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Registered number: 07353748
KERAS RESOURCES PLC
ANNUAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
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Contents
Pages
Company Information ...........................................................................................................................................................2
Chairman’s Statement ...........................................................................................................................................................3
Strategic Report .....................................................................................................................................................................6
The Board ..............................................................................................................................................................................13
Corporate Governance Statement....................................................................................................................................14
Directors’ Report..................................................................................................................................................................17
Independent Auditor’s Report to the Members of Keras Resources PLC..................................................................20
Consolidated Statement of Comprehensive Income ....................................................................................................26
Consolidated Statement of Financial Position................................................................................................................27
Consolidated Statement of Changes in Equity – 31 December 2022.........................................................................28
Consolidated Statement of Changes in Equity – 31 December 2021.........................................................................29
Consolidated Statement of Cash Flows ...........................................................................................................................30
Company Statement of Financial Position ......................................................................................................................31
Company Statement of Changes in Equity......................................................................................................................32
Notes to the Consolidated Financial Statements...........................................................................................................33
Throughout this document ‘Keras’, ‘Keras Resources’ or ‘the Company’ means Keras Resources PLC, ‘the Group’
means the Company and its subsidiaries and ‘$’ or ‘USD’ means the United States dollar.
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Company Information
Directors:
R Lamming (Non-Executive Chairman)
G Stacey (Chief Executive Officer)
B Moritz (Non-Executive Director)
C Parry (Non-Executive Director)
Company secretary:
B Moritz
Company number:
07353748
Registered office:
Nominated advisor
and joint broker:
Joint broker:
Solicitor:
Auditor:
Registrars:
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Chairman’s Statement
I am pleased to provide an update on our progress since the last report and to set out our outlook for the
business going forward.
The main activity of the Group is now in progressing our organic phosphate business in Utah, USA, where Keras
increased its ownership from 51% to 100% on 30 March 2022.
The Diamond Creek phosphate mine
The Diamond Creek phosphate mine, which is believed to be one of the highest grade organic rock phosphate
deposits in the US, comprises an opencast operation located on an 840 acre Federal Lease, and the Spanish Fork
Processing Facility; both owned and operated by Falcon Isle Resources LLC and Falcon Isle Holdings LLC
(collectively ‘Falcon Isle’). Prior to the acquisition of the 49% outside interest on 30 March 2022, Falcon Isle was
a 51% subsidiary of Keras during 2021, since which it has been a wholly owned subsidiary. Keras now has full
management control with Graham Stacey also being appointed CEO of Falcon Isle where he can focus his efforts
on the development of that business.
Diamond Creek is located approximately 80km south-east of Salt Lake City, and our focus going forward is to
build the operation into the premier high-grade organic phosphate producer in the US. Our focus and target
market is in supporting sustainable agriculture and we are strong advocates for the benefits of enhancing soil
health and reducing the impact that synthetic fertilisers have on water resources. Our organic phosphate
fertilizer products help farmers realise better crop growth and yields, and reduce the soil degradation seen
when farmers use chemically manufactured fertilisers, while at the same time reducing the carbon footprint
associated with growing their crops.
The mine is fully permitted, and the Spanish Fork processing plant is close to infrastructure and ideally located
to take advantage of Salt Lake City’s resources including labour, supplies, industrial engineering and financial
services. The integrated mining and processing operation has compelling economics with a low capex,
low-intensity seasonal mining operation and our in-house processing plant has flexibility to process a variety of
organic rock phosphate products throughout the year. The mined material requires crushing, milling and bagging
before being sold as high-grade organic rock phosphate fertiliser – a 23% total phosphorus pentoxide (‘P205’)
premium product and importantly with minimum 12% available P205 which is significantly higher than our
competitors in the US. Falcon Isle is currently investigating ways to expand its product offering and potential
customer base by offering both granulated and liquidised fertilizers.
The mine has a pre-stripped area with production drilling information delineating approximately 2 years of
planned production still in-situ. However, we believe there is significant scope to increase the current life of
mine at Diamond Creek with historic “surface mineable resources” representing in excess of 60 years of
production.
In 2022, 4,750 tons of phosphate were mined and delivered to the laydown area at Diamond Creek. Sales totalled
4,276 tons of phosphate for the year. Since Keras took control of the marketing function and with both the
mining and processing facilities now operating as planned developing market share will be our primary focus
for the next two years. Production rhythm is key to the supply of both consistent quantity and quality products
which Keras’s operational control has now enabled.
A key component of our marketing effort will be growth tests across a range of crops and soil types. This process
is planned to run for the balance of 2023 and will provide focussed market feedback to support of our product
use across crop types, regions and planting seasons.
We are now looking forward to commencing our mining season at Diamond Creek which takes place during the
summer season from July to October 2023, while the mine site is free of snow.
Falcon Isle is currently operating profitably at the company level and has commenced repaying loans made to it
by Keras.
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Chairman’s Statement
continued
Nayéga manganese mine / Togo
The Group’s interests in Togo are accounted for at 31 December 2022 as assets held for sale. Keras holds an
85% interest in Société Générale de Mines (“SGM”), which owns the Research Permits for the Nayéga manganese
project (“Nayéga”) in the Republic of Togo (“State”).
On 17 May 2023 an agreement was signed between Keras and the State whereby it was agreed that Nayéga is
a Togolese strategic asset and the exploitation permit will be awarded to Société Togolaise de Manganèse, a
Togolese incorporated company 100% owned by the State (“STM”) and Keras will no longer pursue the Nayéga
exploitation permit. Keras will transfer all its intellectual knowledge on Nayéga to the State and provide advisory
and brokerage services to fast track the development of Nayéga.
The State agreed to pay Keras a cash consideration of US$1.7m, which amount has now been received by Keras,
and thereafter Keras will be paid advisory fees of 1.5% of gross revenue for 3 years and brokerage fees of 6.0%
of gross revenue for the lesser of 3.5 years or 900,000 tonnes of beneficiated manganese ore produced and
sold from Nayéga.
Financial review
The Consolidated Statement of Comprehensive Income for the year shows a loss of £847,000 (15 months to
31 December 2021 – loss £1,948,000).
The loss for the year includes costs relating to Togo. The carrying value of assets relating to the Nayéga mine at
31 December 2022 is materially equal to their estimated initial disposal value amounting to $1.7m, after allowing
for costs of the sale. No amount is included in respect of the value of future income receivable from Nayéga.
Also included in the consolidated loss is a severance payment of $340,000 payable to the previous CEO of
Falcon Isle.
In May 2022 Keras raised £1,950,000 (before costs) by an issue of new ordinary shares. These funds were used
for the first tranche of US$800,000 of the cost of acquiring the former minority interest in Falcon Isle, including
loans owed to the vendor, and for general working capital. The second tranche of $800,000, plus $240,000 of
the severance payment referred to above, has been paid from the $1.7m received from the Republic of Togo.
As the payment was made after 1 July 2023 there was a technical default for late payment, which default has
been remedied within the 30 day period provided for in the agreement.
At a general meeting held on 25 July 2022 a resolution was passed consolidating the ordinary share capital on
the basis of 1 new ordinary share of 1p for every 100 old ordinary shares of 0.01p. Following the passing of that
resolution the number of ordinary shares in issue was reduced to 79,735,731.
Directors and Management
On 1 June 2022 Graham Stacey took over the role of Chief Executive Officer from me, and I moved into the role
of Non-Executive Director.
On 1 September 2022, I took over from Brian Moritz as Non-Executive Chairman. Brian remains a Non-Executive
Director and Company Secretary, and will continue to provide valuable oversight of the Company's finances.
At the same date Claire Parry joined the Board as an independent non-executive director. I would like to welcome
Claire on behalf of myself and my colleagues.
Also on 1 September 2022 Dave Reeves, who was CEO for many years following the Company’s flotation,
resigned from the Board to concentrate on his role as managing director of Calidus Resources Ltd in Australia.
I would like to thank Dave for his dedicated work over the years and wish him well for the future.
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Outlook
With the securing of 100% ownership of our high-grade organic phosphate Diamond Creek mine, drawing a line
under the uncertainty related to Nayéga and securing an agreement with the Togolese State whereby the $1.7m
cash payment and ongoing cashflows for the next 3 years will further underpin the cashflow generative Diamond
creek operation, we believe the Company is excellently positioned to deliver into the growing North American
organic agricultural sector. This sector is underpinned by the macro-economic tailwinds of the global fertiliser
markets, and we remain bullish on our premium phosphate product and our position as we continue to build
market share.
Plans for expansion to broaden our product mix are underway and we continue to negotiate new offtake
agreements with our repeat customers. The construction of a downstream granulator plant is planned for 2023
to allow us to further expand the range of our products from five sized dry products to include two sized blend
granulates which will attract a price premium in markets that we are not currently supplying. Now that we are
fully in charge of operations the Directors are confident that Falcon Isle will be an increasingly profitable and
valuable asset for the Group, and we look forward to updating our shareholders on our progress as we continue
to ramp up production and build our position and market share of the fast-growing US organic phosphate
market.
Finally, I would like to take this opportunity to thank my colleagues on the Board and our management team
for their hard work, and shareholders for their continuing support.
