AfriTin Mining
Annual Report 2021

Plain-text annual report

2021 ANNUAL REPORT 1 CHAIRMAN’S STATEMENT ................................................................................................................................. 5 CHIEF EXECUTIVE OFFICER’S STATEMENT ............................................................................................... 7 FINANCIAL REVIEW ............................................................................................................................................ 11 DIRECTORS’ REPORT .......................................................................................................................................... 15 CORPORATE GOVERNANCE REPORT ......................................................................................................... 23 STATEMENT OF DIRECTORS’ RESPONSIBILITIES .................................................................................... 31 INDEPENDENT AUDITOR’S REPORT ............................................................................................................. 33 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .......................................................... 42 CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................... 43 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...................................................................... 44 CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................................................... 46 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .............................................................. 47 NOTICE OF ANNUAL GENERAL MEETING ................................................................................................. 85 COMPANY INFORMATION ................................................................................................................................. 89 TABLE OF CONTENTS 2  GLEN PARSONS CHAIRMAN In reviewing our financial year, I first want to thank AfriTin’s staff, shareholders and broader stakeholder groups for their continued support of and belief in this Company. No corner of the globe has escaped the COVID-19 pandemic during this period, and we are particularly appreciative of our staff’s efforts during these difficult and testing times. Given this backdrop, what we have achieved this year as a Company has been all the more admirable. I would like to congratulate the AfriTin Mining team for their cohesive efforts on behalf of those same stakeholders and the non-executive directors. Despite the challenges of 2020, the Company has had a transformative year at the Uis Tin Mine, as demonstrated by the achievements and ramp-up of the Uis Phase 1 pilot plant. To ramp up production and surpass nameplate production capacity is a testament to the hard work carried out on site, and to the team’s resolve and determination to deliver. Since November 2020, Uis continues to grow total monthly production which has exceeded the planned production of 60 tonnes of tin concentrate per month. Having achieved the tin production goals of the Uis Phase 1 pilot plant, the senior management team, led by Anthony Viljoen, is now focussed on a number of key initiatives: • The expansion of Phase 1 to increase production to 120 tonnes of concentrate per month; • Exploration work to potentially increase Mineral Resources and Mineral Reserves; • Fast tracking test work to assess the potential of unlocking two additional by-product revenue streams, namely lithium and tantalum. These are exciting developments for AfriTin, and we look forward to seeing the results of the test work and providing further updates. The safety of all our staff remains a priority for the Company. We continue to implement the strictest measures to combat the pandemic and protect our employees, while also supporting the communities in which they live. The Company continues to successfully transition from developer to producer, which can only be achieved through the focus and dedication of our team, management, my fellow directors, and of course, our shareholders, all of whom I thank. We have built an excellent platform to continue our growth story, and I look forward to our future. GLEN PARSONS Chairman 21 July 2021 CHAIRMAN’S STATEMENT 4 5  ANTHONY VILJOEN CHIEF EXECUTIVE OFFICER The year under review has been transformative for AfriTin Mining, especially at our flagship Uis Tin Mine in Namibia. These achievements are even more impressive given the immense challenges that everyone has faced as a result of the global COVID-19 pandemic. After navigating these difficult circumstances, the financial year culminated in the Company announcing the first material revenue numbers from the mine of £5m. Total production for the year amounted to 473t of tin concentrate (311.7t of contained tin metal). This is a monumental first step and we believe it’s just a precursor of what is to ensue as the plant cost base becomes more efficient and the expansion plans are implemented. The post balance sheet date equity raise also allowed for the extinguishing of all the loan note obligations, providing a robust balance sheet for the next growth phase of the Company. We are incredibly proud of our team for efficiently accomplishing this ramp-up in production, while maintaining an exemplary safety record. This basis from which AfriTin will grow underpins our ambition of becoming a significant multi-commodity tech metals producer out of Africa. The historical mining heritage of the Erongo province resided primarily in its tin production with no meaningful uses for lithium and tantalum. Forty years on since the mine closure, tin has become a new technology metal and the demand for lithium and tantalum has transformed the economics of the historical operation. We believe this province will become a globally significant metallogenic province for new technology metals, allowing for increased revenues and economies of scale within AfriTin’s licence areas. Despite challenges resulting in project delays, AfriTin’s production has come on stream at a time when tin prices have reached highs that have not been seen in the last decade. This is mainly due to an increase in demand from new technologies, especially electric vehicles and semi-conductors, at a time when there have been supply issues that are likely to persist after decades of underspending on exploration and mine development. The lithium market has matched this buoyancy and AfriTin is well placed to take advantage of this growth phase. The Uis JORC (2012) resource of 95 539t of tin, 6 091t of tantalum and 450 265t of lithium oxide establishes a globally significant resource from the currently exploited V1 and V2 pegmatites. We are now planning to grow the Company’s revenue streams by expanding the throughput of the pilot plant and introducing tantalum and lithium by-product revenue streams. The metallurgical test work to develop the process design has been a key priority to unlocking the significant potential of AfriTin. In December 2020, it was a pleasure to confirm that the Company’s existing offtake partner, Thaisarco, renewed and extended its tin concentrate offtake agreement for three years. This deal further cements the Company’s future and allows us to supply what has become a highly demanded product. We were also delighted to conclude a maiden tantalum concentrate offtake agreement with AfriMet Resources AG, demonstrating the commercial viability of AfriTin’s plans. We believe these deals are substantive votes of confidence in AfriTin, its strategy, and its vision, from two leaders in the global and African metal markets. In an attempt to direct all of the Company’s attention to the investment-friendly jurisdiction of Namibia, and to unlocking the metallogenic jewel that is the Erongo region, a decision was made to relinquish and impair the Company’s South African asset base. Namibia continues to be an incredibly gracious host country within which to conduct business. An overarching theme in all decisions and corporate strategy is the safety, health and wellbeing of all our employees and the people in the surrounding communities where we operate. We remain sensitive to the environment and its people and are committed to mitigating the impact of our operations. This philosophy will continue to be built into our corporate DNA as we strive to become the new technology metals champion of Africa. CHIEF EXECUTIVE OFFICER’S STATEMENT 6 7 POST-PERIOD ACTIVITIES Subsequent to the period under review, we reached two further significant milestones: publication of the Definitive Feasibility Study for Phase 1 (“DFS”) and declaration of a JORC (2012) Ore Reserve estimate over the V1 and V2 pegmatites. The robust economics of the DFS provide us with an opportunity to increase the revenue and profit margin of the current operation, while importantly de-risking the expansion of the project into the much larger Phase 2 operation. In addition to the above, on 12 May 2021 the Company announced the placing of 216 666 667 ordinary shares to raise £13m (before expenses). This puts the Company into a position to expedite the Phase 1 expansion of our flagship Uis Tin Mine and develop the inherent value of our Namibian licence portfolio through the unlocking of its metallurgy and exploration potential. This includes further test work on the lithium and tantalum by-product potential. I would like to congratulate and thank our management teams, staff, and stakeholders for their outstanding efforts and continued support in what has been a challenging time globally. In addition to this, I would like to thank the Board of Directors for their guidance and advice over the past year. We are committed to expanding and developing Uis and our other Namibian exploration assets as we look to become a significant African multi-commodity tech metals producer. I look forward to updating the market on our progress. This report was approved by the Board of Directors on 21 July 2021. ANTHONY VILJOEN Chief Executive Officer 21 July 2021 8 9  ROBERT SEWELL CHIEF FINANCIAL OFFICER I am pleased to report the Company’s first notable annual revenue of £5m from the sale of tin concentrate. This was achieved by ramping up the Uis operation to commercial production from March through to November 2020 producing 473t of tin concentrate during the financial year (311.7t of contained tin metal). With our flagship asset, the Uis Tin Mine, transitioning from a developing to a producing operation, administrative expenses across the Group increased to £2.540m for the year (in comparison to £1.815m incurred in the previous financial year, ending 29 February 2020 (“2020”)). Furthermore, the increase is as a result of an increase in salaries and head count given the growth phase of the business and a discretionary bonus awarded to senior management in January 2021 settled through the issue of shares. A decision was made to relinquish and impair the Company’s South African exploration asset base resulting in an impairment charge of £3.069m during the financial year under review. The increase in finance cost for the year to £0.184m (2020: £0.041m) is mainly due to interest on Nedbank facilities no longer being capitalised to the mining asset subsequent to the achievement of commercial production at Uis on 1 December 2020. The Group’s loss for the year totalled £5.796m (2020: £1.830m). This loss includes an impairment charge of £3.069m, as detailed above. A basic loss per share from operations of 0.76 pence was recorded (2020: 0.29 pence loss per share). Expenditure amounting to £0.978m (2020: £0.522m) was capitalised to the intangible exploration and evaluation asset. This included costs relating to the Definitive Feasibility Study for the expansion of the Phase 1 mining and processing facility which was finalised and announced in May 2021, costs relating to the conversion of the JORC (2012) Mineral Resource estimate into an initial JORC (2012) Proved and Probable Ore Reserve estimate, as well as costs relating to additional exploration and evaluation work. Capital expenditure relating to the mining asset under construction amounted to £2.028m during FY2021 (2020: £7.370m). Included in this amount is £0.418m relating to capitalised ramp up costs at the Uis operation and £0.842m relating to upgrades to improve plant availability, utilisation and recoveries. The remainder of the capitalised expenditure related to project team salary and travel costs and finance costs capitalised to the mining asset under construction. Upon reaching commercial production, the mining asset under construction of £13.550m was transferred to the mining asset. Mining asset additions totalled £0.124m and depreciation of the mining asset amounted to £0.718m. As at 28 February 2021, the Group had cash in the bank amounting to £1.351m (2020: £0.575m) with the primary movements reflecting cash used in operations totalling £1.501m (mainly the result of operating costs incurred and changes in working capital), investing cash outflows of £2.955m (mainly due to the capital expenditure detailed above), and £5.160m of financing cash inflows. The Nedbank working capital facility was successfully renewed and increased to N$43m (c. £2.038m) in July 2020. Furthermore, Nedbank continued to provide a bank guarantee letter in favour of Namibia Power Corporation Pty Limited for an amount of N$4.118m (c. £0.195m) in relation to a deposit for the supply of electrical power to the Uis operations. At 28 February 2021, N$36m (c. £1.7m) had been drawn down on this facility. The facility is due for annual review in July 2021, and discussions are currently underway with the lender to secure the rollover of the facility. The remaining significant financing cash inflows relate to £2.05m raised through loan notes in May 2020 and an equity raise in August 2020 as detailed below. The loan notes matured and were settled post year-end in May 2021. The inventory balance increased to £0.997m (2020: £0.247m) as a result of the operations at the Uis Tin FINANCIAL REVIEW 10 11 Mine reaching commercial production, and £0.373m (2020: £0.185m) of tin concentrate (36 tonnes) being on hand and ready for shipment at year-end (these have subsequently been shipped). Trade receivables increased to £0.717m at year end (2020: £0.043m). Contributing to the increase was an increase in shipments in transit as a result of the higher production rates achieved during the last quarter of the financial year, as well as a fair value adjustment that was passed to reprice the shipments in transit in accordance with the requirements of IFRS. All trade receivables relating to the sale of tin concentrate at year end have been subsequently settled by our valued offtake partner, Thailand Smelting and Refining Company (Thaisarco). The movement in the share capital balance for the financial year under review is accounted for by net proceeds from an equity raise in August 2020 of £2.797m, the conversion of £1.6m of the convertible loan notes held by AfriMet Resources AG, and the issue of shares to employees, directors and suppliers of £0.724m. Share-based payment charges relating to the share option scheme amounting to £0.175m (2020: £0.365m), as well as a charge of £0.107m (2020: £0.038m) relating to shares to be issued to directors, employees and suppliers in lieu of salaries/fees, were recognised in the share-based payment reserve during the financial year. Trade and other payables increased to £1.484m (2020: £0.895m) as a result of Uis becoming a fully- fledged operation running at commercial production levels at year-end. FUNDING Subsequent to year-end, on 12 May 2021, an equity placing raised £13m gross proceeds. Furthermore, the remaining 2019 convertible loan notes and the 2020 loan notes were settled on 25 May 2021. The outstanding convertible loan notes were partially settled through conversion into ordinary shares and the remainder settled in cash. The outstanding loan notes were all settled in cash. Management and the Board of Directors have considered cash flow forecasts and stress testing of the cash flow forecasts contained herein and have concluded that the Company will be able to continue in operation for the foreseeable future as a going concern and will be able to realise its assets and discharge its liabilities in the normal course of operations. Please refer to Note 2 for further details. ROBERT SEWELL Chief Financial Officer 21 July 2021 12 13 The Directors of AfriTin hereby present their report together with the consolidated financial statements for the year from 1 March 2020 to 28 February 2021. PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS The principal activity of the Group (AfriTin and its subsidiaries) is mineral exploration and the development of mining and exploration projects in Namibia. A review of the Group’s progress and prospects is given in the CEO’s statement in this Annual Report. PRINCIPAL RISKS AND UNCERTAINTIES The Group is subject to a variety of risks, specifically those relating to the mining and exploration industry. As an entrepreneurial business operating in commodities and emerging markets, there is clearly an elevated risk which is balanced by potentially greater rewards. The Board is mindful of, and monitors, both its corporate risk and individual project risk. Outlined below are the principal risk factors that the Board feels may affect performance. The risks detailed below are not exhaustive, and further risks and uncertainties may exist which are currently unidentified or considered to be immaterial. The risks are not presented in any order of priority. Risk and Impact Mitigation COVID-19 The countries in which the Group operates have all instituted measures to limit the spread of COVID-19. The Group is following the World Health Organisation (WHO) guidelines and is complying with the regulations of Namibia, South Africa and the United Kingdom related to COVID-19. In addition, the Group has updated its health and safety policies and procedures to align with the above guidelines and to translate these guidelines into workplace-specific measures. The Group has adopted technological tools, such as online video conferencing and project and team management software, to enable office-bound staff to work remotely. COVID-19 resulted in widespread socio-economic disruption around the world. The countries where the Group operates, namely Namibia, South Africa and the United Kingdom continue to be subject to varying levels of lockdown restrictions to contain the spread of the disease. Despite lockdowns, the Group’s operation in Namibia remained open during the course of the reporting period (albeit with a temporary suspension on mining in April 2020) due to an exemption granted to the mining industry but did suffer supply- chain disruptions which delayed production ramp-up. The Group’s operations are continuing with minimal disruption now that the global lockdown measures have eased. However, there continues to be a risk that lockdown measures return in the event of further COVID-19 outbreaks, which may result in interruptions to operations through supply chain disruption, illness amongst our workforce and related personnel, together with potential volatility in tin, tantalum and lithium prices. In addition to the above, COVID-19 restrictions have resulted in shipping disruptions and congestion at container shipping ports. Despite this, the shipping of tin concentrate to Thaisarco has continued. DIRECTORS’ REPORT 14 15 Risk and Impact Mitigation Risk and Impact Mitigation Volatility of metal prices Foreign exchange Development projects Exploration and mining risks Tin, tantalum and lithium prices are subject to high levels of volatility and are impacted by numerous factors that are outside of the control of the Group. A low tin, tantalum or lithium price as well as commodity demand could affect the financial performance of the Group and this may affect the ability of the Group to fund future growth. With AfriTin’s operations mainly in Namibia and South Africa, but tin sales based in US Dollars and equity funding based in Pound Sterling, the volatility and movement in the Rand/Namibian Dollar exchange rate could be a significant risk factor to the Group. Development projects have no operating history upon which to base estimates of future cash operating costs. For development projects, estimates of proven and probable reserves and cash operating costs are, to a large extent, based on the interpretation of geological data obtained from drillholes and other sampling techniques and feasibility studies which derive estimates of cash operating costs based upon anticipated tonnage and grades of ore to be mined and processed, as well as the configuration of the orebody, expected throughput and recovery rates, comparable facility and equipment operating costs and other factors. The business of mineral exploration involves a high degree of risk. Whilst the discovery of a mineral deposit may result in substantial rewards, few properties at the exploration stage are ultimately developed into producing mines. The operations of the Group may be disrupted by a variety of risks and hazards which are beyond the control of the Group, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupational and health hazards, technical failures, labour 16 The Board and management constantly monitor the markets in which the Group operates. Long-term financial planning is undertaken on a regular basis. The Group holds the majority of its funds in major currencies. It attempts to match cash held in a particular currency to the currency in which liabilities are incurred. The Group has appointed an experienced team of geoscientists and engineers, complemented by experienced consultants in specialist areas. Any new capital projects are supported by feasibility studies. The Uis Phase 1 pilot plant will assist in understanding the metallurgy and processing elements of the project which will provide essential up-front information for the implementation of Phase 2. Exploration projects are carefully managed with regular review by the Board of progress against targets and expenditure. Funds are only expended in areas deemed prospective. The Group adheres strictly to a health and safety programme. When con- structing a mine site, external geotech- nical, environmental and geo-hydrolog- ical consultants are used to ensure all potential risks of this nature are under- stood and mitigation plans are put in place. Social license to operate disputes, unexpected rock properties, explosions, flooding, and extended interruptions due to inclement or hazardous weather conditions and other acts of God. Past environmental incidents in the extractive industry highlight risks such as water management, tailings storage facilities and other potential hazards to both the environment and community health and safety. Capital budget overruns Whilst best estimates are used in preparing capital project budgets, these budgets are dependent on a number of external factors which are beyond the control of the Group, resulting in a risk of material overruns versus budget. Power and water supply Power sources and water supply are key to the functioning of viable mining operations. A lack of power or water, or uncertainties around their uninterrupted supply, would adversely impact the feasibility of the operation. 