ANNUAL REPORT ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 1 2 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 CONTENTS Key Highlights Who We Are Our Investment Case Chairman’s Statement Chief Executive Officer’s Statement Chief Financial Officer’s Financial Review Directors’ Report Statement of Directors’ Responsibilities Corporate Governance Report Remuneration and Nomination Committee Report Independent Auditor’s Report Consolidated Statement Of Comprehensive Income Consolidated Statement Of Financial Position Consolidated Statement Of Changes In Equity Consolidated Statement Of Cash Flows Notes To The Consolidated Financial Statements Notice of Annual General Meeting 4 6 12 14 16 20 24 34 36 42 52 62 63 64 66 67 100 ANDRADA ANNUAL REPORT 2023 ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS CONTENTS 02 3 KEY HIGHLIGHTS 23% increase in tin concentrate production to 960 tonnes 22% increase in contained tin production to 586 tonnes 28% increase in production capacity to 1 000 tonnes of concentrate per annum 13% increase in tin recovery to 68% OPERATIONAL 10% decrease in C1 operating costs to US$19 762 per tonne of contained tin FINANCIAL 9% reduction in All-in Sustaining Costs to US$24 939 per tonne of contained tin LITHIUM & TANTALUM upgraded to a Measured and Indicated classification Lithium average grade increased to from 0.73% Li2O 0.63% Li2O Li2O tonnes increased by 30% to 587 000 tonnes Lithium Carbonate Equivalent of 1.45m tonnes EXPLORATION Updated Mineral Resource Estimate for the V1/V2 deposit. Measured and Indicated lithium resources increased by 47% to 38 Mt Tin average grade increased to 0.15% Sn from 0.13% Sn Total MRE increased to 81 Mt from 72 Mt Inaugural Sustainability Report published 500 000 LTI free hours Lost Time Injury Frequency Rate improved to 3.04 from 6.26 GOVERNANCE Name changed from AfriTin Mining Limited to Andrada Mining Limited to reflect the expansion to a multi-metal production company. STRATEGIC Expanded and restructured the C-suite to include Chief Strategy Officer in line with the enhanced strategic intent. 4 KEY HIGHLIGHTS ANDRADA ANNUAL REPORT 2023 ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 5 WHO WE ARE Andrada Mining Limited has a vision to create a portfolio of Walvis Bay. Andrada can be considered a high growth tin, globally significant, conflict-free, production and exploration tantalum, and potential lithium producer. Uis Mine started assets. The Company’s flagship asset is the Uis Mine in production in 2019 and is currently producing tin at a Namibia, formerly the world’s largest hard-rock open cast processing rate of between 130 and 140 tonnes per hour tin mine. The Uis Mine is in central west Namibia located with availability above 90%. In May 2023, Andrada produced approximately 200km northeast of the international port, 4.16% Li2O as part of its off-site pilot testing programme. BRANDBERG WEST Sn W Cu LICENSED AREAS WITHIN THE SIGNIFICANT TECH-METAL ERONGO REGION IN NAMIBIA 6 WHO WE ARE ANDRADA ANNUAL REPORT 2023 Andrada has three mining licences, namely: licence EL5445 (Brandberg West) on which the main • ML134 on which Uis Mine is located. minerals are tin, copper and tungsten. The Company has • ML133 (Nai Nais / Lithium Ridge). set a mineral resource target of 200 Mt to be delineated • ML129 (B1C1 / Spodumene Hill). within the next five years. The substantial mineral resource The main minerals in these mining licences are tin, lithium potential allows the Company to consider economies of and tantalum. Additionally, the Company has an exploration scale. Sn Li Ta Uis MINE SPODUMENE HILL Li Ta Sn LITHIUM RIDGE Sn Li Ta Li Lithium Ta Tantalum Sn Tin Cu Copper W Tungsten Developing Projects Mine in Production ANDRADA ANNUAL REPORT 2023 WHO WE ARE 7 OPPORTUNITY TO SUBSTANTIALLY INCREASE THE RESOURCE AT UIS w K-CLUSTER P-CLUSTER UIS OREBODY V1V2 OREBODY (Current Resource) V-CLUSTER (excl. V1V2) PROCESSING PLANT Exploited Pegmatite Mapped Pegmatite Existing Pit MRE UIS V1V2 Pegmatites February 2023 Grade Gross resource tonnes Contained Metal Tin (Sn) 0.15% 81 Mt 120 Kt Lithium (Li2O) 0.73% 81 Mt 1.45 Mt LCE Tantalum (Ta) 86 ppm 81 Mt 6.96 Kt Current Resource: 138 Mt Resource drilling commenced CY 2022 Target Resource: 200 Mt Regional exploration programme Potentially higher than 200 Mt upside potential from unexploited pegmatites 8 WHO WE ARE ANDRADA ANNUAL REPORT 2023 AFRITIN TO ANDRADA The name change was necessary due to the increased confidence in lithium and tantalum mineralisation throughout the resource and the expanded vision to harness the value from the current by-products of tin production. The potential tech-metals upside was not captured in the name AfriTin. The name “Andrada” was inspired by the Brazilian mineralogist José Bonifácio de Andrada e Silva, who discovered petalite and spodumene. Therefore, the name represents the Company’s overarching mission to enter the battery and electric vehicle sectors. ANDRADA ANNUAL REPORT 2023 WHO WE ARE 9 Andrada is managed by a Board of Directors with extensive value for the wider community, investors, and other key industry knowledge and a management team with deep stakeholders. Andrada has established an environmental, commercial and technical skills. Furthermore, the Company is social and governance system which has been implemented committed to the sustainable development of its operations at all levels of the Company and aligns with international and the growth of its business. This is demonstrated by how standards. the leadership team places significant emphasis on creating PLANNED TIN PRODUCTION GROWTH TIN PRODUCTION HAS DE-RISKED THE POTENTIAL LITHIUM OPPORTUNITY CY 2020A CY 2022A CY 2025E CY 2027E I N O T C U D O R P N T S U I I Uis Mine • Licence area: 18 000 Ha • Acquired by Andrada in 2017 Uis Mine • Phase 1 ramp-up completed ahead of schedule • • Production capacity increased by 70% Lowest quarterly in Q4 AISC at US$18 236 per tonne of contained tin Achieved above nameplate production Expansion commissioned Ore sorting to increase contained Sn to 2 500 tpa Long-term planned configuration of 10 000 tpa Sn concentration Uis start-up operation to 500 tpa contained Sn Uis crushing expansion resulting in 1 000 tpa contained Sn run rate Integration of lithium circuit and ongoing exploration drilling of all licences 10 WHO WE ARE ANDRADA ANNUAL REPORT 2023 LITHIUM DEVELOPMENT: ROADMAP LITHIUM BULK SAMPLING PILOT PLANT AND STRATEGIC PARTNERSHIP FOCUS CY 2022 CY 2023 CY 2024 CY 2025 Tin Production Lithium expansion Uis Mine (ML134) DRILLING PILOTING 2.5 Mtpa plant feed 15 000 tpa LCE 2 500 tpa tin metal 30 tpa Ta2O5 1 Mtpa plant feed 900 tpa tin metal FEASIBILITY STUDY STRATEGIC PROCESS CONSTRUCTION Spodumene Hill (ML129) Spodumene discovery Lithium Ridge (ML133) 200m @ 1.25% Li2O FAST TRACK PRODUCTION DRILLING AND MRE FAST TRACK PRODUCTION DRILLING AND MRE ANDRADA ANNUAL REPORT 2023 WHO WE ARE 11 OUR INVESTMENT CASE LITHIUM DEVELOPMENT POTENTIAL FOR MULTI-ASSET LITHIUM PRODUCTION Large lithium resource at 1.45m tonnes LCE Existing open-pit tin mining operation: Lithium contained in the same ore body as tin Scalable production through integration of existing mine site Concentrate suitable for the industrial market 12 OUR INVESTMENT CASE ANDRADA ANNUAL REPORT 2023 WORLD CLASS RESOURCE BASE • • • Globally significant lithium, tin and tantalum resource in Namibia Upside spodumene potential on adjacent mining licences Successful expansion of plant to produce 1 000 tonnes contained tin NEGATIVE AISC¹ • Negative AISC of US$490/t LCE2 highly competitive during commodity cycles FOCUS ON STRATEGIC TECH-METALS • • Portfolio of strategic tech-metals Accelerated demand increase expected to support the global drive to a greener technology future SOCIAL LICENCE TO OPERATE • • Established relationships with relevant government entities and local communities Strong focus on ESG best practice, guided by international standards (ICMM, IFC) • • • • HIGH PURITY PRODUCT Test work produced high purity lithium product for the technical market Low-cost alternative to mineral supply into the chemical market FULLY PERMITTED • Fully permitted mining operation with an experienced management and operational team DE-RISKED DEVELOPMENT Existing mining and processing operation enabling fast-tracked lithium production timeline Phased expansion with incremental revenue streams 1 AISC = Forecast All In Sustaining Cost as per the PEA released in April 2022 2 LCE = Lithium Carbonate Equivalent ANDRADA ANNUAL REPORT 2023 OUR INVESTMENT CASE 13 CHAIRMAN’S STATEMENT “ Looking to the future, we are hugely excited by the prospect of becoming a multi-tech-metal producer. The immediate objective of the Board is to accelerate the growth of Andrada “ Dear Shareholders, For this, we are appreciative of their continued support. The 2023 financial year proved to be a successful one for During the year, the Company began expanding beyond Andrada, culminating in significant milestones achieved. being a tin-only producer to potentially becoming one of Unfortunately, the depressed tin prices resulted in negative the first significant African lithium producers on AIM (a earnings as detailed in the financial review by the Chief market of the London Stock Exchange). This important Finance Officer. Nonetheless, we further cemented the transformational focus of the Company has meant that we foundation by rounding our production suite towards identify ourselves as a Company that will play a significant becoming a meaningful tech-metals producer. The role in the energy transition space. It is for this reason that Company’s stated Five-Year Growth Strategy and the we decided to rename the Company Andrada Mining. tangible attributable value of our assets, as displayed in the internally developed Preliminary Economic Assessment, provide stakeholders with visibility on how Andrada will achieve its goals. The global rhetoric around the supply of critical metals continues to gain momentum and there is a continued drive to transition to a greener world. We are determined to play our part in this transition by sustainably contributing Maintaining sufficient cash resources during this to bridging the burgeoning supply gap by producing development and growth phase is key to achieving all our critical metals. We are fully committed to observing strong stakeholder objectives and I am pleased to state that the Environmental, Social and Governance (ESG) principles. The Andrada team has been managing this diligently in what has publication of Andrada’s inaugural Sustainability Report been a challenging market. The support and success of the for the 2022 financial year demonstrates this commitment fundraising in September 2022 by our loyal , existing as to our ESG best practices. We are particularly proud of well as, new shareholders highlight their confidence in our the role we have played in redeveloping the town of Uis in strategy. Furthermore, it allows the Company to fast track conjunction with our majority Namibian workforce, the local the development of the lithium and tantalum opportunities communities, as well as the government. while accelerating the expansion of the existing operations. 14 CHAIRMAN’S STATEMENT ANDRADA ANNUAL REPORT 2023 We recognise that the diversity and talent of our employees against a backdrop of volatile financial markets and a will ultimately determine Andrada’s success. By the end declining tin price. On behalf of the Board, I wish to express of FY 2023, 38% of our corporate team were women, with my appreciation to all our valued investors, suppliers and six women on the Management Committee (40%) and customer for their mutual trust and confidence in Andrada one woman on the executive team. As a Board, we are Mining. Along with this, I would like to thank my fellow Board committed to continue striving to maintain and improve on members for their tireless effort to ensure that Andrada these global governance standards. achieves its stated objectives. Looking to the future, we are hugely excited by the prospect of becoming a multi-tech-metal producer. The immediate objective of the Board is to accelerate the growth of Andrada. Therefore, we have embarked on seeking a strategic partner with appropriate technical and financial capabilities to assist the Company in accelerating the development of the lithium Finally, I would like to welcome the newly appointed Board members who complement the team, namely Ms Gida Nakazibwe Sekandi as a Non-Executive Director and Mr Hiten Ooka, the Company’s Chief Financial Officer, as an Executive Director. Gida’s extensive regional and sustainability experience and Hiten’s broad financial opportunity on the Uis mining licence area. Simultaneously, experience enhance our team as we move forward to our we will start developing our other licence areas through next exciting phase. expansive exploration programmes. These programmes will start bearing fruit if we are able to confirm the mineralisation potential within all the mining licences, providing significant blue sky for shareholders. I congratulate the management team and employees on the work and goals achieved during the year, especially GLEN PARSONS Chairman 23 August 2023 ANDRADA ANNUAL REPORT 2023 CHAIRMAN’S STATEMENT 15 CHIEF EXECUTIVE OFFICER’S STATEMENT “ All three mining licences contain prolific pegmatite occurrences, containing lithium, tin, and tantalum mineralisation. Petalite and spodumene appear to be the dominant lithium minerals present in the mineralised pegmatites. “ INTRODUCTION The adjective ‘transformative’ is often over-used in Company mineralogist and professor who first categorised petalite and spodumene, which are major lithium-bearing minerals. reporting, but it is one which I believe to be truly befitting We have continued the great work that we did as AfriTin of Andrada’s latest financial year. It is a pleasure to reflect and are confident that the Andrada name will build on the on our achievements this year, taking advantage of our strong market reputation of AfriTin for many years to come. significant portfolio of tech-metals assets and laying the foundation of a leading global mineral supplier. HEALTH AND SAFETY The Company understands the importance of its workforce Beginning with the discovery of lithium-bearing spodumene in operational success and is always focused on strength- within our mining licence ML129 (“Spodumene Hill”), we fully ening health and safety management. To realise our vision understood the significance of a lithium revenue stream on of everyone going home uninjured every day, we have in- the incremental returns for shareholders. This discovery tegrated safety thinking into everything we do. During the at Spodumene Hill in early March 2022 complemented reporting year we recorded zero fatalities and three Lost the Company’s confirmed mineral resource on the lithium- Time Injuries (LTIs), resulting in a Lost Time Injury Frequency bearing pegmatites within the adjacent Uis licence area and Rate (LTIFR) of 3.04 (2022: 6.26). On 28 February 2023, our set in motion our transformation from a tin producer to a operations celebrated 500 000 LTI-free hours, a significant Company with a full suite of tech-metals assets. safety milestone for the Group. In our most recent opera- tional update, for the first quarter of 2023, we announced This discovery motivated the name change from AfriTin a safety performance significantly improved to 0.95 LTIFR, Mining to Andrada Mining. The AfriTin name served us amounting to 881 808 LTI-free hours. Additional measures excellently for five years, but it is important to reflect the to improve our on-site health and safety include an online inclusion of our significant lithium assets in the Company’s health and safety system requiring each employee to com- new name. Therefore, we could think of no better way than plete a risk assessment at the start of each shift. a nod to José Bonifácio de Andrada e Silva, the Brazilian 16 CEO’S STATEMENT ANDRADA ANNUAL REPORT 2023 The system enables real-time reporting across the opera- period under review, we completed Phase 1a of the strategy tion, enabling us to better understand and respond to inci- that consisted of a modular expansion of the crushing and dents with the ultimate goal of preventing future incidents screening circuit, as well as construction of a fines ore from occurring. Furthermore, the Company introduced an initiative called ‘Maintenance Wednesdays’ that involves the lockdown of the entire plant every Wednesday to allow for uninterrupted maintenance work, while simultaneously involving our entire workforce in occupational health and safety awareness activities. OPERATIONAL REVIEW In the first quarter of the financial year, we communicated and embarked on our Five-Year Growth Strategy, aiming to become one of the lowest cost tech-metal producers. The strategy is built on four pillars: unlocking the resource in the existing tenements with the intent to expand into the rest of Africa, driving operational excellence, implementation of sound ESG principles, and best practice in project development. Our goal is to become a 10m tonnes per annum Run Of Mine (ROM) Company of global significance. stockpile on the existing plant. This successful expansion resulted in a 23% increase in tin concentrate production to 960 tonnes and an 22% increase in contained tin to 586 tonnes year-on-year (“YoY”). The increased plant production capacity enabled processing of significantly higher tonnage, which inevitably reduced C1 operating costs and AISC (All- In Sustaining Cost) by 10% and 9% YoY respectively. The improved costs confirm the view that large scale bulk mining at Uis is amenable to favourable economies of scale. We anticipate implementing the intermediate Phase 1b at 2.5Mtpa ROM production with a partner who will be identified as part of the current strategic process. This phase will introduce the production of lithium and tantalum, as these minerals will be extracted from existing processing streams. In September 2022, we successfully raised approximately US$22.8m (c£18.1m) gross, to further expand the Uis resource drilling programme, exploration campaigns and for general corporate purposes. These funds enabled the Recognising the magnitude of the goal, we decided on a Company to complete the modular expansion within the phased approach in implementing the strategy. During the targeted period. ANDRADA ANNUAL REPORT 2023 CEO’S STATEMENT 17 petalite price of US$2 000. Our tin assets remain an integral part of our tech-metals EXPLORATION offering, and so we were delighted to expand our resource An infill surface exploration programme started in January estimate in February 2023 based on the analysis of drill 2023 on the Lithium Ridge licence area to enhance the holes at Uis’s Proximal Pegmatites. The additional results data resolution and to confirm the continuity of lithium from the Proximal Pegmatites, were added to the maiden mineralisation along an identified strike length of 6km. resource derived solely from the V1/V2 pegmatite, bringing In April 2023, a first-pass Reverse Circulation drilling the resource to approximately 138 Mt. The occurrence of programme commenced to investigate the subsurface several minerals in the same pegmatites such as lithium and continuation of lithium and tin mineralisation identified tantalum, provide the opportunity for producing multiple during the 2022 calendar year mapping and sampling tech-metals from the same ore body. Therefore, the programme. The results of this drilling programme will be expansion of the resource made us the owner of one of the released as soon as the associated assays are returned largest tech-metals asset globally and moved us closer to from the laboratory. our internal target of a 200Mt resource. Andrada’s primary strength currently lies in its globally significant lithium Furthermore, an exploration drilling programme was resource. LITHIUM DEVELOPMENT: METALLURGICAL TESTWORK undertaken on Spodumene Hill, resulting in 1159m of Diamond Drilling (“DD”) being completed over 17 drill holes. The drill results, released in July 2023, indicate zones of lithium enrichment within the pegmatite unit with the primary All three mining licences contain prolific pegmatite and only lithium ore mineral identified as being spodumene. occurrences, containing lithium, tin, and tantalum mineralisation. Petalite and spodumene appear to be the dominant lithium minerals present in the mineralised SUSTAINABILITY UPDATE The publication of Andrada’s inaugural Sustainability Report pegmatites. Metallurgical test work to date has focused for the 2022 financial year in January 2023 demonstrates on the concentration of petalite due to its prevalence our commitment to ESG best practice. We are proud that in the current mining area on Uis. However, spodumene we have further improved reporting on the Company’s ESG beneficiation has been included in the future work performance, as disclosed in the FY 2023 Sustainability programme, in response to the discovery of spodumene Report that has been released together with this Annual occurrences on Spodumene Hill and Lithium Ridge (ML133). Report. We believe that a strong ESG performance We commenced a pilot test programme for lithium during enhances shareholder value and investor confidence. the first quarter of the 2023 calendar year, consisting of bulk sampling and pilot processing. POST-PERIOD ACTIVITY INITIAL SALEABLE LITHIUM CONCENTRATE LITHIUM PILOT TESTING PLANT In May 2023 we produced half a tonne of 85% pure petalite Construction of the on-site lithium bulk-sampling pilot concentrate at a grade of 4.16%, making Andrada one of plant commenced at the end of the financial year and the few companies currently on AIM to have produced a was completed within budget and on time in June 2023. saleable sample. The concentrate was produced as part of Commissioning of the pilot plant and tantalum circuit the Company’s off-site pilot test programme to investigate started in July 2023. The pilot plant, consisting of a crusher, the metallurgical potential of the pegmatites from its Lithium screen, dense medium separator, and a gravity separation Ridge mining licence area located approximately 33km circuit is expected to expedite Andrada’s bulk pilot test from the Uis Mine. We believe this moves us one step closer work and to produce saleable lithium concentrate. The to full-scale lithium production and with the completion of pilot plant processing capacity will be 20 tonnes per hour the on-site pilot plant, we intend to expedite bulk pilot test with minimum annual production targeted at 2 400 tonnes. work on all our mineral licences. Therefore, the pilot plant can potentially generate revenue of US$5m, assuming an average grade of 4.0% Li2O and a In May 2023 Andrada also announced the appointment of 18 CEO’S STATEMENT ANDRADA ANNUAL REPORT 2023 Barclays Bank (“Barclays”) as a Strategic Adviser to seek out Officer. Frans is a qualified engineer with over 20 years a suitable partner to accelerate Andrada’s lithium strategy. of operational and technical experience across multiple Barclays provides the optimal combination of extensive commodities. He is well placed to drive the Company’s experience in advising on strategic partnerships and access development as a significant global lithium producer. Chris to the global financial markets. The strategic process comes has significant experience in process optimisation and a as a result of numerous unsolicited approaches Andrada proven track record of stimulating operational performance. has received from international entities. He has surpassed the targets for plant expansion and will The main objective of the process is to identify a partner for the next level of growth. Our collaboration as a with appropriate technical and financial capabilities to highly experienced C-suite has ensured that our multiple be instrumental in optimising the operational processes accelerate the development of the lithium opportunity workstreams run smoothly. on the Uis mining licence area. The Company will provide updates on the process as it develops. We have entered FY 2024 with confidence and look forward to delivering and communicating our progress as LISTING ON THE NEW YORK OTCQB® Alongside great operational progress, the Company we continue to unlock value from across our portfolio. We have full confidence in achieving our ambitions to become commenced trading on the US OTCQB® platform in a global tech-metals champion. June 2023, which has been a key step in broadening our shareholder register, making our shares more accessible to North American retail and institutional investors. This CONCLUSION As we progress in FY 2024, the key objectives will be to investor base is known for its understanding of, and strong commence testing and the production of lithium through appetite for, mining companies, particularly lithium equities. the pilot plant. We aim to attain off-take agreements for THANK YOU I would like to thank all our stakeholders for their continued the petalite as we expedite the exploration programme at Spodumene Hill and Lithium Ridge. We are also looking forward to the development of the Brandberg West license support, which is never taken for granted. To our employees, area (EPL5445) following the receipt of the Environmental thank you for your commitment and dedication to Andrada’s Clearance Certificate. This project will potentially add vision, shown by your diligence. To our investors, we thank Tungsten to our growing list of technology metal inventories. you for your support as we pursue our strategic objectives. Finally, we look forward to the conclusion of the strategic To our Board of Directors, your guidance and oversight process to expedite the lithium development. have enabled us to achieve the milestones to date. In particular, I extend gratitude to our Chief Financial Officer and Executive Director, Hiten Ooka for his sterling work on the successful fundraising in September 2022 and the progress on the various financing packages. Since joining in July 2022, Hiten’s experience working for multinational organisations, coupled with his technical finance and tax experience, has proven invaluable to Andrada’s operational progress. In the same vein, the milestones we have enjoyed over the past year could not have been possible without the efforts of Frans van Daalen, appointed to the role of Chief Strategy Officer in March 2023, and Chris Smith as Chief Operations Anthony Viljoen Chief Executive Officer 23 August 2023 ANDRADA ANNUAL REPORT 2023 CEO’S STATEMENT 19 CHIEF FINANCIAL OFFICER’S FINANCIAL REVIEW The group managed to deliver on its key strategic The Group’s EBITDA was similarly impacted by the milestones despite several challenges in the macro- significantly lower tin pricing, resulting in a loss of £5.9m economic environment. Annual tin concentrate tonnage (2022: £2.6m). The net finance costs increased to £0.6m increased by 23% to 960 (2022: 780 tonnes) but revenue (2022: £0.3m), mainly due to the higher interest on leases decreased to £9.8m (2022: £13.6m) mainly due to a 34% and bank debt. In addition, the Company was charged £0.2m decline in the average tin price to US$25k (2022: US$39k). (2022: £0.05m) interest on the prepayments received from Andrada exported 33 shipments (2022: 29 shipments) of tin Thaisarco due to the higher sales volume and long transit concentrate to the Company’s offtake partner Thaisarco. periods caused by shipping delays. The full impact on the production profile and cash costs of the expansion project that was successfully completed towards the end of the financial year, will reflect in the upcoming financial year. The Group net loss for the year was £8.1m (2022: loss £0.5m) resulting in the basic loss per share of 0.60 pence (2022: loss 0.08 pence). The expansion on the Uis Mine plant is expected to further reduce the cash costs as demonstrated PROFIT AND LOSS STATEMENT OVERVIEW by the FY 2023 C1 costs that decreased to US$19 762 per Despite increased sales volumes, the significant decrease tonne of contained tin from US$21 839 in the comparative in the tin price against inflationary cost increases further period due to the 70% increase in production capacity. The negatively impacted profitability, resulting in a gross loss of all-in sustaining unit cost was 9% lower YoY at US$24 939 £0.7m (2022: profit of £4.3m). The administrative expens- (2022: US$27 515) due to the favourable economies of scale. es increased to £7.5m (2022: £3.7m) mainly due to the ex- panded operations and the higher headcount in line with the continued implementation of the growth strategy. The multiple workstreams and special skills necessary to achieve the potential lithium production necessitated the increase in recruitment. FINANCIAL POSITION STATEMENT OVERVIEW Total assets increased by 28%, mainly due to additions on property, plant, and equipment (“PPE”), as well as intangible assets. The value of PPE increased to £27m (2022: £19m), mainly due to the equipment purchased and capitalised costs for the Uis Phase 1a continuous improvement project. 