Russell Lamming
Chairman
5 July 2023
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Strategic Report
Having acquired 51% in Falcon Isle Resources LLC in December 2020, we reported on the acquisition of the
remaining 49% in Falcon Isle on 30 March 2022 - a firm commitment to the Company’s strategy of delivering
growth from Falcon Isle’s Diamond Creek Mine and downstream processing assets and, in time, from other
assets in the US which we will look to evaluate in terms of their synergies with commodities contributing to a
sustainable future.
The year to 31 December 2022 was therefore one of consolidation – building on existing client relationships
and introducing our PhosAgri brand to prospective clients at trade shows. To this end we attended the Organic
Growers Summit in Monterey on California’s west coast and the World Ag Expo in Tulare California, both pivotal
to the agricultural sector in California's Central Valley. Two key take aways from these events revolved around
the sector’s demand for both liquid and granular organic products, each aimed directly at improving phosphate
availability from organic rock phosphate and therefore improved return on organic fertilizer purchase for organic
growers. While sales of our existing range of dry sized products improved markedly from 2021 (2,197t) to 2022
(4,276t), we recognise that granulates and solubilised products will represent a material component of the
organic sector demand going forward.
To this end, having acquired and taken delivery of a granulator plant to our Spanish Fork facility during 2022 we
are in discussions with two potential partners to construct the plant off-site which will give us and our partner
the ability to produce a range of bespoke granulated organic fertiliser blends rather than simply a phosphate
granule which would limit our market options. A site selection decision is expected during the second half of
2023 as the feasibility of the sites are evaluated in terms of bulk infrastructure supply (power, water and natural
gas), zoning to support long-term production and proximity to source materials and downstream markets.
With regard to producing liquid products, we have four testwork processes underway to progress the solubilising
and/or microbial/bacterial digestion of our finer 100# or 350# products into liquid products which can be used
in liquid blends in fertigation (drip fed irrigation) and hydroponic applications. The application of liquid organic
products at higher available phosphate (P2O5) (testwork presented to date suggests potential for >20% from
our micronized 350# product) ensures quicker absorption, provides for tighter quality control, reduces losses
in the application processes and provides us access to a rapidly growing indoor controlled environment
agricultural (‘CEA’) sector.
These opportunities are exciting developments for us and as a historically mineral resources/mining business
we look forward to researching additional product augmentation opportunities as we learn more about the
organic agricultural sector. Each product development will broaden our market reach, to grow annual sales to
enforce our strategy to enhance shareholder value through broadening our product mix and building market
share for our products within the North American organic fertilizer market.
Another meaningful operational improvement has been the centralisation of all our Falcon Isle crushing and
milling operations at our Spanish Fork site. This will continue to reduce operating costs by eliminating
unnecessary ore transport between sites previously established for different crushing and/or milling operations.
Value engineering initiatives will continue to streamline operations and rationalise costs to ensure consistent
product quality and volumes, all aimed at increasing margins.
In the longer-term, enhancing value of that asset will involve both organic expansion as well as identifying
value-accretive projects/businesses with natural synergies to increase scale and to add value to the Company,
ultimately to build the operation into the premier organic phosphate producer in the US.
Additional future value enhancements include developing opportunities around carbon sequestration and the
associated carbon credits. Diamond Creek’s organic phosphate products have the potential to tap directly into
this rapidly growing market and the Company is looking at developing and enhancing the value of this aspect
of its portfolio and in-turn generate greater returns for shareholders.
The business model has established the Company as an increasingly efficient, high-quality and low-cost producer
direct into the North American fertiliser market.
As noted in the Chairman’s Statement our Togolese asset, which was being held for sale as at 31 December
2022, was sold on 18 May 2023, although we expect to generate income in Togo for at least the next three years.
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From the Company’s point of view disposing of SGM is consistent with our strategy to deliver shareholder value
by concentrating our efforts in the US.
In exploring and developing mines to exploit mineral deposits, the Group accepts that not all its exploration
will be successful but also that the rewards for success can be high. It therefore expects that its shareholders
will be invested for potential capital growth, taking a long-term view of management’s good track record in
mineral discovery and development. The Directors have continued to invest in the Company and currently hold
approximately 9.04% of the issued shares in Keras, after allowing for the substantial fund raisings since the
period end. We believe this stake provides further evidence of the Board’s belief in and commitment to its
strategy.
To date, the Group has financed its activities through equity raisings. As the Group’s projects become more
advanced, the Board will seek mining and/or offtake finance and may also investigate strategic opportunities
to obtain funding for projects from future customers via pre-payments, royalties, and other marketing
arrangements.
Mining projects
United States
Keras acquired an interest in Falcon Isle, holder of the Diamond Creek phosphate mine, in July 2020, and
increased its interest to 51% in December 2020. Keras acquired the outstanding 49% in March 2022. The mine
is situated approximately 80km SSE of Salt Lake City, Utah. Diamond Creek is a fully permitted, high-grade direct
shipping ore (‘DSO’), low capex organic phosphate mine, which has significant historical estimated in-situ
tonnage (mineral resources have not been classified according to modern International Reporting Standards)
with sufficient phosphate ore exposed in-situ to provide for the 2023 and 2024 mining seasons before any
overburden stripping is required. The phosphate mineralisation is concentrated in the sedimentary shale beds
of the Meade Peak Member of the Phosphoria Formation. The mineralised zone is c.3m thick and averages 23%
total P2O5 with guaranteed available P2O5 of 12%. Historic reports vary with “surface mineable resources”
ranging from 3.10Mt to 4.60Mt. At an internally estimated peak production rate of 23.5ktpa, the opencast
resources alone represent a significant mine life.
The 2022 mining campaign was completed in October 2022 with a total of 4,750 ore tons extracted from the
mine. Primary crushing during the reporting period was undertaken using a contractor-operated mobile crusher
on the mine site, with downstream processing conducted through a combination of contractor toll-milling
(producing 10mesh and -50mesh products) and Falcon Isle owned milling plant comprising front-end feed,
primary crush, milling, ultra-fine dust extraction, 50lb and 1ton bagging circuits to produce -100 mesh and -350
mesh powders. As noted previously a granulation plant was procured and delivered to our Spanish Fork site
during the fourth quarter of 2021 with construction and commissioning initially planned for the second half of
2022. Pending discussions with potential partners in development of the granulation side of our business,
construction has been postponed to enable us to conclude agreements relating to the feasibility of proposed
sites for the granulator plant. The construction phase of the plant will be approximately 3 months post
conclusion of the feasibility assessment which is estimated to be concluded during the fourth quarter of 2023.
Our initial intention to construct the granulator plant in a building adjacent to our milling plant in Spanish Fork,
however as we’ve established ourselves in the organic agricultural sector it became apparent that we could
extract greater value from a blended granulate incorporating nitrogen, phosphate, potassium as well as other
minor valuable fertiliser constituents. We therefore elected to investigate opportunities to collaborate with
partners to select sites to achieve this. These discussions remain ongoing and we look forward to reporting on
finalisation of these discussions and construction progress.
Our products have received Organic Certification by all three key certification agencies in the USA – California
(‘CDFA’), Washington State (‘WSDA’) and the federal Organic Materials Review Institute (‘OMRI’). As a Direct
Shipping Ore (‘DSO’) it requires no chemical/synthetic upgrade processes which is the basis for our organic
certification. Our rock phosphate contains low heavy metal impurities, significantly higher available P2O5 than
any other organic rock phosphate in North America, and a calcium content of >25%.
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Strategic Report
continued
West Africa
Through the Company’s 85% interest in the Nayéga manganese project in Togo, Keras developed the asset
through exploration, and definitive feasibility study (‘DFS’) culminating in successful trial mining during the first
quarter of 2019. During the final quarter of 2022 Keras was notified that the Togolese State had intended to
declare manganese, among other metals and minerals, as strategic state assets and that a process would be
implemented to investigate how the State would take greater ownership and participate in the development
and operation of these assets.
Considering the investment made by Keras between 2012 and 2019 this clearly represented a departure from
Togolese Mining Law as well as the Mining Convention drafted between the parties as to how the State would
benefit from the Nayéga Mine. However, the Company remained in ongoing discussions with the State to
understand how this State declaration would pan out. As was recently announced on 18 May 2023, Keras and
the State entered into an agreement in terms of which Keras would no longer pursue the granting of an
Exploitation Permit and that the State would establish a wholly owned manganese holding vehicle - STM which
would be responsible for the development of all manganese assets within Togo.
Given the circumstances, Keras negotiated the disposal of all historical Nayéga technical studies commissioned
and funded by Keras to the State. While it was not the ideal outcome for the Company, the State acknowledged
that the newly formed STM would require a period of technical information and skills transfer. Keras therefore
entered into the agreement in good faith in the knowledge that there would be an ongoing revenue stream
for a three year period post re-commencement of the mine. This in addition to a USD1.7m cash payment for
the technical studies will provide Keras with an initial compensation for development expenditures as well as
an ongoing revenue stream for advisory and brokerage services provided to STM meaning that Keras is not
walking away from the project and the State values Keras’s institutional knowledge.
Keras is therefore satisfied with the outcome and will continue to provide routine technical advisory and product
sale brokerage services to STM.