17 Our ability to maintain regulatory compliance in order to protect the environment, as well as the health and safety of host communities and workers, remains our top priority. We seek to build partnerships with host governments and local communities based on trust to drive shared long- term value while working to minimise the social and environmental impacts of our activities. The Board oversees the Group’s environmental, safety and health, and corporate social responsibility programmes, policies and performance and is in the process of setting up an ESG board sub- committee to focus on these matters. Capital expenditure and project execution are subject to pre-defined governance and approval procedures, which include feasibility studies prior to implementation. Management and the Board regularly review project progress and related expenditure on projects. This includes reviewing actual costs against budgeted costs, updating working capital models, and assessing potential impacts on future cash flow. The Group has concluded a formal electrical power supply agreement with Namibia Power Corporation for power to the mining and processing facility at Uis and this will provide enough power for Phase 1 of the project. Diesel generators will serve as backup power. A geohydrological study, water drilling and test pumping programme has demonstrated the viability of using groundwater sources for the Phase 1 pilot plant. This was confirmed with the implementation and successful operation of a water supply network. Risk and Impact Mitigation RESULTS AND DIVIDEND Country and political risk Key personnel risk AfriTin’s operations are predominantly based in Namibia. Emerging-market economies are generally subject to greater risks including legal, regulatory, tax, economic and political risks, which are potentially subject to rapid change. The success and operational performance of the Group is dependent on the skills, expertise and knowledge of management and qualified personnel. Group profitability could be impacted in the event that key personnel leave the business. Financing Climate change The successful extraction of tin, tantalum and eventually lithium will require significant capital investment. The Group’s ability to raise further funds will depend on the success of existing operations. Market conditions may not be conducive to financing. The Group may not be successful in procuring the requisite funds. Climate change and regulatory actions to reduce its impact may affect our suppliers, customers and business model, and hence affect AfriTin’s growth and profitability. This impact could be amplified by the perception that the Company is undertaking activities that are harmful to the environment. Solutions for Phase 2 in terms of both electrical power and water supply are in the process of being reviewed. The AfriTin team is experienced at operating in Africa. AfriTin routinely monitors political and regulatory developments in Namibia at both regional and local level. The Group has built a team of executives, scientists, engineers and support personnel who are experienced and versatile enough to address shortcomings that may arise from the loss of employees. In addition, the Group has developed long-standing relationships with consulting firms in key specialist areas. Remuneration arrangements, given the stage of the Group’s development, are intended to be sufficiently competitive to attract, retain and motivate high- quality staff capable of achieving the Group’s objectives, thereby enhancing shareholder value. The Group has sufficient funds to continue as a going concern and has a supportive shareholder base, as well as significant future investor interest, to engage with for future funding rounds. The Group monitors cash flows on a monthly basis. AfriTin is working towards implementing the recommendations of the Task Force on Climate-Related Financial Disclosures. Current risk mitigation around climate change involves assessing exposure across a wide range of outcomes, monitoring government action around climate change and constantly striving to reduce the environmental impact of our operations. The Board oversees the Group’s environmental, safety and health, and corporate social responsibility programmes, policies and performance and is in the process of setting up an ESG board sub- committee to focus on these matters. The Group’s results show a loss for the year of £5 795 883. The Directors will not be recommending a dividend. SHARE CAPITAL AND FUNDING Full details of the authorised and issued share capital, together with details of the movements in the Company’s issued share capital during the year, are shown in Note 20. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company. DIRECTORS The Directors who served the Company during the year and to date are as follows: Anthony Viljoen Glen Parsons Laurence Robb Roger Williams Terence Goodlace Chief Executive Officer Chairman/Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director (resigned 29 September 2020) Independent Non-Executive Director DIRECTORS’ INTERESTS The Directors’ beneficial interests in the shares of the Company at 28 February 2021 were: Anthony Viljoen Glen Parsons Laurence Robb Terence Goodlace Ordinary shares of no par value 11 296 690 4 307 486 1 300 815 - Share options 10 600 000 4 500 000 4 000 000 4 000 000 DIRECTORS’ INDEMNITY INSURANCE The Group has maintained insurance throughout the year for its directors and officers against the consequences of actions brought against them in relation to their duties for the Group. EMPLOYEE INVOLVEMENT POLICIES The Group places considerable value on the awareness and involvement of its employees in the Group’s exploration and development activities. Within the bounds of commercial confidentiality, information is disseminated to all levels of staff about matters that affect the progress of the Group, and that are of interest and concern to them as employees. CREDITORS PAYMENT POLICY AND PRACTICE The Group’s policy is to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its standard payment policy to abide by the terms of payment agreed with suppliers when agreeing the terms of each transaction. Suppliers are made aware of the terms of payment. 18 19 RELATED-PARTY TRANSACTIONS Details of related-party transactions are given in Note 26 of the consolidated financial statements. EVENTS AFTER BALANCE SHEET DATE Events after balance sheet date are detailed in Note 25 of the consolidated financial statements. STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor. AUDITOR The Directors will place a resolution before the Annual General Meeting to reappoint BDO LLP as the Group’s auditor for the ensuing year. ELECTRONIC COMMUNICATIONS The maintenance and integrity of the Group’s website is the responsibility of corporate management and the Directors; the work carried out by the auditor does not involve consideration of these matters and accordingly the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. The Group’s website is maintained in compliance with AIM Rule 26. By order of the Board ANTHONY VILJOEN Chief Executive Officer 21 July 2021 20 21 INTRODUCTION As a listed company traded on the AIM market of the London Stock Exchange, we recognise the importance of sound corporate governance throughout our organisation, giving our shareholders and other stakeholders including employees, customers, suppliers and the wider community confidence in our business. We endeavour to conduct our business in an ethical and sensitive manner irrespective of gender, race, colour or creed. AfriTin has chosen to adopt the Quoted Companies Alliance (QCA) Corporate Governance Code 2018 for Smaller Companies. The table below outlines how we apply each of the code’s ten key principles to our business. Principle Application 1. Establish a strategy and business model that promotes long-term value for shareholders. 2. Seek to understand and meet shareholder needs and expectations. 3. Take into account wider stakeholder and social responsibilities and their implications for long-term success. The Company is a pure tin company listed in London and its vision is to create a portfolio of world-class, conflict-free, tin-producing assets. The Company’s flagship asset is the Uis brownfield tin mine in Namibia, formerly the world’s largest hard-rock tin mine. The Company is managed by an experienced Board of Directors and management team with a current two-fold strategy: fast-track Uis brownfield tin mine in Namibia to commercial production (the intention is to ramp up to 10 000 tonnes of concentrate) and consolidate other quality African tin assets. The Company strives to capitalise on the solid supply/demand fundamentals of tin by developing a critical mass of tin resource inventory, achieving production in the near term and further scaling-up production by consolidating tin assets in Africa. Sustainable development principles are integrated into corporate strategies and decision-making processes by the Board of Directors and management team. The Company endeavours to ensure that responsible health and safety, environmental, human rights and labour practices and policies are adopted by suppliers and contractors. The Company is subject to a variety of risks, specifically those relating to the mining and exploration industry. The principal risk factors facing the business as well as mitigation of those risks are outlined in the Directors’ Report in this Annual Report. The Board is committed to maintaining good communication and having a constructive dialogue with all its shareholders. Management, led by the CEO, undertake regular presentations and roadshows to investors as appropriate. This enables them to develop a balanced understanding of the issues and concerns of shareholders. The views of shareholders are communicated to the rest of the Board. Furthermore, the Company keeps shareholders informed on the Company’s progress through its public announcements and its website. All reports and press releases are published in the ‘Investors’ section of the Company’s website. The Board recognises that its prime responsibility is to promote the success of the Company for the benefit of its stakeholders and members as a whole. This success is largely reliant on its relations with its stakeholders, both internal (employees and shareholders) and external (customers, suppliers, business partners and advisors). CORPORATE GOVERNANCE REPORT 22 23 Principle Application Principle Application Employees, community members and other stakeholders work in collaboration with one another and with transparency and accountability. Open dialogue and engagement with community members at our sites is central to maintaining a successful relationship, and is essential to ensuring long-term sustainability for all parties involved. The Company continually implements inclusive and supportive approaches with local communities, to contribute to their economic and social well-being. The Company endeavours to systematically examine the environmental impact of any of our operations and will adopt measures to mitigate this challenge. The goal is to minimise the negative impacts on the environment of the different processes related to the extraction of tin. At our operational project area, Uis, the non-chemical nature of ore beneficiation, combined with an ore that is largely free of deleterious elements, contributes to a reduced level of environmental risk. Nonetheless, the Company ensures compliance with its operational environmental management plan through continuous monitoring of dust, water and waste management. The Company maintains a regular dialogue with key suppliers. Managing human capital equitably and sustainably is central to the Company’s project development strategy. The Company promotes an inclusive work environment through its recruitment policies, management and remuneration policies and development initiatives. Within the bounds of commercial confidentiality, information is disseminated to all levels of staff about matters that affect the progress of the Company and that are of interest and concern to them as employees. The Company has set up a share option scheme for key employees which gives them a stake in the Company’s long-term success. As an entrepreneurial business operating in emerging markets there is clearly an elevated risk which is balanced by potentially greater rewards. The Board is mindful of and monitors both its corporate risks and individual project risks. The Board ensures that there is a risk-management framework in place which identifies and addresses all relevant risks in order to execute and deliver strategy. Key risks are reviewed by the Board regularly and disclosed in the Directors’ Report. 6. Ensure that between them the Directors have the necessary up-to- date experience, skills and capabilities. clear information. The Chairman and Non-Executive Directors (Glen Parsons, Terence Goodlace and Laurence Robb) are considered to be independent of management and free to exercise independent judgement. It is acknowledged that the Non-Executive Directors do have share options. However, the quantum of these share options is not material and is too low to affect independence. The Board meets at least every three months or at any other time deemed necessary for the good management of the business. Every Director has attended all Board meetings whilst being a Director of the Company. Directors who have been appointed to the Company have been chosen because of the skills, knowledge and experience they offer considering the stage of the Company and the strategy that it is pursuing. The composition of the Board as well as biographical details of Board members can be found on the Board of Directors page on the Company website. Furthermore, the Company has put in place an Audit Committee and a Remuneration Committee. The Directors have access to training (online training or external training courses) to ensure that their skills are kept up to date. The Board and its committees will also seek external expertise and advice where required. As part of the induction programme conducted by the Company’s nominated adviser, Directors are briefed on regulations that are relevant to their role as directors of an AIM-quoted company. Robert Sewell (Chief Financial Officer) and Frans van Daalen (Chief Operating Officer) attend Board meetings by invitation to provide input from a financial and operational perspective. 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. The Board considers evaluation of its performance and that of its committees and individual Directors to be an integral part of corporate governance to ensure Board Members have the necessary skills, experience and abilities to fulfil their responsibilities. The goal of the Board evaluation process is to identify and address opportunities for improving the performance of the Board and to solicit honest, genuine and constructive feedback. The Audit Committee receives feedback from the external auditor on the state of the Company’s internal controls, and reports their findings to the Board. The Chairman is responsible for ensuring the evaluation process is “fit for purpose”, as well as for dealing with matters raised during the process. The Board is made up of a Chairman, two Non-Executive Directors and the CEO. The roles of the Chairman and CEO are clearly separated. The CEO is responsible for the day-to-day operational management of the business and is supported by a Chief Financial Officer, a Chief Operating Officer, geologists and engineers. The Chairman is responsible for the leadership and effective working of the Board, for the implementation of sound corporate governance, for setting the Board agenda, and ensuring that Directors receive accurate, timely and 8. Promote a corporate culture that is based on ethical values and behaviours. Succession planning is a vital task for boards and the management of succession planning represents a key measure of the effectiveness of the Board. The Company has a strong ethical culture, which is promoted by the Board and the management team. The Company endeavours to conduct its business in an ethical, professional and responsible manner, treating all employees, customers, suppliers and partners with equal courtesy irrespective of gender, race, colour or creed. 24 25 4. Embed effective risk management, considering both opportunities and threats, throughout the organisation. 5. Maintain the Board as a well- functioning, balanced team led by the chair. Principle Application 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board. 