20 CFO’S STATEMENT ANDRADA ANNUAL REPORT 2023 During the year, £9.5m of costs related to the Uis Phase to approximately £36m due to the fundraising in Septem- 1 Definitive Feasibility Study and the related construction ber 2022 for £11.1m and in October 2022 for £8.7m. Further- was transferred from mining assets under construction more, warrants valued at £0.4m were exercised in January to the mining assets, as per the requirements of IFRS 6. 2023. Consequently, the number of issued shares increased Consequently, the capital expenditure increased from from 1 121 841 684 to 1 537 863 344. £6.0m to £13.3m. Further details on the PPE and intangible assets can be read in the Annual Financial Statements (“AFS”) Notes 11 and 12. The inventory balance increased to £2.7m (2022: £1.5m) due to the expanded capacity resulting in higher volumes of tin concentrate, ROM stockpile and consumables. At year end, 157 tonnes (2022: 75 tonnes) of tin concentrate was on hand, valued at £1.4m (2022: £0.9m). CASH FLOW STATEMENT OVERVIEW Fundraising proceeds supported cashflows during the year as the Company implemented its continuous improvement project at the Uis Mine plant. The value accretion of these inflows is demonstrated by the improvement in operational costs. Approximately £13m (2022: £6m) was utilised to pur- chase assets required for the plant expansion. Borrowings Trade and other receivables were valued at £2.6m at year mainly provided the requisite cash inflows for working capi- end (2022: £3.9m), mainly due to the comparatively lower tal purposes. On 28 February 2023, the Group cash balance tin prices during the financial year. Trade and other pay- amounted to £8.2m (2022: £7.4m). ables increased to £3.66m (2022: £2.97m) due to accruals related to the expanded operations. All payables are paid within the agreed credit terms with the average credit peri- od for trade purchases being 30 days. Borrowings increased to £6.2m (2022: £5.1m) mainly due to the higher working capital facility at £1.3m (£0.2m) and the introduction of a £0.5m vehicle financing facility from Stan- dard Bank Namibia. The value of equity increased by £8.5m FUNDING OVERVIEW During the year, the Company secured a vehicle financing facility for the value of £0.7m which had a balance of £0.5m at year end. The £4.5m term loan facility at an interest rate of three month JIBAR plus 4.5% had a balance of £4.1m at year end. The loan including the accrued interest is being repaid quarterly for five years from February 2022. ANDRADA ANNUAL REPORT 2023 CFO’S STATEMENT 21 The VAT and working capital financing facilities do not have These are that the facility is for a 10-year term, for the first a fixed maturity dates but are renewed annually, attracting 12 months after execution there will be no interest or capital an interest charge of the Namibian prime rate minus 1%. repayment, and interest accrues at Namibian prime lending At year end the effective rate on the term loan was 11.7% rate (currently 11.5%) plus 2.5% per annum. The facility is and the rate on the VAT and working capital facilities was ringfenced for the continuous improvement programme of 10.75%. The vehicle asset financing facility has a term of Uis Mine. five years at an interest charge of the Namibian prime rate minus 0.5%. Therefore, at year end the effective rate on the vehicle financing was 11.25%. The Company received a covenant waiver for the year under review without penalty and the next measurement date will be 28 February 2024. POST-PERIOD FUNDING CONVERTIBLE LOAN NOTES CONCLUSION: GOING CONCERN Management and the Board of Directors have considered cash flow forecasts and have stress tested the potential impact of the decline in tin prices. There are circumstances indicating that a material uncertainty exists which may cast significant doubt on the Group’s ability to continue as a going concern and that the Group may therefore be unable to realise its assets or settle its liabilities in the ordinary In July 2023, Andrada raised £7.7m (c.US$10m) through course of business. However, following their review, the the issue of 77 unsecured, convertible loan notes of Directors have confidence in the Group’s forecasts and £100 000 each to new and existing investors. The proceeds have a reasonable expectation that the Group will continue are intended for commissioning the lithium pilot plant and in operational existence for the going concern assessment period, and have therefore used the going concern basis in preparing these consolidated financial statements. HITEN OOKA Chief Financial Officer 23 August 2023 the tantalum circuit. In addition, the funds are for working capital purposes as the Company implements the explora- tion programme and a lithium feasibility study. These work- streams further consolidate Andrada’s competitive lithium advantage within the Erongo region of Namibia. ORION GLOBAL RESOURCE FUND On 14 August 2023, Andrada signed the conditional binding documentation for an updated US$25m unsecured funding package with funds managed by Orion Resource Partners (“Orion”). Orion agreed to an unsecured financing package at marginally higher rates. The financing includes a royalty on the production of contained tin, a convertible note, equity subscription and warrants. The outstanding conditions to finalise the financing are the requisite shareholder authorities at the upcoming Annual General Meeting, Andrada lender banks’ consent, the exchange control approval to remit funds into Namibia, and the admission of subscription shares to trading on AIM. DEVELOPMENT BANK OF NAMIBIA At the writing of this review, the inter-creditor agreements between DBN and Standard Bank have been concluded. The only outstanding condition to complete and access the N$100m (c. US$5.8m) facility is the finalisation of the security package. The terms are unchanged from those detailed in the Company’s announcement of 5 July 2022. 22 CFO’S STATEMENT ANDRADA ANNUAL REPORT 2023 ANDRADA ANNUAL REPORT 2023 CFO’S STATEMENT 23 DIRECTOR’S REPORT The Directors of Andrada hereby present their report, together with the consolidated financial statements for the financial year from 1 March 2022 to 28 February 2023. 24 DIRECTOR’S REPORT ANDRADA ANNUAL REPORT 2023 ANDRADA ANNUAL REPORT 2023 ANDRADA ANNUAL REPORT 2023 PAGE SECTION 25 PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS PRINCIPAL RISKS AND UNCERTAINTIES The Group is subject to a variety of risks, specifically The principal activity of the Group (Andrada and its those relating to the mining and exploration industry. As subsidiaries) is mineral exploration and the development of an entrepreneurial business operating in commodities and mining and exploration projects in Namibia. Following the emerging markets, there is clearly an elevated risk, which discovery of lithium and other minerals in the pegmatites is balanced by potentially greater rewards. The Board from which the tin has historically been mined, the strategy is mindful of, and monitors, both its corporate risk and of the Group has been enhanced to cater for the potential of individual project risk. Outlined below are the principal risk a multi-metal revenue stream. The polymetallic nature of the factors that the Board feels may affect performance. The pegmatites has enabled the Group to construct a tantalum risks detailed below are not exhaustive, and further risks circuit adjacent to the existing plant to commercially extract and uncertainties may exist which are currently unidentified the metal, for which no credit is currently recognised. or considered to be immaterial. The risks are not presented To expedite the development of lithium production, the in any order of priority. Directors commissioned a strategic process to identify an appropriate partner with the relevant skills and financial capacity to participate in producing lithium. A review of the Group’s progress and prospects is given in the CEO’s Statement and Financial Review in this Annual Report. HIGH VOLATILITY OF METAL PRICES IMPACT Tin, tantalum, and lithium prices are subject to high levels of volatility and are impacted by numerous exogenous factors beyond the Group’s control. Low tin, tantalum, or lithium prices coupled with decreased demand could affect the financial performance of the Group, and its ability to fund future growth. MITIGATION The Board and management constantly monitor the commodity markets in which the Group operates. Long-term financial planning is undertaken on a regular basis. The Board approved the modular expansion of the Uis plant to increase tin output and lower unit costs. The resultant economies of scale support profitability in a volatile price market. The Board supports the exploration and metallurgical test work for the extraction of lithium and tantalum at Uis. The additional metals enhance revenue, lower unit costs, and provide diversity within the metals industry. 26 DIRECTOR’S REPORT ANDRADA ANNUAL REPORT 2023 FOREIGN EXCHANGE TRANSLATION LOSSES IMPACT Andrada’s operations are in Namibia and South Africa, where the currency is the Namibian Dollar (N$) and Rand (ZAR), respectively. The N$ is pegged to the ZAR, but tin metal sales are denominated in US Dollars (USD) and equity funding is based in UK Pound Sterling (GBP). The depreciation of the N$ and ZAR against the USD is a significant risk factor for the Group. MITIGATION The Group reserves most of its funds in USD and GBP, providing a hedge against the volatility of the ZAR and N$. The Group ensures that the available cash matches the currency in which liabilities are incurred. EXPLORATION AND MINING UNCERTAINTY IMPACT Mineral exploration inherently has a high degree of uncertainty, which carries a significant risk. Statistically, numerous mineral deposit discoveries flounder, with few ultimately developed into producing mines. The operations of the Group may be disrupted by a variety of risks and hazards beyond the control of the Group, including: • geological and geotechnical factors, • environmental hazards, • industrial accidents, • occupational and health hazards, • technical failures, • unexpected rock properties, • explosions, and • extended interruptions due to inclement or hazardous weather conditions and other acts of God. MITIGATION Exploration projects are meticulously managed by the executive team and regularly reviewed by the Board of Directors. Progress is measured against targets and expenditure. Funds are only expended in areas deemed prospective. The Group strictly adheres to a health and safety programme that is structured to continually improve performance. Exploration projects are reviewed after every programme is executed with the impact of new information used in the revaluation after each milestone. When constructing a mine site, external experts such as geotechnical, environmental, and geohydrological consultants are contracted to ensure all potential risks of this nature are understood and appropriate mitigation plans are developed. ANDRADA ANNUAL REPORT 2023 DIRECTOR’S REPORT 27 DEVELOPMENT PROJECTS FAILURE IMPACT Development projects often do not have the history to base estimates of future cash operating costs. For exploration projects, estimates of proven and probable reserves are mainly based on the interpretation of geological data obtained from drillhole assays, sampling techniques and feasibility studies. The cash operating costs are then based on: • anticipated tonnage, grades of mined and processed ore, • the configuration of the orebody, • expected throughput and recovery rates, and • comparable facility and equipment operating costs. MITIGATION The Group has appointed an experienced team of geoscientists and engineers, complemented by experienced consultants in specialist areas. New capital projects are supported by scoping, feasibility, and extensive metallurgical studies. The initial Uis Phase 1 pilot plant expansion has enhanced the Group’s understanding of the requisite metallurgical and processing elements to succeed in this type of project. This knowledge will provide essential up-front information for the implementation of Phase 1b and Phase 2. Additionally, detailed metallurgical test work is being undertaken to assess the optimal method of extracting lithium. Third-party experts are integral to the metallurgical test work. The Group is advancing exploration drilling programmes to increase confidence levels for lithium and tantalum mineralisation. All resources and reserves need to be Joint Ore Reserve Committee (JORC) compliant and signed off by competent persons. CAPITAL EXPENDITURE BUDGET OVERRUNS AND WEAK COST COMPETITIVENESS IMPACT While best estimates are used in preparing capital project budgets, they are influenced by several external factors beyond the Group’s control, resulting in expenditure overruns against the budget. Weak cost competitiveness relates to internal and external factors that hinder the Group from optimising profitability. MITIGATION Capital expenditure and project execution are subject to pre-defined governance and approval procedures, including feasibility studies prior to implementation. Management and the Board regularly review progress and related expenditure during the full tenure of the project. This includes updating working capital models and assessing potential impacts on future cash flow. 28 DIRECTOR’S REPORT ANDRADA ANNUAL REPORT 2023 Cost competitiveness is achieved through economies of scale through the expansion of the operational output to enhance unit cost dilution. Furthermore, the Group closely manages procurement pricing and cost efficiencies. The adoption of continuous improvement methodology enables the business to constantly track and reduce costs. The introduction of tantalum and lithium revenue streams will further reduce unit costs. ELECTRICITY AND WATER SUPPLY UNCERTAINTY IMPACT Sources of electricity and water supply are essential for viable mining operations. Lack of electricity or water supply, or uncertainties regarding uninterrupted supply, would adversely impact the feasibility of the operation. MITIGATION The Group has a formal electrical power supply agreement with Namibia Power Corporation for the mining and processing facility at Uis Mine. Diesel generators have been installed as the backup electricity supply. A geohydrological study as well as a water drilling and test pumping programme has demonstrated the viability of using groundwater sources for plant operations. This was confirmed through the successful implementation of a water supply network. Electricity and water supply solutions for the Phase 2 expansion programme are being reviewed. INSUFFICIENT FINANCING IMPACT The successful extraction of tin, tantalum and eventually lithium will require significant capital investment. The Group’s ability to secure requisite funds will depend on the success of existing operations. Prevailing market conditions may not be conducive to financing when critical for the Group. The Group may not be successful in procuring the requisite funds, which may impact its ability to complete value- accretive capital projects. MITIGATION The Group has a supportive shareholder base, and proven significant investor interest, for future funding rounds. The Group secured funding through Convertible Notes for a value of £ 7.7m through existing and new shareholders. The Group is at an advanced stage of securing strategic funding as follows: • DBN facility for N$100m (c. US$5.8m). • Orion funding package for US$25m comprising a tin royalty, convertible note and equity. ANDRADA ANNUAL REPORT 2023 DIRECTOR’S REPORT 29 LOSS OF KEY PERSONNEL IMPACT The success and operational performance of the Group is dependent on the unique skills, expertise and knowledge of management and qualified personnel. Short-term Group profitability could be impacted if key personnel leave the business. The establishment of new mines and re-establishment of old mines in the region increases competition for similar human resources. MITIGATION The Group has built a team of executives, scientists, engineers, and support personnel who are sufficiently experienced and versatile to eliminate shortcomings from the loss of employees. In addition, the Group has developed long-standing relationships with consulting firms in key specialist areas who can be contracted at short notice. Remuneration arrangements are intended to be sufficiently competitive to attract, retain and motivate high-quality staff to achieve the Group’s objectives, thereby enhancing shareholder value, given the increasing competition for qualified personnel in the market. DELAYS IN THE ISSUANCE OR RENEWAL OF PERMITS, LICENCES AND CERTIFICATES IMPACT Delays the processing, issuance or renewal of permits, licences and certificates requisite in the execution of exploration and mining licences could impede the ability of the business to achieve its objectives. MITIGATION The Group seeks to comply with regulatory requirements and always operates within the ambits of applicable rules and regulations. The Group actively tracks the status of all licences and permits. Ensures that renewals are submitted when required and all reporting is done according to the stipulated requirements. The governing laws of the countries we operate in allow for the continuation of operations while the licences are in the renewal process. Legislation also allows for a “correction period” should there be any additional clarification required for the granting/renewal of the application. 30 DIRECTOR’S REPORT ANDRADA ANNUAL REPORT 2023 LACK OF SOCIAL LICENCE TO OPERATE IMPACT Historical environmental incidents in the extractive industry, including poor water management practices and insufficient tailings storage facilities, have negatively impacted the environment and communities, resulting in a pervasive bad reputation. Communities within the vicinity of mining operations tend to have significant expectations for the mining companies to provide employment and procurement opportunities. MITIGATION Our ability to maintain regulatory compliance to protect the environment, as well as the health and safety of host communities and workers, remains the Group’s top priority. The Group seeks to build mutually-beneficial partnerships with host governments and local communities based on shared long-term value, while working to minimise the social and environmental impacts of the Group’s activities. The Board oversees the Group’s environmental, safety, health, and corporate social responsibility programmes, policies, and performance. The Board has an ESG Committee to focus on these matters. ADVERSE CLIMATE CHANGE IMPACT Adverse climate change and regulatory actions to reduce its impact may affect our suppliers, customers, as well as the Group’s business model. The change may reduce the Group’s growth and profitability, due to the amplified negative perception towards the mining industry. MITIGATION Andrada has started implementing the recommendations of the Task Force on Climate-Related Financial Disclosures. The Group regularly assesses exposure across a wide range of outcomes, while monitoring government action around climate change. The Group is constantly striving to reduce the environmental impact of its operations. The Board oversees the Group’s environmental, safety, health, and corporate social responsibility programmes, policies, and performance. The Board has an ESG Committee to focus on these matters. ANDRADA ANNUAL REPORT 2023 DIRECTOR’S REPORT 31 COUNTRY AND POLITICAL UNCERTAINTY IMPACT Andrada’s operations are predominantly based in Namibia. Emerging market economies are generally subject to greater risk exposure to uncertainty in the legal, regulatory, tax, economic and political processes. Policies are subject to unexpected and often investment unfriendly amendments. Threats to ownership of assets is commonly experienced in emerging economies. MITIGATION The Group has senior management that is highly experienced in operating in Africa. The Group routinely monitors political and regulatory developments in Namibia, at both local and national level. OPERATIONAL UNDERPERFORMANCE IMPACT Inability to achieve operational production guidance due to adverse internal or external factors. MITIGATION Digitised daily production monitoring and planned maintenance programmes ensure effective plant availability and run time. The daily monitoring system enables management to effectively respond to any deviation from planned targets. Management can promptly resolve or mitigate any down times. THREAT, LOSS, OR HARM DUE TO INADEQUATE CYBER SECURITY IMPACT Cyber threats loss or harm to our technical infrastructure and the use of technology within the organisation from malicious or unintentional sources. MITIGATION The Board and Management recognise the need to protect operational technology to reduce potential disruptions for the efficient running of the business. Due to the dramatic increase in cybercrime globally, we implemented a software platform across the Group to safeguard infrastructure critical to our sustainability. Additional software precautions were embedded at the onset of the COVID-19 pandemic to protect the business against attacks while our people connected and worked remotely. 32 DIRECTOR’S REPORT ANDRADA ANNUAL REPORT 2023 RESULTS AND DIVIDEND The Group’s results are a loss of £8.1m. The Directors will confidentiality, information is disseminated to all levels of staff about matters that affect the progress of the Group, not be recommending the declaration of a dividend. and that are of interest and concern to them as employees. 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 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 vote at general meetings of the Company. payment. DIRECTORS The Directors who served the Company during the year and to date are as follows: Glen Parsons Chairman/Independent Non-Executive Director Laurence Robb Independent Non-Executive Director Terence Goodlace Independent Non-Executive Director Michael Rawlinson Independent Non-Executive Director Anthony Viljoen Executive Director & Chief Executive Officer Hiten Ooka Executive Director & Chief Financial Officer Gida Nakazibwe-Sekandi Independent Non-Executive Director DIRECTORS’ INTERESTS The Directors’ beneficial interests in the shares of the 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 have 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 Company as at 28 February 2023 were: auditor for the ensuing financial year. Ordinary shares of no par value Share options ELECTRONIC COMMUNICATIONS The maintenance and integrity of the Group’s website is the Anthony Viljoen 15 296 690 16 600 000 Glen Parsons Laurence Robb 4 307 486 6 900 000 1 300 815 6 400 000 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 Terence Goodlace - 6 400 000 occurred to the financial statements since they were initially Michael Rawlinson 4 680 616 2 400 000 presented on the website. DIRECTORS’ INDEMNITY INSURANCE The Group has maintained insurance throughout the year The Group’s website is maintained in compliance with AIM Rule 26. for its directors and officers against the consequences of By order of the Board 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 GLEN PARSONS Chairman / Non-Executive Director 23 August 2023 ANDRADA ANNUAL REPORT 2023 DIRECTOR’S REPORT 33 STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN REGARD TO THE FINANCIAL STATEMENTS 34 STATEMENT OF DIRECTOR’S RESPONSIBILITIES ANDRADA ANNUAL REPORT 2023 The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Companies (Guernsey) Law, 2008 requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the group financial statements in accordance with UK adopted international accounting standards. Under the Companies (Guernsey) Law, 2008 the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to: • 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 UK adopted international accounting standards subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. WEBSITE PUBLICATION The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. ANDRADA ANNUAL REPORT 2023 STATEMENT OF DIRECTOR’S RESPONSIBILITIES 35 CORPORATE GOVERNANCE REPORT 36 CORPORATE GOVERNANCE REPORT ANDRADA ANNUAL REPORT 2023 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, PRINCIPLE Seek to understand and meet shareholder giving our shareholders and other stakeholders, including needs and expectations. employees, customers, suppliers, and the wider community, confidence in our business. The Board is committed to best practice corporate governance principles, upholding APPLICATION The Board is committed to maintaining effective ethical leadership and responsible corporate citizenship communication by having a constructive dialogue with all that promote shared value among stakeholders. We its shareholders. endeavour to conduct our business in an ethical and sensitive manner irrespective of gender, race, colour, or Management, led by the CEO, undertake regular presen- creed. tations and roadshows to investors as appropriate. This enables them to develop a balanced understanding of the Andrada has chosen to adopt the Quoted Companies issues and concerns of shareholders. The views of share- Alliance (QCA) Corporate Governance Code 2018 for holders are communicated to the Board. Smaller Companies. Below we outline how we apply each of the code’s ten key principles to our business. Furthermore, the Company keeps shareholders informed PRINCIPLE Establish a strategy and business model that promotes long-term value for shareholders. APPLICATION Andrada is listed on the AIM market of the London Stock Exchange and its vision is to create a portfolio of world- class, conflict-free, multi-technology producing assets. The Company’s flagship asset is the Uis Tin Mine in Namibia, formerly the world’s largest hard-rock tin mine. The Company has an experienced Board of Directors and highly skilled management team with a strategy to fast- track the expansion of Uis Mine production to 10 000 tonnes of tin concentrate and consolidate other quality tech-metal assets. The Company strives to capitalise on the on the Company’s progress through its public announce- ments, the Company’s website and through interviews on renowned media platforms. All reports and press releases are published in the ‘Investors’ section of the Company’s website - www.andradamining.com PRINCIPLE Consider wider stakeholder and social responsibilities and their implications for long term success. APPLICATION The Board recognises that its prime responsibility is to promote the success of the Company for the benefit of its stakeholders. This success is largely reliant on its relations with its stakeholders, both internal (employees and shareholders) and external (customers, suppliers, solid supply and demand fundamentals of tech-metals by business partners and advisers). achieving production in the near term and further scaling up volumes by consolidating the tin assets in Africa. The Board of Directors and management team integrate sustainable development principles into corporate strategies and decision-making processes. 