Sustainability
Keras is committed to responsible mining and upholding ESG best practice across our business. We are similarly
committed to our stakeholders and are focused on looking to create value and benefits for all whilst seeking to
manage and mitigate the potential impacts that our operations may have. We are focussed on mining an essential
resource that can contribute to a more sustainable future and importantly sustainable and regenerative
agriculture. With the Diamond Creek mine we are running a simple operation with only crushing & milling
requirements and will look to maintain our low carbon footprint. We are focused on meeting our commitments
across the ESG space and will continue to be proactive in this area as we look to develop and sustain a
positive legacy.
Risk Management
The Board regularly reviews the risks to which the Group is exposed and ensures through its meetings and
regular reporting that these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this stage in its development are:
Market Risk
Unlike marketing globally traded, indexed commodities into international markets, growing market share within
the niche organic fertiliser market within North America presents risk in terms of pricing and volume.
The Group has employed a head of marketing to develop and implement a marketing strategy which will be a
key focus area to build market share. The business has a range of existing customers, three of which are anchor
clients having provided commitments to purchase a pleasing base load of our planned annual production. Our
marketing strategy rollout will include presence at industry trade exhibitions and conferences, as well as regular
regional direct contact visits with a comprehensive schedule of contacts within the wholesale and distribution
segments of the organic fertiliser market. Our business model will largely be driven by uptake from co-operative
type clients with wide distribution networks, rather than selling directly to farmers themselves.
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Exploration Risk
The Group’s business has been primarily mineral exploration and evaluation which are speculative activities and
whilst the Directors are satisfied that good progress is being made, there is no certainty that the Group will be
successful in the definition of economic mineral resources, nor that it will proceed to the development of any
of its projects or otherwise realise their value.
The Group aims to mitigate this risk when evaluating new business opportunities by targeting areas of potential
where there is at least some historical drilling or geological data available.
Resource Risk
All mineral projects carry risk associated with defined grade and continuity. Mineral resources and reserves are
calculated by the Group in accordance with accepted industry standards and codes but are always subject to
uncertainties in the underlying assumptions which include geological projection and commodity price assumptions.
The Group reports exploration targets, mineral resources and ore reserves in accordance with internationally
approved codes where our operations/projects are located, which set minimum standards for public reporting of
mineral exploration results, mineral resources and ore reserves.
Development Risk
Delays in permitting, financing and commissioning a project may result in delays to the Group meeting
development and/or production targets. Changes in commodity prices can affect the economic viability of
mining projects and affect decisions on continuing exploration activity.
Mining and Processing Technical Risk
Notwithstanding the completion of metallurgical testwork, trial mining and pilot studies indicating the technical
viability of a mining operation, variations in mineralogy, mineral continuity, ground stability, ground water
conditions and other geological conditions may still render a mining and processing operation economically or
technically non-viable.
The Group has a small team of mining professionals experienced in geological evaluation, exploration, financing
and development of mining projects. To mitigate development risk, the Group supplements this from time to
time with engagement of external expert consultants and contractors.
Environmental Risk
Exploration and development of a project can be adversely affected by environmental legislation and the
unforeseen results of environmental studies carried out during evaluation of a project. Once a project is in
production unforeseen events can give rise to environmental liabilities.
As Keras undertakes mining operations, any disturbance to the environment during this phase is required to be
rehabilitated, with specific requirements for closure and closure funding in accordance with the prevailing
regulations of the countries in which we operate as well as to international best-practice.
Given the Group’s size and scale it is not considered practical or cost effective to collect and report data on
carbon emissions.
Financing & Liquidity Risk
The Group has had an ongoing requirement to fund its activities through the equity markets and may in future
need obtain finance for further project development. There is no certainty such funds will be available when
needed. To date, Keras has managed to raise funds primarily through equity placements despite the very difficult
markets that currently exist for raising funding in the junior mining industry.
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Strategic Report
continued
Political Risk
All countries carry political risk that can lead to interruption of activity. Politically stable countries can have
enhanced environmental and social permitting risks, risks of strikes and changes to taxation whereas less
developed countries can have, in addition, risks associated with changes to the legal framework, civil unrest and
government expropriation of assets.
Partner Risk
Whilst there has been no past evidence of this, the Group can be adversely affected if joint venture or equity
partners are unable or unwilling to perform their obligations or fund their share of future developments. Keras
no longer operates with either equity or joint venture partners having secured 100% of the Diamond Creek project.
Bribery Risk
The Group has adopted an anti-corruption and bribery policy and whistle blowing policy under the Bribery Act
2010. Notwithstanding this, the Group may be held liable for offences under that Act committed by its
employees or subcontractors, whether or not the Group or the Directors had knowledge of the commission of
such offences.
Financial Instruments
Details of risks associated with the Group’s financial instruments are given in Note 29 to the financial statements.
Keras does not utilise any complex or derivative financial instruments.
COVID-19
Travel and shipping restrictions in place globally during 2021 had a direct impact on timing and cost of delivery
of plant and equipment to the USA. However, given recent developments the Directors do not believe that
Covid 19 will have a material effect on the Company or its operations going forward.
Insurance Coverage
The Group maintains a suite of insurance coverage that is appropriate for the Group and Company. This is
arranged via a specialist mining insurance broker and coverage includes public and products liability, travel,
property and medical coverage and assistance while Group employees and consultants are travelling on Group
business. This is reviewed at least annually and adapted as the Group’s scale and nature of activities changes.
Keras also has Directors and Officers insurance in place.
Internal Controls and Risk Management
The Directors are responsible for the Group’s system of internal financial control. Although no system of internal
financial control can provide absolute assurance against material misstatement or loss, the Group’s system is
designed to provide reasonable assurance that problems are identified on a timely basis and dealt with
appropriately.
In carrying out their responsibilities, the Directors have put in place a framework of controls to ensure as far as
possible that ongoing financial performance is monitored in a timely manner, that corrective action is taken and
that risk is identified as early as practically possible. The Directors review the effectiveness of internal financial
control at least annually.
The Board, subject to delegated authority, reviews capital investment, property sales and purchases, additional
borrowing facilities, guarantees and insurance arrangements.
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The Board takes account of the significance of social, environmental and ethical matters affecting the business of
the Group. At this stage in the Group’s development the Board has not adopted a specific policy on Corporate Social
Responsibility as it has a limited pool of stakeholders other than its shareholders. Rather, the Board seeks to protect
the interests of Keras’ stakeholders through individual policies and through ethical and transparent actions.
The Group has adopted an anti-corruption and bribery policy and a whistle blowing policy as stated previously.
Shareholders
The Directors are always prepared, where practicable and subject to confidentiality under the AIM Rules, to
enter into dialogue with shareholders to promote a mutual understanding of objectives. The Annual General
Meeting provides the Board with an opportunity to informally meet and communicate directly with investors.
Employees
The Group operates primarily through contractors. Notwithstanding this, the Group engages its contract
employees to understand all aspects of the Group’s business and seeks to remunerate them fairly, being flexible
where practicable. The Group gives full and fair consideration to applications for employment received
regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual
orientation. The Group takes account of employees’ interests when making decisions and welcomes suggestions
from employees aimed at improving the Group’s performance.
The Group currently operates in the USA and Togo. It recruits locally as many of its employees and contractors
as practicable.
The Company has four directors, three are male and one is female.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business
success and seeks to build and maintain this goodwill through fair dealings. The Group has a prompt payment
policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. Contractors are appointed
based on a detailed assessment of their capabilities, capacity and track record.
Health and Safety
The Board recognises that it has a responsibility to provide strategic leadership and direction in the development
of the Group’s health and safety strategy in order to protect all of its stakeholders. The Group does not have a
formal health and safety policy at this time. This is re-evaluated as and when the Group’s nature and scale of
activities expand.
Section 172 statement
The Directors believe they have acted in the way most likely to promote the success of the Company for the
benefit of its members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
•
•
•
•
•
•
Consider the likely consequences of any decision in the long-term;
Act fairly between the members of the Company;
Maintain a reputation for high standards of business conduct;
Consider the interests of the Company’s employees;
Foster the Company’s relationships with suppliers, customers and others; and
Consider the impact of the Company’s operations on the community and the environment.
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Strategic Report
continued
The Company’s operations and strategic aims are set out throughout the Strategic Report and in the Chairman’s
Statement, and relationships with stakeholders are also dealt with in the Corporate Governance Statement.
Graham Stacey
Director
This Strategic Report was approved by the Board of Directors on 5 July 2023.
12 KERAS RESOURCES PLC
266424 Keras Resources pp01-pp19.qxp 06/07/2023 14:30 Page 13
The Board
RUSSELL LAMMING
Non-Executive Chairman
Russell Lamming is a qualified geologist with an honours degree in geology from the University of the
Witwatersrand and a Bachelor of Commerce in Economics from the University of Natal. Russell has a broad
range of experience including directorship of a South African mining consultancy and precious metals analyst
for a leading international broker and was the CEO of AIM listed Chromex Mining and Goldplat Plc. He has strong
relationships in London and internationally and has raised considerable funds for resource companies over
the years.
GRAHAM STACEY
Chief Executive Officer
Graham holds an honours degree in Mining Engineering from WITS University in Johannesburg (1995), and an
MBA from the WITS Business School (2004) and a Mine Manager’s Certificate of Competency (2001). Graham
has over 25 years' experience across a range of commodities in the resources sector, including direct operational
management in the coal, PGE and chrome businesses in South Africa, manganese in Togo and rock phosphate
in the USA, as well in a technical consulting role (2004-2008). He is a Competent Person and Competent Valuator
as a longstanding member of the South African Institute of Mining and Metallurgy (SAIMM), and has wide ranging
experience in mine design, project execution, operations and mineral resource management. He was previously
a director of AIM listed Chromex Mining. Following the acquisition of 100% of Falcon Isle he has been appointed
as CEO of that company.