10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. The Board approves the Company’s strategy and ensures that necessary resources are in place in order for the Company to meet its objectives. Whilst the Board has delegated the operational management of the Company to the Chief Executive Officer and other senior management, a number of specific matters are subject to the approval of the Board. These include: • annual budget; interim and final financial statements; • • management structure and appointments; • mergers, acquisitions and disposals; • capital raising; • • corporate strategy; • projects of a capital nature; and • major contracts. joint ventures and investments; The Non-Executive Directors have a particular responsibility to constructively challenge the strategy proposed by the executive management team, to scrutinise and challenge performance, to ensure appropriate remuneration, and to ensure that succession planning is in place in relation to senior members of the management team. The senior management team enjoy open access to the Non-Executive Directors. The Chairman is responsible for leadership of the Board and ensuring its effectiveness. The Chairman with the assistance of the Chief Executive Officer sets the Board’s agenda and ensures that adequate time is available for discussion of all agenda items, in particular strategic issues. The roles of the Audit Committee and the Remuneration Committee are set out further on in this report. The governance structures will evolve over time in parallel with the Company’s objectives, strategy, and business model to reflect the development of the Company. The Board is committed to maintaining good communication and having constructive dialogue with all of its stakeholders, including shareholders, providing them with access to information to enable them to come to informed decisions about the Company. The ‘Investors’ section on the Company’s website provides all required regulatory information as well as additional information shareholders may find helpful, including: • • a historical list of the Company’s announcements; • corporate governance information; • historical Annual Reports and notices of Annual General Meetings; and • information on Board members, advisers and significant shareholdings; share price information and interactive charting facilities to assist shareholders in analysing performance. Results of shareholder meetings and details of votes cast will be publicly announced through the regulatory system and displayed on the Company’s website with suitable explanations of any actions undertaken as a result of any significant votes for or against resolutions. 26 THE BOARD OF DIRECTORS The Board currently comprises: Independent Non-Executive Chairman • Glen Parsons (appointed 23 October 2017) Independent Non-Executive Directors • Laurence Robb (appointed 23 October 2017) • Terence Goodlace (appointed 23 May 2018) Executive Director - Chief Executive Officer • Anthony Viljoen (appointed 23 October 2017) Operational management in South Africa and Namibia is led by Anthony Viljoen supported by a Chief Financial Officer (Robert Sewell), a Chief Operating Officer (Frans van Daalen), geologists and engineers. Operational management is also supported technically through various consultancy agreements that were in place during the year under review. The Board met formally four times during the year and also met frequently on an ad-hoc basis. All press releases, including operational updates, are approved by the entire Board. THE AUDIT COMMITTEE The Audit Committee meets at least twice a year and is composed exclusively of Non-Executive Directors: Glen Parsons (Chairman) and Terence Goodlace. The Chief Financial Officer, Robert Sewell, attends Audit Committee meetings by invitation. The committee is responsible for: • reviewing the annual financial statements and interim reports prior to approval, focusing on changes in accounting policies and practices, major judgemental areas, significant audit adjustments, going concern and compliance with accounting standards, stock exchange requirements, and legal requirements; receiving and considering reports on internal financial controls, including reports from the auditor, and reporting auditor findings to the Board; • • considering the appointment of the auditor and their remuneration, including reviewing and monitoring their independence and objectivity; • meeting with the auditor to discuss the scope of the audit, issues arising from their work and any matters they wish to raise; and • developing and implementing policy on the engagement of the external auditor to supply non-audit services. The Audit Committee is provided with details of any proposed related-party transactions in order to consider and approve the terms and conditions of such transactions. The Audit Committee met three times during the year to consider the following agenda items: August 2020: • External audit report • Critical accounting estimates • Going concern assessment • Approval of the Annual Report for the period ended February 2020 September 2020: • Approval of the half-year results and report to 31 August 2020 • Going concern assessment February 2021: • Auditor independence • External audit plan for the year ended February 2021 27 THE REMUNERATION COMMITTEE The Remuneration Committee meets at least once a year and is composed exclusively of Non-Executive Directors: Glen Parsons (Chairman) and Terence Goodlace. The Committee is responsible for reviewing the performance of senior management and for setting the scale and structure of their remuneration, determining the payment of bonuses, considering the grant of options under any share option scheme and, in particular, the price per share and the application of performance standards which may apply to any such grant, paying due regard to the interests of shareholders and the performance of the Group. The Remuneration Committee met formally once during the year to consider the following agenda items: December 2020: • Repricing of share options • Awarding discretionary bonuses to the executive team settled through the issue of shares • Consideration of salary increases INTERNAL CONTROLS The Board acknowledges its responsibility for the Group’s systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal use and external publication. Whilst the Board is aware that no system can provide absolute assurance against material misstatement or loss, in light of the increased activity and further development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. RISK MANAGEMENT The Board considers risk assessment and management to be important in achieving its strategic objectives. Project milestones and timelines are regularly reviewed. 28 29 The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations. The Companies (Guernsey) Law, 2008 requires the Directors to prepare Group financial statements for each financial year in accordance with generally accepted accounting principles. The Directors are required by the AIM rules of the London Stock Exchange to prepare Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The financial statements of the Group are required by law to give a true and fair view of the state of the Group’s affairs at the end of the financial year and of the profit or loss of the Group for that year and are required by IFRS as adopted in the EU to reflect fairly the financial position and performance of the Group. In preparing the Group financial statements, the Directors are required to: i) ii) iii) iv) Select suitable accounting policies and then apply them consistently; Make judgements and accounting estimates that are reasonable and prudent; State whether they have been prepared in accordance with IFRS as adopted by the EU; and Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions, disclose with reasonable accuracy at any time the financial position of the Group, and enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors confirm they have discharged their responsibilities as noted above. STATEMENT OF DIRECTORS’ RESPONSIBILITIES 30 31 OPINION ON THE FINANCIAL STATEMENTS In our opinion: • the financial statements give a true and fair view of the state of the Group’s affairs as at 28 February 2021 and of its loss for the year then ended; the Group financial statements have been prepared in accordance with IFRSs as adopted by the European Union; and the financial statements have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008. • • We have audited the financial statements of AfriTin Mining Limited (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 28 February 2021 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows and notes to the consolidated financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee. Independence We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. CONCLUSIONS RELATING TO GOING CONCERN In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. We considered the judgements associated with the going concern assessment and the appropriateness of disclosure of any uncertainties to be a key focus for our audit, and therefore a key audit matter. Details of the Directors’ consideration of the appropriateness of the going concern basis are outlined in Note 2: Significant accounting policies. Our evaluation of the Directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting, and our response to the key audit matter included: • We discussed with management and the Audit Committee their assessment of potential risks and uncertainties, including those related to COVID-19, including areas such as supply chain and offtake disruption, forecast commodity prices and the availability of financing that is relevant to the Group’s business model and operations. We formed our own assessment of risks and uncertainties based on our understanding of the business and mining sector. • We reviewed the latest Board-approved cash flow forecasts for the Group, which covered 12 months from the date of approval of these financial statements. We challenged management’s assumptions in respect of the level of production, tin and tantalum prices, operating costs and capital expenditure. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AFRITIN MINING LIMITED 32 33 In doing so, we considered factors such as empirical operational performance, recent cost profile and market analyst commentary regarding forecast commodity prices. South Africa. All of the audits were conducted by either the group audit team or BDO network member firms. • We obtained management’s sensitivity and stress test scenarios and considered management’s conclusions as to whether such scenarios are reasonably possible based on our knowledge of the business and operating environment. • We evaluated the nature of mitigating actions identified by management in their assessment in the event of downside scenarios, including deferral of capital expenditure. This included evaluating the quantum ascribed to these mitigating actions and the extent to which they are within management’s control. • We agreed the post balance sheet date equity fundraising to bank statements. • We reviewed the adequacy of disclosures in the financial statements against the accounting standards and our knowledge of the business. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. OVERVIEW Coverage 89% (2020: 93%) of Group total assets 99% (2020: 69%) of Group revenue* * The Group was not in commercial production in the prior year and therefore revenue balances were immaterial in FY20. Key audit matters (“KAM”) Going concern Carrying value of the Uis mining assets 2021 2020 Yes Yes Yes Yes Materiality Group financial statements as a whole £230,000 (2020: £210,000) based on 1% of total assets (2020: 1% of AN OVERVIEW OF THE SCOPE OF OUR AUDIT total assets) Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. In approaching the Group audit we considered how the Group is organised and managed. Whilst AfriTin Mining Limited is a Company registered in Guernsey and listed on AIM in the UK, the Group’s principal operations are located in Namibia and South Africa. We assessed the business as being principally a single project comprising of the Namibian subsidiaries that operate the Uis Mine, a corporate head office function and an exploration business unit. The Namibian subsidiaries that operate the Uis Mine and the corporate head office function were regarded as being significant components of the Group and were subject to full scope audits. The audits of each of the components were principally performed in the United Kingdom, Namibia and The remaining components of the Group were considered non-significant and these components were principally subject to analytical review procedures, together with specified audit procedures over exploration and evaluation related assets. This work was conducted by BDO network member firms. Our involvement with component auditors For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a whole. Our involvement with component auditors included the following: • We held planning meetings with the component auditors and local management. • Detailed Group reporting instructions were sent to the component auditors, which included significant areas to be covered by the audits and set out the information to be reported to the Group audit team. • The Group audit team was actively involved in the direction of the audits performed by the component auditor for Group reporting purposes, along with the consideration of findings and determination of conclusions drawn. We performed our own additional procedures in respect of certain of the significant risk areas that represented Key Audit Matters in addition to the procedures performed by the component auditor. • We received and reviewed Group reporting submissions and performed a review of the component auditors’ file. Our review was performed remotely using our online audit software as a result of travel restrictions due to COVID-19. • We held clearance meetings remotely with the component auditors and local management to discuss significant audit and accounting issues and judgements. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Conclusions relating to going concern section, we have determined the matter described below to be a key audit matter. Key audit matter Carrying value of the Uis mining assets Details of the carrying value of the Uis mining assets are disclosed in Note 12: Property, Plant and Equipment. As disclosed in Note 2: Significant accounting policies, management have performed an impairment indicator How the scope of our audit addressed the key audit matter We reviewed and challenged management’s impairment indicator assessment which was carried out in accordance with relevant accounting standards in order to determine whether there were any indicators of impairment. In doing so, our procedures included: • Comparing the Group’s market capitalisation at year end to its net assets. • Reviewing the Competent Person’s Report to support the mineral reserve, and performing an assessment of the independence and competence of the expert. 34 35 review in accordance with the accounting standards. In undertaking this assessment management have reviewed the underlying valuation model of the Uis mine. As set out in Note 2, Management have concluded that no indicators of impairment have been identified at year end. The assessment of the recoverable value of the mining assets requires significant judgement and estimates to be made by management – in particular regarding the inputs applied in the models including: future tin and tantalum prices; production and reserves; operating and development costs; and discount rates. The carrying value of mining assets is therefore considered a key audit matter given the level of judgement and estimation involved. • Obtaining management’s Life of Mine (“LoM”) forecast to confirm that headroom existed over the asset-carrying value as part of our assessment of potential impairment indicators. • Critically reviewing the LoM forecast and the key inputs by making enquiries of operational management, and evaluating against our understanding of the operations and historical performance. • Checking the mathematical accuracy of management’s models. • Challenging the significant inputs and assumptions used in the impairment model and whether these were indicative of potential bias. This included comparing forecast commodity prices to a range of third-party independent market outlook reports and historical actual data, comparing the forecast production to third-party feasibility and resource studies, and evaluating the judgments regarding future tantalum production against the status of test data. We compared forecast costs against the expected production profiles in the mine plans and recent historical performance. • Recalculating the discount rate and utilising BDO valuation specialists to assess the discount rate. • Reviewing management’s sensitivity analysis and performing our own sensitivity analysis over individual key inputs including tin prices and future tantalum production. Key observation: We found the key assumptions made by management and the Board in respect of the underlying LoM forecast to be within an acceptable range and found management’s conclusion that no impairment indicator was present at 28 February 2021 to be appropriate. OUR APPLICATION OF MATERIALITY We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. GROUP FINANCIAL STATEMENTS Materiality 2021 £230 000 2020 £210 000 Basis for determining materiality 1% of total assets 1% of total assets Rationale for the benchmark applied We consider total assets to be the most significant determinant of the Group’s financial performance used by the members of the Group. The Group has invested significant sums on its production and non-production mining assets and these are considered to be the key value driver for the Group as its assets are an indicator of future value to shareholders. £172 500 £157 500 Performance materiality was set at 75% of the above materiality level based on assessment of aggregation risk considering factors such as volume and nature of errors in prior periods. Performance materiality Basis for determining performance materiality Component materiality We set materiality for each component of the Group based on a percentage of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £128 000 to £46 000 (2020: £100 000 to £95 000). In the audit of each component, we further applied performance materiality levels of 75% (2020: 75%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £12 000 (2020: £10 000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. OTHER INFORMATION The Directors are responsible for the other information. The other information comprises the information included in the Annual Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: OTHER COMPANIES (GUERNSEY) LAW, 2008, REPORTING 36 37 • proper accounting records have not been kept by the Company; or We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008, requires us to report to you if, in our opinion: the financial statements are not in agreement with the accounting records; or • • we have failed to obtain all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit. RESPONSIBILITIES OF DIRECTORS As explained more fully in the Directors’ Responsibilities for financial reporting, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and the industry in which it operates, and considered the risk of acts by the Company that were contrary to applicable laws and regulations, including fraud. We focused on laws and regulations that could give rise to a material misstatement in the financial statements, including but not limited to, Guernsey Companies Law, tax legislation and the various Mining Regulations in Namibia. Based on our understanding we designed our audit procedures to identify non-compliance with such laws and regulations impacting the Company. Our procedures involved making enquiries of management and those charged with governance to understand their awareness of any non-compliance of laws or regulations, inquiring about the policies that have been established to prevent non-compliance with laws and regulations by officers and employees of the Company, inquiring about the Company’s methods of enforcing and monitoring compliance with such policies, and reviewing Board minutes to identify any instances of non-compliance. • We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur, by obtaining an understanding of the controls that the Company has established to address risks identified by the entity, or that otherwise seek to prevent, deter or detect fraud. We considered the significant fraud risk areas to be in relation to revenue recognition and management override of controls. • We addressed the fraud risk in relation to revenue recognition by testing one hundred percent of revenue transactions to supporting documentation, including testing the cut-off of revenue transactions in the period proceeding and preceding year end. • We addressed the risk of management override of internal controls, including testing a risk-based selection of journals and evaluating whether there was evidence of bias in management’s estimates (refer to the ‘key audit matters’ section) that represented a material misstatement due to fraud. • • We also communicated relevant identified laws and regulations and potential fraud risks to the component audit team and all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. In respect of the component auditors, we communicated our consideration of where the financial statements could be susceptible to material misstatement, including how fraud might occur, and communicated specific procedures to be performed in relation to testing the appropriateness of journal entries made throughout the year by applying specific criteria to select journals which may be indicative of possible irregularities and fraud and also by assessing the judgements made by management when making key accounting estimates and judgements, and challenging management on the appropriateness of these judgements. As part of our Group audit, we performed a review of the component auditors’ file, which included the areas detailed above. In addition, as part of their audit, the component auditors assessed compliance with local legislation, including mining regulations in Namibia. Their procedures involved making enquiries of local management to understand their awareness of any non-compliance of laws or regulations, inquiring about the policies that have been established to prevent non-compliance with laws and regulations, inquiring about the Company’s methods of enforcing and monitoring compliance with such policies, and reviewing Board minutes to identify any instances of non-compliance. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed. The further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. The engagement director on the audit resulting in this independent auditor’s opinion is Ryan Ferguson. USE OF OUR REPORT This report is made solely to the Company’s members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. RYAN FERGUSON For and on behalf of BDO LLP, Chartered Accountants London, United Kingdom 21 July 2021 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 38 39 FINANCIAL STATEMENTS 40 41 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 28 February 2021 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 28 February 2021 Year ended 28 February 2021 £ Year ended 29 February 2020 £ Notes 28 February 2021 £ 29 February 2020 £ Notes Continuing operations Revenue Cost of Sales Gross (loss)/profit Impairment of exploration licences Other administrative expenses Total administrative expenses Operating loss Finance income Finance cost Loss before tax Income tax expense Loss for the year Other comprehensive income/(loss) Items that will or may be reclassified to profit or loss: Exchange differences on translation of share- based payment reserve 5 11 6 8 9 4 985 107 (4 987 696) (2 589) (3 069 232) (2 539 762) (5 608 994) (5 611 583) - (184 300) (5 795 883) - (5 795 883) 69 032 (47 336) 21 696 - (1 815 227) (1 815 227) (1 793 531) 3 793 (40 719) (1 830 457) - (1 830 457) (531) (1 039) Exchange differences on translation of foreign (526 231) (1 113 281) operations Exchange differences on non-controlling 1 390 4 167 interest Total comprehensive loss for the year (6 321 255) (2 940 610) Loss for the year attributable to: Owners of the parent Non-controlling interests Total comprehensive loss for the year attributable to: Owners of the parent Non-controlling interests Loss per ordinary share (5 694 962) (100 921) (5 795 883) (1 781 962) (48 495) (1 830 457) (6 221 724) (99 531) (6 321 255) (2 896 282) (44 328) (2 940 610) Assets Non-current assets Intangible assets Property, plant and equipment Total non-current assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets Total assets Equity and liabilities Equity Share capital Convertible loan note reserve Accumulated deficit Warrant reserve Share-based payment reserve Foreign currency translation reserve Equity attributable to the owners of the parent Non-controlling interests Total equity Non-current liabilities Environmental rehabilitation liability Lease liability Total non-current liabilities Current liabilities Trade and other payables Borrowings Lease liability Total current liabilities 11 12 13 14 15 5 240 461 13 634 701 18 875 162 7 441 018 12 467 868 19 908 886 996 698 1 18 8 152 1 351 200 3 536 050 246 910 648 722 574 600 1 470 232 22 411 212 21 379 118 20 27 25 608 001 2 170 645 (10 030 679) 21 211 348 22 743 615 (2 061 339) 16 641 591 (151 344) 16 490 247 180 917 260 512 441 429 1 484 482 3 869 489 125 565 5 479 536 23 18 19 17 16 19 20 487 239 3 770 645 (4 365 500) 78 651 559 534 (1 535 108) 18 995 461 (51 812) 18 943 649 86 005 181 544 267 549 894 830 1 230 961 42 129 2 167 920 Basic and diluted loss per share (in pence) 10 (0.76) (0.29) Total equity and liabilities 22 411 212 21 379 118 The notes that follow in this report form part of these financial statements. The financial statements were authorised and approved for issue by the Board of Directors and authorised for issue on 21 July 2021. ANTHONY VILJOEN Chief Executive Officer 21 July 2021 42 43 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 28 February 2021 Total equity at 28 February 2019 Loss for the year Other comprehensive income/(loss) Total comprehensive income/(loss) Transactions with owners: Share-based payments in the year Issue of shares Share issue costs Issue of convertible loan notes Convertible loan note issue costs Share capital £ 17 337 718 - - - - 3 261 208 (111 687) Convertible loan note reserve £ - - - - - - - - - 3 800 000 (29 355) Accumulated deficit £ (2 583 538) (1 781 962) - (1 781 962) - - - - - Warrant reserve £ Share-based payment reserve £ Foreign currency translation reserve £ Non- controlling interests £ Total £ Total equity £ 78 651 220 729 (421 827) 14 631 733 (7 484) 14 624 249 - - - - - - - - - - (1 781 962) (48 495) (1 830 457) (1 039) (1 113 281) (1 114 320) 4 167 (1 110 153) (1 039) (1 113 281) (2 896 282) (44 328) (2 940 610) 403 562 (63 718) - - - - - - - - 403 562 3 197 490 (111 687) 3 800 000 (29 355) - - - - - 403 562 3 197 490 (111 687) 3 800 000 (29 355) Total equity at 29 February 2020 20 487 239 3 770 645 (4 365 500) 78 651 559 534 (1 535 108) 18 995 461 (51 812) 18 943 649 Loss for the year Other comprehensive income/(loss) Total comprehensive income/(loss) Transactions with owners: Share-based payments in the year (includes amounts due to staff and suppliers) Issue of shares Share issue costs - - - 3 774 079 (253 317) - - - - - Conversion of convertible loan notes 1 600 000 (1 600 000) Warrants issued in the year Warrants expired in the year - - - - (5 694 962) - (5 694 962) - - - - - 29 783 - - - - - - - 162 480 (29 783) - (531) (531) 281 431 (96 819) - - - - - (5 694 962) (100 921) (5 795 883) (526 231) (526 762) 1 390 (525 372) (526 231) (6 221 724) (99 531) (6 321 255) - - - - - - 281 431 3 677 260 (253 317) - 162 480 - - - - - - - 281 431 3 677 260 (253 317) - 162 480 - Total equity at 28 February 2021 25 608 001 2 170 645 (10 030 679) 211 348 743 615 (2 061 339) 16 641 591 (151 344) 16 490 247 44 45 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 28 February 2021 Year ended 28 February 2021 £ Year ended 29 February 2020 £ Notes Cash flows from operating activities Loss before taxation Adjustments for: Fair value adjustment to customer contract Depreciation of property, plant and equipment Impairment of exploration licences Share-based payments Equity-settled transactions Finance income Finance costs Changes in working capital: Increase in receivables Increase in inventory Increase in payables Net cash used in operating activities Cash flows from investing activities Finance income Purchase of intangible assets Purchase of property, plant and equipment (including capitalised cash interest of £179 194 (2020: £55 235)) Net cash used in investing activities Cash flows from financing activities Finance costs Lease payments Net proceeds from issue of shares Net proceeds from issue of convertible loan notes Proceeds from borrowings Repayment of borrowings Net cash generated from financing activities 5 12 11 22 8 14 13 17 11 12 8 19 20 16 16 Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Foreign exchange differences Cash and cash equivalents at the end of the year 15 46 (5 795 883) (1 830 457) (205 635) 898 528 3 069 232 217 407 618 260 - 184 300 (352 953) (753 688) 619 573 - 128 130 - 184 888 109 190 (3 793) 40 719 (220 634) (241 546) 578 828 (1 500 858) (1 254 675) - (964 191) (1 990 856) 3 793 (596 291) (7 159 313) (2 955 047) (7 751 811) (37 612) (128 600) 2 796 683 - 7 908 028 (5 378 742) 5 159 757 (562) (68 015) 2 876 705 3 770 645 4 840 989 (3 610 028) 7 809 734 703 852 (1 196 752) 574 600 1 781 335 72 748 1 351 200 (9 983) 574 600 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 28 February 2021 1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES AfriTin Mining Limited (“AfriTin”) was incorporated and domiciled in Guernsey on 1 September 2017, and admitted to the AIM market in London on 9 November 2017. The company’s registered office is PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH and operates from Illovo Edge Office Park, 2nd Floor, Building 3, Corner Harries and Fricker Road, Illovo, Johannesburg, 2116, South Africa. These financial statements are for the year ended 28 February 2021 and the comparative figures are for the year ended 29 February 2020. The AfriTin Group comprises AfriTin Mining Limited and its subsidiaries as noted below. AfriTin Mining Limited (“AML”) is an investment holding company and holds 100% of Guernsey subsidiary, Greenhills Resources Limited (“GRL”). GRL is an investment holding company that holds investments in resource-based tin and tantalum exploration companies in Namibia and South Africa. The Namibian subsidiary is AfriTin Mining (Namibia) Pty Limited (“AfriTin Namibia”), in which GRL holds 100% equity interest. The South African subsidiaries are Mokopane Tin Company Pty Limited (“Mokopane”) and Pamish Investments 71 Pty Limited (“Pamish 71”), in which GRL holds 100% equity interest. AfriTin Namibia owns an 85% equity interest in Uis Tin Mining Company Pty Limited (“UTMC”). The minority shareholder in UTMC is The Small Miners of Uis who own 15%. Mokopane owns a 74% equity interest in Renetype Pty Limited (“Renetype”) and a 50% equity interest in Jaxson 641 Pty Limited (“Jaxson”). The minority shareholders in Renetype are African Women Enterprises Investments Pty Limited and Cannosia Trading 62 CC who own 10% and 16% respectively. The minority shareholder in Jaxson is Lerama Resources Pty Limited who owns a 50% interest in Jaxson. Pamish 71 owns a 74% interest in Zaaiplaats Mining Pty Limited (“Zaaiplaats”). The minority shareholder in Zaaiplaats is Tamiforce Pty Limited who owns 26%. AML holds 100% of Tantalum Investment Pty Limited, a company containing Namibian exploration licenses EPL5445 and EPL5670 for the exploration of tin, tantalum and associated minerals. As at 28 February 2021, the AfriTin Group comprised: Company AfriTin Mining Limited Greenhills Resources Limited1 AfriTin Mining Pty Limited1 Tantalum Investment Pty Limited1 AfriTin Mining (Namibia) Pty Limited2 Uis Tin Mining Company Pty Limited3 Mokopane Tin Company Pty Limited2 Renetype Pty Limited4 Jaxson 641 Pty Limited4 Pamish Investments 71 Pty Limited2 Zaaiplaats Mining Pty Limited5 Equity holding and voting rights Country of incorporation Nature of activities N/A 100% 100% 100% 100% 85% 100% 74% 50% 100% 74% 47 Guernsey Ultimate holding company Guernsey Holding company South Africa Group support services Namibia Namibia Namibia Tin & tantalum exploration Tin & tantalum operations Tin & tantalum operations South Africa Holding company South Africa Tin & tantalum exploration South Africa Tin & tantalum exploration South Africa Holding company South Africa Property owning 1 Held directly by AfriTin Mining Limited 2 Held by Greenhills Resources Limited 3 Held by AfriTin Mining (Namibia) Pty Limited 4 Held by Mokopane Tin Company Pty Limited 5 Held by Pamish Investments 71 Pty Limited These financial statements are presented in Pound Sterling (£) because that is the currency in which the Group has raised funding on the AIM market in the United Kingdom. Furthermore, Pound Sterling (£) is the functional currency of the ultimate holding company, AfriTin Mining Limited. The Group’s key subsidiaries, AfriTin Namibia and UTMC, use the Namibian Dollar (N$) as their functional currency. The year-end spot rate used to translate all Nambian Dollar balances was £1 = N$21.10 and the average rate for the financial year was £1 = N$21.31. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively “IFRS”) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU adopted IFRS”). The Group has adopted the standards, amendments and interpretations effective for annual periods beginning on or after 1 March 2020. The adoption of these standards and amendments did not have a material effect on the financial statements of the Group. See Note 3. The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity and areas where assumptions and estimates are significant to the consolidated financial statements are discussed further in this note. The principal accounting policies are set out below. GOING CONCERN These financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the company will be able to continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities in the normal course of operations. At year end, the company had cash in the bank of £1.4m and had drawn down £1.7m of the £2m Nedbank working capital facility. Subsequent to year end, an equity placement in May 2021 raised gross proceeds of £13m. Furthermore, both long term liabilities and associated interest, namely the remaining 2019 convertible loan notes and the 2020 loan notes were settled on 25 May 2021. The outstanding convertible loan notes were partially settled through conversion into ordinary shares and partially settled in cash. The outstanding loan notes were all settled in cash. Management have prepared a detailed cash flow forecast for the period to 31 July 2022 and stress tests of this forecast. The forecast excludes the Group’s £2.038m working capital and VAT facility that is currently due for renewal. The Directors fully anticipate renewal of the facility based on current discussions with the lender, the security in place and the history of renewals. The base case forecast demonstrates that the Group will have sufficient funds to meet its liabilities as they fall due and includes the following key assumptions: • Prices have been set at $28 100 per tonne of tin and $150 000 per tonne of tantalum. • The base case forecast assumes continuing steady-state production for the current mining and processing facility. • The base case forecast includes the procurement of long-lead items relating to the Phase 1 expansion but does not include the full capital expenditure required for the Phase 1 expansion, which remains discretionary, as management intends to finance this requirement with debt financing. In addition, the Board have considered the risks and uncertainties associated with COVID-19 on the Group’s operations including the potential impact of production stoppages as a result of potential outbreaks of the virus at the operation as well as downside scenarios in relation to commodity pricing and production across the period. The scenarios demonstrated that the Group will be able to maintain liquidity without use of its working capital facilities through management of its expansionary capital project expenditure. Accordingly, the Directors have concluded that the going concern basis in the preparation of the financial statements is appropriate and that there are no material uncertainties that would cast doubt on that basis of preparation. BASIS OF CONSOLIDATION Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition-date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability are recognised either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity. The acquisition of subsidiaries that do not meet the definition of a business and hold early-stage exploration licenses are accounted for as asset purchases with the fair value of consideration being allocated to the assets. Inter-company transactions, balances and unrealised gains/losses on transactions between Group companies are eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. 48 49 Disposal of subsidiaries iii) all resulting exchange differences are recognised in other comprehensive income. When the Group ceases to have control, any retained interest in the entity is measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. Non-controlling interests Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling shareholders that present ownership interests entitling their holders to a proportionate share of the net assets upon liquidation are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the management steering committee that makes strategic decisions. FOREIGN CURRENCIES Functional and presentational currency The individual financial statements of each Group company are prepared in the currency of the primary economic environment in which they operate (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in Pound Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation date where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Group companies The results and financial position of all the Group entities (none of which has the currency of a hyper- inflationary economy) that have a financial currency different from the presentation currency are translated into the presentation currency as follows: i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of ii) that balance sheet; income and expenses for each income statement are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and REVENUE RECOGNITION IFRS 15 “Revenue from Contracts with Customers” establishes a comprehensive framework for determining whether, how much and when revenue is recognised. The core principle is that an entity recognises revenue to depict the transfer of promised goods and services to the customer of an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Group generates revenue from its primary activity, the sale of tin concentrate, and it continued to generate immaterial revenue from the sale of sand. The Group produces and sells tin concentrate from its Uis Tin Mine in Namibia. Once concentrate has been produced at the Uis plant, it is sampled, bagged and loaded into containers for transportation to the port in Walvis Bay for shipment. The company currently has an offtake agreement with its customer, Thailand Smelting and Refining Company (“Thaisarco”), which was signed on 1 August 2019. This contract was renewed on 1 December 2020 for a further 3 years. As per the contract, Thaisarco pays AfriTin on the basis of actual tin content in the concentrate per Thaisarco’s analysis at the London Metal Exchange price less treatment charges, unit deductions and impurity charges. The Group can elect for the sale of each shipment to occur under the following terms: Option 1: Standard provisional payment Thaisarco shall pay 90% provisional payment on the basis of actual tin content as per their own analysis. Payment is to be made within 10 working days after the arrival of concentrate at Thaisarco’s works. Title shall pass to Thaisarco when the concentrate arrives at the Songkhla Port in Thailand. Option 2: Provisional payment option against original bill of lading Thaisarco shall pay 90% provisional payment on the basis of provisional tin content per UTMC’s analysis. The provisional payment shall be done against presentation of a provisional invoice and an original bill of lading. Title shall pass to Thaisarco when UTMC receives the 90% provisional payment. Option 3: Provisional payment option against warehouse holding certificate Thaisarco shall pay 70% provisional payment on the basis of provisional tin content per UTMC’s analysis. The provisional payment shall be done against presentation of provisional invoice and original warehouse holding certificate. Thaisarco shall pay an additional 20% provisional payment upon presentation of the original bill of lading. Title shall pass to Thaisarco when the UTMC receives the 70% provisional payment. During the year, the Group concluded sales under either Option 2 or Option 3. Revenue is recognised at a point in time when title and control of the goods has transferred to the customer, which is when the concentrate arrives at the Songkhla Port in Thailand under Option 1 or when provisional payment is received by UTMC under Option 2 and Option 3. There is limited judgement needed to identify the point at which control passes: once physical delivery of the products to the agreed location has occurred, the Group no longer has physical possession of the products. At this point, the Group will have a present right to payment and retains none of the significant risks and rewards of the goods in question. Pricing for the provisional payment is determined by the published tin price on the date that title and control passes. Pricing for the final payment shall be declared within 20 market days after arrival at Thaisarco’s works. The lower of the cash price and the 3-month forward-looking price is used in these calculations. Variable consideration relating to final assay results is constrained in estimating revenue unless it is highly probable that there will not be a future reversal in the amount of revenue recognised when the final assay has been determined. 