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 exploration and mining 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. Employees, community members and other stakeholders work in collaboration with transparency and accountability. Open dialogue and engagement with community members at our sites are central to maintaining a successful relationship and 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 at its operations and will adopt measures to mitigate this challenge. ANDRADA ANNUAL REPORT 2023 CORPORATE GOVERNANCE REPORT 37 The goal is to minimise the negative impacts on the APPLICATION environment of the different processes related to the extraction of tech-metals. At 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 Board is made up of the Chairman, five Non-Executive Directors and two Executive Directors (CEO and CFO). 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 Strategy Officer, Chief Operating Officer, geologists, engineers, and executive management. The Chairman is responsible for the leadership and effective working of the Board, the implementation of sound corporate governance, setting the Board agenda, and ensuring that Directors receive accurate, timely and clear information. The Company promotes an inclusive work environment The Chairman and Non-Executive Directors (Glen through its recruitment and remuneration policies as Parsons, Terence Goodlace, Laurence Robb, Michael well as 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. Rawlinson and Gida Nakazibwe Sekandi) 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 to affect The Company has set up a share option scheme for key independence. employees, which gives them a stake in the Company’s long-term success. PRINCIPLE Embed effective risk management, considering both opportunities and threats, throughout the organisation. APPLICATION 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 and project risks. The Board meets at least every quarter or at any other time deemed necessary for the good management of the business. In addition, the Board is kept updated through monthly Board update sessions. Every Director has attended all Board meetings while being a Director of the Company. PRINCIPLE Ensure that between them the Directors have the necessary up-to-date experience, skills, and capabilities. The Board ensures that there is a risk management APPLICATION framework in place which identifies and addresses all Directors who have been appointed to the Company relevant risks in order to execute and deliver on the Board have been chosen because of the skills, knowledge strategy. Key risks are regularly reviewed by the Board and and experience they offer, considering the stage of the are disclosed in the Directors’ Report. Company and the strategy that it is pursuing. The Audit Committee receives feedback from the external The composition of the Board as well as biographical de- auditor on the state of the Company’s internal controls. PRINCIPLE Maintain the Board as a well functioning, balanced team led by the Chairman. tails of Board members can be found on the Board of Directors page on the Company website. Although, ulti- mately responsible for the adherence to sound corporate governance practices, the Board has constituted three committees to enable it to properly discharge its duties and responsibilities, as well as to effectively guide its deci- sion-making process. 38 CORPORATE GOVERNANCE REPORT ANDRADA ANNUAL REPORT 2023 The Directors have access to training (online training or is a set of globally applicable policies. These have been external training courses) to ensure that their skills are drafted to meet or exceed the requirements of our host kept up to date. The Board and its committees also seek country legislation, IFC Performance Standards, the external expertise and advice where required. Equator Principles, World Bank Operational Guidelines, 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. Frans van Daalen (Chief Strategy Officer) and Chris Smith (Chief Operating Officer) attend Board meetings by invitation to provide input from a financial and operational perspective. PRINCIPLE Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. OECD Bribery Convention, and the United Nations Global Principles. PRINCIPLE Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board. APPLICATION The Board approves the Company’s strategy and ensures that necessary resources are in place in order for the Company to meet its objectives. While the Board has delegated the operational management of the Company to the Chief Executive Officer and other senior management, several specific matters are subject to the approval of the APPLICATION The Board considers the evaluation of its performance and that of its committees and individual Directors to Board. These include: • annual budget, be an integral part of corporate governance to ensure • interim and annual financial statements, Board Members have the necessary skills, experience, • management structure and appointments, and abilities to fulfil their responsibilities. The goal of the • mergers, acquisitions, and disposals, evaluation process is to identify and address opportunities • capital raising, for improving the performance of the Board and to solicit • joint ventures and investments, honest, genuine and constructive feedback. The Chairman is responsible for ensuring the evaluation process is “fit for purpose”, as well as for dealing with matters raised during the process. Management of succession planning is a vital task and is a key measure of its effectiveness. PRINCIPLE Promote a corporate culture that is based on ethical values and behaviours. • corporate strategy, • projects of a capital nature, and • major contracts. 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. APPLICATION The Chairman is responsible for leading the Board and The Company has a strong ethical culture, which is ensuring its effectiveness. The Chairman with the assistance promoted by the Board and the management team. of the Chief Executive Officer sets the Board’s agenda and The Company endeavours to conduct its business in an ensures that adequate time is available for discussion of all ethical, professional, and responsible manner, treating all agenda items, in particular strategic issues. employees, customers, suppliers, and partners with equal courtesy irrespective of gender, race, colour, or creed. We are committed to not only having the highest sustainability standards, but to having the plans, procedures, metrics, and targets in place to ensure our commitments are implemented. The bedrock of our sustainability governance The roles of the Audit and Risk Committee as well as the Remuneration Committee are set out further 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. ANDRADA ANNUAL REPORT 2023 CORPORATE GOVERNANCE REPORT 39 PRINCIPLE Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders APPLICATION The Board is committed to maintaining effective com- munication and having constructive dialogue with all its stakeholders, providing them with access to information to enable them to arrive at informed decisions about the Company. The ‘Investors’ section on the Company’s website provides 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) • Michael Rawlinson (appointed 20 December 2021) • Gida Nakazibwe Sekandi (appointed 10 May 2023) EXECUTIVE DIRECTORS • Anthony Viljoen (appointed 23 October 2017) • Hiten Ooka (appointed 10 May 2023) all required regulatory information as well as additional in- Operational management in South Africa and Namibia formation shareholders may find helpful, including: • information on Board members, advisers, and is led by Anthony Viljoen supported by a Chief Financial Officer (Hiten Ooka), a Chief Strategy Officer (Frans van significant shareholdings, • a historical list of the Company’s announcements, • corporate governance information, • historical Annual Reports and notices of general meetings, and Daalen), a Chief Operating Officer (Chris Smith), geologists, engineers, and executive management. Operational management is also supported technically through various consultancy agreements that were in place during the year under review. All press releases, including operational • share price information and interactive charting facilities updates, are approved by the entire Board. to assist shareholders in analysing performance. Results of shareholder Annual General 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. The Board met four times during the year. Refer to the table below for attendance. Board and Committee membership and attendance for the year ended 28 February 2023: Board (4) Audit and Risk (3) Remuneration and Nominations (2) Environmental, Social and Governance (2) Number of Meetings Non-Executive Directors Glen Parsons 4* 3* Laurence Robb Terence Goodlace Michael Rawlinson Gida Nakazibwe Sekandi2 Executive Directors Anthony Viljoen Hiten Ooka2 * Chairman 2 Appointed 10 May 2023 4 4 4 - 4 4 3 3 3 2 2* - 2 2 2 2* - 2 2 40 CORPORATE GOVERNANCE REPORT ANDRADA ANNUAL REPORT 2023 THE AUDIT AND RISK COMMITTEE The Audit and Risk Committee meets at least twice a • meeting with the auditor to discuss the scope of the audit, issues arising from their work and any matters year and is composed exclusively of Non-Executive Directors: Glen Parsons (Chairman), Michael Rawlinson and they wish to raise; • developing and implementing policy on the Terence Goodlace. The Chief Executive Officer, Anthony engagement of the external auditor to supply non- Viljoen, and the Chief Financial Officer, Hiten Ooka, attend audit services; 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 • considering the effectiveness of the Company’s enterprise risk management (ERM) program to minimise the effect of downside risks on the organisation; accounting policies and practices, major judgemental • The management of risk, including compliance, and areas, significant audit adjustments, going concern risk governance; and 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 • overseeing the implementation of an appropriate ethics and compliance programme and establishing a reporting hotline. The Audit Committee is provided with the details of any reporting auditor findings to the Board; proposed related-party transactions in order to consider • considering the appointment of the auditor and their remuneration, including reviewing and monitoring and approve the terms of such transactions. The Audit Committee met three times during the year. their independence and objectivity; ANDRADA ANNUAL REPORT 2023 CORPORATE GOVERNANCE REPORT 41 REMUNERATION AND NOMINATION COMMITTEE REPORT PART 1: CHAIRMAN’S MESSAGE ON REMUNERATION AND NOMINATION COMMITTEE REPORT Dear Shareholders, policy nor to seek annual approval of the remuneration paid I am pleased to present to you the Remuneration and to the Board, the Board believes that it is good practice to Nomination Committee Report on behalf of the Board of seek shareholder’s views on Board remuneration by way of Directors. This report has been benchmarked against the an advisory shareholder vote on the Remuneration Report. requirements of the QCA Code of Corporate Governance and Shareholders can find the report on pages 44 to 46 of this in accordance with AIM requirements. Part 2 of this report Annual Report. pertains to the Proposed Remuneration Policy (“the Policy”) which now includes a Long-Term Incentive Plan (“LTIP”), and Employee Share Scheme. Part 3 is the Remuneration Report, which details the awards to the Directors and Person Discharging Managerial Responsibilities (“PDMRs”) for the fiscal year ending 28 February 2023. As a whole, this report outlines our commitment to sound governance, transparent remuneration practices, and the alignment of executive compensation with the Company’s strategic objectives. Our Policy was created following extensive engagement with our major shareholders, and aligns seamlessly with our evolving remuneration and reward framework. We will highlight the significant changes from our current policy and practice, underscoring our dedication to transparency and communication. Although the Company is not required to obtain shareholder’s approval of a triannual remuneration OVERVIEW OF EXECUTIVE MANAGEMENT REMUNERATION AND PERFORMANCE Our remuneration philosophy is anchored in the principles of performance-based compensation, aiming to foster a strong connection between executive rewards and the attainment of strategic and operational milestones. This approach includes pay-for-performance metrics that align with the Company’s core objectives, culminating in the achievement of our strategic goals. We recognise that our talented workforce is instrumental in our achievements. Therefore, we place great emphasis on attracting and retaining skilled executives with extensive experience in the mining industry, particularly within the “green metals” sector. 42 REMUNERATION REPORT ANDRADA ANNUAL REPORT 2023 This strategic focus ensures that our leadership team can based framework, we are steadfast in our pursuit of effectively manage the complex challenges that arise attracting and retaining outstanding executives who from stakeholder engagement, operational management, will contribute significantly to our ongoing success. In and community interaction. Our remuneration package is conclusion, this report serves as a testament to our crafted to be highly competitive, reflecting the critical role dedication to transparency, governance, and accountability. our executives play in realising our growth ambitions. In the We appreciate your continued trust and support as we same vein, I am delighted to report that during FY 2023, collectively strive to achieve our Company’s objectives and our Company achieved strong results, surpassing core create sustainable value for all stakeholders. objectives across multiple fronts. Our operational success and robust performance underscore the dedication and Sincerely, expertise of our executive management team. LOOKING FORWARD: STRENGTHENING ALIGNMENT AND ACCOUNTABILITY As we progress, we remain committed to ensuring that our executive compensation programme is closely aligned with shareholder interests, providing a competitive package that supports our strategic direction and overall stakeholder satisfaction. By adhering to a performance- MICHAEL RAWLINSON Chairman of REMCO 23 August 2023 ANDRADA ANNUAL REPORT 2023 REMUNERATION REPORT 43 PART 2: REMUNERATION POLICY INTRODUCTION In line with our commitment to cultivating a motivated, replacement of options awards to employees on Grade 13 and above as a long-term incentive with available engaged, and high-performing workforce, Andrada shares that are less dilutive. The LTIP excludes the CEO Mining is excited to present a comprehensive proposal and CFO who are also Executive Directors. The Policy is for the integration of an enhanced LTIP that harmoniously intended to: aligns with our recently formulated Reward Philosophy. This chapter highlights our evolving organisational ethos and synergy between our core values and progressive compensation strategies. THE NEW REWARD PHILOSOPHY • The Reward Philosophy translates Andrada’s Purpose, Strategic Plan, Values and Objectives into a framework that guides decision-making on reward practices and strategies. An essential element of the Policy is the • align the efforts of the Company to the interests and expectations of shareholders. • focus on delivering short-term objectives as aligned to the Company’s overall strategy, • attract and retain competent people, with strong skills, through market competitive remuneration. • motivate, measure and reward individual and team performance. • be simple to understand and consistent in application. COMPONENTS OF THE PROPOSED REMUNERATION POLICY Base Salary • Range set from 80% of the 50th percentile (P50) of the target market. • Peer group/s for market data reviewed annually. STIP LTIP* Production Bonus • Outcomes linked to Company and individual performance. • Paid annually in cash. • Share scheme based. • Applies to permanent employees on Global Grade 13 and above. • Intention is to get senior management to behave like owners through shares in compa- ny performance. • Long-term retention tool. • Primarily for operational employees. • Awards linked to production targets. • Paid monthly in cash. Benefits • Planned pipeline of employee benefits subject to Company growth and affordability. • Benefits to included life insurance, retirement funding and medical aid. Employee Share Scheme • Enables all employees below Grade 13 to share in the growth and success of Andrada. * This LTIP excludes Non-Executive Directors. 44 REMUNERATION REPORT ANDRADA ANNUAL REPORT 2023 The Reward Framework of the Policy is comprised of the attract and retain employees with the requisite skills and following components that are further detailed in the table capabilities to deliver desired performance. below: • A market competitive base salary. • A planned pipeline of employee benefits subject to Company growth and affordability. • A Short-Term Incentive Plan based on performance of strategic and operational objectives. • A Long-Term Incentive Plan for Senior Management. Performance-Based Reward: Performance-linked reward will be structured in a manner that provides for differen- tiation between individual employee performance. As per best practice, the performance management system will recognise and differentiate between good, average, and poor performance. In the application of the Reward Framework and in all Affordability: The Company is restricted in terms of its decisions related thereto, the following principles will guide business plan and annual budgetary scope in setting limits the implementation: Transparency: The Company will be transparent in the application of this framework to the extent that is legally possible without compromising any confidential information. regarding remuneration and reward-related benefits. When the Company reaches a steady financial position, it commits to implementing a planned pipeline of improved employee benefits. The main development in the new Remuneration Policy is the inclusion of the Employee Share Scheme, and the LTIP Non-Discrimination: All remuneration-related decisions offered to employees at Grade 13 and above but excluding will be unbiased and free of unfair discrimination. the CEO and CFO. Under the prior policy, the Company Internal Equity: Employees will be remunerated fairly and consistently according to their role and individual contribution to the Company. Where there is differentiation between employees performing similar work, the differentiation is required to be valid, rational, and justifiable. Market Competitiveness: The Company needs to maintain market competitive reward practices to ensure that it can offered option grants to the CEO, CFO and, employees below Grade 13. In line with best practice and informed by the fact that Andrada has developed significantly, with production approaching steady state, we are now proposing a standard LTIP structure with forward-looking three-year performance measures based on best practice. The Company intends to make the first such award in FY 2024: COMPONENTS OF THE LTIP STRUCTURE Form of award • Retention** and performance shares. Vesting terms Performance conditions (applicable for FY 2024 awards) • Vesting three calendar years after award date, subject to continuing employment and satisfaction of performance conditions. • All performance conditions are to be measured over three financial years, beginning with FY 2024. • Further details regarding the initial performance conditions for LTIPs will be defined and approved by the REMCO. • Suggestion for 50% of scorecard to be Total Shareholder Return. Holding period (Post-vesting) • An additional two-year holding period post-vesting for Executive Directors. Threshold for vesting • Still to be determined. ** Retention shares exclude Executive Directors because they will only be awarded performance shares. ANDRADA ANNUAL REPORT 2023 REMUNERATION REPORT 45 REMUNERATION COMMITTEE FLEXIBILITY, DISCRETION salaries. For a detailed breakdown of the STIP metrics, you AND JUDGEMENT can refer to the remuneration policy below. The Board recognises the importance of flexibility, discretion, and judgement in determining an approach to Executive Directors’ remuneration. Although the Company’s comprehensive Policy aims to address a wide range of scenarios, there will be instances when the REMCO must exercise its expertise to ensure equitable outcomes. It is essential to acknowledge that no remuneration policy, regardless of its comprehensiveness, can predict every situation. Therefore, the Company values the ability of the REMCO to use its discretion, particularly when evolving business needs require adjustments to reward structures or short-term incentives. The application of judgement and flexibility can extend to revising remuneration elements, whether upgrading or downgrading, and achieving the right equilibrium between fixed and performance-related components, immediate and deferred incentives. This flexibility empowers the REMCO to navigate changes and challenges within the business environment, even in the face of external pressures that might influence the Company’s strategic path. This adaptability allows the Company to encourage desired behaviour, stimulate performance, and drive the long-term prosperity. The REMCO is dedicated to ongoing shareholder involvement during the Policy’s three-year term. Whenever deemed suitable, the REMCO will formally engage shareholders to endorse any revision to the Policy before the conclusion of the three-year period. It is important to state that during FY 2023 the REMCO did not award discretionary allocations. LTIP: In line with our commitment to align the CEO and CFO’s interests with the long-term success of Andrada Mining, the CEO and CFO have historically received share options and will be awarded provisional shares, subject to performance conditions as in the Policy subject to shareholder approval. These shares will be granted up to an allocation equivalent to 100% of the CEO’s and 75% of the CFO’s base salaries. This component ensures that the CEO and CFO are directly invested in the Company’s growth and performance, as the value of the share options is closely related to the Company’s share price performance long-term. This compensation structure is carefully designed to create a balanced approach that combines guaranteed salary, short- term performance incentives, and a strong focus on long- term value creation through share options. By incorporating these three components, we aim to ensure that the CEO’s and CFO’s compensation is reflective of both Company performance and market standards. NON-EXECUTIVE DIRECTOR COMPENSATION AND REMUNERATION The Non-Executive Directors’ (“NED”) remuneration strategy strikes a balance in aligning their interest with long-term Company success, while conserving cash flow. Historically, Andrada has adopted a multi-faceted remuneration mix including share options for NEDs, to address the Company’s inability to match industry-related cash-based remuneration. The Company has amended the remuneration structure to a fully cash-based compensation model as from FY 2025. The EXECUTIVE DIRECTORS (EDS) REMUNERATION aim is to offer NEDs compensation that mirrors Andrada’s The compensation structure for the CEO and CFO at development stage, while still honouring their expertise and Andrada Mining is designed to encompass three distinct contributions. The Company will ensure that any adjustments components: to the NED remuneration structure continues to cultivate Base salary: Is determined prior to the commencement of collaboration, ownership, and a collective dedication to the financial year. This component serves as a guaranteed driving Andrada’s ongoing trajectory. portion of the CEO and CFO’s compensation, providing financial stability and predictability. The salary is not subject to performance metrics and is established based on considerations such as market standards, industry norms, and the CEO and CFO’s responsibilities within the organisation. STIP: Is a variable component of the CEO and CFO’s short-term compensation, based on performance against a balanced scorecard determined by the REMCO at the outset of a financial year. The maximum allocation of the STIP component is 100% of the CEO and 75% of the CFO’s 46 REMUNERATION REPORT ANDRADA ANNUAL REPORT 2023 PART 3: REMUNERATION REPORT REMCO & NOMCO GOVERNANCE This report fulfils the the guidance set out in the QCA executives, in line with the Company’s strategic objectives. The committee also establishes annual Guides for Smaller Companies and delineates how the targets that incorporate a combination of financial, non- Board has upheld the tenets of sound governance. financial, and strategic performance conditions. REMUNERATION GOVERNANCE The REMCO consists entirely of Non-Executive Directors to ensure unbiased decision-making. The Company Secretary attends meetings as the committee’s secretary. Occasionally, other members of management, such as the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Head of Sustainability, may be invited to attend meetings at the Chairman’s request. However, they are not present during discussions or decisions regarding their own remuneration. The committee is responsible for the following: • Ensuring that remuneration policies and practices adhere to the principles of AIM and the QCA Code for Smaller Companies. This includes promoting clarity, simplicity, risk mitigation, predictability, proportionality, and alignment with the Company’s culture. • Selecting remuneration consultants and commissioning reports, surveys, or other relevant information necessary for the effective functioning of the REMCO. MEMBERSHIP OF THE REMUNERATION COMMITTEE The REMCO’s role and responsibilities are outlined in • Establishing the policy and framework for remunerating approved terms of reference, which were endorsed by the Directors and determining the remuneration of the Board of Directors in FY 2022. The table below displays the current members and their attendance record: Chairman of the Board. • When determining the remuneration for Executive Directors, the committee considers the business requirements, talent needs, competitive market practices, and principles of the Quoted Companies Alliance (QCA) Remuneration Committee Guide and QCA Corporate Governance Code. Remuneration & Nominations members Non-Executive Directors Remuneration & Nominations meetings 2 2* • When establishing remuneration policies for Executive Glen Parsons Directors, reviewing, and considering the remuneration of the wider workforce. This includes addressing pay Michael Rawlinson gaps and disparities and considering the Company’s * Chairman broader approach to remuneration, particularly regarding gender and ethnic diversity. • Determining whether performance conditions for the STIP and LTIP have been achieved during each fiscal year and confirming the vesting of any awards. • Assessing and reviewing the appropriate market positioning of remuneration for the executive management team to ensure fairness and equity. • Ensuring a suitable combination of fixed and variable remuneration, by applying the STIP and LTIP for ANDRADA ANNUAL REPORT 2023 REMUNERATION REPORT 47 REMUNERATION COMMITTEE ACTIVITIES DURING FY 2023 The committee implemented key activities as part of its responsibilities as follows: • Pay positioning review: The REMCO examined pay positioning, which involved assessing the current remuneration structure and ensuring it aligns with the Company’s objectives. The outcomes of incentive awards for both FY 2021 and FY 2022 were carefully evaluated. • Market analysis: REMCO gathered and analysed extensive market data on executive remuneration to understand the quantum of executive pay in relation to industry standards. The REMCO performed a comprehensive gap analysis to identify any discrepancies FY 2023 PERFORMANCE CONTEXT Andrada Mining achieved 77% of the objectives set out by the Remuneration Committee in line with the Company’s strategic targets. For three consecutive years, the Company has exceeded its nameplate capacity, demonstrating our commitment to delivering exceptional results. Uis Mine produced 960 tonnes of tin concentrate at an annualised run rate of 1 000 tonnes per annum, accelerating us to our production guidance of 1 200 tonnes over three years. Despite industry-wide inflationary pressures, Andrada met our AISC target of below US$25 000 per tonne of contained tin. This significant achievement can be attributed to the increase in production volumes and successful implementation of optimisation initiatives. and determine appropriate adjustments. This outstanding operational performance was • Setting performance targets: TThe REMCO established accomplished while navigating the long-term impacts the FY 2023 STIP Key Performance Indicators (KPIs) of a post-pandemic world. The Company demonstrated for the Executive Management. This involved defining resilience and adaptability by overcoming severe supply bonus targets and outlining the conditions under which chain issues and inflationary pressures. Furthermore, incentive awards would vest based on performance management surpassed its ESG targets making substantial achievements. The REMCO also implemented a new, progress in areas of environmental sustainability, social transparent, and quantifiable STIP template for the CEO responsibility, and corporate governance. More details can and other executives, eliminating subjectivity. be read in the FY 2023 Sustainability report, which will be • Future incentive awards: The REMCO engaged published in August 2023. executives and approved all target KPIs to be included in the FY 2023 incentive awards. This encompassed both the STIP and option awards. • Remuneration policy development: The REMCO developed the policy that will be presented to shareholders for approval at the AGM in September 2023. The REMCO ensured that the Policy aligns with best practices and aligns the Company’s strategic objectives. • Shareholder engagement: The REMCO engaged with the Company’s major institutional shareholders and proxy agencies in developing the Policy. The REMCO has ongoing engagement with shareholders and proxy agencies, to address any concerns, gather feedback, and ensure transparency and accountability. REMUNERATION POLICY APPLICATION IN FY 2023 EXECUTIVE REMUNERATION IN CONTEXT The Company has mining operations, three nascent projects in initial developmental stages, and a vigorous exploration programme. Therefore, it is imperative that the Executive management allocates adequate resources between the various key stakeholders. These stakeholders encompass mine management and employees, government institutions, and the communities adjacent to the Company’s operations. The remuneration structure was exclusively based on the balanced scorecard approach. The balanced scorecard holistically considers the Company’s overall performance, internal dynamics, external factors, and the principle of fairness across all stakeholders. CHIEF EXECUTIVE OFFICER REMUNERATION FOR FY 2023 The REMCO assessed the Company’s performance in determining the CEO’s remuneration. The remuneration consisted of 66% performance-related compensation based on a balanced scorecard measuring four major strategic areas, namely ESG, production targets, strategic initiatives and resource growth with the remainder being the fixed portion. The detailed outcome of the CEO’s assessment is presented in the scorecard table below. ANNUAL BONUS The REMCO established that the CEO’s performance against the balanced scorecard KPIs yielded a performance score of 77% of his base salary. Consequently, the annual bonus was determined to be £145 565. This represents an increase from the previous financial year, when the corresponding scorecard for the STIP was 70% of base salary. 