BRIAN MORITZ
Non-Executive Director
Brian is a Chartered Accountant and former Senior Partner of Grant Thornton, London. He formed Grant
Thornton’s Capital Markets Team which floated over 100 companies on AIM under his chairmanship. In 2004 he
retired from Grant Thornton to concentrate on bringing new companies to the market as a director.
He concentrates on mining companies, primarily in Africa, and was formerly chairman of African Platinum PLC
(Afplats) and Metal Bulletin PLC as well as currently being chairman of several junior mining companies.
CLAIRE PARRY
Non-Executive Director
Claire is a Chartered Accountant and a partner in the Canterbury office of Azets, a top 10 UK accounting firm.
With over 20 years in the industry she specialises in the application of IFRS and accounting and financial control
generally for smaller quoted companies, primarily in the natural resources sector.
KERAS RESOURCES PLC 13
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Corporate Governance Statement
To the extent applicable, and to the extent able (given the current size and structure of the Company and the
Board), the Company has adopted the Quoted Companies Alliance Corporate Governance Code. Details of how
the Company complies with the principles contained in the Code are set out below.
No key governance matters have arisen since the publication of the last Annual Report.
Taking account of the Company’s size and nature, the Board considers that the current Board is a cost effective
and practical method of directing and managing the Company. As the Company’s activities develop in size,
nature and scope, the size of the Board and the implementation of additional corporate governance policies
and structures will be reviewed. Further disclosures under the Code are included on the Company’s website.
Principle 1: Establish a strategy and business model which promote long term value for shareholders.
The Company’s strategy is to identify mining projects which can be developed to create value and income for
shareholders. In June 2017 this strategy was successfully demonstrated when the Company’s Australian gold
exploration assets were floated on the Australian Securities Exchange (ASX) with the name Calidus Resources
Limited. In November 2019 the Company’s shares in Calidus were demerged and transferred to the Company’s
shareholders by way of a capital reduction.
The demerger has permitted the Board to examine other projects, and in particular the Diamond Creek
phosphate mine in Utah, USA, where the Company has completed the staged acquisition of 100% equity interest
in March 2022. This is now the Company’s main project.
The Company had, for some years, been seeking to convert the Research Permits held by its 85% owned
subsidiary, Société Générale de Mines SA, over the Nayéga manganese project in Togo, to an Exploitation Permit.
Since 31 December 2022 the Company has sold its intellectual property and other assets relating to Nayéga to
a newly formed parastatal company, so that it no longer operates in Togo but will continue to provide advisory
and brokerage services to the Togolese State.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation.
The risks facing the Company are detailed in the Strategic Report. The Board seeks to mitigate such risks so far
as it is able to do, but certain important risks cannot be controlled by the Board.
In particular, products the Company is seeking to identify and mine are traded globally at prices reflecting supply
and demand rather than the cost of production. So far as the Company is concerned, the substantial decline in
the price of iron ore rendered two previous projects non-viable, both of which had appeared to have substantial
value on a discounted cash flow basis, and they were abandoned.
While the Company will only invest in exploration projects where there is a legal right to convert an initial
exploration licence to a mining licence, in practice it may be difficult to obtain such conversion for political
reasons. There is no legal way that the Company can protect itself against this possibility.
Principle 5: Maintain the Board as well-functioning, balanced team led by the chair.
The Board has been substantially changed during the year under review, both as regards its composition and as
regards the roles of the individual directors. Brief CVs of the current directors are set out separately in this
Annual Report.
Previously the board comprised four founder directors, none of whom qualified as independent as all had
material shareholdings resulting largely from their support of previous fund raisings.
Dave Reeves, who is resident in Western Australia, retired as a non-executive director on 1 September 2022.
He was replaced by Claire Parry, who is considered to be an independent non-executive director.
Graham Stacey, the CEO since 1 June 2022, works full time for the Company, with primary responsibility for the
Diamond Creek phosphate mine in Utah, USA. The other directors, Russell Lamming (CEO until 1 June 2022 and
14 KERAS RESOURCES PLC
266424 Keras Resources pp01-pp19.qxp 06/07/2023 14:30 Page 15
non-executive chairman from 1 September 2022), Brian Moritz (non-executive chairman until 1 September 2022)
and Claire Parry are non-executive directors. As Utah is in a time zone 7 hours different from the UK, Board
meetings are normally conducted by video conference or by telephone, supplemented by physical meeting
when Graham Stacey is in the UK.
The CEO is in regular touch with the Directors. He also holds frequent informal discussions with other directors.
Throughout the year such discussions average approximately two per week.
Non-executive directors are committed to devote 30 days per annum to the Company, but they are likely to exceed
that required time commitment. Standard director’s fees are currently £48,000 per annum for the Chairman and
£24,000 per annum for each non-executive director, below the median for AIM companies. Brian Moritz also acts
as Company Secretary and has board responsibility for accounting matters and receives an extra £12,000
per annum in respect of those responsibilities. No further amounts are paid for serving on Board committees.
Principle 6: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
Brief CVs of the directors are disclosed elsewhere in this Annual Report.
Each of the directors maintains up to date skills by a combination of technical journals, courses, conferences
and trade shows.
As an exploration and mining Company the Board requires skills in the area of geology and mining. Russell
Lamming is a qualified geologist and Graham Stacey is a qualified mining engineer. Each has a long history of
achievement in this area. Importantly, each of them has been in charge of the construction and operation
of mines.
Brian Moritz and Claire Parry are Chartered Accountants. In addition to his financial skills, Brian Moritz has
previously been registered as a Nominated Adviser and has wide experience of corporate transactions.
The advice of Azets, a top 10 UK accounting firm in which Claire Parry is a partner, is sought on technical
accounting matters, in particular in relation to compliance with IFRS.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.
Recently the Board has successfully achieved a major objective by acquiring a phosphate mine in Utah, USA,
constructing a processing plant and commencing production. The next stage for this mine is to expand its
product range and client base.
The Board will concentrate on achieving profitable production and positive cash flow from its existing project
while continuing to seek other mining projects.
Given the current state of the Company’s development the directors believe that the Board operates efficiently
and cost effectively and that the cost of an external review process is not justified.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours.
So far as possible the Company recruits locally for staff and sub-contractors.
In Utah, the Group’s product is a natural organic fertilizer which plays its part in reducing reliance on artificial
manufactured fertilizers.
Company has adopted a comprehensive anti-corruption and whistle blowing policy and an ethical policy which
is strictly applied.
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Corporate Governance Statement
continued
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
The Board communicates with its stakeholders through social media and webcasts, as well as by announcements
on RNS. It welcomes the ability to meet and engage with shareholders at general meetings.
The audit committee normally meets twice per annum, on its own to consider and approve the interim results,
and with the auditors to consider the annual report and matters raised by the auditors based on their audit. So
far as possible recommendations by the auditors are immediately implemented. As the CEO is also present as
an observer at such meetings, no further report is submitted to the Board.
The remuneration committee meets on an ad hoc basis when required. Fees paid to the non-executive directors
are settled by the Chief Executive Officer, as the non-executive directors comprise the remuneration committee.
Brian Moritz
Director
16 KERAS RESOURCES PLC
266424 Keras Resources pp01-pp19.qxp 06/07/2023 14:30 Page 17
Directors’ Report
The Directors present their report together with the audited financial statements of the Group for the year
ended 31 December 2022.
The Group’s projects are set out in the Strategic Report.
Review of business and financial performance
Further details on the financial position and development of the Group are set out in the Chairman’s Statement,
the Strategic Report and the annexed financial statements.
Results
The Group reports a loss for the year of £997,000 (15 months to 31 December 2021 - loss £2,014,000).
Major events after the balance sheet date
Since the end of the year the Company has agreed to transfer its interests in the Nayéga manganese project to the
Republic of Togo on the terms set out in Note 31.
Dividends
The Directors do not recommend payment of a dividend for the year ended 31 December 2022 (15 months to
31 December 2021 - £nil).
Political donations
There were no political donations during the year (15 months to 31 December 2021 - £nil).
Going concern
The Directors continue to adopt the going concern basis in preparing the financial statements as further
explained in Note 2 to the financial statements.
Directors’ indemnities
The Group maintains Directors and Officers liability insurance providing appropriate cover for any legal action
brought against its Directors and/or officers.
Audit Committee
The Audit Committee, which currently comprises B Moritz and C Parry, and is chaired by B Moritz, is responsible
for ensuring the financial performance, position and prospects of the Group are properly monitored and
reported on and for meeting the auditors and reviewing their reports relating to accounts and internal controls.
Meetings of the Audit Committee are held at least twice a year, at appropriate times in the reporting and audit
cycle. The Audit Committee reports to the Board on its proceedings after each meeting on all matters for which
it has responsibility. The members of the Audit Committee are subject to annual re-election by the Board.