50 51 Revenue from the sale of sand is recognised at the point in time when control of the goods has transferred to the customer, which is when the sand leaves the Group’s premises. At this point, the Group will have a present right to payment and retains none of the significant risks and rewards of the goods in question. TAXATION The tax expense represents the sum of the tax currently payable and deferred tax. The tax charge is based on taxable profit for the period. The Group’s liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the “balance sheet liability” method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled based upon rates enacted and substantively enacted at the reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items credited or charged to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income. • whether exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable deposits and the Group has decided to discontinue such activities in the specific area; or • whether sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by sale. If any such facts or circumstances are noted, the Group, as a next step, perform an impairment test in accordance with the provisions of IAS 36 “Impairment of Assets”. In such circumstances, the aggregate carrying value of the mining exploration and assets is compared to the expected recoverable amount of the cash-generating unit. The recoverable amount is the higher of value in use and the fair value less costs to sell. SHARE CAPITAL AND RESERVES i) Warrant reserve The warrants issued by the Company are recorded at fair value on initial recognition net of transaction costs. The fair value of warrants granted is recognised as an expense or as share issue costs based on their nature, with a corresponding increase in equity. The fair value of the warrants granted is measured using the Black Scholes valuation model, taking into account the terms and conditions under which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of warrants that vest. INTANGIBLE EXPLORATION AND EVALUATION ASSETS ii) Convertible loan note reserve All costs associated with mineral exploration and evaluation including the costs of acquiring prospecting licenses; mineral production licenses and annual license fees; rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource; are capitalised as intangible exploration and evaluation assets and subsequently measured at cost. If an exploration project is successful, the related expenditures will be transferred at cost to property, plant and equipment and amortised over the estimated life of the commercial ore reserves on a unit of production basis (with this charge being taken through profit or loss). Where capitalised costs relate to both development projects and exploration projects, the Group reclassifies a portion of the costs which are considered attributable to near-term production based on a percentage of the ore resource expected to be mined in the relevant phase. Where a project does not lead to the discovery of commercially viable quantities of mineral resources and is relinquished, abandoned, or is considered to be of no further commercial value to the Group, the related costs are recognised in the income statement. The recoverability of deferred exploration costs is dependent upon the discovery of economically viable ore reserves, the ability of the Group to obtain necessary financing to complete the development of ore reserves and future profitable production or proceeds from the extraction or disposal thereof. IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS The proceeds received on issue of the Group’s convertible loan notes are allocated into their liability and equity components based on the terms of the agreement. The Group takes into account: • whether there is a contractual obligation to settle in cash; • whether there is a contractual obligation to issue a variable number of shares; and • whether the instrument’s book value is variable. Where none of the above criteria are met, the convertible loan notes are allocated as equity. iii) Share-based payment reserve Where equity settled share options are awarded to directors or employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non- market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied. Intangible exploration and evaluation assets are reviewed regularly for indicators of impairment following the guidance in IFRS 6 “Exploration for and Evaluation of Mineral Resources” and tested for impairment where such indicators exist. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of comprehensive income over the remaining vesting period. In accordance with IFRS 6, the Group considers the following facts and circumstances in their assessment of whether the Group’s exploration assets may be impaired: • whether the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed; or • whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted nor planned; or Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with the fair value of goods and services received. 52 53 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at historical cost less accumulated depreciation. Land is not depreciated. Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful economic life. The applicable rates are: • The mining assets are depreciated using the units of production method from the point that commercial production was achieved. This reflects the production activity in the period as a proportion of the total mining reserve. Where the units of production method is used, the assets are depreciated based on a rate determined by the tonnes of ore processed divided by the estimate of the mineral reserve. • Short-lived assets which are used in the mining and processing plant are depreciated over a period of between one and ten years. • Right-of-use assets are depreciated over the period of the lease contract. • Computer equipment is depreciated over three years. • Furniture is depreciated over five years. • Vehicles are depreciated over four years. Mining assets under construction are not depreciated. The estimated useful lives, residual values and depreciation methods are reviewed at each year end and adjusted if necessary. Gains or losses on disposal are included in profit or loss. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. RIGHT-OF-USE ASSET At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset, for a period of time, in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether: • the contract involves the use of an identified asset. This may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and the Group has the right to direct the use of the asset. The Group has the right when it has the decision- making rights that are most relevant to changing how and for what purposes the asset is used. In rare cases where the decision about how and for what purpose the assets is used is predetermined, the Group has the right to direct the use of the asset if either: - the Group has the right to operate the asset; or - the Group designed the asset in a way that predetermines how and for what purpose it will be used. • • At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. The right-of-use asset is initially measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is annually assessed for impairment and will be adjusted for certain re-measurements of the lease liability. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT At each statement of financial position date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where there has been a change in economic conditions that indicate a possible impairment in a cash- generating unit, the recoverability of the net book value relating to that mine is assessed by comparison with the estimated discounted future cash flows based on management’s expectations of future commodity prices and future costs. The recoverable amount is determined on the fair value less cost to develop basis. In assessing the recoverable amount, which is determined on a fair value less costs to develop basis, the expected future post-tax cash flows from the asset are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The Life of Mine (“LoM”) plan is the approved management plan at the reporting date for ore extraction and its associated capital expenditure. The capital expenditure included in the impairment model does not include capital expenditure to enhance the asset performance outside of the existing LoM plan. The ore tonnes included in the LoM plan are those as per the Reserve Statement, which management considers economically viable. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease to the extent that it reverses gains previously recognised in other comprehensive income. Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment. INVENTORIES Inventory consists of tin concentrate on hand, the run of mine stockpile and consumable items. The tin concentrate is carried at the lower of cost or net realisable value. The cost of the concentrate includes direct materials, direct labour, depreciation and overhead costs relating to processing and engineering activities. Net realisable value is the estimated selling price net of any estimated selling costs in the ordinary course of business. The run of mine stockpile is carried at the lower of cost or net realisable value. The cost of the stockpile includes direct materials, direct labour, depreciation and overhead costs relating to mining activities. Net realisable value is the estimated selling price net of necessary processing costs and any estimated selling costs in the ordinary course of business. Consumables are valued at the lower of cost (determined on the weighted average basis) and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Replacement cost is used as the best available measure of net realisable value. 54 55 FINANCIAL INSTRUMENTS FINANCIAL LIABILITIES Financial instruments are recognised in the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities include trade and other payables, borrowings and other longer-term financing, classified into one of the following categories: FINANCIAL ASSETS The Company classifies its financial assets in the following measurement categories: • • those to be measured subsequently at amortised cost, and those to be measured subsequently at fair value through profit or loss. Fair value through profit and loss: The liabilities are carried in the statement of financial position at fair value with changes in fair value recognised in the income statement. The Group currently has no financial liabilities carried at fair value through profit and loss. Financial liabilities carried at amortised cost: The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows. Trade and other payables Financial assets are classified as at amortised cost only if the asset is held to collect the contractual cash flows and the contractual terms of the asset give rise to cash flows that are solely payments of principal and interest. At subsequent reporting dates, financial assets at amortised cost are measured at amortised cost less any impairment losses. For assets measured at fair value, gains and losses will be recorded in profit or loss. IMPAIRMENT OF FINANCIAL ASSETS The Group assesses on a forward-looking basis the expected credit losses, defined as the difference between the contractual cash flows and the cash flows that are expected to be received, associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables only, the simplified approach permitted by IFRS 9 “Financial Instruments” is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Losses are recognised in the income statement. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the income statement. Trade and other receivables Trade and other receivables are initially recognised at the fair value of the consideration receivable less any impairment. Trade and other receivables are subsequently measured at amortised cost or at fair value through profit or loss. Under its offtake arrangement, the Group receives a provisional payment upon satisfaction of its performance obligations based on the tin price at that date. This occurs prior to the final price determination and the Group then subsequently receives the difference between the final price and quantity and the provisional payment. As a result of the pricing structure, the instrument is classified at fair value through profit or loss and changes in fair value are recorded as other revenue. Trade and other receivables are classified as a current asset as these are expected to be settled within a year. Cash and cash equivalents Cash and cash equivalents comprise cash at hand and deposits on a term of not greater than three months. Trade and other payables are initially recognised at fair value and are subsequently measured at amortised cost, calculated using the effective interest rate method. Borrowings Interest-bearing debt is initially recorded at fair value, less transaction costs and is subsequently measured at amortised cost, calculated using the effective interest rate method. Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use. DERECOGNITION A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when: • The rights to receive cash flows from the asset have expired; or • The company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party, and either - The company has transferred substantially all the risks and rewards of the asset, or - The company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the profit or loss. REHABILITATION PROVISION The net present value of estimated future rehabilitation costs is provided for in the financial statements and capitalised within property, plant and equipment on initial recognition. Rehabilitation will generally occur on closure or after closure of a mine. Initial recognition is at the time of the construction or disturbance occurring and thereafter as and when additional construction or disturbances take place. The estimates are reviewed annually to take into account the effects of inflation and changes in the estimated cost of the rehabilitation works and are discounted using rates that reflect the time value of money. Annual increases in the provision due to the unwinding of the discount are recognised in the statement of comprehensive income as a finance cost. The present value of additional disturbances and changes in the estimate of the rehabilitation liability are recorded to mining assets against an increase/decrease in the rehabilitation provision. 56 57 The rehabilitation asset is amortised over the life of the mine once commercial production commences. Rehabilitation projects undertaken, included in the estimates, are charged to the provision as incurred. Environmental liabilities, other than rehabilitation costs, which relate to liabilities arising from specific events, are expensed when they are known, probable and may be reasonably estimated. would result in a £49 935 difference in the liability. iii) Impairment indicator assessment for exploration & evaluation assets LEASE LIABILITY The lease liability is initially measured at the present value of the remaining lease payments, discounted using the interest rate implicit in the lease. The liability is subsequently measured at amortised cost using the effective interest method. Lease payments are apportioned between the finance charges and reduction of the lease liability using the incremental borrowing rate to achieve a constant rate of interest on the remaining balance of the liability. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. In particular, information about significant areas of estimation uncertainty considered by management in preparing the financial statements is described below. Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the year in which the estimates are revised if the revision affects only that year, or in the year of revision and in future years if the revision affects both current and future years. i) Going concern and liquidity Significant estimates were required in forecasting cash flows used in the assessment of going concern including tin and tantalum prices, the levels of production, operating costs and capital expenditure requirements. Additionally, judgement has been applied in assessing the risks associated with COVID-19, together with mitigating steps available to the Group if required. Refer to going concern considerations noted earlier in Note 2 for further details. ii) Decommissioning and rehabilitation obligations Estimating the future costs of environmental and rehabilitation obligations is complex and requires management to make estimates and judgements as most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. The resulting provisions (see Note 18) are further influenced by changing technologies, political, environmental, safety, business and statutory considerations. The Group’s rehabilitation provision is based on the net present value of management’s best estimates of future rehabilitation costs. Judgement is required in establishing the disturbance and associated rehabilitation costs at period end, timing of costs, discount rates and inflation. In forming estimates of the cost of rehabilitation which are risk adjusted, the Group assessed the Environmental Management Plan and reports provided by internal and external experts. Actual costs incurred in future periods could differ materially from the estimates, and changes to environmental laws and regulations, life of mine estimates, inflation rates, and discount rates could affect the carrying amount of the provision. The carrying amount of the rehabilitation obligations for the Group at 28 February 2021 was £180 917 (2020: £86 005). In determining the amount attributable to the rehabilitation liability, management used a discount rate of 12.8% (2020: 9.35%), an inflation rate of 6% (2020: 5.5%) and an estimated mining period of 18 years, being the Phase 1 expansion life of mine. A 1% increase or decrease in the inflation rate used would result in a £34 074 difference in the liability. A 2% increase or decrease in the discount rate used Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including specific impairment indicators prescribed in IFRS 6: Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future tin prices, future capital expenditures, environmental and regulatory restrictions, and the successful renewal of licences. The Group considers the South African exploration and evaluation assets to be non- core as it continues to primarily focus on developing its Namibian assets. Accordingly, the capitalised exploration and evaluation expenditure relating to the South African assets has been impaired to nil on the basis that the Group does not intend to incur any further expenditure on its South African licences. The directors have concluded that there are no indications of impairment in respect of the carrying value of Namibian intangible assets at 28 February 2021 based on planned future development of the Namibian projects, and current and forecast tin prices. Exploration and evaluation assets are disclosed fully in Note 11. iv) Impairment assessment for property, plant and equipment Management have reviewed the Uis mine for indicators of impairment and have considered, among other factors, the operations to date at the Uis mine, planned Phase 1 Stage II expansion of the Uis operations, forecast commodity prices and market capitalisation of the group. In undertaking the indicator review, management have also reviewed the underlying LoM valuation model for Uis and have concluded that no indicators of impairment have been noted at year end. The LoM valuation model is on a fair value less cost to develop basis and includes assessments of different scenarios associated with capital development and expansion opportunities. The forecasts required estimates regarding forecast tin and tantalum prices, ore resources and production, and operating and capital costs. The discounted cash flows use a discount rate of 11.7% post tax nominal. Under the base case forecast using a forecast tin price of $23 889 rising to $24 505 by 2025 and forecast tantalum price of $150 000, the forecast indicates headroom as at 28 February 2021. Whilst the valuation based on the operations limited to the Phase 1 Stage II expansion is sensitive to pricing with a 6% reduction being required to reach break-even point, the planned additional expansion indicates significant headroom and reduced pricing sensitivity. v) Depreciation Judgement is applied in making assumptions about the depreciation charge for mining assets when using the unit-of-production method in estimating the ore tonnes held in reserves. The relevant reserves are those included in the current approved LoM plan which relates to the Phase 1 expansion. Judgement is also applied when assessing the estimated useful life of individual assets and residual values. The assumptions are reviewed at least annually by management and the judgement is based on consideration of the LoM plan, as well as the nature of the assets. The reserve assumptions included in the LoM plan are evaluated by management. 