48 REMUNERATION REPORT ANDRADA ANNUAL REPORT 2023 FY 2023 CEO REMUNERATION SCORECARD Category Category Weighting KPA KPA Weighting % Achieved ESG 30% H&S Environment General Social Governance Projects Reporting Production 20% Production and Cost Strategic Initiative 35% Corporate Finance and IR Capital Projects Resource Growth 15% OVERALL SCORE HR Uis Mine Brandberg West Other Programmes 40% 10% 10% 10% 10% 10% 10% 50% 50% 40% 40% 20% 50% 20% 30% 94% 100% 57% 58% 77% PROPOSED CHIEF EXECUTIVE OFFICER REMUNERATION FOR FY 2024 ENGAGEMENT OF INDEPENDENT REMUNERATION ADVISERS Salary benchmarking, surveys and grading Andrada, through the REMCO, seeks and considers advice from independent remuneration advisers where appropriate. Remuneration advisers are engaged by, and report directly to, the Company’s Human Resources department. The Company has contracted two advisory entities to advise on remuneration structuring and appropriate reward structures. The consultants were assigned to provide a thorough review of AIM executive salary reports to inform the CEO’s remuneration. Based on the review feedback, the CEO’s proposed base salary excluding incentives for FY 2024 is £189 045 compared to £187 138 in FY 2023. ANDRADA ANNUAL REPORT 2023 REMUNERATION REPORT 49 28 February 2023 £ £ £ £ Share Option Charge Shares to be Issued in Relation to Director Fees/ Salary Director Fees/ Salary (Incl. bonus payment and accruals) Other Fees Non-Executive Directors Glen Parsons (Chairman) Terence Goodlace Laurence Robb Michael Rawlinson Executive Director Anthony Viljoen (Chief Executive Officer) Other key management Personnel Hiten Ooka (Chief Financial Officer)1 Frans van Daalen (Chief Strategy Officer) 36 032 36 032 36 032 36 032 90 081 72 065 72 065 24 000 18 000 21 000 55 000 44 778 17 000 24 000 360 780 198 042 265 894 £ Total 91 032 80 810 95 032 81 032 450 861 270 107 337 959 TOTAL 378 339 39 000 965 494 24 000 1 406 833 28 February 2022 £ £ £ £ Share Option Charge Shares to be Issued in Relation to Director Fees/ Salary Director Fees/ Salary (incl bonus payment) Other Fees 5 524 5 524 5 524 - 13 258 8 838 8 838 18 000 3 500 59 167 56 308 17 000 4 000 170 454 110 326 140 390 8 000 49 102 £ Total 64 691 61 832 48 524 56 602 183 712 119 164 149 228 47 506 21 500 557 645 57 102 683 753 Non-Executive Directors Glen Parsons (Chairman) Terence Goodlace Laurence Robb Roger Williams Executive Director Anthony Viljoen (Chief Executive Officer) Other key management Personnel Robert Sewell (Chief Financial Officer) Frans van Daalen (Chief Operating Officer) TOTAL 1 Appointed June 2022 50 REMUNERATION REPORT ANDRADA ANNUAL REPORT 2023 STIP BREAKDOWN FOR FY 2024 AWARDS Category Category Weighting KPA KPA Weighting H&S Environment General Social Governance Projects Reporting Production and Cost Capital Projects Corporate Finance and IR HR Uis Mine Brandberg West Other Programmes ESG 30% Production Strategic Initiative 20% 35% Resource Growth 15% SHARE OPTIONS MATRIX ALLOCATION FY 2024 Name Glen Laurence Terence Michael Anthony Hiten Frans Chris Surname Parsons Robb Goodlace Rawlinson Viljoen Ooka Van Daalen Smith Title NED NED NED NED ED & CEO ED & CFO CSO COO 40% 10% 10% 10% 10% 10% 10% 50% 50% 40% 40% 20% 50% 20% 30% Allocation 843 447 843 447 843 447 843 447 2 811 489 2 108 616 2 108 616 2 108 616 ANDRADA ANNUAL REPORT 2023 REMUNERATION REPORT 51 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANDRADA MINING OPINION ON THE FINANCIAL STATEMENTS In our opinion the financial statements: • give a true and fair view of the state of the Group’s affairs as at 28 February 2023 and of its loss for the year then the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. ended; • have been properly prepared in accordance with UK MATERIAL UNCERTAINTY RELATED TO GOING adopted international accounting standards; and • have been prepared in accordance with the requirements CONCERN We draw attention to Note 2 to the financial statements, of the Companies (Guernsey) Law, 2008. which indicates that the Group will need to raise additional We have audited the financial statements of Andrada Mining Limited (the “Parent Company”) and its subsidiaries (the “Group”) for the year ended 28 February 2023 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 financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and UK adopted international accounting standards. BASIS FOR OPINION We conducted our audit in accordance with International funding from the Development Bank of Namibia and other sources after the approval of the financial statements to fund their working capital and capital projects. However, this additional funding has not yet been completed. As stated in Note 2, these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting and our audit procedures in response to key audit matter included the following: Standards on Auditing (UK) ISAs (UK) and applicable law. Our responsibilities under those standards are further • We discussed with Directors and the Audit Committee their assessment of potential risks and uncertainties, described in the Auditor’s responsibilities for the audit of forecast commodity prices, production and the availability the financial statements section of our report. We believe of financing that are relevant to the Group’s business that the audit evidence we have obtained is sufficient and model and operations. We formed our own assessment appropriate to provide a basis for our opinion. INDEPENDENCE We remain independent of the Group in accordance with of risks and uncertainties based on our understanding of the business and mining sector and considered these in performing our own sensitivities. 52 INDEPENDENT AUDITOR’S REPORT ANDRADA ANNUAL REPORT 2023 • We reviewed the latest Board-approved cash flow forecasts for the Group to September 2024. We development plans and working capital needs. We have verified the post year end funding received by the Group. challenged Directors’ assumptions in respect of level We considered the Director’s judgement that they had of production, forecast tin prices, operating costs and reasonable expectation of securing further necessary capital expenditure. In doing so, we considered factors funding and the timing of such funding requirement. such as operational performance, recent cost profile There are term-sheets in place; however, currently there and market analyst commentary regarding forecast are no binding agreements in respect of additional fund commodity prices. raising. • We recalculated forecast covenant compliance calculations and assessed the consistency of such • We reviewed and considered the adequacy of the disclosure within the financial statements relating to calculations with the ratios stated in the relevant lender Directors’ assessment of the going concern basis of agreements. • We assessed the sensitivity analysis performed in respect of key assumptions underpinning the forecasts and considered Directors’ conclusions as to whether preparation with the requirements of the financial reporting framework, our understanding of the business and the Directors’ going concern assessment. such scenarios are reasonably possible based on our Our responsibilities and the responsibilities of the Directors knowledge of the business and operating environment. • We discussed with management and the Board the Group’s strategy to access capital to fund its with respect to going concern are described in the relevant sections of this report. OVERVIEW Coverage1 Key audit matters 99% (2022: 99%) of Group revenue 90% (2022: 89%) of Group total assets Going concern Potential Impairment of mining assets 2023 Yes Yes 2022 Yes Yes Materiality Group financial statements as a whole £470 000 (2022: £370 000) based on 1% of total assets (2022: 1% of total assets) 1 These are areas which have been subject to a full scope audit and specified audit procedure performed by the group engagement team and the component auditor teams. ANDRADA ANNUAL REPORT 2023 INDEPENDENT AUDITOR’S REPORT 0053 AN OVERVIEW OF THE SCOPE OF OUR AUDIT Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of • 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 material misstatement in the financial statements. We also be covered by the audits and set out the information to addressed the risk of management override of internal be reported to the Group audit team. controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. • The Group engagement partner visited Namibia, and during this visit he had meetings with the component auditor and the management of the audited entity, and visited the mine site. In approaching the Group audit we considered how the Group is organised and managed. Andrada Mining Limited • The Group audit team was actively involved in the direction of the audits performed by the component auditor for is a Company registered in Guernsey and listed on AIM in Group reporting purposes, along with the consideration the UK, the NSX in Namibia and has qualified to trade on of findings and determination of conclusions drawn. We the OTCQB Venture Market in the US from 5 June 2023. performed our own additional procedures in respect of The Group’s principal operations are located in Namibia certain of the significant risk areas that represented key and South Africa. Our Group audit scope focused on the audit matters in addition to the procedures performed Group’s producing and exploration assets to gain sufficient by the component auditor. coverage over the Group’s total assets, total revenue and loss before tax while considering the audit risks identified. • We received and reviewed Group reporting submissions and performed a review of the component auditors’ files. As a result, we determined Parent Company and two Our review was performed remotely using our online subsidiary entities, AfriTin Mining (Namibia) Pty Limited audit software. and Uis Tin Mining Company Pty Limited which operate the • We held clearance meetings remotely with the Uis Mine to be significant components of the Group and component auditors and local management to discuss were subject to the full scope audits. The audits of each significant audit and accounting issues and judgements. of the significant components were principally performed in the United Kingdom, Namibia and South Africa. All the KEY AUDIT MATTERS audits were conducted by either the group audit team or Key audit matters are those matters that, in our professional BDO network member firms. The remaining components judgement, were of most significance in our audit of the of the Group were considered non-significant, and these financial statements of the current period and include the components were principally subject to analytical review most significant assessed risks of material misstatement procedures, together with specified audit procedures over (whether or not due to fraud) that we identified, including exploration and evaluation related assets. This work was those which had the greatest effect on: the overall audit conducted by BDO network member firms. strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. In addition to OUR INVOLVEMENT WITH COMPONENT AUDITORS the matter disclosed in the material uncertainty related to For the work performed by component auditors, we going concern section of our report, we have determined determined the level of involvement needed in order to the matter described below to be the key audit matter to be able to conclude whether sufficient appropriate audit be communicated. These matters were addressed in the evidence has been obtained as a basis for our opinion on context of our audit of the financial statements as a whole, the Group financial statements as a whole. Our involvement and in forming our opinion thereon, and we do not provide with component auditors included the following: a separate opinion on these matters. 54 INDEPENDENT AUDITOR’S REPORT ANDRADA ANNUAL REPORT 2023 Key audit matter How the scope of our audit addressed the key audit matter Potential impairment of mining assets We reviewed and challenged management’s impairment See Note 2: Critical accounting estimates and judgements and Note 12: Property, Plant and Equipment. As disclosed in Note 2 Critical accounting estimates and indicator assessment and testing performed on the underlying LoM valuation model for the Uis mining assets which was carried out in accordance with relevant accounting standards. Our audit procedures in this regard included: judgements, management have reviewed the Uis Mine • Reviewing the Competent Person’s Report to support for indicators of impairment and have considered among the mineral reserve and performed an assessment of the other factors , the operations to date at Uis Mine including independence and competence of management’s expert. production from the lithium pilot plant, forecast commodity • Critically reviewing LoM forecast by making enquiries prices, production profile, inflation rate, post-tax real of operational management, evaluating it against our discount rate and market capitalisation of the Group. The understanding of the operations and historic performance, drilling and testing of lithium, decision on lithium production and evaluating the consistency of available reserves with and the initial steps that were taken prior 28 February 2023 the Competent Person’s Report. and, the construction of pilot plant concluded in July 2023. • Obtaining management’s LoM valuation model to confirm Hence , production from lithium pilot plant is included in the that sufficient headroom existed over the asset carrying impairment review of the mining asset. value as part of our assessment of potential impairment indicators. As set out in Note 2, Management have identified the • Checking the mathematical accuracy of management’s reduction in the tin price as an indicator of impairment. In LoM valuation model. undertaking the impairment review, management have • Challenging the significant inputs and assumptions used also reviewed the underlying Life of Mine (“LoM”) valuation in the management’s LoM valuation model and whether model for Uis. The LoM valuation model is on a fair value these were indicative of potential bias. This included less cost to develop basis and includes assessments of comparing forecast commodity prices to a range of third- different scenarios associated with capital improvements and party independent market outlook reports and historical expansion opportunities. The impairment testing performed actual data, comparing the forecast production to third by management did not result in an impairment. party feasibility and resource studies. We compared forecasted costs against the expected production profiles The assessment of the recoverable value of the Uis mining in the mine plans and recent historical performance. assets requires significant judgement and estimates to be • Recalculating the discount rate and utilising BDO valuation made by management – in particular regarding the inputs experts to assist us in assessing management’s discount applied in the models including; future tin, tantalum and lithium rate by recalculating it in reference to external data. prices, production and reserves, operating and development • We enquired management and reviewed the pre and post costs and discount rates. The carrying value of the Uis mining year end RNS announcements with respect to identification assets is therefore considered a key audit matter given the of lithium resources. This was further corroborated with level of judgement and estimation involved. the drilling cost for identification of lithium resources in the current year. • We reviewed the post year end RNS announcements regarding completion of construction and commissioning of the lithium bulk sampling plant and tantalum circuit. • Review of management’s sensitivity analysis and performance of our own sensitivity analysis over individual key inputs including tin prices, discount rate and plant recovery. Key observation: Based on the procedures performed, we found that the key judgements and estimates applied by management in their LoM valuation model to be within an acceptable range and found their conclusion that there was no impairment as of 28 February 2023 to be reasonable. ANDRADA ANNUAL REPORT 2023 INDEPENDENT AUDITOR’S REPORT 55 OUR APPLICATION OF MATERIALITY We apply the concept of materiality both in planning to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be and performing our audit, and in evaluating the effect evaluated as immaterial as we also take account of the of misstatements. We consider materiality to be the nature of identified misstatements, and the particular magnitude by which misstatements, including omissions, circumstances of their occurrence, when evaluating their could influence the economic decisions of reasonable users effect on the financial statements as a whole. that are taken on the basis of the financial statements. Based on our professional judgement, we determined In order to reduce to an appropriately low level the materiality for the financial statements as a whole and probability that any misstatements exceed materiality, performance materiality as follows: we use a lower materiality level, performance materiality, Materiality Group financial statements 2023 £470 000 2022 £370 000 Basis for determining materiality 1% of total assets 1% of total assets We consider total assets to be the most significant determinant of the Group’s financial performance used by members given the nature of Group. Rationale for the benchmark applied The Group has invested significant sums on its production and non-production mining assets and these are considered to be the key value driver for the Group as its assets are an indicator of future value to shareholders. Performance materiality £352 000 Basis for determining performance materiality 75% of Materiality £278 000 75% of Materiality Rationale for the percentage applied for performance materiality 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. COMPONENT MATERIALITY statements does not cover the other information and, except We set materiality for each significant component of the to the extent otherwise explicitly stated in our report, we do Group based on a percentage of between 21% and 66% not express any form of assurance conclusion thereon. Our (2022: 18% and 83%) of Group materiality dependent on the responsibility is to read the other information and, in doing size and our assessment of the risk of material misstatement so, consider whether the other information is materially of that component. Significant component materiality inconsistent with the financial statements or our knowledge ranged from £97 000 to £310 000 (2022: £66 000 to obtained in the course of the audit, or otherwise appears £264 000). In the audit of each component, we further to be materially misstated. If we identify such material applied performance materiality levels of 75% (2022: 75%) inconsistencies or apparent material misstatements, we are of the component materiality to our testing to ensure that required to determine whether this gives rise to a material the risk of errors exceeding component materiality was misstatement in the financial statements themselves. If, appropriately mitigated. based on the work we have performed, we conclude that there is a material misstatement of this other information, REPORTING THRESHOLD we are required to report that fact. We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £23 000 We have nothing to report in this regard. (2022:£18 500). We also agreed to report differences be- low 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 OTHER COMPANIES (GUERNSEY) LAW, 2008 REPORTING We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion: in the annual report other than the financial statements and • proper accounting records have not been kept by the our auditor’s report thereon. Our opinion on the financial Parent Company; or 56 INDEPENDENT AUDITOR’S REPORT ANDRADA ANNUAL REPORT 2023 • the financial statements are not in agreement with the governance; and 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. • Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and regulations. RESPONSIBILITIES OF DIRECTORS As explained more fully in the Statement of Directors’ We considered the significant laws and regulations directly relevant to specific assertions in the financial statements are those related to reporting framework (UK adopted responsibilities, the Directors are responsible for the international accounting standards, the Companies preparation of the financial statements and for being (Guernsey) Law, 2008, AIM rules and the various Mining satisfied that they give a true and fair view, and for such Regulations in Namibia), and terms and conditions included internal control as the Directors determine is necessary to in the Group’s exploration and evaluation licences and the enable the preparation of financial statements that are free mining licences. from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. EXTENT TO WHICH THE AUDIT WAS CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD Irregularities, including fraud, are instances of 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: NON-COMPLIANCE WITH LAWS AND REGULATIONS Based on: • Our understanding of the Group and the industry in which it operates; • Discussion with management and those charged with Our procedures in respect of the above included: • Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations; • Review of financial statement disclosures and agreeing to supporting documentation; • Holding discussions with the Directors and the Audit Committee and made enquiries about whether they were aware of any known or suspected instances of non-compliance with laws and regulations or fraud; and • Gaining an understanding of the of the laws and regulations relevant to the Group and the industry in which it operates, through discussion with Directors and our knowledge of the industry. FRAUD We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included: • Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; • Discussion among the engagement team as to how and where fraud might occur in the financial statements; and • Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these. Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue recognition and management override of controls. ANDRADA ANNUAL REPORT 2023 INDEPENDENT AUDITOR’S REPORT 57 Our procedures in respect of the above included: • Addressing the fraud risk in relation to revenue misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may recognition by testing one hundred percent of revenue involve deliberate concealment by, for example, forgery, transactions to supporting documentation, including misrepresentations or through collusion. There are inherent testing that revenue was recorded in the correct period limitations in the audit procedures performed and the by testing revenue transactions in the period proceeding further removed non-compliance with laws and regulations and preceding year end; • Addressing the risk of fraud through management the internal controls, by override of testing is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. appropriateness of journal entries made throughout the A further description of our responsibilities is available on year by applying specific criteria to select journals which the Financial Reporting Council’s website at: may be indicative of possible irregularities or fraud; • Held a meeting with forensic specialists to understand industry specific susceptible areas. Based on the input www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. from forensic team, we added two additional testing The engagement partner on the audit resulting in this criteria for journal entries testing. independent auditor’s opinion is Jack Draycott (Senior • Assessing the susceptibility of the Group’s financial statements to material misstatement, including how Statutory Auditor). fraud might occur by making enquiries of the Directors and the Audit Committee during the planning and USE OF OUR REPORT This report is made solely to the Company’s members, as execution phases of our audit to understand where a body, in accordance with Section 262 of the Companies they considered there to be susceptibility to fraud, (Guernsey) Law, 2008. Our audit work has been undertaken considering the risk of management override of controls so that we might state to the Parent Company’s members and relevant controls established to address risks those matters we are required to state to them in an identified to prevent or detect fraud. auditor’s report and for no other purpose. To the fullest • Agreeing the financial statement disclosures to extent permitted by law, we do not accept or assume underlying supporting documentation; responsibility to anyone other than the Parent Company • Made enquiries of Directors as to whether there was any correspondence from regulators in so far as the and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have correspondence related to the financial statements; • Assessing the judgements made in respect of going concern (see section on Material uncertainty relating formed. BDO LLP to going concern above) and Note 2 to the financial Chartered Accountants statements; and • Assessed whether the judgements made in accounting estimates were indicative of a potential bias (refer to London, United Kingdom 23 August 2023 key audit matters above and Note 2 to the financial BDO LLP is a limited liability partnership registered in England and statements). Wales (with registered number OC305127). We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including component engagement teams who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. For component engagement teams, we also reviewed the result of their work performed in this regard. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material 58 INDEPENDENT AUDITOR’S REPORT ANDRADA ANNUAL REPORT 2023 ANDRADA ANNUAL REPORT 2023 INDEPENDENT AUDITOR’S REPORT 59 FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 61 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 28 February 2023 Revenue Cost of Sales Gross (loss) / profit Administrative expenses Idle plant costs Other income Operating (loss) / profit Finance income Finance cost (Loss) / profit before tax Deferred tax movement Loss for the year Other comprehensive (loss) / income Items that will or may be reclassified to profit or loss: Exchange differences on translation of share-based payment reserve Exchange differences on translation of foreign operations Exchange differences on non-controlling interest Total comprehensive (loss) / income for the year Loss for the year attributable to: Owners of the parent Non-controlling interests Total comprehensive (loss) / profit for the year attributable to: Owners of the parent Non-controlling interests Loss per ordinary share Basic loss per share (in pence) Notes 4 5 6 8 9 23 Year ended 28 February 2023 Year ended 28 February 2022 £ 9 827 474 (10 509 418) £ 13 615 045 (9 302 518) (681 944) 4 312 527 (7 451 352) (3 674 662) (258 177) 52 196 (8 339 277) 39 054 (669 824) (8 970 047) 866 203 (8 103 844) (441) (2 298 674) 19 395 (10 383 564) (7 753 819) (350 025) (8 103 844) - 61 753 699 618 6 545 (316 365) 389 798 (864 199) (474 401) 767 526 779 (6 700) 46 445 (815 645) 341 244 (474 401) (10 052 933) (288 098) (330 631) (10 383 564) 334 543 46 445 10 (0.60) (0.08) 62 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 28 February 2023 28 February 2023 28 February 2022 Notes £ £ 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 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 Borrowings Lease liability Deferred tax liability Total non-current liabilities Current liabilities Trade and other payables Borrowings Lease liability Total current liabilities 11 12 13 14 15 20 21 22 23 18 16 19 9 17 16 19 7 279 593 26 723 218 34 002 811 5 147 782 19 150 092 24 297 874 2 667 193 2 592 770 8 205 705 1 451 933 3 953 382 7 365 379 13 465 668 12 770 694 47 468 479 37 068 568 56 883 908 (18 334 115) 50 307 1 049 663 (3 833 234) 35 816 529 (147 430) 38 655 078 (10 739 321) 192 632 704 828 (1 534 560) 27 278 657 183 200 35 669 099 27 461 857 965 578 3 287 121 707 355 - 295 151 4 095 405 167 216 861 784 4 960 054 5 419 556 3 655 126 2 915 917 268 283 6 839 326 2 969 833 1 024 736 192 586 4 187 155 Total equity and liabilities 47 468 479 37 068 568 GLEN PARSONS Non-executive Director 23 August 2023 ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 63 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 28 February 2023 Total equity at 28 February 2021 Loss for the year Other comprehensive income Transactions with owners: Issue of shares Share issue costs Share-based payments Share options exercised during the year Warrants exercised in the year Issue costs reclassified to retained earning Settlement of convertible loan note in shares Settlement of convertible loan note in cash Total equity at 28 February 2022 Loss for the year Other comprehensive income / (loss) Transactions with owners: Issue of shares Share issue costs Share-based payments Warrants exercised in the year Warrants modified in the year Total equity at 28 February 2023 Share capital Convertible loan note reserve Accumulated deficit £ £ £ 25 608 001 2 170 645 (10 030 679) - - 13 039 102 (793 775) - 308 545 63 150 - 430 055 - 38 655 078 - - 19 801 083 (1 962 253) - 390 000 - 56 883 908 - - - - - - - 29 355 (430 055) (1 769 945) - - - - - - - - (815 645) - - - - 117 642 18 716 (29 355) - - (10 739 321) (7 753 819) - - - - 159 025 - (18 334 115) 64 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 Warrant reserve Share-based payment reserve Foreign currency translation reserve £ 211 348 £ £ 743 615 (2 061 339) - - - - - - (18 716) - - - - 767 (10 000) - 88 088 (117 642) - - - - - 526 779 - - - - - - - - 192 632 704 828 (1 534 560) - - - - - (159 025) 16 700 50 307 - (441) - - 345 276 - - - (2 298 674) - - - - - Total £ 16 641 591 (815 645) 527 546 13 029 102 (793 775) 88 088 308 545 63 150 - - (1 769 945) 27 278 657 (7 753 819) (2 299 115) 19 801 083 (1 962 253) 345 276 390 000 16 700 Non-controlling interests £ (151 344) 341 244 (6700) - - - - - - - - 183 200 Total equity £ 16 490 247 (474 401) 520 846 13 029 102 (793 775) 88 088 308 545 63 150 - - (1 769 945) 27 461 857 (350 025) (8 103 844) 19 395 (2 279 720) - - - - - 19 801 083 (1 962 253) 345 276 390 000 16 700 1 049 663 (3 833 234) 35 816 529 (147 430) 35 669 099 ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 65 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 28 February 2023 Cash flows from operating activities (Loss) / profit before taxation Adjustments for: Fair value adjustment to customer contract Depreciation of property, plant and equipment Depreciation of intangible assets Share-based payments Equity-settled transactions Finance income Finance costs Changes in working capital: Decrease / (increase) in receivables Increase in inventory Increase in payables Net cash (used in) / generated from operating activities Cash flows from investing activities Purchase of intangible assets Purchase of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Finance income Finance costs Lease payments Net proceeds from issue of shares Settlement of convertible loan notes Proceeds from borrowings Repayment of borrowings Net cash generated from financing activities Net increase 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 Year ended 28 February 2023 Year ended 28 February 2022 Notes £ £ (8 970 047) 389 798 261 689 2 377 349 10 290 345 276 16 700 (39 054) 669 824 (137 019) 1 861 023 28 198 55 793 66 101 (6 545) 316 365 869 458 (2 866 192) (1 471 706) 997 469 (4 932 752) (418 556) 1 006 060 569 064 (2 580 267) (10 677 505) (1 442 774) (4 543 884) (13 257 772) (5 986 658) 39 054 (499 621) (363 959) 18 228 830 - 1 729 454 6 545 (224 061) (213 661) 12 548 248 (1 769 945) 5 024 727 (89 014) (3 907 086) 19 044 744 11 464 767 854 220 7 365 379 (13 894) 8 205 705 6 047 173 1 351 200 (32 994) 7 365 379 4 12 11 8 14 13 17 19 20 16 16 15 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 23 August 2023. GLEN PARSONS Non-executive Director 23 August 2023 66 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 28 February 2023 1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES operates from Illovo Edge Office Park, Ground Floor, Building 3, Corner Harries and Fricker Road, Illovo, Johannesburg, Andrada Mining Limited (“Andrada”) was incorporated and domiciled in Guernsey on 1 September 2017, and admitted to the AIM market in London on 9 November 2017. The Company’s registered office is PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH, and it 2116, South Africa. These financial statements are for the year ended 28 February 2023 and the comparative figures are for the year ended 28 February 2022. As at 28 February 2023, the Andrada Group comprised: Company Andrada 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 Uis Tin Mining Rwanda Limited2 1 Held directly by Andrada 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 Equity holding and voting rights Country of incorporation Nature of activities N/A 100% 100% 100% 100% 85% 100% 74% 50% 100% 74% 100% Guernsey Guernsey Ultimate holding Company Holding Company South Africa Group support services Namibia Namibia Namibia South Africa South Africa South Africa South Africa South Africa Tin & Tantalum exploration Tin, Tantalum & Lithium operations Tin, Tantalum & Lithium operations Holding Company Tin exploration Tin exploration Holding Company Property owning Rwanda Tin & Tantalum exploration ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 67 These financial statements are presented in Pound Sterling expansion project, as well as the additional production on (£) because that is the currency in which the Group has the successful completion of the continuous improvement raised funding on the AIM market in the United Kingdom. capital project, which will be started upon receipt of the Furthermore, Pound Sterling (£) is the functional currency of funding from the Development Bank of Namibia, this is the ultimate holding Company, Andrada Mining Limited. The conditional and not yet completed. In addition, the Group Group’s key subsidiaries, AfriTin Namibia and UTMC, use the successfully raised £7.7m through the issue of 77 unsecured Namibian Dollar (N$) as their functional currency. The year convertible loan notes of £100 000 each on 18 July 2023. end spot rate used to translate all Namibian Dollar balances This further supports the liquidity requirements of the Group was £1 = N$22.22 and the average rate for the financial year and its ability to meet its obligations in the ordinary course was £1 = N$20.22. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The consolidated financial statements have been prepared in accordance with UK adopted international accounting standards. The consolidated financial statements also comply with the AIM Rules for Companies, NSX Listing Requirements and the Companies (Guernsey) Law, 2008 and show a true and fair view. The significant accounting policies applied in preparing these consolidated financial statements are set out below. These policies have been consistently applied throughout the period. The consolidated financial statements have been prepared under the historical cost convention except as where stated. GOING CONCERN The Group closely monitors and manages its liquidity risk and day-to-day working capital requirements. Cash forecasts are regularly produced, considering the global logistical challenges around sales to ensure that there is sufficient cash within the Group to meet its obligations. The Group runs sensitivities for different scenarios, including but not limited to changes in commodity prices and exchange rates. The Group also routinely monitors the covenants associated with the borrowing facilities and proactively engages with Standard Bank, the lender, where there is any risk. Although the bank granted the Group a waiver on all covenants on the 28 February 2023 measurement date, based on the year-to- date production profile and latest forecast, the Group will be able to meet its covenant obligations for the testing period to February 2024. For the purpose of assessing going concern, the directors have prepared forecasts to February 2025. The main estimates considered as part of management’s going concern assessment are production profiles, tin, lithium and tantalum prices, exchange rates and committed capital. The production profile is based on the Group’s current achieved production post the completion of the of business until February 2025. The Group also retains the ability to flex its ongoing exploration and metallurgical capital expenditures in line with cash availability as well as macro-economic circumstances. Based on the forecasts, additional funding will be required within the next 12 months for the purpose of envisaged capital and exploration projects. As the Group is also entering a new market with reference to lithium and tantalum sales, which are close to near-term production, the cash flow forecast has assumed the successful completion of the lithium pilot plant and the tantalum circuit in order to deliver the business strategy. The need for further funding would be required for additional exploration and capital projects as well as studies related to the feasibility of the future growth phases. The Group believes it has several options available to it, including but not limited to, use of the overdraft facility, restructuring of the debt, additional debt or equity, cost reduction strategies as well as potential offtake arrangements. Management is already at an advanced stage of securing bank funding mentioned above as well as other finance for the next 12 months. On the 14th of August 2023, the Group has entered into a conditional binding agreement to secure a blended funding package for the amount of US$25m from Orion Resource Partners to further support the capital investment strategy of the Group. Accordingly, the Directors continue to adopt the going concern basis in preparing the consolidated financial information. Notwithstanding the above, these circumstances indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, that the Group may be unable to realise its assets or settle its liabilities in the ordinary course of business. As a result of their review, and despite the aforementioned material uncertainty, the Directors have confidence in the Group’s forecasts and have a reasonable expectation that the Group will continue in operational existence for the going concern assessment period and have therefore used the going concern basis in preparing these consolidated financial statements. 68 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 BASIS OF CONSOLIDATION Subsidiaries Smelting and Refining Company (“Thaisarco”). The Namibian operating segment has a non-current asset balance of Subsidiaries are all entities (including structured entities) £25 442 966 (consisting of property, plant and equipment of over which the Group has control. The Group controls £21 824 522 and intangible assets of £3 618 444). The Group an entity when the Group is exposed to, or has rights to, will continue to monitor their operating segments and variable returns from its involvement with the entity and provide the necessary disclosure going forward. has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the FOREIGN CURRENCIES date on which control is transferred to the Group. They are Functional and presentational currency deconsolidated from the date that control ceases. The individual financial statements of each Group Company Inter-Company transactions, balances and unrealised gains/losses on transactions between Group companies are eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. Non-controlling interests Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling shareholders that present ownership interests entitling their holders to a proportionate share of the net assets upon liquidation are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. SEGMENT REPORTING Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the management steering committee that makes strategic decisions. The Group previously reported a Namibian and a South African operating segment. In the 2021 financial year, the Group made the decision to impair the full value of the South African mining licences as it chose to focus on developing its Namibian assets and it did not intend to incur any further expenditure on its South African licences. The Group now has a single operating segment, consisting of the Namibian operations. During the financial year, the Namibian operations earned £10 024 487 revenue from the sale of tin concentrate to the Group’s customer, Thailand are prepared in the currency of the primary economic environment in which that Company operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group Company are expressed in Pound Sterling, which is the functional currency of the Group, and the presentation currency for the consolidated financial statements. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation date where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. 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 that balance sheet; ii) 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 iii) all resulting exchange differences are recognised in other comprehensive income. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 69 REVENUE RECOGNITION Thaisarco shall pay an additional 20% provisional payment IFRS 15 “Revenue from Contracts with Customers” establishes upon presentation of the original bill of lading. Title shall pass to a comprehensive framework for determining whether, how Thaisarco when UTMC receives the 70% provisional payment. 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 During the financial year, the Group concluded sales under Option 3. that reflects the consideration to which the entity expects Revenue is recognised at a point in time when title and control to be entitled in exchange for those goods or services. The of the goods has transferred to the customer, which is when Group generates revenue from its primary activity, the sale the concentrate arrives at Songkhla Port in Thailand under of tin concentrate, and it continued to generate immaterial Option 1 or when provisional payment is received by UTMC revenue from the sale of sand. under Option 2 and Option 3. There is limited judgement needed to identify the point at which control passes: once The Group produces and sells tin concentrate from its Uis Tin physical delivery of the products to the agreed location has Mine in Namibia. Once concentrate has been produced at the occurred, the Group no longer has physical possession of Uis plant, it is sampled, bagged and loaded into containers the products. At this point, the Group will have a present for transportation to the port in Walvis Bay for shipment. right to payment and retains none of the significant risks and The Group currently has an offtake agreement with its customer, Thailand Smelting and Refining Company (“Thaisarco”), which was signed on 1 August 2019. This contract was renewed on 1 December 2020 for a further three years. As per the contract, Thaisarco pays the Group on the basis of actual tin content in the concentrate per 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 30 market days after arrival at Thaisarco’s works. The lower of the cash price and the three month forward-looking price is Thaisarco’s analysis, at the London Metal Exchange price used in these calculations. less treatment charges, unit deductions and impurity charges. The Group can elect for the sale of each shipment to occur under the following terms: 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 Option 1: Standard provisional payment rewards of the goods in question. Thaisarco shall pay 90% provisional payment on the basis of actual tin content as per their own analysis. Payment is to be made within 10 working days after the arrival of concentrate at Thaisarco’s works. Title shall pass to Thaisarco when the concentrate arrives at the Songkhla Port in Thailand. Option 2: Provisional payment option against original bill of lading Thaisarco shall pay 90% provisional payment on the basis of provisional tin content per UTMC’s analysis. The provisional payment shall be done against presentation of a provisional invoice and an original bill of lading. Title shall pass to Thaisarco when UTMC receives the 90% provisional payment. Option 3: Provisional payment option against warehouse holding certificate Thaisarco shall pay 70% provisional payment on the basis of provisional tin content per UTMC’s analysis. The provisional payment shall be done against presentation of a provisional invoice and an original warehouse holding certificate. 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. 70 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 Deferred tax is calculated at the tax rates that are expected facts and circumstances in their assessment of whether the to apply to the year when the asset is realised or the liability Group’s exploration assets may be impaired: 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 • whether the period for which the Group has the right to explore in a specific area has expired during the period credited or charged to other comprehensive income, or will expire in the near future, and is not expected to in which case the deferred tax is also dealt with in other be renewed; or comprehensive income. • whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific area INTANGIBLE EXPLORATION AND EVALUATION ASSETS is neither budgeted for nor planned for; or All costs associated with mineral exploration and evaluation are capitalised as intangible exploration and evaluation • whether exploration for and evaluation of mineral resources in a specific area have not led to the discovery assets and subsequently measured at cost. These include of commercially viable deposits and the Group has the costs of: acquiring prospecting licences; mineral decided to discontinue such activities in the specific production licences and annual licence fees; rights to explore; area; or topographical, geological, geochemical and geophysical studies; and exploratory drilling, trenching, sampling and • whether sufficient data exists to indicate that although a development in a specific area is likely to proceed, other activities to evaluate the technical feasibility and the carrying amount of the exploration and evaluation commercial viability of extracting a mineral resource. assets is unlikely to be recovered in full from successful development or by sale. If an exploration project is successful, the related expenditures will be transferred at cost to property, plant If any such facts or circumstances are noted, the Group, and equipment and depreciated over the estimated life of as a next step, performs an impairment test in accordance the commercial ore reserves on a unit of production basis with the provisions of IAS 36 “Impairment of Assets”. In (with this charge being taken through profit or loss). Where such circumstances, the aggregate carrying value of the capitalised costs relate to both development projects and mining exploration and evaluation assets is compared to the exploration projects, the Group reclassifies a portion of expected recoverable amount of the cash-generating unit. the costs which are considered attributable to near-term The recoverable amount is the higher of value in use and the production based on a percentage of the ore resource fair value less costs to sell. expected to be mined in the relevant phase. Where a project does not lead to the discovery of commercially SHARE CAPITAL AND RESERVES viable quantities of mineral resources and is relinquished, i) Warrant reserve abandoned, or is considered to be of no further commercial The warrants issued by the Group are recorded at fair value value to the Group, the related costs are recognised in the on initial recognition net of transaction costs. The fair value income statement. of warrants granted is recognised as an expense or as share issue costs based on their nature, with a corresponding The recoverability of deferred exploration costs is increase in equity. The fair value of the warrants granted dependent upon the discovery of economically viable is measured using the Black Scholes valuation model, ore reserves, the ability of the Group to obtain necessary taking into account the terms and conditions under which financing to complete the development of ore reserves and the options were granted. The amount recognised as an future profitable production or proceeds from the extraction expense is adjusted to reflect the actual number of warrants or disposal thereof. that vest. IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS ii) Share-based payment reserve Intangible exploration and evaluation assets are reviewed Where equity-settled share options are awarded to directors regularly for indicators of impairment following the guidance or employees, the fair value of the options at the date of in IFRS 6 “Exploration for and Evaluation of Mineral Resources” grant is charged to the statement of comprehensive income and tested for impairment where such indicators exist. over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity In accordance with IFRS 6, the Group considers the following instruments expected to vest at each reporting date so ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 71 that, ultimately, the cumulative amount recognised over The estimated useful lives, residual values and depreciation the vesting period is based on the number of options that methods are reviewed at each year end and adjusted eventually vest. Non-vesting conditions and market vesting if necessary. conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, Gains or losses on disposal are included in profit or loss. a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not An asset’s carrying amount is written down immediately adjusted for failure to achieve a market vesting condition or to its recoverable amount if the asset’s carrying amount is where a non-vesting condition is not satisfied. greater than its estimated recoverable amount. Where the terms and conditions of options are modified MINING ASSET – STRIPPING before they vest, the increase in the fair value of the options, In open pit mining operations, it is necessary to incur costs measured immediately before and after the modification, is to remove overburden and other mine waste materials in also charged to the statement of comprehensive income order to access the ore body (“stripping costs”). During over the remaining vesting period. the development of a mine, stripping costs are capitalised and included in the carrying amount of the related mining Where equity instruments are granted to persons other property. During the production phase of a mine, stripping than employees, the statement of comprehensive income is costs will be recognised as an asset only if the following charged with the fair value of goods and services received. conditions are met: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at historical cost • it is probable that the future economic benefit (improved access to the ore body) associated with the stripping less accumulated depreciation. activity will flow to the entity; Depreciation is provided at rates calculated to write off the • the entity can identify the component of the ore body (mining phases) for which access has been improved; cost less the estimated residual value of each asset over its and expected useful economic life. The applicable rates are: • the costs relating to the stripping activity associated with that component can be measured reliably. • The mining assets are depreciated using the units of production method from the point that commercial Stripping costs incurred and capitalised during the development and production phase are depreciated using the unit-of-production method over the reserves and, in production was achieved. This reflects the production some cases, a portion of resources of the area that directly activity in the period as a proportion of the total mining benefit from the specific stripping activity. Costs incurred reserve. Where the units of production method is used, for regular waste removal that do not give rise to future the assets are depreciated based on a rate determined economic benefits are considered as costs of sales. by the tonnes of ore processed divided by the estimate of the mineral reserve. RIGHT-OF-USE ASSET • Short-lived assets which are used in the mining and processing plant are depreciated over a period of between one and ten years. 