Remuneration Committee
The Remuneration Committee, which comprises B Moritz and C Parry and which is chaired by B Moritz, reviews
the performance of the executive directors and sets their remuneration, determines the payment of bonuses to
executive directors and considers the future allocation of share options and other equity incentives pursuant to
any share option scheme or equity incentive scheme in operation from time to time to Directors and employees.
Meetings of the Remuneration Committee are held on an ad hoc basis as required. The Remuneration Committee
reports to the Board on its proceedings on all matters for which it has responsibility. The members of the
Remuneration Committee are subject to annual re-election by the Board.
KERAS RESOURCES PLC 17
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Directors’ Report
continued
Directors
The following Directors held office throughout the period:
B Moritz
D Reeves (resigned 1 September 2022)
R Lamming
G Stacey
C Parry (appointed 1 September 2022)
Directors’ interests
The beneficial interests of the Directors holding office on 31 December 2022 in the issued share capital of the
Company, including spouses of Directors, were as follows:
R Lamming
G Stacey
B Moritz
C Parry
31 December 2022
31 December 2021
Number of
Ordinary
Shares
4,611,845
437,390
2,125,821
–
Percentage
of issued
ordinary
share capital
5.78%
0.59%
2.67%
–
Number of
Ordinary
Shares
416,184,497
43,739,000
177,582,118
–
Percentage
of issued
ordinary
share capital
6.61%
0.69%
2.82%
–
On 26 April 2022 B Moritz, and R Lamming subscribed for 35,000,000 and 45,000,000 Ordinary Shares of
0.01p each respectively at 0.12p per share. Each share subscribed received a warrant to subscribe for 1 new
Ordinary Share at any time up to 31 May 2024, at an exercise price of 0.18p per share.
On 25 July 2022 every 100 existing ordinary shares of 0.01p each were consolidated into 1 ordinary share of
1p each. The figures presented in the 31 December 2022 column above are shown after the consolidation.
Since 31 December 2022 there have been no changes in these shareholdings.
Directors’ remuneration and service contracts
Details of remuneration payable to Directors as disclosed in note 11 to these financial statements:
B Moritz
D Reeves
C Parry
R Lamming
G Stacey
Remuneration
£’000
Share-based
payments
£’000
Year to
31 December
2022
Total
£’000
15 months to
31 December
2021
Total
£’000
40
10
8
118
114
290
–
–
–
4
–
4
40
10
8
122
114
294
52
30
–
237
22
341
18 KERAS RESOURCES PLC
266424 Keras Resources pp01-pp19.qxp 06/07/2023 14:30 Page 19
Statement of Directors’ responsibilities
The Directors are responsible for preparing the strategic report, the directors’ report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the Group financial statements in accordance with UK-adopted International
Accounting Standards (“UK-adopted IAS”) in conformity with the requirements of the Companies Act 2006 and
the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and
applicable law).
Under company law 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 Parent Company and of the profit or loss of the
Group and Parent Company 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 estimates that are reasonable and prudent;
state whether the consolidated financial statements comply with UK-adopted IAS and the parent company
financial statements are prepared in accordance with UK GAAP/FRS 101 in conformity with the
requirements of the Companies Act 2006, subject to any material departures disclosed and explained in
the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position
of the Company and the Group and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Company is compliant with AIM Rule 26 regarding the Company’s website.
Statement of disclosure to auditor
Each Director at the date of approval of this report confirms that;
So far as they are aware,
•
•
there is no relevant audit information of which the Company’s auditor is unaware; and
they have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that information.
Auditor
A resolution to re-appoint PKF Littlejohn LLP as auditor will be proposed at the Annual General Meeting.
PKF Littlejohn LLP has indicated its willingness to continue in office.
By order of the Board
Brian Moritz
Director
5 July 2023
KERAS RESOURCES PLC 19
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Independent Auditor’s Report to the Members of Keras
Resources Plc
Opinion
We have audited the financial statements of Keras Resources Plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2022 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent
Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows
and notes to the financial statements, including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and UK-adopted international accounting
standards. The financial reporting framework that has been applied in the preparation of the parent company
financial statements is United Kingdom Accounting Standards, including FRS 101 Reduced Disclosure Framework
(United Kingdom Generally Accepted Accounting Practice) and as applied in accordance with the provisions of
the Companies Act 2006.
In our opinion, the financial statements:
•
•
•
•
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2022 and of the group’s loss for the period then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice and as applied in accordance with the provisions of the Companies
Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the group in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included reviewing cashflow forecasts covering a period of 12 months from the date of approval of
these financial statements, considering the levels of discretionary and non-discretionary expenditure forecasted,
challenging and conducting sensitivity analysis using the key inputs and assumptions underpinning said forecasts,
ascertaining the group and parent company’s current cash position and reviewing the group and parent
company’s performance since the period end. Whilst the group made a significant loss in the period and has
forecasted significant growth in revenues over the going concern period, the group and parent company has
notable cash reserves and a notable proportion of the costs forecasted are discretionary therefore if forecasted
growth targets are not met, discretionary costs could be reduced or deferred accordingly.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group's or parent company’s ability
to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
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266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 21
Our application of materiality
For the purposes of determining whether the financial statements are free from material misstatement, we
define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a
reasonably knowledgeable person, relying on the financial statements, would be changed, or influenced. We
also determine a level of performance materiality which we use to assess the extent of testing needed to reduce
to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.
Materiality for the group financial statements as a whole was set as £121,000 (2021: £109,000). This was
calculated based upon 2% of gross assets (2021: 2% of gross assets) due to the group’s significant capitalised
exploration costs, assets held for sale and cash reserves being key balances of interest within the financial
statements and the fact that though generating revenues, the group is not yet profit generating. Performance
materiality and the triviality threshold for the consolidated financial statements was set at £84,700 (2021:
£76,300) and £6,050 (£5,450) respectively due to the assessed risk and our accumulated knowledge of the group.
Materiality for the parent company financial statements as a whole was set as £105,000 (2021: £43,700). This
was calculated based upon 2% of gross assets (2021: 5% of loss before tax) due to the focus on the investment
in and loans due from Falcon Isle Resources LLC. Performance materiality and the triviality threshold for the
parent company was set at £73,500 (2021: £30,600) and £5,250 (2021: £2,185) respectively due to the assessed
risk and our accumulated knowledge of the Company.
We also agreed to report to those charged with governance any other audit misstatements below the triviality
thresholds established above which we believe warranted reporting on qualitative grounds.
Our approach to the audit
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative
thresholds for materiality determine the scope of our audit and the nature, timing, and extent of our audit
procedures.
In designing our audit, we considered areas involving significant accounting estimates and judgements by the
directors as well as future events that are inherently uncertain. These included the recoverable value of the
parent company’s investment in its subsidiary and the amounts due to the parent company by its subsidiaries
and the recoverable value of capitalised exploration costs. We also addressed the risk of management override
of internal controls, including among other matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
We performed an audit of the financial information of the group’s four components in order to obtain the
assurance required for the group audit opinion. All of the components were assessed as being significant due to
their results for the year, the value of their assets, liabilities and capital and reserves as at 31 December 2022 and
the assessed risks in respect of their results for the year and their assets, liabilities and capital and reserves.
Of the four reporting components of the group, two are located in the United Kingdom, one is located in the
United States of America and one is located in Togo. PKF Littlejohn LLP audited the ultimate parent company,
situated in the United Kingdom, and its subsidiaries, situated in the United Kingdom, United States of America
and Togo. The Engagement Partner conducted audit work in the United Kingdom but interacted regularly with
the Management team in the United States of America and Togo during all stages of the audit and was
responsible for the scope and direction of the audit process. This, in conjunction with additional procedures
performed, gave us appropriate evidence for our opinion on the group financial statements.
KERAS RESOURCES PLC 21
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Independent Auditor’s Report to the Members of Keras
Resources Plc
continued
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our scope addressed this matter
Carrying value of intangible assets
As at 31 December 2022 the Group has intangible
assets with a carrying value of £3,558k which
represents capitalised exploration and evaluation
costs.
Given the value of the balance and the significant
estimates and judgements required to be made by
management when conducting their impairment
assessments, there is a risk that the exploration
costs capitalised may be materially misstated as
they are impaired and/or costs capitalised in the
year have been inappropriately capitalised in
accordance with the eligibility requirements of
IFRS 6.
Assets held for sale – Sale of Societe General
De Mine
During the year, the Company entered into
discussions to dispose of its Togolese operations
and negotiations with an interested party have
the
to
continued post year-end,
completion of a transaction
in May 2023.
Management have therefore classified this
segment as a held for sale asset as per IFRS 5.
leading
Given the value of the assets and liabilities of this
segment and the significant judgement and
estimation required in assessing the fair value of
the asset held for sale, there is a risk the segment
has not been correctly classified as a held for sale
asset and accounted for in accordance with IFRS 5
and that the fair value less cost to sell has not
been correct calculated and thus the assets held
for sale may be impaired.
22 KERAS RESOURCES PLC
Our work in this area included but was not limited to:
•
•
Confirming that the group held good title to the
underlying licenses and assessing whether any
indicators of impairment exists.
their assessment and
Obtaining
impairment
Management’s
assessments in relation to intangible assets and
supporting discounted cashflow forecasts.
their
Reviewing
supporting value
for
reasonableness; considering whether any of the
IAS 36 impairment indicators have been met and
considering if the recoverable value exceeds the
carrying value.
in use calculates
We consider Management’s assessment of impairment
is reasonable in concluding that no impairment is
required to be recognised at the year end.