58 59 vi) Commercial production x) Determining the incremental borrowing rate to measure lease liabilities Judgement is required to determine when a construction asset is in the location and condition intended. No specific guidance exists within IFRS, particularly as to what it means for an asset to be “in the location and condition necessary for it to be capable of operating as intended by management”, but it is common to simply refer to the achievement of “commercial production” as the point at which the assets are commissioned, i.e. ready for their intended use. In determining the commercial production date, management uses certain criteria that are required to be met before commercial production is achieved. Commercial production is determined to have been reached when the asset is operating at its designed production level. The Uis Tin Mine achieved commercial production based on production levels at 1 December 2020 and commercial production was declared. At that date, capitalisation of cost to the mining asset ceased and depreciation commenced. vii) Determination of ore reserves The estimation of ore reserves primarily impacts the depreciation charge of evaluated mining assets, which are depreciated based on the quantity of ore reserves. Reserve volumes are also used in calculating whether an impairment charge should be recorded where an impairment indicator exists. The Group estimates its ore reserves and mineral resources based on information, compiled by appropriately qualified persons, relating to geological and technical data on the size, depth, shape and grade of the ore body and related to suitable production techniques and recovery rates. The estimate of recoverable reserves is based on factors such as tin prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body. There are numerous uncertainties inherent in estimating ore reserves and mineral resources. Consequently, assumptions that are valid at the time of estimation may change significantly if or when new information becomes available. viii) Valuation of inventories Judgement is applied in making assumptions about the value of inventories and inventory stockpiles, including tin prices, plant recoveries and processing costs, to determine the extent to which the Group values inventory and inventory stockpiles. The Group uses forecast tin prices to determine the net realisable value of the run-of-mine stockpile and the tin concentrate inventory on hand at year end. Inventory stockpiles are measured using actual mining and processing costs. ix) Determining the lease term In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise, or not to exercise, an extension option. Extension options are only included in the lease term where the company is reasonably certain that it will extend or will not terminate the lease when the lease expires. For all leases, the most relevant factors include: • • The group considers other factors including historical lease durations, related costs and the possible If there are significant penalties to terminate, the group is typically reasonably certain to extend. business disruption as a result of replacement of the leased asset. The lease term is reassessed on an ongoing basis, especially when the option to extend becomes exercisable, or on occurrence of a significant event or a significant change in circumstances which affects this assessment, and that is within the control of the group. The interest rate implicit in leases is not available, therefore, the group uses the relevant incremental borrowing rate (IBR) to measure its lease liabilities. The IBR is estimated to be the interest rate that the group would pay to borrow: • over a similar term • with similar security • • the amount necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment The IBR, therefore, is considered to be the best estimate of the incremental rate and requires management’s judgement as there are no observable rates available. xi) Determining the fair value of trade receivables classified at fair value through profit and loss The consideration receivable in respect of certain sales for which performance obligations have been satisfied at year end and for which the Group has received prepayment under the terms of the offtake agreement, remain subject to pricing adjustments with reference to market prices at the date of finalisation. Under the Group’s accounting policies, the fair value of the consideration is determined, and the remaining receivable is adjusted to reflect fair value. Management estimated the forward price based on the LME 3-month tin price at year end. As at 28 February 2021 the Group recognised a receivable at fair value through profit or loss of £531 583 (2020: nil). 3. ADOPTION OF NEW AND REVISED STANDARDS The Company adopted the following amendments to standards that became effective for periods commencing on or after 1 March 2020: IFRS 3 Amendments to IFRS 3 “Business Combinations”: Definition of business 1 January 2020 IAS 1 and IAS 8 Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 1 January 2020 “Accounting Policies, Changes in Accounting Estimates and Errors”: Definition of material Conceptual Amendments to References to the Conceptual Framework in IFRS Standards 1 January 2020 Framework The adoption of these amendments did not have a material impact on the financial statements of the Group. ACCOUNTING STANDARDS AND INTERPRETATIONS NOT APPLIED The following standards, amendments and interpretations to existing standards that are not yet effective have not been early adopted by the Group: Annual Improvements to IFRS: 2018-2020 Cycle Conceptual Framework for Financial Reporting (Amendments to IFRS 3) IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment – Onerous Contracts – Cost of Fulfilling a Contract) IAS 16 Property, Plant and Equipment (Amendment – Proceeds before Intended Use) IFRS 17 Insurance Contracts IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-Current) 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2023 1 January 2023 The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group based on current operations. 60 61 4. SEGMENTAL REPORTING The reporting segments are identified by the management steering committee (who are considered to be the chief operating decision-makers) by the way that the Group’s operations are organised. As at 28 February 2021, the Group operated within two operating segments: tin exploration and mining activities in Namibia and South Africa. Segment results The following is an analysis of the Group’s results by reportable segment. South Africa £ Namibia £ Total £ As at 29 February 2020 Intangible assets - exploration and evaluation Other reportable segmental assets Other reportable segmental liabilities Unallocated net liabilities Total consolidated net assets 3 108 713 4 332 305 7 441 018 60 323 (64 997) - 3 104 039 13 041 793 (774 676) - 16 599 422 13 102 116 (839 673) (759 812) 18 943 649 South Africa £ Namibia £ Total £ Unallocated net assets/liabilities are mainly comprised of cash and cash equivalents and the working capital facility which are managed at a corporate level. 34 863 (8 786) (3 069 232) (3 043 155) 4 950 244 (5 715 954) - (765 710) 4 985 107 (5 724 740) (3 069 232) (3 808 865) 5. REVENUE Year ended 28 February 2021 £ Year ended 29 February 2020 £ Year ended 28 February 2021 Results Revenue Associated costs Impairment of exploration licence Segmental profit/(loss) Year ended 29 February 2020 Results Revenue Associated costs Segmental profit/(loss) 21 696 (14 006) 7 690 47 336 (436 922) (389 586) 69 032 (450 928) (381 896) The reconciliation of segmental gross loss to the Group’s loss before tax is as follows: Segmental profit/(loss) Unallocated costs Finance income Finance costs Loss before tax Year ended 28 February 2021 £ Year ended 29 February 2020 £ (3 808 865) (1 802 718) - (184 300) (5 795 883) (381 896) (1 411 635) 3 793 (40 719) (1 830 457) Revenue from the sale of tin Revenue from the sale of sand Total revenue from customers Other revenue – change in fair value of customer contract Total revenue 4 744 609 34 863 4 779 472 205 635 4 985 107 47 336 21 696 69 032 - 69 032 The revenue from the sale of tin and sand is recognised at the point in time at which control transfers. Refer to Note 2 for further details. Other revenue relates to the change in the fair value of amounts receivable under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date. Refer to Note 2 for details of trade receivables recorded at fair value through profit or loss. 6. OTHER ADMINISTRATIVE EXPENSES The loss for the year has been arrived at after charging: Unallocated costs are mainly comprised of corporate overheads and costs associated with being listed in London. As at 28 February 2021 Intangible assets - exploration and evaluation Other reportable segmental assets Other reportable segmental liabilities Unallocated net liabilities Total consolidated net assets South Africa £ Namibia £ Total £ 11 309 5 229 152 5 240 461 15 494 907 (1 651 016) - 19 073 043 15 571 367 (1 713 318) (2 608 263) 16 490 247 76 460 (62 302) - 25 467 62 Staff costs Depreciation of property, plant & equipment Professional fees Travelling expenses Uis administration expenses Auditor’s remuneration Other costs Year ended 28 February 2021 £ Year ended 29 February 2020 £ 1 201 489 275 987 127 902 44 793 361 509 69 250 458 832 793 687 128 130 88 550 98 988 199 984 52 873 453 015 2 539 762 1 815 227 63 Other costs are mainly comprised of corporate overheads necessary to run the South African head office and the costs associated with being listed in London. 9. TAXATION The tax expense represents the sum of the tax currently payable and deferred tax. 7. STAFF COSTS Year ended 28 February 2021 £ Year ended 29 February 2020 £ Staff costs capitalised under property, plant and 1 094 729 1 185 121 equipment Staff costs capitalised under intangible assets Staff costs recognised as administrative expenses Staff costs included in cost of sales Share-based payment charge capitalised under property, plant and equipment 261 844 666 746 285 216 45 820 104 521 575 561 - 186 835 Share-based payment charge capitalised under 18 204 31 839 intangible assets Share-based payment charge recognised as 207 407 184 888 administrative expenses Share issue charge (including amounts capitalised in 327 336 65 470 the prior year) Year ended 28 February 2021 £ Year ended 29 February 2020 £ Factors affecting tax for the year: The tax assessed for the year at the Guernsey corporation tax charge rate of 0%, as explained below: Loss before taxation (5 795 883) (1 830 457) Loss before taxation multiplied by the Guernsey corporation tax charge rate of 0% Effects of: Differences in tax rates (overseas jurisdictions) Tax losses carried forward Tax for the year - - (549 615) 549 615 - (327 821) 327 821 - Accumulated losses in the subsidiary undertakings for which there is an unrecognised deferred tax asset are £3 244 873 (2020: £1 797 379). 2 907 301 2 334 235 10. LOSS PER SHARE FROM CONTINUING OPERATIONS Key management personnel have been identified as the Board of Directors, Frans van Daalen (Chief Operating Officer of the Group) and Robert Sewell (Chief Financial Officer of the Group). Details of key management remuneration are shown in Note 26. The average number of staff during the period was 108 (2020: 66) with an average total cost per employee for the year of £26 862 (2020: £25 970). The calculation of a basic loss per share of 0.76 pence (2020: loss per share of 0.29 pence), is calculated using the total loss for the year attributable to the owners of the Company of £5 694 962 (2020: £1 781 962) and the weighted average number of shares in issue during the year of 749 085 933 (2020: 623 591 330). Due to the loss for the year, the diluted loss per share is the same as the basic loss per share. The number of potentially dilutive ordinary shares, in respect of share options, warrants and shares to be issued as at 28 February 2021 is 86 882 728 (2020: 69 080 819). These potentially dilutive ordinary shares may have a dilutive effect on future earnings per share. Emoluments of £289 104 including £172 323 of share options and shares to be issued (2020: £190 932 including £65 281 of share options and shares to be issued) were paid in respect of the highest-paid director during the year. 11. INTANGIBLE ASSETS 8. FINANCE COST Interest on lease liability Interest on environmental rehabilitation liability Bank interest Interest on loan notes Amortisation of warrant charge Other interest Year ended 28 February 2021 £ Year ended 29 February 2020 £ 39 691 7 593 31 696 49 863 49 541 5 916 33 128 7 029 562 - - - As at 28 February 2019 Additions for the year Exchange differences As at 29 February 2020 Additions for the year Impairment for the year Exchange differences Exploration and evaluation assets £ Computer software £ Total £ 7 012 317 522 131 (209 954) 7 324 494 977 797 (3 069 232) (108 373) - 125 894 7 012 317 648 025 (9 370) (219 324) 116 524 4 598 7 441 018 982 395 - (3 069 232) (5 347) (113 720) 184 300 40 719 As at 28 February 2021 5 124 686 115 775 5 240 461 64 65 For the purposes of impairment testing, the intangible exploration and evaluation assets are allocated to the Group’s cash-generating units, which represent the lowest level within the Group at which the intangible exploration and evaluation assets are measured for internal management purposes, which is not higher than the Group’s operating segments as reported in Note 4. The amounts for intangible exploration and evaluation assets represent costs incurred on active exploration projects. Amounts capitalised are assessed for impairment indicators under IFRS 6 at each year end as detailed in the Group’s accounting policy. The Uis Tin Mine reached commercial production on 1 December 2020. Nameplate capacity (taking into account mining volumes, plant throughput and recovery) of Stage I of Phase 1 was defined as 60 tonnes of tin concentrate at a grade of 60% tin in concentrate per month (36 tonnes of contained tin). 63.9 tonnes of tin concentrate was produced in November 2020 and production of 60 tonnes or more per month has been consistently achieved subsequently. Management has therefore determined that commercial production was reached at this point. Up to this date, costs directly related to the development of the mine were capitalised to the mining asset. Included in these costs was capitalised interest of £254 539 (2020: £55 235). The Group considers the South African exploration and evaluation assets to be non-core as it continues to primarily focus on developing its Namibian assets. Accordingly, the capitalised exploration and evaluation expenditure relating to the South African assets of £3.069m has been impaired to nil on the basis that the Group does not intend to incur any further expenditure on its South African licences. A deduction to assets under construction of £2 805 630 (2020: £38 143) has been recorded in respect of the revenues generated during the development phase prior to commercial production being established with a corresponding charge to cost of sales to reflect the contribution to development cost provided by such revenues. The directors have concluded that there are no indicators of impairment in respect of the carrying value of the Namibian exploration and evaluation assets at 28 February 2021 based on planned future development of the projects and current and forecast tin prices. From 1 December 2020, depreciation of the mining asset commenced in accordance with IAS 16. The total depreciation charge for the year was split between administrative expenses and cost of sales. £275 987 was included in administrative expenses, while the balance of £622 541 was included in cost of sales as it was a cost that was incurred for mining and processing purposes. 12. PROPERTY, PLANT AND EQUIPMENT n o i t c u r t s n o C r e d n u t e s s A i g n n M i d n a L i g n n o i s s i m m o c e D t e s s A e s u - f o - t h g R i t e s s A t n e m p u q E i r e t u p m o C e r u t i n r u F s e l c i h e V l a t o T 13. INVENTORIES Tin concentrate on hand Run-of-mine stockpile Consumables t e s s a g n n M i i 28 February 2021 £ 29 February 2020 £ 373 310 427 423 195 965 996 698 185 338 - 61 572 246 910 Cost As at 28 February 2019 Additions for the year Foreign exchange differences As at 29 February 2020 Additions for the year Disposals for the year Transfer between categories of assets Foreign exchange differences As at 28 February 2021 Accumulated Depreciation As at 28 February 2019 Charge for the year Foreign exchange differences As at 29 February 2020 Charge for the year Foreign exchange differences As at 28 February 2021 Net Book Value As at 28 February 2021 As at 29 February 2020 As at 28 February 2019 11 862 12 438 13 439 13 439 - 5 495 771 7 370 105 - - 75 180 10 715 - 276 547 66 198 35 768 71 234 20 290 85 504 - 5 807 326 7 713 425 (1 001) (864 947) 12 438 - - 12 000 929 2 028 009 - - - 123 803 - (6 398) 79 497 90 323 - (20 583) 255 964 259 957 - (7 593) (6 776) (6 369) (931 667) 94 373 46 543 (1 955) 84 748 21 598 - 79 135 - - 12 607 084 2 570 233 (1 955) - - (576) 11 862 - - - - - - (13 550 114) 13 550 114 - - - - - - (478 824) - 1 236 13 675 153 (2 777) 167 043 (9 250) 506 671 (3 903) 135 058 (3 681) (3 662) (501 437) 102 665 75 473 14 673 925 - - - - - - - 12 000 929 5 495 771 - - - 717 864 6 118 723 982 - - - - - 58 220 11 040 32 573 4 116 15 962 7 127 21 375 22 283 128 130 (4 333) 53 887 108 794 (3 274) 40 339 35 622 (1 468) 18 610 17 566 (2 122) 26 380 18 682 (11 197) 139 216 898 528 - - (1 407) 161 274 (1 528) 74 433 (669) 35 507 (1 034) 44 028 1 480 1 039 224 12 951 171 - - 167 043 79 497 75 180 345 397 202 077 - 60 625 54 034 55 158 67 158 66 138 67 118 31 445 52 755 78 377 13 634 701 12 467 868 5 785 043 14. TRADE AND OTHER RECEIVABLES Trade receivables Trade receivables at fair value through profit or loss Other receivables VAT receivables 28 February 2021 £ 29 February 2020 £ 185 451 531 583 204 779 266 339 1 188 152 42 772 - 111 614 494 336 648 722 The Directors consider that the carrying amount of trade and other receivables approximates to their fair value due to their short-term nature. No allowance for any expected credit losses against any of the receivables is provided due to no history of default or non-payment from Thaisarco. The trade receivable from Thaisarco was settled after year end. Trade receivables at fair value through profit or loss relates to the change in the fair value of trade receivables under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date. The total trade and other receivables denominated in South African Rand amount to £79 888 (2020: £65 288), denominated in Namibian Dollars amount to £429 819 (2020: £517 322) and denominated in US Dollars amount to £627 566 (2020: nil). 66 67 15. CASH AND CASH EQUIVALENTS Reconciliation of net cash flow to movement in borrowings 28 February 2021 £ 29 February 2020 £ Cash on hand and in bank 1 351 200 574 600 Cash and cash equivalents (which are presented as a single class of assets on the face of the Statement of Financial Position) comprise cash at bank. The Directors consider that the carrying amount of cash and cash equivalents approximates their fair value. The total cash and cash equivalents denominated in South African Rand amount to £119 976 (2020: £48 887), the total cash and cash equivalents denominated in Namibian Dollars amount to £13 156 (2020: £240 623) and the total cash and cash equivalents denominated in US Dollars amount to £551 832 (2020: £132). 