions with Directors, key executives and associates and their related entities were no
more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-
Director related entities on an arm’s length basis.
Charges from
Charges to
2021
US$
2020
US$
2021
US$
2020
US$
Mitchell River Group Pty Ltd
36,668
52,851
-
-
Directors Mr Cooke, Mr Fry and Dr Tabeart are Directors and 25% shareholders of Mitchell River Group Pty Ltd which charges
the Group for provision of a serviced office and administration staff.
6.3 Assets and liabilities at 30 June arising from transactions with related parties
Trade and other receivables
Trade and other payables
7.
Share based payments
7.1 Options
2021
US$
-
1,205
2020
US$
-
2,184
Options granted during the year have been valued using the Black-Scholes Option Valuation model, which takes account of
factors including the option exercise price, the current level and volatility of the underlying share price, the risk-free interest
rate, expected dividends on the underlying share, current market price of the underlying share and the expected life of the
option. See below for the assumptions used for grants made during the year.
On 20 July 2020, the Company issued 31,124,532 options exercisable at AUD$0.02 (“Options”) to ALS (Hong Kong) Limited, a
consultant appointed by the Sese Joint Venture to provide advice and assistance in securing a project partner for the Sese
Power Project. Options will vest upon the successful completion of an agreement that results in a new party becoming a
majority shareholder in the Sese Joint Venture and expire on 20 July 2022.
African Energy has valued the Options at AUD$404,619 based on the following inputs, however has determined that the
Options are less likely than more likely to vest and has not expensed the Options during the year.
Number:
Date of Issue
Spot price on Date of Issue
Exercise price:
Expiry:
Volatility
Risk free rate
Value per Option on date of issue
Total value of options
8.
Other
8.1 Events occurring after the reporting period
31,124,532
22/07/2020
AUD$0.02
AUD$0.02
Two years from date of issue
132%
0.145%
$0.013
A$404,619
On 18 August 2021, African Energy announced that it had increased its focus on copper by signing a binding term sheet by which it is
granted an exclusive option to commence an earn-in to obtain up to a 70% interest in the Briggs, Mannersley and Fig Tree Hill Porphyry
Copper Project in South East Queensland.
43 | P a g e
African Energy Resources Limited
Notes to the Financial Statements (continued)
Annual Report 2021
The Company subscribed for 8,333,333 Canterbury Shares at 12c each for a total investment of $1,000,000 to secure the option until
31 July 2022 before which it must have spent a minimum of $750,000 on RC drilling and soil sampling programme.
The Company has undertaken a placement of 70,000,000 new shares at 2 cents per share to raise A$1,400,000 to fund the option
expenditure commitment. Directors, Frazer Tabeart (1,250,000 shares) and Alasdair Cooke (5,000,000 shares), are seeking to
participate in the placement subject to shareholder approval at an upcoming shareholder meeting.
To facilitate the Company's increased focus on copper, the Company proposes to undertake a restructure so that its interest in Sese
Coal Project, Mmamantswe Coal Project and Mmamabula West Coal Project will be spun-out of the Company by way of an in-specie
distribution.
No other matters or circumstances have arisen since the end of the financial year which have significantly affected or may
significantly affect the operations, results or state of affairs of the Group in future financial years which have not been disclosed
publicly at the date of this report.
8.2 Contingencies and Commitments
There were no contingent assets or liabilities in the Group at 30 June 2021. There were no commitments at 30 June 2021.
8.3 Remuneration of Auditors
BDO Audit (WA) Pty Ltd: Audit and review of financial reports
8.4 New standards and interpretations not yet adopted
Early adoption of accounting standards
2021
US$
31,071
31,071
2020
US$
30,848
30,848
The Group has not elected to apply any pronouncements before their operative date in the annual reporting year beginning
1 July 2020.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Standards and Interpretations in use not yet adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The Group's assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out
below.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and early
adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance
on measurement that affects several Accounting Standards. Where the Group has relied on the existing framework in
determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the
Australian Accounting Standards, the Group may need to review such policies under the revised framework. At this time, the
application of the Conceptual Framework is not expected to have a material impact on the Group's financial statements.
44 | P a g e
African Energy Resources Limited
Additional Shareholder Information
Annual Report 2021
The following additional information required by the ASX Listing Rules is current as at 16 September 2021.
African Energy Resources Limited shares are listed on the Australian Securities Exchange (ASX:AFR).
Distribution of Shareholders
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
Largest 20 shareholders
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
First Quantum Minerals (Australia) Pty Limited
Alasdair Cooke
PS Consulting Pty Ltd
Clear Elm Pty Ltd
SAF Management Pty Ltd
JBBM Pty Ltd
Wimalex Pty Ltd
Omondali Pty Ltd
Stl Super Pty Ltd
Helmet Nominees Pty Ltd
CS Third Nominees Pty Limited
Raejan Pty Ltd
ACN 161 604 315 Pty Ltd
ACN 161 604 315 Pty Ltd
Mr Miroslaw Jan Marzec & Mrs Barbara Anne Wiszniewski
General Advisory Pty Ltd
924 Pty Ltd
Miss Belinda Lees
Mr Donal Paul Windrim
Citicorp Nominees Pty Limited
Securities
% No. of holders
656,847,759
95.65
26,132,917
2,153,380
1,470,147
106,423
3.81
0.31
0.21
0.02
421
695
279
495
444
%
18.04
29.78
11.95
21.21
19.02
686,710,626
100.00
2,334
100.00
4,380,991
0.64
1,276
54.67
Number of
Shares Held
%IC
86,692,308
50,003,683
50,000,000
18,000,000
12,000,000
10,000,000
10,000,000
10,000,000
9,693,148
7,775,095
7,312,500
7,200,000
7,000,055
6,850,000
6,300,000
6,000,926
6,000,000
6,000,000
5,904,337
5,318,903
328,050,955
12.62
7.28
7.28
2.62
1.75
1.46
1.46
1.46
1.41
1.13
1.06
1.05
1.02
1.00
0.92
0.87
0.87
0.87
0.86
0.77
47.77
The voting rights attaching to the ordinary shares are in accordance with the Company’s Memorandum & Articles of Association being
that:
Class of shares and voting rights
a.
b.
c.
each shareholder entitled to vote may vote in person or by proxy, attorney or Representative;
on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one
vote; and
on a poll, every person present who is a shareholder or a proxy, attorney or Representative of a shareholder shall, in respect of
each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or Representative, have one vote for the
Share, but in respect of partly paid Shares, shall, have such number of votes as bears the proportion which the paid amount (not
credited) is of the total amounts paid and payable (excluding amounts credited).”
45 | P a g e
African Energy Resources Limited
Annual Report 2021
Additional Shareholder Information (continued)
Substantial Holders
As notified to the Company
Name
First Quantum Minerals (Australia) Pty Limited
Alasdair Cooke
PS Consulting Pty Ltd
Other information
The company has not utilised a share buyback in the past 12 months
Number Of
Shares Held
86,692,308
50,003,683
50,000,000
%IC
12.62
7.28
7.28
46 | P a g e
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PERTH OFFICE Suite 1, 245 Churchill Avenue, Subiaco WA 6008 | PO Box 162, Subiaco WA 6904
Tel: +61 8 6465 5500 | Fax: +61 8 6465 5599 | Email: info@africanenergyresources.com
africanenergyresources.com
African Energy Resources Limited ARBN 123 316 781