Our work in this area included but was not limited to:
•
•
•
Obtaining management’s justification for the
classification the segment as a held for sale
asset. Reviewing, discussing with management
and obtaining corroborative evidence where
possible; considering whether the recognition
criteria per IFRS 5 is met;
Obtaining from management their justification
for the fair value determined and any
supporting workings and documentation.
Reviewing and discussing with management;
challenging the key inputs and assumptions in
their valuation and considering whether the fair
value less costs to sell is reasonable.
Ensuring that the segment’s assets and liabilities
have been appropriately presented within the
financial statements and that they represent the
lower or the carrying value of the segment’s net
assets is value and fair value less costs to sell.
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 23
Key Audit Matter
How our scope addressed this matter
•
Obtaining the agreement signed post year-end,
reviewing and considering the reasonableness
of management’s assessment and the estimates
and judgements made in respect of the assets
held for sale.
We consider Management’s classification of the
segment as held for sale and the estimation of fair
value less cost to sell to be reasonable.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial period for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
KERAS RESOURCES PLC 23
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 24
Independent Auditor’s Report to the Members of Keras
Resources Plc
continued
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the group and parent company financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the
group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below:
•
•
•
•
•
We obtained an understanding of the group and parent company and the sector in which they operate to
identify laws and regulations that could reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through discussions with management, industry
research and our cumulative audit knowledge and experience of the sector.
We determined the principal laws and regulations currently relevant to the group and parent company in
this regard to be those arising from UK Company Law, rules applicable to issuers on AIM, UK and US
employment law and local mining, environmental and health and safety laws in the US.
We designed our audit procedures to ensure the audit team considered whether there were any indications
of non-compliance by the group with those laws and regulations. These procedures included, but were
not limited to:
o
o
o
Discussions with management regarding compliance with laws and regulations by the parent
company and components;
Review of board minutes; and
Review of regulatory news announcements made throughout and post period-end.
We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, that the potential for management bias exists in relation to the carrying value of
intangible assets, the carrying value of investments in and loans due from subsidiaries and the carrying
value of assets held for sale and we addressed these by challenging the assumptions and judgements
made by management when auditing these significant accounting estimates and judgements.
As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; discussing with management as to whether there were any
instances or suspicions of fraud since 1 January 2022 within the parent company or components and
evaluating the business rationale of any significant transactions that are unusual or outside the normal
course of business.
24 KERAS RESOURCES PLC
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 25
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial statements or non-compliance with regulation. This
risk increases the more that compliance with a law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the
company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
5 July 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
KERAS RESOURCES PLC 25
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 26
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
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The notes on pages 33 to 63 are an integral part of these consolidated financial statements.
26 KERAS RESOURCES PLC
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 27
Consolidated Statement of Financial Position
as at 31 December 2022
Assets
Property, plant and equipment
Right of use asset
Intangible assets
Non-current assets
Inventory
Trade and other receivables
Assets held for sale
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Other reserves
Retained deficit
Equity attributable to owners of the Company
Non-controlling interests
Total equity
Liabilities
Trade and other payables
Liabilities held for sale
Lease liabilities – current
Current liabilities
Trade and other payables
Lease liabilities – non-current
Non-current liabilities
Total liabilities
Total equity and liabilities
31 December
2022
£’000
31 December
2021
£’000
Notes
14
15
16
20
21
23
22
25
25
25, 27
28
23
18
28
18
381
121
3,558
4,060
668
191
1,558
207
2,624
6,684
797
5,838
282
(2,990)
3,927
(146)
3,781
1,158
471
126
1,755
1,148
–
1,148
2,903
6,684
554
215
4,606
5,375
273
94
–
166
533
5,908
630
4,033
111
(1,721)
3,053
229
3,282
1,658
–
107
1,765
749
112
861
2,626
5,908
The financial statements were approved by the Board of Directors and authorised for issue on 5 July 2023. They were
signed on its behalf by:
Brian Moritz
Director
The notes on pages 33 to 63 are an integral part of these consolidated financial statements.
KERAS RESOURCES PLC 27
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 28
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
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The notes on pages 33 to 63 are an integral part of these consolidated financial statements.
28 KERAS RESOURCES PLC
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 29
Consolidated Statement of Changes in Equity
for the 15 month period ended 31 December 2021
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The notes on pages 33 to 63 are an integral part of these consolidated financial statements.
KERAS RESOURCES PLC 29
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 30
Consolidated Statement of Cash Flows
for the period ended 31 December 2022
Cash flows from operating activities
Loss from operating activities
Adjustments for:
Depreciation and amortisation
Share of loss of equity accounted associate
Expenses settled in shares
Finance costs recognised
Equity-settled share-based payments
Changes in:
– inventory
– trade and other receivables
– trade and other payables
Cash generated by/(used in) operating activities
Finance costs
Taxes paid
Net cash generated by/(used in) operating activities
Cash flows from investing activities
Cash acquired on acquisition
Acquisition of property, plant and equipment
Exploration and licence expenditure
Consideration for purchase of minority interest in subsidiary
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issue of share capital
Loans received
Repayment of loans
Payment of lease obligations
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period/year
Foreign exchange differences
Cash and cash equivalents at 31 December
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
Notes
(997)
(2,014)
14,15,16
12
27
17
25
22
179
–
109
204
9
(496)
(395)
(97)
119
(869)
(52)
–
(921)
–
–
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(286)
(286)
1,641
100
(375)
(93)
1,273
66
166
(25)
207
172
116
–
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37
(1,616)
(216)
111
540
(1,181)
–
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(1,181)
158
(188)
(538)
–
(568)
1,477
–
–
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1,477
(272)
438
73
166
Significant non-cash transactions
During the year, share capital was issued in return for non-cash consideration being the settlement of £231,000
due to creditors and £100,000 in respect of loans.
The notes on pages 33 to 63 are an integral part of these consolidated financial statements.
30 KERAS RESOURCES PLC
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 31
Company Statement of Financial Position
as at 31 December 2022
Assets
Property, plant and equipment
Investments
Non-current assets
Loans
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Other reserves
Retained deficit
Total equity attributable to owners of the Company
Liabilities
Trade and other payables
Current liabilities
Trade and other payables
Non-current liabilities
Total liabilities
Total equity and liabilities
31 December
2022
£’000
31 December
2021
£’000
Notes
14
17
19
21
22
25
25
25, 27
28
28
–
2,594
2,594
3,686
45
54
3,785
6,379
797
5,838
102
(2,190)
4,547
767
767
1,065
1,065
1,832
6,379
2
1,959
1,961
2,081
20
122
2,223
4,184
630
4,033
100
(729)
4,034
150
150
–
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150
4,184
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the
Parent Company profit and loss account. The Parent Company loss for the period was £1,467,879 (15 months to
31 December 2021: loss of £1,014,000).
The financial statements of Keras Resources PLC, company number 07353748, were approved by the Board of
Directors and authorised for issue on 5 July 2023. They were signed on its behalf by:
Brian Moritz
Director
The notes on pages 33 to 63 are an integral part of these consolidated financial statements.
KERAS RESOURCES PLC 31
266424 Keras Resources pp20-pp32.qxp 06/07/2023 14:30 Page 32
Company Statement of Changes in Equity
for the period ended 31 December 2022
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The notes on pages 33 to 63 are an integral part of these consolidated financial statements.
32 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 33
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
1. Reporting entity
Keras Resources PLC is a company domiciled in England and Wales. The address of the Company’s registered
office is Coveham House, Downside Bridge Road, Cobham KT11 3EP. The Group currently operates as a miner
of and explorer for mineral resources.
The Group consists of Keras Resources Plc and all of its subsidiaries.
2. Going concern
The Directors have adopted the going concern basis in preparing the Group and Company financial statements.
The Group’s and Company’s business activities together with the factors likely to affect its future development,
performance and position are set out in the Chairman’s Statement and Strategic Report. In addition, note 29 to
the Financial Statements includes the Group’s policies and processes for managing its financial risk management
objectives.
Since the end of the year the Company has agreed to sell its manganese mining interests in Togo to the Republic
of Togo. The consideration of $1,700,000 was received in July 2023, and the amount received, after payment
of costs associated with the sale, has been used to pay the 2023 instalment of the consideration for the
acquisition of the 49% interest in Falcon Isle, as described below, as well as for general working capital.
During the year, the Company acquired the minority 49% interest in Falcon Isle, and agreed to repay loans made
by the vendor to Falcon Isle, for a total consideration of $3.2 million. In addition a severance payment of
$340,000 is payable to the previous CEO of Falcon Isle. The consideration amount is payable in four annual
instalments of $800,000 commencing on 1 July 2022 with the severance payments being due being split
$240,000 on 1 July 2023 and the balance of $100k being due on 1 July 2024. The first instalment has been paid,
and the second instalment together with $240,000 of the severance payment has been settled from the
proceeds of the disposal of the Togolese interests as set out above.
Falcon Isle is currently generating positive cash flow, which is forecast to increase as its client base and product
range are expanded. In addition, the agreement with the Republic of Togo for the provision of advisory and
brokerage services, described in Note 31, is expected to generate substantial cash flow over the next three years.