16. BORROWINGS Working capital facility Loan note instrument 28 February 2021 £ 29 February 2020 £ 1 710 247 2 159 242 3 869 489 1 230 961 - 1 230 961 On 16 August 2019, a working capital facility of N$35 000 000 (c. £1.659 million) and a VAT facility for N$8 000 000 (c. £379 000) was entered into between the Company’s subsidiary, AfriTin Mining (Namibia) Pty Limited and Nedbank Namibia. The VAT facility is secured by assessed/audited VAT returns (refunds) which have not been paid by Namibia Inland Revenue. Nedbank Namibia provides a facility amounting to 70% of the total unpaid refunds. Any drawdowns against this facility are repaid to the bank upon receipt of cash from Namibia Inland Revenue. The working capital facility and the VAT facility were reviewed on 31 July 2020 and were renewed for a further 12-month period. The facility is due for annual review in July 2021 and discussions are currently underway with the lender in securing the rollover of the facility. Interest accrues on these loans at the prime rate charged by Nedbank Namibia. Both AfriTin, as the parent company of AfriTin Mining (Namibia) Pty Limited, and Bushveld Minerals Limited (“Bushveld”), a shareholder holding approximately 5% of the Company provide collateral in the form of a joint suretyship. In addition to the facility amount of N$35 000 000, Nedbank Namibia have provided AfriTin Mining (Namibia) Pty Limited with a N$4 117 500 guarantee to Namibia Power Corporation Pty Limited in relation to a deposit for the supply of electrical power. As a result of the guarantee provided by Nedbank Namibia, no cash was paid over for the deposit. On 5 May 2020, £2.05 million financing was secured by way of a loan note facility. The notes, which are issued in tranches of £50 000, bear an interest rate of 10% per annum to be accrued and payable in full on redemption, and have a 12-month term. Balance at 29 February 2020 1 230 961 Cash flows Proceeds from working capital facility Proceeds from loan note instrument Repayment of working capital facility Non-cash flows Interest accrued on loan note instrument Warrants issued during the year 5 858 028 2 050 000 (5 378 742) 146 836 (162 480) Warrants charge amortised during the year 124 886 Balance at 28 February 2021 3 869 489 17. TRADE AND OTHER PAYABLES Trade payables Other payables Accruals 28 February 2021 £ 29 February 2020 £ 1 094 390 141 677 248 415 1 484 482 570 779 71 117 252 934 894 830 Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for trade purchases is 30 days. The Group has financial risk management policies in place to ensure that payables are paid within the pre- arranged credit terms. No interest has been charged by any suppliers as a result of late payment of invoices during the year. The Directors consider that the carrying amount of trade and other payables approximates to their fair value. The total trade and other payables denominated in South African Rand amount to £232 071 (2020: £165 988) and £1 185 802 (2020: £622 762) is denominated in Namibian Dollars. 68 69 18. ENVIRONMENTAL REHABILITATION LIABILITY Balance at 28 February 2019 Increase in provision Interest expense Foreign exchange differences Balance at 29 February 2020 Increase in provision Interest expense Foreign exchange differences Balance at 28 February 2021 £ 75 180 10 717 7 029 (6 921) 86 005 90 323 7 593 (3 004) 180 917 Provision for future environmental rehabilitation and decommissioning costs are made on a progressive basis. Estimates are based on costs that are regularly reviewed and adjusted appropriately for new circumstances. The environmental rehabilitation liability is based on disturbances and the required rehabilitation as at 28 February 2021. The rehabilitation provision represents the present value of decommissioning costs relating to the dismantling of mechanical equipment and steel structures related to the Phase 1 pilot plant, the demolishing of civil platforms and reshaping of earthworks. A provision for this requires estimates and assumptions to be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. In calculating the appropriate provision, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability. In determining the amount attributable to the rehabilitation liability, management used a discount rate of 12.8% (2020: 9.35%), an inflation rate of 6% (2020: 5.5%) and an estimated mining period of 18 years, being the Phase 1 expansion life of mine. Actual rehabilitation and decommissioning costs will ultimately depend upon future market prices for the necessary rehabilitation works and timing of when the mine ceases operation. 19. LEASE LIABILITY The Company assessed all rental agreements and concluded that the following rentals fall within the scope of IFRS 16: Leases and therefore a lease liability has been recognised: Lease term Option to extend/ terminate Incremental borrowing rate Office building 5 years Option to extend not specified in contract. Term 13.75% Workshop facility 2 years Option to extend not specified in contract. Term 7.5% of lease determined to be 5 years. Residential housing 5 years The lease will continue automatically after the 8.5% of lease determined to be 2 years. initial period for an open-ended period. Either party must provide written notice if they wish to terminate. Lease term determined to be 5 years. Balance at 28 February 2019 Additions Interest expense Lease payments Foreign exchange differences Balance at 29 February 2020 Additions Interest expense Lease payments Foreign exchange differences Balance at 28 February 2021 Office Building £ Workshop £ Housing £ Total £ - 276 547 33 128 (68 015) (17 987) 223 673 - 24 419 (64 201) (10 749) 173 142 - - - - - - 108 252 3 923 (30 319) 818 82 674 - - - - - - 151 705 11 349 - 276 547 33 128 (68 015) (17 987) 223 673 259 957 39 691 (34 080) (128 600) 1 287 130 261 (8 644) 386 077 The following is the split between the current and the non-current portion of the liability: Non-current liability Current liability 28 February 2021 £ 29 February 2020 £ 260 512 125 565 386 077 181 544 42 129 223 673 A total of £168 792 (2020: £113 205) was included in administrative expenses during the year for the cost of short-term rentals for vehicles and lifting equipment. 20. SHARE CAPITAL Balance at 28 February 2019 Capital raise - 22 May 2019 Share issue costs Shares issued to Hannam & Partners Shares issued to directors/employees Balance at 29 February 2020 Capital Raise - 3 August 2020 Shares issued to suppliers Share issue costs Shares issued to directors/employees Loan note conversion Balance at 28 February 2021 Number of ordinary shares of no par value issued and fully paid 544 588 525 99 613 074 - 327 868 8 616 906 653 146 373 145 238 089 15 273 480 - 16 133 440 44 898 630 874 690 012 Share Capital £ 17 337 718 2 988 392 (111 687) 10 000 262 816 20 487 239 3 050 000 320 743 (253 317) 403 336 1 600 000 25 608 001 70 71 Authorised: 1 220 486 913 ordinary shares of no par value Allotted, issued and fully paid: 874 690 012 shares of no par value On 22 April 2021, notice was received from warrant holders to exercise 1 186 666 warrants at an exercise price of 4.5p and 500 000 warrants at an exercise price of 1.95p. On 22 May 2019, AfriTin Mining Limited completed an equity fundraising by way of a direct subscription of 99 613 074 ordinary shares of no par value in the Company at a price of 3 pence per share. 22. SHARE-BASED PAYMENT RESERVE Director share options On 10 December 2019, 8 616 906 ordinary shares of no par value were issued to various directors and employees in lieu of payment of director fees and part settlement of salaries. Furthermore 327 868 shares were issued to Hannam and Partners, in accordance with the terms of their broker agreement with the Company. These shares were issued at a price of 3.05 pence per share. On 3 August 2020, the Company completed an equity fundraising by way of a placing and direct subscription of 145 238 089 ordinary shares of no par value in the Company at a price of 2.1 pence per share. The following director share options were granted during the year ended 29 February 2020: Date of grant Number granted Vesting period Contractual life Estimated fair value per option (pence) 18 October 2019 3 200 000 1 year 5 years 1.4790 18 October 2019 3 200 000 2 years 5 years 1.3340 18 October 2019 3 200 000 3 years 5 years 1.2510 On 3 August 2020, 15 273 480 ordinary shares of no par value were issued to various suppliers as settlement of invoices for services rendered. These shares were issued at a price of 2.1 pence per share. The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were: On 4 January 2021, 16 133 440 ordinary shares of no par value were issued to various directors and employees in lieu of payment of director fees and part settlement of salaries. These shares were issued at a price of 2.5 pence per share. On 15 February 2021, AfriMet Resources AG elected to convert its portion of outstanding convertible loan notes, totalling £1 600 000 into fully paid ordinary shares. These shares were issued at a price of 4 pence per share. 21. WARRANTS The following warrants were granted during the year ended 28 February 2021: Date of grant Number granted Contractual life Estimated fair value per warrant (£) 10 December 2020 2 500 000 2.4 years 0.0101 7 July 2020 2 500 000 2.8 years 0.0122 31 May 2020 2 500 000 2.9 years 0.0068 5 May 2020 13 000 000 3 years 0.0069 The warrants in issue during the year are as follows: Outstanding at 28 February 2019 Exercisable at 28 February 2019 Granted during the year Expired during the year Exercised during the year Outstanding at 29 February 2020 Exercisable at 29 February 2020 Granted during the year Expired during the year Exercised during the year Outstanding at 28 February 2021 Exercisable at 28 February 2021 5 671 939 5 671 939 - - - 5 671 939 5 671 939 20 500 000 (1 871 939) - 24 300 000 24 300 000 The warrants outstanding at year end have an average exercise price of £0.023, with a weighted average remaining contractual life of 2.14 years. In the year ended 28 February 2021, there was a charge of £162 480 (2020: nil) accounted for due to the issue of warrants. Date of grant Share price at grant date (pence) Exercise price (pence) Expiry date Expected volatility Expected dividends Risk-free interest rate 18 October 2019 3.15 3.75 18 October 2024 60% Nil 1.24% 18 October 2019 3.15 4.50 18 October 2024 60% Nil 1.24% 18 October 2019 3.15 5.00 18 October 2024 60% Nil 1.24% The director share options in issue during the year are as follows: Outstanding at 28 February 2019 Exercisable at 28 February 2019 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 29 February 2020 Exercisable at 29 February 2020 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 28 February 2021 Exercisable at 28 February 2021 17 500 000 - 9 600 000 - - - 27 100 000 13 125 000 - - - - 27 100 000 8 389 999 On 4 January 2021, 10 600 000 share options held by the Chief Executive Officer, Anthony Viljoen were repriced by the Remuneration Committee to align company and shareholder expectations with long-term incentivisation goals. The exercise price and the first exercise date were changed, however, the contractual life of the options remained unchanged. The fair value of the repriced options (calculated using the Black Scholes method) decreased from the initial fair valuation. As such, no adjustment to amortising of the initial fair value over the vesting period was made. The director share options outstanding at year end have an average exercise price of £0.045 (2020: £0.053), with a weighted average remaining contractual life of 2.77 years (2020: 3.77 years). A director must remain as a director of the Company for the share options to vest. In the event that a director ceases to be a director during the vesting period, the Board reserves the right to determine whether the share options will be terminated or not. There are no market-based vesting conditions on the share options. 72 73 Employee share options Director shares to be issued The following employee share options were granted during the year ended 29 February 2020: Date of grant Number granted Vesting period Contractual life Estimated fair value per option (pence) 18 October 2019 4 110 001 1 year 5 years 1.4790 18 October 2019 4 110 000 2 years 5 years 1.3340 18 October 2019 4 109 999 3 years 5 years 1.2510 The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were: Date of grant Share price at grant date (pence) Exercise price (pence) Expiry date Expected volatility Expected dividends Risk-free interest rate 18 October 2019 3.15 3.75 18 October 2024 60% Nil 1.24% 18 October 2019 3.15 4.50 18 October 2024 60% Nil 1.24% 18 October 2019 3.15 5.00 18 October 2024 60% Nil 1.24% The employee share options in issue during the year are as follows: Outstanding at 28 February 2019 Exercisable at 28 February 2019 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 29 February 2020 Exercisable at 29 February 2020 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 28 February 2021 Exercisable at 28 February 2021 22 500 000 - 12 330 000 - - - 34 830 000 11 250 000 - - - - 34 830 000 - On 4 January 2021, 34 830 000 share options held by employees were repriced by the Remuneration Committee to align company and shareholder expectations with long-term incentivisation goals. The exercise price and the first exercise date were changed, however the contractual life of the options remained unchanged. The fair value of the repriced options (calculated using the Black Scholes method) decreased from the initial fair valuation. As such, no adjustment to amortising of the initial fair value over the vesting period was made. The employee share options outstanding at the year-end have an average exercise price of £0.034 (2020: £0.053), with a weighted average remaining contractual life of 2.96 years (2020: 3.96 years). An employee must remain in employment with the Company for the share options to vest. There are no market-based vesting conditions on the share options. Directors’ fees of £16 342 (2020: £24 050) are owing to the directors at the end of the year. These fees will be settled through the issuing of shares. The corresponding credit has been recorded in the share-based payment reserve. Employee shares to be issued Employee salaries of £17 720 (2020: £13 961) are owing to employees at the end of the year. These salaries will be settled through the issuing of shares. The corresponding credit has been recorded in the share- based payment reserve. 23. NON-CONTROLLING INTERESTS Non-controlling interest that is material in the group relates to the Small Miners of Uis (“SMU”) who own 15% of UTMC. SMU is a non-profit association incorporated in Namibia. The entity was set up by the Ministry of Mines and Energy to act on behalf of small-scale miners across Namibia. Other includes the following minority interests which are not material: - Cannosia Trading 62 CC who own 16% of Renetype - African Women Enterprise Investments (Pty) Ltd who own 10% of Renetype - Lerama Resources (Pty) Ltd who own 50% of Jaxson - Tamiforce (Pty) Ltd who own 26% of Zaaiplaats As at 28 February 2021 UTMC Other Total Amount attributable to all shareholders: Loss after tax Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities (659 673) (7 150) (666 822) 2 678 021 15 233 2 693 254 2 524 054 5 202 076 - 15 233 2 524 054 5 217 308 5 136 254 43 275 5 179 529 997 620 6 133 874 11 964 55 239 1 009 584 6 189 113 Net liabilities 931 798 40 006 971 804 Amount attributable to non-controlling interest: Loss after tax Net liabilities (98 951) (1 970) (100 921) 139 770 11 574 151 344 74 75 As at 29 February 2020 UTMC Other Total Amount attributable to all shareholders: Loss after tax Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities (299 949) (13 243) (313 192) 2 165 378 1 037 166 3 202 544 699 699 2 865 077 - 1 037 166 699 699 3 902 243 2 531 291 1 057 484 3 588 775 612 209 3 143 500 14 058 1 071 542 626 267 4 215 042 Net liabilities 278 423 34 376 312 799 Categories of financial instruments The Group holds the following financial assets: Measured at amortised cost: Trade and other receivables Cash and cash equivalents Measured at fair value through profit or loss: Trade and other receivables Total financial assets Year ended 28 February 2021 £ Year ended 29 February 2020 £ 390 230 1 351 200 531 583 2 273 013 154 386 574 600 - 728 986 (44 992) 41 764 (3 502) 10 049 (48 495) 51 812 Under its customer sale arrangement, the Group receives a provisional payment upon satisfaction of its performance obligations based on the spot price at that date. This occurs prior to the final price Amount attributable to non-controlling interest: Loss after tax Net liabilities 24. FINANCIAL INSTRUMENTS The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and processes of the Group for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising returns to shareholders. In order to maintain or adjust the capital structure, the Group may issue new shares or arrange debt financing. The capital structure of the Group consists of cash and cash equivalents and equity, comprising issued capital, issued convertible loan notes, borrowings and retained losses. The Group is not subject to any externally imposed capital requirements. Significant accounting policies Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement and the basis for recognition of income and expenses for each class of financial asset, financial liability and equity instrument are disclosed in Note 2. Principal financial instruments The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows: • Trade and other receivables • Cash and cash equivalents • Trade and other payables • Borrowings • Lease liability • Convertible loan notes determination, with the Group then subsequently receiving or paying the difference between the final price and quantity and the provisional payment. As a result of the pricing structure, the instrument is classified at fair value through profit or loss and measured at fair value with resulting changes in fair value recorded as other revenue. Trade receivables at fair value through profit or loss fail the criteria for being measured at amortised cost owing to the variability resulting from final pricing adjustments. Financial instruments measured at fair value are presented by level within which the fair value measurement is categorised. The levels of fair value measurement are determined as follows: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group’s contract receivable at 28 February 2021 is recorded at fair value through profit or loss and fair valued based on the estimated forward prices that will apply under the terms of the sales contracts on the product reaching the port of destination. The trade receivables fair value reflects amounts receivable from the customer adjusted for forward prices expected to be realised. The forward price is based on the LME 3-month tin price as at 28 February 2021. Given the short period to final pricing, the time value of money is not considered to be significant. Fair value of this trade receivable at fair value through profit or loss is categorised at Level 1. During the year there were no transfers between levels of fair value hierarchy. 76 77 The Group holds the following financial liabilities: Year ended 28 February 2021 £ Year ended 29 February 2020 £ Measured at amortised cost: Trade and other payables Borrowings Lease liability Total financial liabilities 1 484 482 3 869 489 386 077 5 740 048 894 830 1 230 961 223 673 2 349 464 Maturity analysis of the contractual undiscounted cash flows: Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years Total Trade and other payables 1 484 482 Borrowings Lease Liability 2 159 242 29 834 3 673 558 - 1 710 247 95 730 1 805 977 - - - - 1 484 482 3 869 489 128 066 128 066 132 447 386 077 132 447 5 740 048 General objectives, policies and processes The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The Board receives reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below: Credit risk Currency Sterling USD South African Rand Namibian Dollars 28 February 2021 £ 29 February 2020 £ 666 236 551 832 119 976 13 156 1 351 200 284 958 132 48 887 240 623 574 600 Please refer to note 14 for the concentration of credit risk relating to trade receivables. At 28 February 2021, the Group held no collateral as security against any financial asset. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. The Group applies IFRS 9 to measure expected credit losses for receivables and these are regularly monitored and assessed. There has been no impairment of financial assets during the year. Management considers the above measures to be sufficient to control the credit risk exposure. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Board manages liquidity risk by regularly reviewing the Group’s gearing levels, cash-flow projections and associated headroom and ensuring that excess banking facilities are available for future use. The Group maintains good relationships with its banks and its cash requirements are anticipated via the budgetary process. At 28 February 2021, the Group had £1 351 200 (2020: £574 600) of cash reserves. Market risk The Group’s activities expose it primarily to the financial risk of changes in commodity prices, foreign currency exchange rates and interest rates. The Group’s principal financial assets are bank balances and trade and other receivables. Interest rate risk Credit risk arises principally from the Group’s cash balances. Credit risk is the risk that the counterparty fails to repay its obligation to the Group in respect of amounts owed. The Group gives careful consideration to which organisations it uses for its banking services in order to minimise credit risk. Credit risk relating to other receivables is minimal. The concentration of the Group’s credit risk is considered by counterparty, geography and currency. The Group has split its cash reserves across multiple banks in an effort to mitigate credit risk. The Pound Sterling and US Dollar accounts are held with a bank in Mauritius which has a rating of Baa1 (Moody’s), the Rand account is held with a bank in South Africa which has a rating of Ba2 (Moody’s), and the Namibian Dollar account is held with a bank in Namibia with a rating of Ba3 (Moody’s). While the credit ratings of the countries in which the cash is held have been downgraded during the year, the banks chosen remain stable and do not present any further risks. The concentration of credit risk was as follows: The Group was exposed to minimal interest rate risk during the year. For this reason, no sensitivity analysis has been performed regarding interest rate risk. Foreign exchange risk The Group has foreign currency denominated assets and liabilities. Exposure to exchange rate fluctuations therefore arises. The carrying amount of the Group’s foreign currency denominated monetary assets and liabilities, all in Pound Sterling, is shown below. 78 79 Cash and cash equivalents Other receivables Trade and other payables Borrowings Year ended 28 February 2021 £ Year ended 29 February 2020 £ 684 964 1 137 272 (1 417 873) (1 710 247) (1 305 884) 289 642 88 274 (788 750) (1 230 961) (1 641 795) the outstanding amount was settled through the issuing of 18 963 699 ordinary shares of no par value in the Company at a conversion price of 4 pence per ordinary share and the remaining portion totalling £1.8m (including £0.328m of accrued interest) was redeemed in cash. Settlement of loan notes On 25 May 2021, the 2020 loan note facility of £2.05m and associated interest of £0.216m was settled in full in cash. Issue of shares On 25 May 2021, 327 868 ordinary shares of no par value were issued in lieu of broker fees at a price of 6 pence. The Group is exposed to a level of foreign currency risk. Due to the minimal level of foreign exchange transactions, the Directors currently believe the foreign currency risk is at an acceptable level. 26. RELATED-PARTY TRANSACTIONS The Group does not enter into any derivative financial instruments to manage its exposure to foreign currency risk. Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The following table details the Group’s sensitivity to a 10% increase and decrease in the Pound Sterling against the Rand and the Namibian Dollar. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonable possible change in foreign currency rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at year end for a 10% change in foreign currency rates. Rand denominated monetary items £ Rand currency impact Strengthening £ Rand currency impact Weakening £ Assets Liabilities 199 863 (232 071) (32 208) 219 849 (255 278) (35 429) 179 877 (208 864) (28 987) Namibian Dollar denominated monetary items £ Namibian Dollar currency impact Strengthening £ Namibian Dollar currency impact Weakening £ Assets Liabilities 442 975 (2 896 049) (2 453 074) 487 273 (3 185 654) (2 698 381) 398 678 (2 606 444) (2 207 767) 25. EVENTS AFTER BALANCE SHEET DATE Exercise of warrants On 22 April 2021, notice was received from warrant holders to exercise 1 186 666 warrants at an exercise price of 4.5 pence and 500 000 warrants at an exercise price of 1.95 pence. Equity Fundraising On 12 May 2021, £13 million (before expenses) was raised by way of a private placement. 216 666 667 ordinary shares of no par value in the company at a price of 6 pence per share were issued. Settlement of convertible loan notes On 25 May 2021, the remaining £2.2m of the £3.8m 2019 convertible loan notes was settled. £0.759m of Goldiblox Pty Limited (“Goldiblox”) is a related party due to Frans van Daalen, key management personnel of AfriTin Mining Limited being a 50% shareholder of Goldiblox. During the prior year, the Group acquired a DMS plant from Goldiblox for £155 678. There were no transactions during the current year. At year end, the Group did not owe Goldiblox any funds (2020: nil). Bushveld Minerals Limited (“Bushveld”) is a related party due to Anthony Viljoen, Chief Executive Officer, being a Non-Executive Director on the Bushveld Board. During the period, Bushveld charged the Group £82 423 (2020: £85 596) for the use of office space. At period end, the Group owed Bushveld £112 962 (2020: £71 762). Furthermore, Bushveld provide suretyship of N$30m (approx £1.42m) as collateral for the Nedbank Namibia working capital facility. The remuneration of the key management personnel of the Group, which includes the Directors, Frans van Daalen and Robert Sewell, is set out below. 28 February 2021 Non-Executive Directors Glen Parsons (Chairman) Terence Goodlace Laurence Robb Roger Williams (resigned 28 September 2020) Executive Director Anthony Viljoen (CEO) Other key management personnel Robert Sewell (CFO) Frans van Daalen (COO) Shares Issued in Shares Share Relation to Issued in Director Option Director Relation to Charge Fees/Salary Bonus Fees/ Salary £ £ 10 893 10 761 10 761 10 761 40 000 - 13 000 - £ - - - - £ - 28 750 12 000 14 583 Other Fees £ - - - - Total £ 50 893 39 511 35 761 25 344 26 090 17 365 128 868 116 781 - 289 104 19 599 22 099 - - 65 919 81 178 86 745 112 322 110 964 70 365 275 965 371 181 - - - 172 263 215 599 828 475 80 81 29 February 2020 Shares Issued in Shares Share Relation to Issued in Director Option Director Relation to Charge Fees/Salary Bonus Fees/ Salary £ £ 17 626 15 471 15 471 15 471 40 000 - 13 000 25 000 £ - - - - £ - 28 772 12 000 22 000 - - Other Fees £ - - Foreign currency translation reserve The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of entities with a functional currency other than Pound Sterling. Retained earnings/accumulated deficit The retained earnings/accumulated deficit represents the cumulative profit and loss net of distribution to owners. Total £ 57 626 44 243 62 471 40 471 Non-Executive Directors Glen Parsons (Chairman) Terence Goodlace Laurence Robb Roger Williams Executive Director Anthony Viljoen (CEO) Other key management personnel Robert Sewell (CFO) Frans van Daalen (COO) 41 440 23 841 - 125 650 - 190 932 43 078 68 944 55 147 10 994 217 501 167 983 - - - 87 257 114 656 - - 185 482 194 594 368 335 22 000 775 819 27. RESERVES WITHIN EQUITY Share capital 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. Convertible loan note reserve The convertible loan note reserve represents net proceeds on outstanding convertible loan notes. On 26 November 2019, the Group raised £3.8m through the issuing of convertible loan notes which mature in May 2021. The instruments entitle the holders to a 10% coupon. Under the terms of the instrument, the Group can elect to settle the loan note into a fixed number of shares at a 4 pence conversion rate. The Group can elect to redeem the loan notes early in cash at a premium of 10%. As there is no obligation to settle in cash, the loan notes have been accounted for in equity as an increase in the convertible loan note reserve. Warrant reserve The warrant reserve represents the cumulative charge to date in respect of unexercised share warrants at the balance sheet date. Share-based payment reserve The share-based payment reserve represents the cumulative charge to date in respect of unexercised share options at the balance sheet date as well as fees/salaries owed to directors/employees to be settled through the issuing of shares. 82 83 NOTICE OF ANNUAL GENERAL MEETING (Incorporated in Guernsey under registered number 63974) Registered office: PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH 30 July 2021 THIS DOCUMENT AND THE ACCOMPANYING FORM OF PROXY IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser who specialises in advising on shares or other securities and who is, in the case of UK shareholders, authorised under the Financial Services and Market Act 2000. If you have sold or transferred your shares in AfriTin Mining Limited, please forward this document at once to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. If you have sold or transferred part of your registered holding of shares, please consult the stockbroker, bank or other agent through whom the sale or transfer was effected. Notice of an Annual General Meeting of AfriTin Mining Limited to be held at 11:00 am on 25 August 2021 PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH. Members of the Company are requested to return the enclosed Form of Proxy which, to be valid, must be completed and returned in accordance with the instructions printed thereon so as to be received as soon as possible by the Company’s Registrars, Link Group, PXS, 10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL, but in any event so as to be received by the company Secretary at the registered office in accordance with the provisions of the Company’s Articles of Incorporation not less than 48 hours (excluding any non-business days) before the time appointed for the Annual General Meeting. Completion and return of a Form of Proxy will not preclude a member of the Company from attending and voting in person at the Annual General Meeting should they so wish. PLEASE READ CAREFULLY: ARRANGEMENTS FOR THE ANNUAL GENERAL MEETING IN LIGHT OF COVID-19 The Company is carefully monitoring the COVID-19 situation, including the guidance issued by the States of Guernsey, and will continue to do so in the lead-up to the Meeting. At the date of this Notice, restrictions on movement within Guernsey have been lifted but persons arriving into the Bailiwick of Guernsey are presently required to self-isolate for periods of up to 14 days depending on the country from and/or through which they have travelled (and subject to one or more negative COVID-19 tests). With effect from 1 July 2021, persons who are fully vaccinated and who in the previous 14 days have only been within the Common Travel Area of the UK, Ireland, Jersey and the Isle of Man will be able to travel to Guernsey without having to self-isolate or undergo a COVID-19 test. However, this concession may change prior to the date of the Meeting. It is expected that shareholders in Guernsey, or those who wish to travel to Guernsey for the Meeting subject to quarantine measures, will be able to attend the Meeting as normal. However, the Board recognises that this may not be possible for the majority of shareholders and has put in place the following precautions (the “COVID-19 Precautions”): 1. The Company urges shareholders to vote by proxy and to appoint the chairman of the Meeting as their proxy for that purpose. If a shareholder appoints someone other than the chairman of the Meeting as their proxy, that proxy, if not present in Guernsey, may not be able physically to attend the Meeting or NOTICE OF ANNUAL GENERAL MEETING 84 85 cast the shareholder’s vote. All votes on the resolutions contained in this Notice will be held by poll, so that all voting rights exercised by shareholders who are entitled to do so at the Meeting will be counted. 2. The Board encourages all shareholders to exercise their votes by proxy, and to submit any questions in respect of the Meeting in advance. This should ensure that your votes are registered in the event that attendance at the Meeting is not possible. Shareholders are encouraged to use the online voting facilities detailed below where possible rather than submitting a paper proxy card to the Company Secretary, the Oak Trust. 3. Shareholders who do choose to attend the Meeting in person are asked to comply with the States of Guernsey’s guidance on respecting personal space and practising good hand hygiene, and with any distancing requirements requested by the chairman of the Meeting. The security arrangements proposed by the Board are subject to constant review, and should they be subject to change in line with changing guidance from the States of Guernsey, or in the event that the situation surrounding COVID-19 should affect the plans to hold the Meeting at the proposed date and time or at the proposed address, the Company will update shareholders through a market announcement and will provide further details on the Company’s website. The Board reserves the right, should it become necessary, to restrict attendance at the Meeting as part of security arrangements pursuant to Article 46 of the Articles of Incorporation of the Company (the “Articles”). PROXY To register your vote electronically, log on to our registrar’s website at www.signalshares.com and follow the instructions on screen. To be valid, your proxy must be registered not later than 48 hours (excluding non-working days) before the time fixed for the Meeting. Do not show these details to anyone unless you wish them to give proxy instructions on your behalf. NOTICE OF MEETING A Form of Proxy for use by shareholders is enclosed. To register a vote electronically, log on to the Registrar’s website at www.signalshares.com and follow the instructions on screen. ORDINARY RESOLUTIONS EXTRAORDINARY RESOLUTIONS 7. That the Directors be and are hereby authorised to exercise all powers of the Company to grant rights to subscribe for shares to directors or employees of the Company in accordance with Article 4.2 of the Articles as part of the previously adopted directors and employees share option schemes (together the “Options”), and to issue shares pursuant to the exercise of such Options, as if the pre-emption rights contained in Article 5.2 of the Articles of Incorporation of the Company did not apply to such issue or grant, provided the total Options outstanding at any point in time may not confer rights to subscribe for shares exceeding 10% of the number of issued shares of the Company at that time, and provided that the authority hereby conferred, unless previously renewed, revoked or varied by the Company by extraordinary resolution, shall expire at the end of the next Annual General Meeting of the Company or, if earlier, at the close of business on the date falling 15 months from the date of the passing of this Resolution (unless previously renewed, revoked or varied by the Company by extraordinary resolution), save that the Company may before such expiry make an offer or agreement which would or might require Options to be granted after such expiry and the Directors may issue or grant the Options in pursuance of such an offer or agreement, and issue shares pursuant to the exercise of Options, as if the authority conferred by the above resolution had not expired. If Resolution 6 is passed, the Directors of the Company be and are hereby authorised to exercise all powers of the Company to issue or grant Equity Securities in the capital of the Company pursuant to the issue or grant referred to in Resolution 6 as if the pre-emption rights contained in Article 5.2 of the Articles of Incorporation of the Company did not apply to such issue or grant provided that the authority hereby conferred, unless previously renewed, revoked or varied by the Company by extraordinary resolution, shall expire at the end of the next Annual General Meeting of the Company or, if earlier, at the close of business on the date falling 15 months from the date of the passing of this Resolution, save that the Company may before such expiry make an offer or agreement which would or might require Equity Securities to be issued or granted after such expiry and the Directors may issue or grant Equity Securities in pursuance of such an offer or agreement as if the authority conferred by the above resolution had not expired. This Resolution is in substitution for all unexercised authorities previously granted to the Directors of the Company to issue or grant Equity Securities in the capital of the Company as if the pre-emption rights contained in Article 5.2 of the Articles of Incorporation of the Company did not apply to such issue or grant. 8. 1. That Nick Babbé be appointed as Chairman of the Annual General Meeting in accordance with and By order of the Board pursuant to article 19.1.5 of Articles of Incorporation of the Company. 2. To receive and adopt the Annual Financial Statements of the Company and the Directors’ report and the report of the Auditor for the year ended 28 February 2021. 3. That Terence Goodlace shall be re-elected as a Director of the Company, having retired by rotation and offered himself for re-election. 4. That Messrs BDO LLP be reappointed as Auditor to the Company. 5. That the Directors be authorised to approve the remuneration of the Company’s Auditor. 6. In substitution for any and all previous authorisations, the Directors of the Company be and are hereby authorised to exercise all powers of the Company to issue, grant rights to subscribe for, or to convert any securities into, up to 556 167 456 shares (together “Equity Securities”) in the capital of the Company in accordance with Article 4.2 of the Articles of Incorporation of the Company, such authority to expire, unless previously renewed, revoked or varied by the Company by ordinary resolution, at the end of the next Annual General Meeting of the Company or, if earlier, at the close of business on the date falling 15 months from the date of the passing of this Resolution, but in each case, during this period the Company may make offers, and enter into agreements, which would, or might, require Equity Securities to be issued or granted after the authority given to the Directors of the Company pursuant to this Resolution ends and the Directors of the Company may issue or grant Equity Securities under any such offer or agreement as if the authority given to the Directors of the Company pursuant to this Resolution had not ended. This Resolution is in substitution for all unexercised authorities previously granted to the Directors of the Company to issue or grant Equity Securities. AR VILJOEN Director 30 July 2021 86 87 REGISTERED OFFICE PO Box 282 Oak House Hirzel Street, St Peter Port Guernsey GY1 3RH REPRESENTATIVE OFFICE - South Africa Illovo Edge Office Park Building 3, 2nd Floor Corner Harries and Fricker Road Illovo, South Africa REPRESENTATIVE OFFICE - Namibia Shop 48, Second Floor Old Power Station Complex Armstrong Street Windhoek, Namibia NOMINATED ADVISER WH Ireland Limited 24 Martin Lane EC4R ODR London United Kingdom INDEPENDENT AUDITOR BDO LLP 55 Baker Street W1U 7EU London United Kingdom LEGAL COUNSEL - South Africa Edward Nathan Sonnenberg 150 West Street Sandown Johannesburg, 2196 South Africa LEGAL COUNSEL - United Kingdom Gowling WLG 4 More London Riverside SE1 2AU London United Kingdom CORPORATE ADVISER AND JOINT BROKER Hannam & Partners 2 Park Street, Mayfair W1K 2HX London United Kingdom JOINT BROKER Turner Pope Investments 8 Frederick’s Place EC2R 8AB London United Kingdom INVESTOR RELATIONS Tavistock 1 Cornhill, Langbourn EC3V 3NR London United Kingdom COMPANY INFORMATION 88 89 

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