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 • Right-of-use assets are depreciated over the period of of an identified asset, for a period of time, in exchange for the lease contract. • Computer equipment is depreciated over three years. • Furniture is depreciated over five years. • Vehicles are depreciated over four years. • Mobile equipment is depreciated over ten years. • Buildings are depreciated over twenty years. consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether: • the contract involves the use of an identified asset. The asset may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier Land and mining assets under construction are not depreciated. has a substantive substitution right, then the asset is not identified; 72 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 • 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 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 rights that are most relevant to changing how and for capital expenditure. The capital expenditure included in the what purposes the asset is used. In rare cases where the impairment model does not include capital expenditure to decision about how and for what purposes the assets enhance the asset performance outside of the existing LoM are used is predetermined, the Group has the right to plan. The ore tonnes included in the LoM plan are those as direct the use of the asset if either: per the Reserve Statement, which management considers • - the Group has the right to operate the asset; or • - the Group designed the asset in a way that predetermines economically viable. how and for what purposes it will be used. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the At inception or on reassessment of a contract that contains carrying amount of the asset (or cash-generating unit) is a lease component, the Group allocates the consideration reduced to its recoverable amount. An impairment loss is in the contract to each lease component on the basis of its recognised as an expense immediately, unless the relevant relative stand-alone price. asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease to the The right-of-use asset is initially measured at the present extent that it reverses gains previously recognised in other value of the remaining lease payments, discounted using the comprehensive income. incremental borrowing rate. The right-of-use asset is subsequently depreciated using reverse, the effect of the impairment charge is also reversed the straight-line method from the commencement date to as a credit to the income statement, net of any depreciation the end of the lease term. In addition, the right-of-use asset that would have been charged since the impairment. Where conditions giving rise to impairment subsequently is annually assessed for impairment and will be adjusted for certain re-measurements of the lease liability. INVENTORIES Inventory consists of tin concentrate on hand, the run of IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT mine stockpile, and consumable items. At each statement of financial position date, the Group reviews the carrying amounts of its tangible assets to The tin concentrate is carried at the lower of cost or net determine whether there is any indication that those assets realisable value. The cost of the concentrate includes have suffered an impairment loss. If any such indication direct materials, direct labour, depreciation, and overhead exists, the recoverable amount of the asset is estimated costs relating to processing and engineering activities. Net in order to determine the extent of the impairment loss, if realisable value is the estimated selling price net of any any. Where the asset does not generate cash flows that are estimated selling costs in the ordinary course of business. independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which The run of mine stockpile is carried at the lower of cost the asset belongs. or net realisable value. The cost of the stockpile includes direct materials, direct labour, depreciation, and overhead Where there has been a change in economic conditions that costs relating to mining activities. Net realisable value is the indicate a possible impairment in a cash-generating unit, estimated selling price net of necessary processing costs and the recoverability of the net book value relating to that unit any estimated selling costs in the ordinary course of business. is assessed by comparison with the estimated discounted future cash flows based on management’s expectations of Consumables are valued at the lower of cost (determined future commodity prices and future costs. on the weighted average basis) and net realisable value. Cost comprises all costs of purchase, costs of conversion, The recoverable amount is determined on the fair value less and other costs incurred in bringing the inventories to their cost to develop basis. In assessing the recoverable amount, present location and condition. Replacement cost is used as the expected future post-tax cash flows from the asset are the best available measure of net realisable value. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 73 FINANCIAL INSTRUMENTS Financial instruments are recognised in the Group’s Under its offtake arrangement, the Group receives a statement of financial position when the Group becomes a provisional payment upon satisfaction of its performance party to the contractual provisions of the instrument. obligations based on the tin price at that date. This occurs FINANCIAL ASSETS The Group 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. The classification depends on the Group’s business model 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 revenue. Trade and other receivables are classified as a current asset as these are expected to be settled within a year. for managing the financial assets and the contractual terms CASH AND CASH EQUIVALENTS of the cash flows. Financial assets are classified as at amortised cost only if the asset is held to collect the contractual cash flows and the contractual terms of the asset give rise to cash flows that are solely payments of principal and interest. At subsequent reporting dates, financial assets at amortised cost are measured at amortised cost less any impairment losses. For assets measured at fair value, gains and losses will be recorded in profit or loss. IMPAIRMENT OF FINANCIAL ASSETS Cash and cash equivalents comprise cash at hand and deposits on a term of not greater than three months. FINANCIAL LIABILITIES Financial liabilities include trade and other payables, borrowings, and other longer-term financing, classified into one of the following categories: • Fair value through profit or 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 The Group assesses on a forward-looking basis the expected credit losses, defined as the difference between fair value through profit or loss. • Financial liabilities carried at amortised cost the contractual cash flows and the cash flows that are expected to be received, associated with its assets carried TRADE AND OTHER PAYABLES at amortised cost. The impairment methodology applied Trade and other payables are initially recognised at fair depends on whether there has been a significant increase in value and are subsequently measured at amortised cost, credit risk. For trade receivables only, the simplified approach calculated using the effective interest rate method. permitted by IFRS 9 “Financial Instruments” is applied, which requires expected lifetime losses to be recognised from BORROWINGS initial recognition of the receivables. Losses are recognised Interest-bearing debt is initially recorded at fair value less in the income statement. When a subsequent event causes transaction costs, and is subsequently measured at amortised the amount of impairment loss to decrease, the decrease in cost, calculated using the effective interest rate method. impairment loss is reversed through the income statement. To measure the expected credit losses, trade receivables relate to the financing of construction or development of have been grouped based on shared credit risk characteristics qualifying assets in which case they are capitalised up to the and the days past due. date when the qualifying asset is ready for its intended use. Borrowing costs are expensed as incurred except where they TRADE AND OTHER RECEIVABLES Trade and other receivables are initially recognised at the fair value of the consideration receivable. DERECOGNITION A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily Trade and other receivables are subsequently measured at derecognised when: amortised cost less impairment or at fair value through profit or loss. 74 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 • the rights to receive cash flows from the asset have incremental borrowing rate to achieve a constant rate of expired; or interest on the remaining balance of the liability. • the Group has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party, and either • - the Group has transferred substantially all the risks and rewards of the asset, or • - the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. 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 A financial liability (in whole or in part) is derecognised when areas of estimation uncertainty considered by management the Group has extinguished its contractual obligations, it in preparing the financial statements is provided below. expires, or it is cancelled. Any gain or loss on derecognition is taken to the profit or loss. REHABILITATION PROVISION 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 net present value of estimated future rehabilitation costs the revision affects both current and future years. is provided for in the financial statements and capitalised within property, plant and equipment on initial recognition. i) Going concern and liquidity Rehabilitation will generally occur on or after closure of a mine. Significant estimates were required in forecasting cash flows used in the assessment of going concern including tin and Initial recognition is at the time that the construction or tantalum prices, the levels of production, operating costs, and disturbance occurs, and thereafter as and when additional capital expenditure requirements. For further details, refer to construction or disturbances take place. The estimates are going concern considerations laid out earlier in Note 2. reviewed annually to take into account the effects of inflation and changes in the estimated cost of the rehabilitation ii) Decommissioning and rehabilitation obligations works, and are discounted using rates that reflect the time Estimating the future costs of environmental and rehabilitation value of money. Annual increases in the provision due to the obligations is complex and requires management to make unwinding of the discount are recognised in the statement estimates and judgements, as most of the obligations will be of comprehensive income as a finance cost. The present fulfilled in the future and contracts and laws are often not clear value of additional disturbances and changes in the estimate regarding what is required. The resulting provisions (see Note 18) of the rehabilitation liability are recorded to mining assets are further influenced by changing technologies, and by political, against an increase/decrease in the rehabilitation provision. environmental, safety, business, and statutory considerations. 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. 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 rate method. Lease payments are apportioned between the finance charges and reduction of the lease liability using the 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. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 75 The carrying amount of the rehabilitation obligations for the value less cost to develop basis and includes assessments Group at 28 February 2023 was £965 578 (2022: £295 151). of different scenarios associated with capital improvements In determining the amount attributable to the rehabilitation and expansion opportunities. The impairment testing liability, management used a risk-free discount rate of performed by management did not result in an impairment. 13% (2022: 10%), an inflation rate of 5.3% (2022: 5%) and The forecasts require estimates regarding forecast tin, an estimated mining period of 13.4 years (2022: 17 years), tantalum and lithium prices, ore resources, production, being the Phase 1 expansion life of mine. The decrease in the operating and capital costs. mining period is as a result of the increased mining volumes post the Phase 1 Expansion. A 1% increase or decrease in the inflation rate used would result in an increase of £139 637 or a decrease of £123 812 difference in the liability respectively. A 2% increase or decrease in the discount rate used would result in a decrease of £175 466 or increase of £ 322 516 difference in the liability respectively. iii) Impairment indicator assessment for exploration and evaluation assets Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including specific impairment indicators prescribed in IFRS 6: Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future tin prices, future capital expenditures, environmental and regulatory restrictions, and the successful renewal of Under the base case forecast scenario, management used life of mine of 30 years a forecast tin price of US$26 000, tantalum price of US$150 000, lithium price of US$2 960 for FY 2024, US$1 619 for FY 2025, US$1 429 for FY2026 and US$1 051 from FY 2027 onwards, discount rate of 11.5% post-tax real rate and inflation rate of 4.5%. The forecast indicates sufficient headroom as at 28 February 2023. Life of mine is assumed to be 30 years based on the measured resources and based on assumption that the licences will be renewed. One of the complex judgements in determining the recoverable amount of mining assets is an estimation of the future tin price. The estimation of future tin price is subject to uncertainty considering the market volatility. Management has therefore compared the forecast tin price with the economic consensus estimates and found that the forecast tin prices are within the range suggested by economic consensus estimates. Furthermore, a sensitivity analysis was performed by lowering the forecast tin prices by 5% which also indicated sufficient headroom as at 28 licences. The directors have concluded that there are no February 2023. indications of impairment in respect of the carrying value of Namibian intangible assets at 28 February 2023 based on As an additional test, management performed certain planned future development of the Namibian projects, and sensitivity calculations. These included lowering plant current and forecast tin prices. Exploration and evaluation recovery by 5% raising the discount rate by 2% and assets are disclosed fully in Note 11. and increasing operating costs by 5%. In each of these circumstances, the forecast indicated sufficient headroom iv) Impairment assessment for property, plant as at 28 February 2023. and equipment Management have reviewed the Uis Mine for indicators of v) Depreciation impairment and have considered, among other factors, the Judgement is applied in making assumptions about the operations to date at the Uis Tin Mine including production depreciation charge for mining assets when using the unit- from the lithium pilot plant, forecast commodity prices, of-production method in estimating the ore tonnes held in production profile, inflation rate, post-tax real discount reserves. The relevant reserves are those included in the rate and market capitalisation of the Group. The drilling current approved LoM plan which relates to the Phase 1 and testing of lithium, decision on lithium production, expansion. the initial steps taken prior 28 February 2023 and the construction of pilot plant that was concluded in July 2023. Therefore, production from the lithium pilot plant is included in the impairment review of the mining asset. Management identified the reduction in the tin price as an indicator of impairment. In undertaking the impairment review, management have also reviewed the underlying LoM valuation model for Uis. The LoM valuation model is on a fair 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. 76 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 vi) Capitalisation and depreciation of waste stripping The Group has elected to capitalise the costs of waste ix) Determining the lease term stripping activities as these are necessary to allow improved In determining the lease term, management considers all access to the ore and, therefore, will result in future facts and circumstances that create an economic incentive to economic benefits. The costs of drilling, blasting and load and haul of waste material is capitalised until such time that the underlying ore is used in production. These costs are then expensed on a proportional basis. The capitalised costs are included in the mining asset in property, plant and equipment and are expensed back into the statement of comprehensive income as depreciation. Capitalisation of waste stripping requires exercise, or not to exercise, an extension option. Extension options are only included in the lease term where the Group 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: • historical lease durations; • costs incurred in replacing the leased asset; • possible business disruption due to replacing the leased the Group to make judgements and estimates in determining asset; the amounts to be capitalised. These judgements and estimates include, amongst others, the expected life of mine • likelihood of extension of the lease – if there are significant penalties to terminate, then it’s reasonably stripping ratio for each separate open pit, the determination certain that the Group will extend. of what defines separate pits, and the expected volumes to be extracted from each component of a pit for which the stripping asset is depreciated. vii) Determination of ore reserves The estimation of ore reserves primarily impacts the depreciation charge of evaluated mining assets, which are depreciated based on the quantity of ore reserves. Reserve volumes are also used in calculating whether an impairment charge should be recorded where an impairment indicator exists. The Group estimates its ore reserves and mineral resources based on information, compiled by appropriately qualified persons, relating to geological and technical data on the size, depth, shape, and grade of the ore body and related to suitable production techniques and recovery rates. The estimate of recoverable reserves is based on factors such as tin, lithium and tantalum prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body. 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. x) Determining the incremental borrowing rate to measure lease liabilities The interest rate implicit in leases is not available, therefore the Group uses the relevant incremental borrowing rate (IBR) to measure its lease liabilities. The IBR is estimated to be the interest rate that the Group would pay to borrow: • over a similar term; • with similar security; • the amount necessary to obtain an asset of a similar value to the right of use asset; and • in a similar economic environment. The IBR, therefore, is considered to be the best estimate of the incremental rate and requires management’s judgement as there are no observable rates available. There are numerous uncertainties inherent in estimating ore xi) Determining the fair value of trade receivables reserves and mineral resources. Consequently, assumptions classified at fair value through profit or loss that are valid at the time of estimation may change The consideration receivable in respect of certain sales for significantly if or when new information becomes available. viii) Valuation of inventories 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 Judgement is applied in making assumptions about the value to pricing adjustments with reference to market prices of inventories and inventory stockpiles, including tin prices, at the date of finalisation. Under the Group’s accounting plant recoveries and processing costs, to determine the extent policies, the fair value of the consideration is determined, to which the Group values inventory and inventory stockpiles. and the remaining receivable is adjusted to reflect fair The Group uses forecast tin prices to determine the net value. Management estimated the forward price based on realisable value of the ROM stockpile and the tin concentrate the LME three month tin price that is expected when the inventory on hand at year end. Inventory stockpiles are open shipments will be finalised. The forward prices used by measured using actual mining and processing costs. management were US$23 866 and US$24 469 depending on the date the shipments were finalised. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 77 As at 28 February 2023 the Group, using forward price of and interpretations had a significant effect on the Group US$24 469 and US$23 866 based on when shipments will because they are either not relevant to the Group’s activities be finalised and recognised as a receivable at fair value or require accounting which is consistent with the Group’s through profit or loss of £126 125 (2022: £812 594). current accounting policies. 3. ADOPTION OF NEW AND REVISED STANDARDS A number of new and amended standards and interpretations issued by IASB have become effective for the first time for financial periods beginning on (or after) 1 March 2022 and have been applied by the Group in these financial statements. None of these new and amended standards ACCOUNTING STANDARDS AND INTERPRETATIONS NOT APPLIED There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods and which have not been adopted early. 4. REVENUE Revenue from the sale of tin Revenue from the sale of sand Total revenue from customers Revenue – change in fair value of customer contract Total revenue Year ended 28 February 2023 Year ended 28 February 2022 £ £ 10 024 487 13 717 620 64 676 34 444 10 089 163 13 752 064 (261 689) 9 827 474 (137 019) 13 615 045 The revenue from the sale of tin and sand is recognised at the point in time at which control transfers. Other revenue relates to the change in the fair value of amounts receivable under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date. Refer to Note 2 for further details. 5. COST OF SALES Costs of production Smelter charges Logistics costs Government royalties Year ended 28 February 2023 Year ended 28 February 2022 £ 9 334 142 757 459 106 626 311 191 £ 8 057 083 748 892 126 086 370 457 10 509 418 9 302 518 78 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 6. ADMINISTRATIVE EXPENSES The profit / (loss) for the year has been arrived at after charging / (crediting): Staff costs Depreciation of property, plant & equipment Professional fees Travelling expenses Uis administration expenses Auditor’s remuneration Foreign exchange (gains)/losses IT costs Other costs Year ended 28 February 2023 Year ended 28 February 2022 £ £ 3 025 406 1 269 882 366 190 1 201 984 350 884 916 238 190 000 696 621 285 408 418 621 221 948 621 379 96 956 660 476 95 000 (15 109) 154 748 569 383 7 451 352 3 674 663 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. 7. STAFF COSTS Staff costs capitalised under property, plant and 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 Share-based payment charge capitalised under intangible assets Share-based payment charge recognised as administrative expenses Share issue charge Year ended 28 February 2023 Year ended 28 February 2022 £ 1 044 009 413 939 2 680 130 1 796 229 - - 345 276 - £ 607 622 171 793 1 182 228 1 317 548 18 892 6 076 80 253 7 401 6 279 583 3 391 813 Key management personnel have been identified as the Board of Directors, Frans van Daalen (Chief Strategy Officer of the Group) and Hiten Ooka (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 219 (2022: 165) with an average total cost per employee for the year of £23 102 (2021: £20 510). Emoluments of £305 270 including £90 081 of share options and shares to be issued (2022: £183 712 including £13 258 of share options and shares to be issued) were paid in respect of the highest-paid director during the year. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 79 8. FINANCE COST Interest on lease liability Interest on environmental rehabilitation liability Bank interest Interest on loan notes Amortisation of warrant charge Interest paid on prepayments from customer Year ended 28 February 2023 Year ended 28 February 2022 £ 156 118 14 085 338 812 - - 160 809 669 824 £ 42 630 12 080 102 655 68 836 37 594 52 570 316 365 9. TAXATION The tax expense represents the sum of the tax currently payable and deferred tax. Factors affecting tax for the year: The tax assessed for the year at the Guernsey corporation tax charge rate of 0%, as explained below: Year ended 28 February 2023 Year ended 28 February 2022 £ £ (Loss) / profit before taxation (8 970 048) 389 798 (Loss) / profit before taxation multiplied by the Guernsey corporation tax charge rate of 0% - - Effects of: Differences in tax rates (overseas jurisdictions) Tax losses carried forward Movement in deferred tax Tax for the year (1 791 238) 1 791 238 866 203 866 203 (525 598) 525 598 (864 199) (864 199) Accumulated losses in the subsidiary undertakings for which (February 2022: loss per share of 0.08 pence), is calculated there is an unrecognised deferred tax asset are £8 100 173 using the total loss for the period attributable to the owners (2022: £4 290 665). of the Company of £7 753 819 (February 2022: £815 645) and the weighted average number of shares in issue during A deferred tax asset of £1 694 362 was not recognised in the period of 1 291 331 804 (February 2022: 1 064 247 295). the Namibian entities. Due to the sizeable assessed losses that have accumulated in these entities, management has Due to the loss for the period, the diluted loss per share is the decided not to recognise the deferred tax asset in the 2023 same as the basic loss per share. The number of potentially financial year as the timing of future taxable profits is not dilutive ordinary shares, in respect of share options, certain at this stage. warrants and shares to be issued as at 28 February 2023 is 77 636 918 (February 2022: 76 261 762). These potentially 10. LOSS PER SHARE FROM CONTINUING OPERATIONS dilutive ordinary shares may have a dilutive effect on future The calculation of a basic loss per share of 0.60 pence earnings per share. 