On this basis, the Directors have a reasonable expectation that the Group and Company will have adequate
resources to continue in operational existence for the foreseeable future. As such, the Directors continue to
adopt the going concern basis of accounting.
3. Basis of preparation
Statement of compliance
(a)
The consolidated financial statements have been prepared in accordance with UK-adopted international
accounting standards in conformity with the Companies Act 2006(“UK-adopted IAS”), and the Companies Act
2006 as applicable to entities reporting in accordance with UK-adopted IAS.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis unless otherwise stated.
Functional and presentation currency
(c)
These consolidated financial statements are presented in Pounds Sterling (‘GBP’ or ‘£’), which is the Group’s
functional currency and is considered by the Directors to be the most appropriate presentation currency to
assist the users of the financial statements. All financial information presented in GBP has been rounded to the
nearest thousand, except when otherwise indicated.
KERAS RESOURCES PLC 33
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 34
Notes to the Consolidated Financial Statements
continued
3. Basis of preparation continued
(d) Basis of parent company preparation
The parent company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework.
As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions from the
requirements of IFRS:
(a)
the requirements of IFRS 7 ‘Financial Instruments: Disclosure’;
(b)
the requirements within IAS 1 relating to the presentation of certain comparative information;
(c)
the requirements of IAS 7 ‘Statement of Cash Flows’ to present a statement of cash flows;
(d) paragraphs 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’
(requirement for the disclosure of information when an entity has not applied a new IFRS that has been
issued but it not yet effective); and
(e)
the requirements of IAS 24 ‘Related Party Disclosures’ to disclose related party transactions and balances
between two or more members of a Group.
(e) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised if the revision affects only that period, or in the
period of revision and future periods of the revision if it affects both current and future periods.
Critical estimates and assumptions that have the most significant effect on the amounts recognised in the
consolidated financial statements and/or have a significant risk of resulting in a material adjustment within the
next financial year are as follows:
Deferred consideration and the loan payable to previous minority shareholder
The deferred consideration due in respect of the acquisition of the remaining 49% of Falcon Isle Resources LLC
has been discounted at a rate of 12%, being the rate at which interest will accrue in the event of a default.
Further details can be found in Note 17.
Carrying value of intangible assets
Intangible assets consists of prospecting and exploration rights. Those acquired with subsidiaries are recognised
at fair value at the date of acquisition. Other rights acquired and evaluation expenditure are recognised at cost.
Impairment of intangible assets
Intangible assets have been assessed during the current year for any impairment and it was concluded that they
are fairly valued. The recoverable amount from the cash generating unit (CGU), in the USA, was assessed by
performing a 10-year discounted cashflow (DCF) model and it was concluded that the recoverable amounts
exceeded the intangible asset value indicating no impairment.
Key assumptions
The recoverable amount for the CGU is based on value-in-use which is derived from discounted cash flow
calculations. The key assumptions applied in value-in-use calculations are those regarding forecast mine
production, sales per product type, operating profit, phosphate prices and discount rates.
34 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 35
Forecast operating profits
For the CGU, the Group prepared cash flow projections derived from the most recent forecast for the year
ending 31 December 2023. Forecast revenue, fixed and variable costs are based on recent performance and
expectations of future changes in the market, operating model and cost base.
Growth rates
For the medium-term, sales growth of 120% was assumed on the basis of consistent historic sales growth, as well
as planned growth projects.
Discount Rate
A post-tax real discount rate used to assess the forecast free cashflows from the CGU was derived from its
weighted average cost of capital, taking into account specific factors relating to the country it operates in. These
rates are reviewed annually and adjusted for the risks specific to the business being assessed and the market in
which the CGU operates. The real post-tax discount rate used during the period for the USA was 10%.
Sensitivity analysis
A sensitivity analysis on the key model parameters has been performed and management has concluded that
no reasonably foreseeable change in the key assumptions would result in an impairment of the intangible assets
of the Group’s CGU.
Assets held for sale
On classification as held-for-sale, assets and disposal groups are measured at the lower of the carrying amount
and fair value less costs to sell, with any adjustments taken to profit or loss (or other comprehensive income in
the case of a revalued asset). The fair value was estimated to be the contract disposal value less costs as detailed
in Note 23.
Intercompany receivables (Company only)
All loans to subsidiaries are currently unsecured and interest free and repayable on demand. Management have
reviewed the forecasts prepared and are satisfied that no impairment of this amount is required.
Fair value of share options and warrants
The determination of the fair values of the schemes issued have been made with reference to the Black-Scholes
model with the inputs set out in Note 27.
4. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, and have been applied consistently by Group entities.
(a) Basis of consolidation
Business combinations
(i)
The Group accounts for business combinations using the acquisition method when control is transferred to the
Group. The consideration transferred in the acquisition is generally measured at fair value, as are identifiable
net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase
is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the
issue of debt or equity securities. The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss.
KERAS RESOURCES PLC 35
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Notes to the Consolidated Financial Statements
continued
4. Significant accounting policies continued
Subsidiaries
(ii)
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases. On disposal of subsidiaries,
any amounts previously recognised in other comprehensive income in respect of that entity are accounted for
as if the Group had directly disposed of the related assets or liabilities. This might mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
Foreign currency
(b)
Transactions in foreign currencies are translated into the respective functional currencies of Group entities at
exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value in a foreign
currency are translated to the functional currency at the exchange rate when the fair value was determined.
Non-monetary items that are measured based on historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction.
Foreign operations
(i)
The assets and liabilities of foreign operations, including goodwill and the fair value adjustments arising on
acquisition, are translated to GBP at exchange rates at the reporting date. The income and expenses of foreign
operations are translated to GBP at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the translation
reserve except to the extent that the translation difference is allocated to non-controlling interests. When a
foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control
is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit
or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but
retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling
interests. When the Group disposes of only part of an associate or joint venture while retaining significant
influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
(c)
Financial instruments
Financial assets
(i)
The Group’s financial assets measured at amortised cost comprise trade and other receivables, cash and cash
equivalents and financial assets at fair value through other comprehensive income in the consolidated statement
of financial position.
Trade receivables and intra group balances are initially recognised at fair value. New impairment requirements
use an expected credit loss model to recognise an allowance. For receivables a simplified approach to measure
expected credit losses during a lifetime expected loss allowance is available and has been adopted by the Group.
During this process the probability of non-payment of the receivables is assessed. This probability is then
multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit
loss for the receivables. For trade receivables, which are reported net, such provisions are recorded in a separate
provision account with the loss being reported within the consolidated statement of comprehensive income.
On confirmation that the trade and intra group receivable will not be collectable, the gross carrying value of
the asset is written off against the provision.
36 KERAS RESOURCES PLC
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(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are
originated. All other financial liabilities are recognised initially on the trade date, which is the date that the Group
becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial
liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other
financial liabilities comprise trade and other payables.
(iii)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
are recognised as a deduction from equity, net of any tax effects.
(d) Property, plant and equipment
Recognition and measurement
(i)
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the
asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between
the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.
Subsequent expenditure
(ii)
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated
with the expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.
(iii) Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis in the statement of
comprehensive income over the estimated useful lives of each component.
Items of property, plant and equipment are depreciated from the date that they are installed and are ready for
use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives of significant items of property, plant and equipment are as follows:
•
•
•
•
plant and equipment
10 years
office equipment
computer equipment
motor vehicles
2 years
2 years
5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(e)
Intangible assets
Prospecting and exploration rights
(i)
Rights acquired with subsidiaries are recognised at fair value at the date of acquisition. Other rights acquired
and evaluation expenditure are recognised at cost.
KERAS RESOURCES PLC 37
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Notes to the Consolidated Financial Statements
continued
4. Significant accounting policies continued
(ii) Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses.
Subsequent expenditure
(iii)
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill
and brands, is recognised in profit or loss as incurred.
(iv) Amortisation
Intangible assets are amortised in profit or loss over their estimated useful lives, from the date that they are
available for use.
The estimated useful lives are as follows:
•
Prospecting and exploration rights - Life of mine based on units of production
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Amortisation is included within administrative expenses in the statement of comprehensive income.
(f)
Impairment
Non-derivative financial assets
(i)
A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset,
and had an impact on the estimated future cash flows from that asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring
of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor
or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic
conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for
an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective
evidence of impairment.
Financial assets measured at amortised cost
The Group considers evidence of impairment for financial assets measured at amortised cost (loans and
receivables) at both a specific asset and collective level. All individually significant assets are assessed for specific
impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that
has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for
impairment by grouping together assets with similar risk characteristics.
In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of
recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by
historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s
original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance against loans
and receivables. Interest on the impaired asset continues to be recognised. When an event occurring after the
impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss
is reversed through profit or loss.
38 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 39
Financial assets at fair value through other comprehensive income
Impairment losses on financial assets at FVOCI are recognised by reclassifying the losses accumulated in the fair
value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of
any principal repayment and amortisation) and the current fair value, less any impairment previously recognised
in profit or loss. Impairment losses recognised in profit or loss for an investment in an equity instrument classified
as FVOCI are not reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated. Indefinite-lived intangible assets are tested annually for impairment or when there is an indication
of impairment. An impairment loss is recognised if the carrying amount of an asset or Cash Generating Unit
(‘CGU’) exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset or CGU. For the purpose of impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are
aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill
is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups
of CGUs that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce
the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(g)
Employee benefits
Share-based payments
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period that the employees become unconditionally
entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for
which the related service and non-market performance conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that meet the related service and non-
market performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and
there is no adjustment for differences between expected and actual outcomes.