80 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 11. INTANGIBLE ASSETS Cost As at 28 February 2021 Additions for the year - other expenditure Transfer to mining asset Transfer to mining asset under construction Exchange differences As at 28 February 2022 Additions for the year - other expenditure Exchange differences As at 28 February 2023 Accumulated Depreciation As at 28 February 2021 Charge for the period Exchange differences As at 28 February 2022 Charge for the period Exchange differences As at 28 February 2023 Net Book Value As at 28 February 2023 As at 28 February 2022 As at 28 February 2021 Exploration and evaluation assets £ 5 124 686 1 577 065 (1 058 602) (678 467) 91 047 5 055 729 2 580 267 (431 234) 7 204 762 Computer software £ 115 775 - - - 4 397 120 172 - (7 858) 112 314 Exploration and evaluation assets Computer software £ - - - - - - - £ - 28 198 (79) 28 119 10 290 (926) 37 483 Exploration and evaluation assets Computer software £ 7 204 762 5 055 729 5 124 686 £ 74 831 92 053 115 775 Total £ 5 240 461 1 577 065 (1 058 602) (678 467) 95 444 5 175 901 2 580 267 (439 092) 7 317 076 Total £ - 28 198 (79) 28 119 10 290 (926) 37 483 Total £ 7 279 593 5 147 782 5 240 461 The amounts for intangible exploration and evaluation approval to commence development and construction of the assets represent costs incurred on active exploration project. Furthermore, the Group transferred the purchase projects. Amounts capitalised are assessed for impairment price of the Uis mining licence ML134. The pegmatites indicators under IFRS 6 at each year end as detailed in the covered by this mining licence are currently being mined at Group’s accounting policy. the Uis Mine. As mining activities are actively taking place and revenue is being generated from the ore that has been During the prior year, the Group transferred the costs mined on this licence area, management concluded that the incurred on the Phase 1 Stage II Definitive Feasibility Study value of this licence must be moved to property, plant and (DFS) from exploration and evaluation assets to mining equipment, in the mining asset category during the prior year. asset under construction. It was determined that the project had reached the stage of being commercially viable and The directors have concluded that there are no indicators of technically feasible, therefore, the transfer from intangible impairment in respect of the carrying value of the Namibian assets to property, plant and equipment was deemed exploration and evaluation assets at 28 February 2023 necessary. Demonstration of commercial viability and based on planned future development of the projects and technical feasibility coincided with a Board decision and current and forecast tin, lithium and tantalum prices. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 81 12. PROPERTY, PLANT AND EQUIPMENT Land Mining asset under construction Mining asset Mining asset - Stripping Decommissioning asset Cost As at 28 February 2021 11 862 - 13 675 153 - Additions for the year Disposals for the year Transfer from exploration and evaluation asset - - - 2 600 997 728 150 1 335 861 - - 678 467 1 058 602 - - 167 043 95 585 - - Foreign exchange differences 450 304 389 147 863 (3 733) 6 076 As at 28 February 2022 12 312 3 583 853 15 609 768 1 332 128 268 704 7 264 184 984 390 1 531 721 750 363 Additions for the year Disposals for the year Transfer between categories of assets Foreign exchange differences As at 28 February 2023 - - - (1 051) 11 261 - (309 259) (9 532 184) 9 532 184 - - (74 979) (2 154 393) (251 622) 1 240 874 23 662 690 2 612 227 - - (90 495) 928 572 - 9 461 (26) 9 435 15 542 (2 205) 22 772 - - - - - - - - - - - - - - 723 982 1 115 292 20 501 1 859 775 964 857 (225 323) - 489 372 (1 368) 488 004 967 435 (128 759) 2 599 309 1 326 680 Accumulated Depreciation As at 28 February 2021 Charge for the year Foreign exchange differences As at 28 February 2022 Charge for the year Foreign exchange differences As at 28 February 2023 Net Book Value As at 28 February 2023 As at 28 February 2022 As at 28 February 2021 11 261 12 312 11 862 1 240 874 21 063 381 1 285 547 905 800 3 583 853 13 749 993 844 124 259 269 1 240 873 12 951 171 - 167 043 In October 2020, the Group embarked on the Uis Phase commercially viable and technically feasible, therefore, the 1 Stage II Definitive Feasibility Study (DFS) with a view to transfer was deemed necessary. The capitalised costs of expand the existing Phase 1 plant to increase its nameplate the study as well as the construction costs of the expansion production from 60 to 105 tonnes of tin concentrate per were accumulated in the mining asset under construction. month. All costs associated with carrying out the study The Uis Phase 1 Expansion was commissioned in November were previously capitalised as exploration and evaluation 2022 and the total costs of the study and the construction assets under IFRS 6. During the prior financial year, were transferred to the mining asset at this date. management performed an assessment and transferred the costs associated with the study from exploration and Additions to the mining asset include capitalised costs and evaluation assets to mining assets under construction. It was equipment purchased as part of the Uis Phase 1 Continuous determined that the project had reached the stage of being Improvement project. 82 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 Right-of-use Asset Computer Equipment Furniture Vehicles Mobile equipment (crane) Buildings Total 506 671 129 982 - - 18 877 655 530 1 121 536 (61 435) - 135 058 102 665 75 473 - 73 337 72 991 - 176 273 (15 891) - - - (12 523) - - - 4 968 3 674 2 901 (493) 197 472 179 330 65 851 175 780 - - - - - - 14 673 925 5 213 176 (28 414) 1 737 069 484 972 22 080 728 112 496 99 371 294 699 303 356 284 733 12 746 849 - - - - - - - - - - (370 694) - (156 934) (26 928) (24 209) (32 154) (42 317) (25 635) (2 880 714) 1 558 697 283 040 254 492 328 396 436 819 259 098 31 576 169 161 274 165 689 5 661 332 624 254 667 (62 451) 74 433 35 507 44 028 40 445 28 329 9 204 2 727 1 255 1 646 117 605 65 091 54 878 50 928 43 556 35 297 (14 656) (9 447) (7 862) 524 840 153 877 99 200 82 313 - 3 231 (7) 3 224 35 930 (3 511) 35 643 - - - - 9 137 (823) 8 314 1 039 224 1 861 023 30 389 2 930 636 2 377 349 (455 037) 4 852 948 1 033 857 129 163 155 292 246 083 401 176 250 7834 26 723 218 322 906 345 397 79 867 114 239 10 973 172 556 60 625 67 158 31 445 - - - 19 150 092 13 634 701 Additions to the mining asset under construction include Please refer to Note 19 for further information on the right- capitalised costs and equipment purchased as part of the of-use asset. construction of the Bulk Sample Processing Facility. This includes a Lithium pilot plant, a Tantalum pilot plant and an The total depreciation charge for the current financial year ore sorting plant. was split between administrative expenses and cost of sales. £336 190 (2022: £221 948) was included in administrative The Group has elected to capitalise the costs of waste expenses, while the balance of £2 071 856 (2022: stripping activities as these are necessary to allow improved £1 639 075) was included in cost of sales as it was a cost that access to the ore and, therefore, will result in future was incurred for mining and processing purposes. economic benefits. The costs of drilling, blasting and load and haul of waste material is capitalised until such time that the underlying ore is used in production. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 83 13. INVENTORIES Tin concentrate on hand Run-of-mine stockpile Consumables 14. TRADE AND OTHER RECEIVABLES Trade receivables Trade receivables at fair value through profit or loss Other receivables VAT receivables Year ended 28 February 2023 Year ended 28 February 2022 £ 1 364 286 589 725 713 182 £ 909 180 155 389 387 364 2 667 193 1 451 933 Year ended 28 February 2023 Year ended 28 February 2022 £ 27 678 126 125 1 369 867 1 069 100 2 592 770 £ 96 173 812 594 1 875 561 1 169 054 3 953 382 The Directors consider that the carrying amount of trade Other receivables primarily consist of prepayments that the and other receivables approximates to their fair value due Group has made and deposits that have been paid on items of to their short-term nature. No allowance for any expected equipment that are necessary for the Phase 1 Stage II expansion. credit losses against any of the trade receivables is provided due to a history without default or non-payment from any of The total trade and other receivables denominated in the Group’s customers. Trade receivables at fair value through profit or loss relates to the change in the fair value of trade receivables under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date. 15. CASH AND CASH EQUIVALENTS Cash on hand and in bank South African Rand amount to £164 427 (2022: £61 316), denominated in Namibian Dollars amount to £2 221 827 (2022: £2 851 028) and denominated in US Dollars amount to £126 125 (2022: £812 594). Year ended 28 February 2023 Year ended 28 February 2022 £ £ 8 205 705 7 365 379 Cash and cash equivalents (which are presented as a single £110 625 (2022: £80 463), the total cash and cash equivalents class of assets on the face of the Statement of Financial denominated in Namibian Dollars amount to £2 526 962 Position) comprise cash at bank. The Directors consider (2022: £1 279 798) and the total cash and cash equivalents that the carrying amount of cash and cash equivalents denominated in US Dollars amount to £3 808 714 (2022: approximates their fair value. The total cash and cash £3 450 626). equivalents denominated in South African Rand amount to 84 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 16. BORROWINGS Standard Bank term loan facility Standard Bank VAT facility Standard Bank working capital facility Standard Bank vehicle asset financing facility Year ended 28 February 2023 Year ended 28 February 2022 £ 4 083 503 336 357 1 298 805 484 373 £ 4 523 414 367 739 228 988 - 6 203 038 5 120 141 On 18 November 2021, a term loan facility of N$90 000 000 (c. lower than 1.3 times £4 050 000), a VAT facility of N$8 000 000 (c. £360 000) and a working capital facility of N$35 000 000 (c. £1 575 000) was • Free cash flow before Debt Service Cover + Total Cash Collateral ÷ Principal and Interest Senior Debt Service entered into between the Group’s subsidiary, Uis Tin Mining Payments must not be lower than 2 times Company (Pty) Ltd and Standard Bank Namibia. During the The Group received a covenant waiver from Standard Bank current year, a vehicle asset financing facility to the value of for the year ended 28 February 2023. The next measurement N$15 000 000 (c. £675 000) was provided. date will be 28 February 2024. The maturity date of the term loan facility is November The VAT facility is secured by assessed/audited VAT 2026 and the capital balance of the loan together with returns (refunds) which have not been paid by Namibia accrued interest will be repaid in quarterly instalments over Inland Revenue. Standard Bank Namibia provides a facility the next five years. Interest is charged on the outstanding amounting to the unpaid refunds. Any drawdowns against capital balance of the loan at a rate of three month JIBAR this facility are repaid to the bank upon receipt of cash from plus a margin of 4.5%. The Company has offered security Namibia Inland Revenue. in the form of lien over all movable assets, inter-Company guarantees over all book debts, cession of insurance The VAT facility and the working capital facility have no fixed policies, the offtake agreement and all shareholder loans. maturity date, but are both renewed on an annual basis. Interest accrues on these facilities at the Namibian prime The Group is required to meet the following covenants as rate less 1%. part of the term loan facility agreement: • EBITDA ÷ total interest must not be lower than 4.5 times • Total debt ÷ EBITDA must not exceed 4 times in year 1, Standard Bank Namibia have provided a N$5 956 100 (c. £268 000) guarantee to the Namibia Power Corporation Pty Limited in relation to a deposit for the supply of electrical 3.5 times in year 2 and 3 times thereafter power. As a result of the guarantee provided by Standard • Free cash flow before Debt Service Cover ÷ Principal and Interest Senior Debt Service Payments must not be Bank, no cash was paid over for the deposit. The following is the split between the current and the non-current portion of the liability: Non-current liability Current liability Year ended 28 February 2023 Year ended 28 February 2022 £ 3 287 121 2 915 917 £ 4 095 405 1 024 736 6 203 038 5 120 141 ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 85 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN BORROWINGS Balance as at 28 February 2021 Incoming cash flows Proceeds from term loan Proceeds from VAT facility Proceeds from working capital facility Outgoing cash flows Repayment of loan note instrument and interest Repayment of working capital facility Interest paid on working capital facility Non-cash flows Interest accrued on term loan (capitalised to mining asset under construction) Amortisation of warrant charge Balance as at 28 February 2022 Incoming cash flows Proceeds from vehicle asset financing facility Proceeds from working capital facility Outgoing cash flows Repayment of capital balance of term loan Interest paid on term loan Non-cash flows Interest accrued on term loan (capitalised to mining asset) Foreign exchange differences Balance as at 28 February 2023 17. TRADE AND OTHER PAYABLES Trade payables Other payables Accruals 3 869 489 4 428 000 367 739 228 988 (2 196 836) (1 607 592) (102 655) 95 414 37 594 5 120 141 532 296 1 197 158 (89 014) (95 903) 125 832 (587 472) 6 203 038 Year ended 28 February 2023 Year ended 28 February 2022 £ 1 624 816 202 127 1 828 183 3 655 126 £ 2 293 471 341 276 335 086 2 969 833 Trade and other payables principally comprise amounts The Directors consider that the carrying amount of trade outstanding for trade purchases and ongoing costs. The and other payables approximates to their fair value. average credit period taken for trade purchases is 30 days. The Group has financial risk management policies in place to African Rand amount to £1 147 054 (2022: £124 904) and ensure that payables are paid within the pre-arranged credit £2 154 031 (2022: £2 692 924) is denominated in Namibian The total trade and other payables denominated in South terms. No interest has been charged by any suppliers as a Dollars. result of late payment of invoices during the year. 86 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 18. ENVIRONMENTAL REHABILITATION LIABILITY Balance as at 28 February 2021 Increase in provision Interest expense Foreign exchange differences Balance as at 28 February 2022 Increase in provision Interest expense Foreign exchange differences Balance as at 28 February 2023 £ 180 917 95 585 12 080 6 569 295 151 750 363 14 085 (94 021) 965 578 Provision for future environmental rehabilitation and decom- turbance, and the timing, extent and costs of the required missioning costs are made on a progressive basis. Estimates closure and rehabilitation activities. In calculating the appro- are based on costs that are regularly reviewed and adjust- priate provision, cost estimates of the future potential cash ed appropriately for new circumstances. The environmental outflows based on current studies of the expected rehabili- rehabilitation liability is based on disturbances and the re- tation activities and timing thereof are prepared. These fore- quired rehabilitation as at 28 February 2023. casts are then discounted to their present value using a risk- free rate specific to the liability. In determining the amount The rehabilitation provision represents the present value of attributable to the rehabilitation liability, management used decommissioning costs relating to the dismantling and sale a discount rate of 13% (2022: 10%), an inflation rate of 5.3% of mechanical equipment and steel structures related to the (2022: 5%), and an estimated mining period of 13.4 years Phase 1 pilot plant, the demolishing of civil platforms, and (2022: 17 years). Actual rehabilitation and decommissioning reshaping of earthworks. A provision for this requires es- costs will ultimately depend upon future market prices for timates and assumptions to be made around the relevant the necessary rehabilitation works and timing of when the regulatory framework, the magnitude of the possible dis- mine ceases operation. 19. LEASE LIABILITY The Group assessed all existing and new rental agreements and concluded that the following rentals fall within the scope of IFRS 16: Leases and therefore a lease liability has been raised: Lease term Option to extend/terminate Incremental borrowing rate Office building 5 years Option to extend not specified in contract. Term of lease determined to be 5 years. 13.75% Workshop facility 2 years Option to extend not specified in contract. Term of lease determined to be 2 years. 9.75% Residential housing 5 years The lease will continue automatically after the initial period for an open-ended 11.75% period. Either party must provide written notice if they wish to terminate. Lease term determined to be 5 years. Mobile Units 2 years The lessee is granted the option to purchase the units after the lease period of 2 years. 7.5% Vehicles 5 years The lessee will own the vehicles after the after the lease period of 5 years. 11.25% ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 87 Balance at 28 February 2021 173 142 82 674 130 261 £ £ Workshop Housing Mobile units Vehicles Total Office Building £ 6 600 170 821 534 606 (22 035) 55 378 (159 096) (51 391) 528 283 61 293 25 103 - 4 259 - 9 857 (95 317) (54 641) (36 811) (26 892) 3 280 5 021 (126) 35 572 108 328 45 082 43 507 153 388 - 15 612 (59 332) (3 018) 32 341 - 62 198 (51 685) (24 004) 248 225 £ - 68 689 3 411 - - £ £ - - - - - - 208 892 386 077 129 982 42 630 (213 661) 14 775 359 803 940 393 - (22 035) 1 906 21 024 156 118 (37 147) (56 699) (363 959) (676) 9 165 (15 593) (94 682) 157 624 975 638 Additions Interest expense Lease payments Foreign exchange differences Balance at 28 February 2022 Additions Disposals Interest expense Lease payments Foreign exchange differences Balance at 28 February 2023 The following is the split between the current and the non-current portion of the liability: Year ended 28 February 2023 Year ended 28 February 2022 Non-current liability Current liability RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN LEASES £ 707 355 268 283 975 638 Balance as at 28 February 2021 Outgoing cash flows Lease payments Non-cash flows Additions Interest expense Foreign exchange differences Balance as at 28 February 2022 Outgoing cash flows Lease payments Non-cash flows Additions Disposals Interest expense Foreign exchange differences Balance as at 28 February 2023 £ 167 215 192 588 359 803 386 077 (213 661) 129 982 42 630 14 775 359 803 (363 959) 940 393 (22 035) 156 118 (94 682) 975 638 88 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 20. SHARE CAPITAL Balance at 28 February 2021 Warrants exercised - 22 April 2021 Capital raise - 12 May 2021 Share issue costs Convertible loan note settled - 25 May 2021 Shares issued to suppliers - 25 May Shares issued to suppliers - 15 December Exercising of employee share options - 14 January Exercising of employee share options - 27 January Exercising of employee share options - 22 February Balance as at 28 February 2022 Capital raise - 16 September 2022 Capital raise - 10 October 2022 Share issue costs Warrants exercised - 25 January 2023 Balance at 28 February 2023 Number of ordinary shares of no par value issued and fully paid Share Capital £ 874 690 012 25 608 001 1 686 666 63 150 216 666 667 13 000 000 - 18 963 699 327 868 798 001 2 185 087 1 250 000 5 273 684 (823 447) 430 055 29 672 39 102 72 059 56 250 180 236 1 121 841 684 38 655 078 222 701 660 173 320 000 - 20 000 000 11 135 083 8 666 000 (1 962 253) 390 000 1 537 863 344 56 883 908 Authorised: 1 616 508 573 ordinary shares of no par value Allotted, issued and fully paid: 1 537 863 344 ordinary shares of no par value On 16 September 2022, the Group completed an equity fundraising by way of a placing and direct subscription of 222 701 660 ordinary shares of no par value in the Group at a price of 5 pence per share. A further 173 320 000 660 ordinary shares of no par value in the Group at a price of 5 pence per share were issued on 10 October 2022 as part of the same capital raise. On 25 January 2023, warrant holders exercised 20 000 000 warrants at an exercise price of 1.95. 21. WARRANTS The warrants in issue during the year are as follows: Outstanding at 28 February 2021 Exercisable at 28 February 2021 Granted during the year Expired during the year Exercised during the year Outstanding at 28 February 2022 Exercisable at 28 February 2022 Granted during the year Expired during the year Exercised during the year Outstanding at 28 February 2023 Exercisable at 28 February 2023 24 300 000 24 300 000 - - (1 686 666) 22 613 334 22 613 334 - - (20 000 000) 2 613 334 2 613 334 On 22 January 2023, 2 613 334 warrants at an exercise price of 4.5 pence were extended for an additional six months. In the year ended 28 February 2023, there was a charge of £16 700 accounted for due to the extension of the period of On 25 January 2023, notice was received from warrant holders to exercise 20 000 000 warrants at an exercise price of 1.95 pence. The charges previously raised on these warrants was reversed, resulting in a movement in the warrant reserve. the warrants in issue (February 2022: nil). Please refer to the statement of changes in equity for the reconciliation of the warrant reserve. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 89 22. SHARE-BASED PAYMENT RESERVE DIRECTOR SHARE OPTIONS The following director share options were granted during the year ended 28 February 2023: Date of grant Number granted Vesting period Contractual life Estimated fair value per option (pence) 8 April 2022 8 April 2022 8 April 2022 7 800 000 3 900 000 3 900 000 1 year 3 years 2.0830 2 years 3 years 2.8490 3 years 3 years 3.4090 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 8 April 2022 8 April 2022 8 April 2022 9.35 9.80 9.35 10.30 9.35 10.80 8 April 2025 8 April 2025 8 April 2025 60% Nil 1.24% 60% Nil 1.24% 60% Nil 1.24% The director share options in issue during the year are as follows: Outstanding at 28 February 2021 Exercisable at 28 February 2021 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 28 February 2022 Exercisable at 28 February 2022 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 28 February 2023 Exercisable at 28 February 2023 27 100 000 8 389 999 - - (1 250 000) - 25 850 000 23 850 000 15 600 000 - - - 41 450 000 23 850 000 The director share options outstanding at year end have A director must remain as a director of the Group for the an average exercise price of £0.067 (2022: £0.045), with share options to vest. In the event that a director ceases to a weighted average remaining contractual life of 1.29 years be a director during the vesting period, the Board reserves (2022: 1.79 years). the right to determine whether the share options will be terminated or not. There are no market-based vesting conditions on the share options. 90 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 EMPLOYEE SHARE OPTIONS The following employee share options were granted during the year ended 28 February 2023: Date of grant Number granted Vesting period Contractual life Estimated fair value per option (pence) 8 April 2022 8 April 2022 8 April 2022 2 400 000 1 200 000 1 200 000 1 year 3 years 2.0830 2 years 3 years 2.8490 3 years 3 years 3.4090 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 8 April 2022 8 April 2022 8 April 2022 9.35 9.80 9.35 10.30 9.35 10.80 8 April 2025 8 April 2025 8 April 2025 60% Nil 1.24% 60% Nil 1.24% 60% Nil 1.24% The employee share options in issue during the year are as follows: Outstanding at 28 February 2021 Exercisable at 28 February 2021 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 28 February 2022 Exercisable at 28 February 2022 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 28 February 2023 Exercisable at 28 February 2023 34 830 000 26 610 001 - - (7 458 771) - 27 371 229 27 371 229 4 800 000 - - - 32 171 229 27 371 229 The employee share options outstanding at the year end have an average exercise price of £0.044 (2022: £0.034), with a weighted average remaining contractual life of 1.13 years (2021: 1.96 years). An employee must remain in employment with the Group for the share options to vest. There are no market-based vesting conditions on the share options. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 91 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. • Cannosia Trading 62 CC which own 16% of Renetype • African Women Enterprise Investments (Pty) Ltd which own 10% of Renetype • Lerama Resources (Pty) Ltd which own 50% of Jaxson • Tamiforce (Pty) Ltd which own 26% of Zaaiplaats Other includes the following minority interests which are not material: No dividends have been paid to any of the minority interests listed above. As at 28 February 2023 Amount attributable to all shareholders: UTMC Other Total Loss after tax (2 321 500) (6 147) (2 327 647) Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities 10 508 167 5 116 388 15 624 555 7 956 192 8 839 733 16 795 925 11 262 10 519 429 - 5 116 388 11 262 15 635 817 - 58 417 58 417 7 956 192 8 898 150 16 854 342 Net assets / (liabilities) (1 171 370) (47 155) (1 218 525) Amount attributable to non-controlling interest: Profit / (loss) after tax Net assets / (liabilities) As at 28 February 2022 Amount attributable to all shareholders: Profit / (loss) after tax Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities (348 224) (173 406) (1 801) (13 557) (350 025) (186 963) UTMC Other Total 2 281 762 (3 926) 2 277 836 7 085 066 8 862 468 15 947 534 12 843 653 1 788 861 14 632 514 12 313 - 12 313 44 967 12 786 57 753 7 097 379 8 862 468 15 959 847 12 888 620 1 801 647 14 690 267 Net assets / (liabilities) 1 315 020 (45 440) 1 269 580 Amount attributable to non-controlling interest: Profit / (loss) after tax Net assets / (liabilities) 342 264 196 230 (1 021) (13 030) 341 243 183 200 92 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 24. FINANCIAL INSTRUMENTS The Group is not subject to any externally imposed capital requirements. The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and processes of the Group for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. CAPITAL RISK MANAGEMENT The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising returns to shareholders. In order to maintain or adjust the capital structure, the Group may issue new shares or arrange debt financing. The capital structure of the Group consists of cash and cash equivalents and equity, comprising issued capital, borrowings and retained losses. 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 SIGNIFICANT ACCOUNTING POLICIES Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement, and the bases for recognition of income and expenses for each class of financial asset, financial liability, and equity instrument, are disclosed in Note 2. PRINCIPAL FINANCIAL INSTRUMENTS The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows: • Trade and other receivables • Cash and cash equivalents • Trade and other payables • Borrowings • Lease liability Year ended 28 February 2023 Year ended 28 February 2022 £ £ 1 397 545 8 205 705 7 365 379 7 365 379 126 125 812 594 9 729 375 10 149 707 ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 93 Under its customer sale arrangement, the Group receives a provisional payment upon satisfaction of its performance obligations based on the spot price at that date. This occurs prior to the final price determination, with the Group then subsequently receiving or paying the difference between the final price and quantity and the provisional payment. As a result of the pricing structure, the instrument is classified at fair value through profit or loss and measured at fair value with resulting changes in fair value recorded as other revenue. Trade receivables at fair value through profit or loss fail the criteria for being measured at amortised cost owing to the variability resulting from final pricing adjustments. Financial instruments measured at fair value are presented by level within which the fair value measurement is categorised. The levels of fair value measurement are determined as follows: (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 2023 is recorded at fair value through profit or loss and fair valued based on the estimated forward prices that will apply under the terms of the sales contracts on the product reaching the port of destination. The trade receivables fair value reflects amounts receivable from the customer adjusted for forward prices expected to be realised. The forward price is based on the expected LME three month tin price on the date of finalisation. Given the short period to final pricing, the time value of money is not considered to be significant. . 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 Fair value of this trade receivable at fair value through profit or loss is categorised at Level 1. During the year there were no transfers between levels of fair value hierarchy. The Group holds the following financial liabilities: Measured at amortised cost: Trade and other payables Borrowings Lease liability Total financial liabilities Year ended 28 February 2023 Year ended 28 February 2022 £ £ 3 655 126 2 969 833 6 203 038 975 638 5 120 141 359 803 10 833 802 8 449 777 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 3 655 126 - - - 3 655 126 Borrowings Lease Liability 560 908 2 355 009 1 226 338 2 060 783 6 203 038 75 616 192 668 205 633 501 721 975 638 4 291 650 2 547 677 1 431 971 2 562 504 10 833 802 GENERAL OBJECTIVES, POLICIES AND PROCESSES The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The Board receives reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below: Credit risk The Group’s principal financial assets are bank balances and trade and other receivables. Credit risk arises principally from the Group’s cash and trade and other receivables balances. Credit risk is the risk that the counterparty fails to repay its obligation to the Group in respect of amounts owed. The Group gives careful consideration to which organisations it uses for its banking services in order to minimise credit risk. 94 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 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 Baa3 (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 Ba2 (Moody’s). The banks chosen remain stable and do not present any further risks. The concentration of credit risk was as follows: Currency UK Pound Sterling US Dollar South African Rand Namibian Dollars Year ended 28 February 2023 Year ended 28 February 2022 £ £ 1 759 404 3 808 714 110 625 2 554 492 3 450 626 80 463 2 526 962 1 279 798 8 205 705 7 365 379 Credit risk relating to trade and other receivables has also been considered. Credit verification procedures are undertaken for all customers with whom we trade on credit. This includes an assessment of the credit quality of the customer, taking into account its financial position, past experience and other factors. The trade account receivables comprise a limited customer base. Ongoing credit evaluation of the financial position of customers is performed and compliance with credit limits by customers is regularly monitored by management. Please refer to Note 14 for the concentration of credit risk relating to trade receivables. 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. At 28 February 2023, the Group held no collateral as security against any financial asset. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. The Group applies IFRS 9 to measure expected credit losses for receivables and these are regularly monitored and assessed. No expected credit losses have been recognised on financial assets during the The Group maintains good relationships with its banks and its cash requirements are anticipated via the budgetary process. At 28 February 2023, the Group had £8 205 705 (2021: £7 365 379) of cash reserves. Market risk The Group’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates and interest rates. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 95 Interest rate risk The Group has interest bearing assets in the form of cash and cash equivalents. The Group does not earn significant interest on cash balances. Borrowings The Group has interest bearing liabilities in the form of bank loans and facilities. These liabilities are exposed to variable interest rates. The following table details the Group’s sensitivity to a 1% increase and a 1 % decrease in the interest rate. Value £ Cash flow impact of a 1% increase in interest rate £ Cash flow impact of a 1% decrease in interest rate £ 6 203 038 (62 030) 62 030 Foreign exchange risk The Group has foreign currency denominated assets and liabilities, and is therefore exposed to exchange rate fluctuations. The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities, all in Pound Sterling, are shown below. Cash and cash equivalents Trade and other receivables Trade and other payables Borrowings Year ended 28 February 2023 Year ended 28 February 2022 £ 6 446 301 1 443 280 £ 4 810 887 2 555 885 (3 301 085) (2 550 860) (6 203 038) (5 120 141) (1 614 542) 304 229 The Group operates on an international basis; therefore, increase and decrease in the Pound Sterling against the foreign exchange risk exposures arise from transactions Rand and the Namibian Dollar. 10% is the sensitivity rate denominated in foreign currencies. The Group is exposed used when reporting foreign currency risk internally to key to foreign currency risk on fluctuations related to financial management personnel and represents management’s instruments that are denominated in UK Pound Sterling, US assessment of the reasonable possible change in foreign Dollars, South African Rand and Namibian Dollars. currency rates. The sensitivity analysis includes only The Group does not enter into any derivative financial and adjusts their translation at year end for a 10% change in outstanding foreign currency denominated monetary items instruments to manage its exposure to foreign currency risk. foreign currency rates. The following table details the Group’s sensitivity to a 10% Assets Liabilities Assets Liabilities Rand denominated monetary items £ Rand currency impact Strengthening £ Rand currency impact Weakening £ 137 109 150 820 123 398 (1 147 054) (1 261 760) (1 032 349) (1 009 945) (1 110 940) (908 951) Namibian Dollar denominated monetary items £ Namibian Dollar currency impact Strengthening £ Namibian Dollar currency impact Weakening £ 3 943 758 4 338 133 3 549 382 (8 357 069) (9 192 776) (7 521 362) (4 413 311) (4 854 643) (3 971 980) 96 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 25. EVENTS AFTER BALANCE SHEET DATE KEY MANAGEMENT CHANGE Frans Van Daalen was appointed as Chief Strategy Officer to drive business development strategy, with a focus on accelerating the lithium project. Chris Smith was appointed as the Chief Operations Officer. BOARD APPOINTMENTS Hiten Ooka, the Chief Financial Officer, was appointed as an Executive Director and Gida Nakazibwe Sekandi has been appointed as a Non-Executive Director. ISSUE OF SHARE OPTIONS On 11 May 2023, the Group granted options over 41 217 116 ordinary shares to certain Directors, senior managers, and employees of the Group, in line with its LTIP. The options are exercisable at a price of 6p per ordinary share. For the employees and senior managers, the options can be exercised at any time from 1 May 2026, for a period of seven years and for the Directors, the options can be exercised at any time from 1 May 2028, for a period of seven years. In each case, the options will vest in three tranches and each tranche can only be exercised if the 60-day Volume Weight Average Price of the Andrada share price exceeds the target share price for that tranche. The target share price for the three tranches are 7p, 8p and 9p respectively. The options expire in 2033 and are conditional on the continued employment of the relevant recipient as an employee of the Group at the time of exercise. LISTING ON THE OTCQB MARKET On 5 June 2023, the Group has qualified to trade on the OTCQB Market (an American financial market) and trading in the Group’s ordinary shares has commence trading on this. The trading of the Group’s ordinary shares on AIM, a market of the London Stock Exchange, and on the Namibian Stock Exchange, remain unaffected by this additional listing. DEVELOPMENT BANK OF NAMIBIA FACILITY On 2 June 2023, the Group executed the contractual documentation for the N$100m (c. US$5.8m) senior secured debt facility with the Development Bank of Namibia. The facility is for a 10-year term; for the first 12 months after execution, no interest or capital repayments are required; and interest accrues at Namibian prime lending rate (currently 11%) plus 2.5% per annum. Completion of the Facility remains subject to a series of final conditions including the execution of an inter-creditor agreement between the DBN and Standard Bank and finalisation of the associated security package. COMPLETION OF CONSTRUCTION OF PILOT PLANTS On 18 July 2023, the Group completed the construction of both the lithium bulk sampling plant and the tantalum production circuit. The Group has begun the commissioning of these plants. ISSUE OF CONVERTIBLE LOAN NOTES On 21 July 2023, the Group raised £7.7m through the issue of 77 unsecured, convertible loan notes of £100 000 each to new and existing investors. The Group has also issued the holders of the loan notes two warrants for every £1 of loan note held. Each warrant enables the holder to subscribe for one ordinary share in the Company. ORION FACILITY On 14 August 2023, Andrada signed binding documentation for an updated, conditional US$25m financing package with Orion. The details of the Orion financing are detailed below: • US$2.5m (c. £2.0m) equity at 6.39p and, US$10m (c. £7.9m) convertible loan note (“the Note”) being for the general purposes of accelerating Andrada’s overall strategy of achieving commercial production of its lithium, tin, and tantalum revenue streams. • US$12.5m unsecured tin royalty for the sole purpose of increasing Andrada’s tin production as it ramps up its capital programmes over the next two years. • The Company will issue Orion with warrants equivalent to double the GBP value of the US$10m Note based on the USD/GBP rate at market close on the Orion Issuance Date. Each warrant will enable Orion to subscribe for one ordinary share in Andrada. • The financing is subject to the fulfilment of the following outstanding conditions precedent: - shareholder approval at the upcoming Annual General Meeting; - the Company’s lender banks’ consent; - exchange control approval to remit funds into Namibia; and - Admission of the Subscription Shares (as defined below) to trading on AIM. Funding expected to be completed around the end of September 2023. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 97 26. RELATED-PARTY TRANSACTIONS Balances and transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The remuneration of the key management personnel of the Group, which includes the Directors, as well as Frans van Daalen and Hiten Ooka, is set out below. 28 February 2023 Non-Executive Directors Glen Parsons (Chairman) Terence Goodlace Laurence Robb Michael Rawlinson Executive Director Share Option Charge £ Shares to be Issued in Relation to Director Fees/ Salary £ Director Fees/Salary (incl. bonus payment and accrual) £ Other Fees £ Total £ 36 032 36 032 36 032 36 032 - - 18 000 21 000 55 000 44 778 17 000 24 000 - - 24 000 91 032 80 810 95 032 81 032 Anthony Viljoen (Chief Executive Officer) 90 081 - 360 780 - 450 861 Other key management personnel Hiten Ooka (Chief Financial Officer – appointed June 2022) Frans van Daalen (Chief Strategy Officer) 72 065 72 065 378 339 - - 39 000 198 042 265 894 965 494 - - 270 107 337 959 24 000 1 406 833 28 February 2022 Non-Executive Directors Glen Parsons (Chairman) Terence Goodlace Laurence Robb Michael Rawlinson Executive Director Anthony Viljoen (Chief Executive Officer) 13 258 Other key management personnel Robert Sewell (previous Chief Financial Officer Frans van Daalen (Chief Strategy Officer) 8 838 8 838 47 506 Share Option Charge £ Shares to be Issued in Relation to Director Fees/ Salary £ Director Fees/Salary (incl. bonus payment) £ 5 524 5 524 5 524 - - - 18 000 3 500 - - - 21 500 59 167 56 308 17 000 4 000 170 454 110 326 140 390 557 645 Other Fees £ - - 8 000 49 102 - - - 57 102 Total £ 64 691 61 832 48 524 56 602 183 712 119 164 149 228 683 753 98 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 27. CAPITAL COMMITMENTS Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows: Exploration and evaluation projects Property, plant and equipment 28. RESERVES WITHIN EQUITY Year ended 28 February 2023 Year ended 28 February 2022 £ 1 246 195 954 192 2 200 387 £ 1 021 297 1 695 932 2 717 229 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. 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. CONVERTIBLE LOAN NOTE RESERVE The convertible loan note reserve represents proceeds on issue of convertible loan notes relating to equity component plus accrued interest on the convertible loan notes. These notes were settled in full during the prior financial year. 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. WARRANT RESERVE The warrant reserve represents the cumulative charge to date in respect of unexercised share warrants at the balance sheet date. RETAINED EARNINGS/ACCUMULATED DEFICIT The retained earnings/accumulated deficit represents the cumulative profit and loss net of distribution to owners. ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 99 NOTICE OF ANNUAL GENERAL MEETING 100 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 NOTICE OF ANNUAL GENERAL MEETING ANDRADA MINING LIMITED (Incorporated in Guernsey under registered number 63974) REGISTERED OFFICE: PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH 23 August 2023 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 advisor 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 Andrada 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 Andrada Mining Limited to be held at 11:00 am on 29 September 2023 at 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, 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. Unless otherwise indicated on the Form of Proxy, [CREST] or any other electronic voting instruction, the proxy will vote as they think fit or, at their discretion, withhold from voting. PROXY To register your vote electronically, log on to our registrar’s web site 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. [CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & International Limited’s specifications and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company’s registrars (ID: RA10) by the latest time(s) for receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & International Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings (www.euroclear.com). The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended).] NOTICE OF MEETING A Form of Proxy for use by shareholders is enclosed. To register a vote electronically, log on to the Registrar’s web site at www.signalshares.com and follow the instructions on screen. ORDINARY RESOLUTIONS 1. 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 2023. 2. That Glen Parsons shall be re-elected as a director of the Company, having retired by rotation pursuant to Article 24.9 of the Articles of Incorporation of the Company (the “Articles”) and offered himself for re-election. 3. That Hiten Ooka shall be re-elected as a director of the Company, having previously been appointed by the Directors in May 2023 pursuant to Article 24.5 of the Articles. 4. That Gida Nakazibwe Sekandi shall be re-elected as a director of the Company, having previously been appointed by the Directors in May 2023 pursuant to Article 24.5 of the Articles. ANDRADA ANNUAL REPORT 2023 NOTICE OF AGM 101 5. That Messrs BDO LLP be reappointed as Auditors to the Company. 6. That the Directors be authorised to approve the remuneration of the Company’s Auditors. 7. The Company be generally and unconditionally authorised to make on market acquisitions of Ordinary Shares on such terms and in such manner as the Directors determine provided that: 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. 8. a. b. c. d. the maximum aggregate number of Ordinary shares which may be purchased is 153 895 553 Ordinary Shares; the minimum price(excluding expenses) which may be paid for each Ordinary share is £0.01; the maximum price (excluding expenses) which may be paid for any Ordinary Share does not exceed 110% per cent of the average closing price of such shares for the 5 business days of AIM prior to the date of purchase; and this authority shall expire at the conclusion of the next Annual General Meeting of the Company unless such authority is renewed prior to that time (except in relation the purchase of Ordinary Shares the contract for which was concluded before the expiry of such authority, in which case such purchase may be concluded wholly or partly after such expiry). 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 equity securities (as defined in Article 5.1 of the Articles) in respect of up to 507 855 325 shares (representing approximately 33% of the issued share capital of the Company as at 29 August 2023) in the capital of the Company in accordance with Article 4.2 of the Articles 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. 9. To receive and approve the Remuneration Policy as set out on pages 44 to 46 in the Company’s Annual Report for the year ended 28 February 2023. EXTRAORDINARY RESOLUTIONS 10. 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 did not apply to such issue 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 11. Subject to the passing of Resolution 8, the Directors of the Company be and they are hereby authorised to exercise all powers of the Company to issue equity securities in the capital of the Company pursuant to the issue referred to in Resolution 8 as if the pre-emption rights contained in Article 5.2 of the Articles did not apply to such issue provided that (i) the maximum aggregate number of equity securities that may be issued under this authority is (or shall relate to rights to subscribe for or convert securities into) 153 895 553 shares, being approximately 10% of the issued share capital of the Company (excluding treasury shares); and (ii) 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 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 did not apply to such issue or grant. 12. That 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 140,000,000 (one hundred and forty million) shares in the capital of the Company in connection with the subscription for shares by Orion Mine Finance Fund III LP (“OMF”) and the subscription for convertible loan notes OMF Fund III (F) Ltd (“OMFF”) pursuant to a subscription agreement between the Company (1) OMF (2) and OMFF (3) further details of which were set out in RNS No 3523J as amended by RNS No 4105J, both published by the Company on 15 August 2023 (the “Subscription Agreement”), in each case as if the pre-emption rights contained in Article 5.2 of the Articles did not apply to such issue or grant. The authority granted by this resolution is granted in accordance with Articles 4.2 and 5.2 of the Articles, shall be in addition to the authority granted pursuant to Resolutions 8 and 10 and shall 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. By order of the Board GLEN PARSONS Chairman / Non-Executive Director 23 August 2023 102 NOTICE OF AGM ANDRADA ANNUAL REPORT 2023 ANDRADA MINING LIMITED (Incorporated in Guernsey under registered number 63974) (The “Company”) ANNUAL GENERAL MEETING FORM OF PROXY For use at the Annual General Meeting of the Company to be held at 11:00 a.m. on 29 September 2023 at PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH (the “Annual General Meeting”) I/WE OF BLOCK LETTERS ADDRESS being (a) member(s) of the Company hereby appoint the Chairman of the Annual General Meeting (See Note 1) OR as my/our proxy and to attend, speak and vote for me/us on my/our behalf at the Annual General Meeting and at any adjournment thereof. My/our proxy is to vote as indicated below in respect of each of the resolutions set out in the Notice of Annual General Meeting (see Note 3). On any other business which may properly come before the Annual General Meeting (including any motion to amend a resolution or to adjourn the Annual General Meeting) the proxy will act at his/her own discretion. Please indicate by placing an “X” in this box if this proxy appointment is one of multiple appointments being made (see Note 2). ORDINARY RESOLUTIONS FOR AGAINST WITHHELD 1. To receive and adopt the Annual Financial Statements of the Company and the Directors’ report and the report of the Auditors for the year ended 28 February 2023. 2. That Glen Parsons shall be re-elected as a director of the Company. 3. That Hiten Mohanlal Ooka shall be elected as a director of the Company. 4. That Gida Nakazibwe Sekandi shall be elected as a director of the Company. 5. That Messrs BDO LLP be reappointed as Auditors to the Company. 6. That the Directors be authorised to approve the remuneration of the Company’s Auditors. ORDINARY RESOLUTIONS (CONT.) FOR AGAINST WITHHELD 7. The Company be generally and unconditionally authorised to make on market acquisitions of Ordinary Shares on such terms and in such manner as the Directors determine provided that: a. b. c. d. the maximum aggregate number of Ordinary shares which may be purchased is 153 895 553 Ordinary Shares; the minimum price(excluding expenses) which may be paid for each Ordinary share is £0.01; the maximum price (excluding expenses) which may be paid for any Ordinary Share does not exceed 110% per cent of the average closing price of such shares for the 5 business days of AIM prior to the date of purchase; and this authority shall expire at the conclusion of the next Annual General Meeting of the Company unless such authority is renewed prior to that time (except in relation the purchase of Ordinary Shares the contract for which was concluded before the expiry of such authority, in which case such purchase may be concluded wholly or partly after such expiry). 8. 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 equity securities (as defined in Article 5.1 of the Articles) in respect of up to 507 855 325 shares (representing approximately 33% of the issued share capital of the Company as at 29 August 2023) in the capital of the Company in accordance with Article 4.2 of the Articles 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. 9. To receive and approve the Remuneration Policy as set out on pages 44 to 46 in the Company’s Annual Report for the year ended 28 February 2023. EXTRAORDINARY RESOLUTIONS FOR AGAINST WITHHELD 10. 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 did not apply to such issue or grant, 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. 11. Subject to the passing of Resolution 8, the Directors of the Company be and they are hereby authorised to exercise all powers of the Company to issue equity securities in the capital of the Company pursuant to the issue referred to in Resolution 8 as if the pre-emption rights contained in Article 5.2 of the Articles did not apply to such issue provided that (i) the maximum aggregate number of equity securities that may be issued under this authority is (or shall relate to rights to subscribe for or convert securities into) 153 895 553 shares, being approximately 10% of the issued share capital of the Company (excluding treasury shares); and (ii) 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 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 did not apply to such issue or grant. EXTRAORDINARY RESOLUTIONS FOR AGAINST WITHHELD 12. That 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 140,000,000 (one hundred and forty million) shares in the capital of the Company in connection with the subscription for shares by Orion Mine Finance Fund III LP (“OMF”) and the subscription for convertible loan notes OMF Fund III (F) Ltd (“OMFF”) pursuant to a subscription agreement between the Company (1) OMF (2) and OMFF (3) further details of which were set out in RNS No 3523J as amended by RNS No 4105J, both published by the Company on 15 August 2023 (the “Subscription Agreement”), in each case as if the pre-emption rights contained in Article 5.2 of the Articles did not apply to such issue or grant. The authority granted by this resolution is granted in accordance with Articles 4.2 and 5.2 of the Articles, shall be in addition to the authority granted pursuant to Resolutions 8 and 10 and shall 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. DATED SIGNED OR SEALED (see Note 4) NOTES 1. If a member wishes to appoint as a proxy a person other than the Chairman of the Annual General Meeting, the name of the other person should be inserted in block capitals in the space provided. A proxy need not be a member of the Company but must attend the Annual General Meeting in person. Any alteration or deletion must be signed or initialled. 2. A member may appoint more than one proxy in relation to a meeting, provided that the proxy is appointed to exercise the rights attached to a different share or shares held by him. To appoint more than one proxy, please contact the Company’s Registrars, Link Group, PXS, Central Square, 29 Wellington Street, Leeds, LS1 4DL for (an) additional form(s) or you may photocopy this form. Please indicate next to the proxy holder’s name the number of shares in relation to which they are authorised to act as your proxy (a proxy appointment which fails to do so may be treated as invalid by the Company). Please also indicate by placing an X in the box provided if the proxy instruction is one of multiple instructions being given. All forms must be signed and returned in the same envelope together. 3. A member should indicate by marking the box headed either FOR, AGAINST or WITHHELD with an ‘X’ to show how he wishes his vote to be cast in respect of each of the resolutions set out in the Notice of Annual General Meeting. Unless so instructed, the proxy will exercise his discretion as to whether to vote or abstain as he thinks fit. The Vote Withheld option is provided to enable a member to instruct the proxy not to vote on any resolution, however it should be noted that a vote withheld in this way is not a “vote” in law and will not be counted in the calculation of the proportion of votes FOR and AGAINST a resolution. 4. In the case of a corporation this form of proxy should be given under its seal or signed on its behalf by an attorney or duly authorised officer. In the case of joint holders, the form of proxy may be signed by one or more of the holders but if more than one form is submitted in respect of same joint holding, the form of proxy signed by that one of them whose name stands first on the register of members in respect of the joint holding shall be accepted to the exclusion of the others. 5. Use of this form of proxy does not preclude a member from attending the Annual General Meeting and voting in person. 6. To be valid, this form of proxy must be lodged together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, at the Company’s Registrars, Link Group, PXS, Central Square, 29 Wellington Street, Leeds, LS1 4DL, not less than 48 hours before the Annual General Meeting or any adjournment thereof or, in the case of a poll taken more than 48 hours after it is demanded, not less than 24 hours before the time appointed for taking the poll and, in the case of a poll not taken during the Annual General Meeting but taken not more than 48 hours after it is demanded, at the time at which the poll was demanded (failing which the proxy notice will not be treated as valid unless the Board in its sole discretion determines otherwise) in each case excluding any days which are a Saturday, Sunday or public holiday in Guernsey. 7. Where more than one proxy notice is delivered, deposited, or received in respect of the same shares, that delivered, deposited or received latest shall prevail. If it is not clear which was delivered, deposited, or received latest, none shall be valid. 8. In order to allow effective constitution of the Annual General Meeting the Chairman may appoint a substitute to act as proxy in his/her place for any member provided that, where the relevant member has not given directions as to how to vote on any resolution, such substitute proxy shall vote in the same way as the Chairman. 106 AUDITED FINANCIAL STATEMENTS ANDRADA ANNUAL REPORT 2023 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 AUDITORS 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 Stifel Nicolaus Europe Limited 150 Cheapside EC2V 6ET London United Kingdom INVESTOR RELATIONS Tavistock 1 Cornhill, Langbourn EC3V 3NR London United Kingdom ANDRADA ANNUAL REPORT 2023 AUDITED FINANCIAL STATEMENTS 107