(h) Revenue
Revenue from the sale of processed products is recognised when ownership of the product passes to the
purchaser in accordance with the relevant sales contract. Ownership passes either upon delivery or once the
product is collected where customers arrange delivery.
Finance income and finance costs
(i)
Finance income comprises interest income on bank funds. Interest income is recognised as it accrues in profit
or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings. Borrowing costs are recognised in profit or loss in the
period in which they are incurred.
KERAS RESOURCES PLC 39
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Notes to the Consolidated Financial Statements
continued
4. Significant accounting policies continued
Taxation
(j)
Tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except
to the extent that it relates to a business combination, or items recognised directly in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous
years. Current tax payable also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for:
•
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent
that it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they can
be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised; such reductions are reversed when the probability
of future taxable profits improves.
Leases
(k)
The Group leases certain property, plant and equipment. Leases of plant and equipment where the Group has
substantially all the risks and rewards of ownership are classified as finance leases under IFRS 16. Finance leases
are capitalised on the lease’s commencement at the lower of the fair value of the leased assets and the present
value of the minimum lease payments. Other leases are either small in value or cover a period of less than
12 months.
The lease liability is initially measured at the present value of the lease payments that are not paid. Lease
payments generally include fixed payments less any lease incentives receivable. The lease liability is discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental
borrowing rate. The Group estimates the incremental borrowing rate based on the lease term, collateral
assumptions, and the economic environment in which the lease is denominated. The lease liability is
subsequently measured at amortized cost using the effective interest method. The lease liability is remeasured
when the expected lease payments change as a result of new assessments of contractual options and residual
value guarantees.
40 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 41
The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease
less any incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments
made before the commencement date, and estimated restoration costs. The right-of-use asset is subsequently
depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the lease liability.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations,
net of finance charges, are included in lease liabilities, split between current and non-current depending on
when the liabilities are due. The interest element of the finance cost is charged to the Statement of Profit and
Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period. Assets obtained under finance leases are depreciated over their useful lives. The lease
liabilities are shown in Note 18.
Inventories
(l)
Inventories for processed material and ore stockpiles are valued at the lower of cost and net realisable value.
Costs allocated to processed material are based on average costs and include all costs of purchase, conversion
and other costs in bringing these inventories to their existing location and condition. Costs allocated to ore
stockpiles are based on average costs, which include an appropriate share of direct mining costs, direct labour
and material costs, mine site overhead, depreciation and amortisation. If carrying value exceeds net realisable
amount, a write down is recognised. The write down may be reversed in a subsequent period if the
circumstances which caused it no longer exist.
(m) Segment reporting
Segment results that are reported to management include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
Equity reserves
(n)
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with
the issue of shares are deducted from share premium.
The share option/warrant reserve is used to recognise the fair value of equity-settled share based payment
transactions.
The exchange reserve is used to record exchange differences arising from the translation of foreign subsidiaries
into the presentation currency.
The financial assets at FVOCI reserve is used to record unrealised accumulated changes in fair value on financial
assets.
(o) Discontinued operation
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can
be clearly distinguished from the rest of the Group and which:
•
•
•
represents a separate major line of business or geographic area of operations;
is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of
operations; or
is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the
criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative statement of profit or loss and
OCI is re-presented as if the operation had been discontinued from the start of the comparative year.
KERAS RESOURCES PLC 41
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 42
Notes to the Consolidated Financial Statements
continued
5. New standards and interpretations
The current standards, amendments and interpretations have been adopted in the year and have not had a
material impact on the reported results in the Company’s financial statements:
•
•
•
•
Amendments to the Conceptual Framework for Financial Reporting
Amendments to IFRS 3 Definition of a Business
Amendments to IAS 1 and IAS 8 Definition of Material
Amendments to IFRS 9, IAS 39 and IFRS 7 Interest rate benchmark reform
The adoption of the following mentioned standards, amendments and interpretations in future years:
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)
Definition of Accounting Estimates (Amendments to IAS 8)
Disclosure of Accounting policies (Amendments to IAS 1 and IFRS Practice Statement 2
IFRS 17 Insurance Contracts
Amendments to IFRS 17
Initial Application of IFRS 17 and IFRS 9—Comparative Information
Amendments to IAS 1 Presentation of Financial Statements
• Non-current Liabilities with Covenants
• Deferral of Effective Date Amendment
• Classification of Liabilities as Current or Non-Current
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
Effective date – period
beginning on or after
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2024*
1 January 2024*
* These standards, amendments and interpretations have not yet been endorsed by the UK and the dates shown
are the expected dates.
The directors have undertaken a project to review the above standards, amendments and interpretations.
Management do not expect these standards to materially impact the financial statements.
6. Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When applicable further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Property, plant and equipment
(i)
The fair value of property, plant and equipment recognised as a result of a business combination is the estimated
amount for which a property could be exchanged on the date of acquisition between a willing buyer and a willing
seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably.
The fair value of items of plant and equipment is based on the market approach and cost approaches using quoted
market prices for similar items when available and depreciated replacement cost when appropriate. Depreciated
replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.
Intangible assets
(ii)
The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the
use and eventual sale of the assets.
42 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 43
(iii) Trade and other receivables
The fair value of trade and other receivables is estimated at the present value of future cash flows, discounted
at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes or
when such assets are acquired in a business combination.
(iv) Share-based payments
The fair value of the employee share options is measured using the Black-Scholes formula. Measurement inputs
include the share price on the measurement date, the exercise price of the instrument, expected volatility (based
on an evaluation of the Company’s historic volatility, particularly over the historic period commensurate with
the expected term), expected term of the instruments (based on historical experience and general option holder
behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and
non-market performance conditions attached to the transactions are not taken into account in determining
fair value.
Investments – other
(v)
When one is available, the Group measures the fair value of an instrument using the quoted price in an active
market for that instrument. A market is regarded as active if transactions for the asset or liability take place with
sufficient frequency and volume to provide pricing information on an ongoing basis. A discount is applied to
the value of any Performance shares to reflect the possibility that the milestones for conversion into ordinary
shares may not be met.
7. Revenue
Revenue comprises:
Group:
Sale of phosphate (USA)
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
994
994
452
452
8. Operating segments
The Group considers that it operated during the period in two distinct business areas, being that of manganese
exploration and development in West Africa, which is now treated as an asset held for sale, and phosphate
mining in Utah, USA. These business areas form the basis of the Group’s operating segments. For each segment,
the Group’s CEO (the chief operating decision maker) reviews internal management reports on at least a
quarterly basis.
Other operations relate to the Group’s administrative functions conducted at its head office and by its
intermediate holding company together with consolidation adjustments.
Information regarding the results of each reportable segment is included below. Performance is measured
based on segment result before tax, as included in the internal management reports that are reviewed by the
Group’s Managing Director. Segment results are used to measure performance as management believes that
such information is the most relevant in evaluating the performance of certain segments relative to other
entities that operate within the exploration industry.
KERAS RESOURCES PLC 43
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 44
Notes to the Consolidated Financial Statements
continued
8. Operating segments continued
Information about reportable segments
Year ended 31 December 2022
External revenue
Cost of sales
Depreciation, amortisation and impairment
(Loss)/profit before Tax
Assets
Exploration and capital expenditure
Liabilities
Manganese
£’000
Phosphate
£’000
–
–
34
(131)
1,558
–
471
994
263
144
68
5,027
3,558
601
15 months ended 31 December 2021
Manganese
£’000
Phosphate
£’000
External revenue
Cost of Sales
Depreciation, amortisation and impairment
Share of associate loss to date of becoming a subsidiary
(Loss)/profit before tax
Assets
Exploration and capital expenditure
Liabilities
–
–
43
–
(60)
1,535
1,332
360
Information about geographical segments
Year ended 31 December 2022
External revenue
Cost of sales
Depreciation, amortisation and impairment
(Loss)/profit before tax
Assets
Exploration and capital expenditure
Liabilities
15 months ended 31 December 2021
External revenue
Cost of Sales
Interest expense
Depreciation, amortisation and impairment
Share of associate loss
(Loss)/profit before tax
Assets
Exploration and capital expenditure
Liabilities
West Africa
£’000
–
–
34
(131)
1,558
–
471
West Africa
£’000
–
–
–
43
–
(44)
1,541
1,332
360
452
496
143
116
(569)
4,229
3,274
2,113
US
£’000
994
263
144
68
5,027
3,558
601
US
£’000
452
496
–
143
(116)
(569)
4,229
3,274
2,113
Other
operations
£’000
–
–
1
(934)
99
–
1,831
Other
operations
£’000
–
–
1
–
(1,385)
144
–
155
Other
£’000
–
–
1
(934)
99
–
1,831
Other
£’000
–
–
–
1
–
(1,385)
138
–
155
Total
£’000
994
263
179
(997)
6,684
3,558
2,903
Total
£’000
452
496
187
116
(2,014)
5,908
4,606
2,628
Total
£’000
994
263
179
(997)
6,684
3,558
2,903
Total
£’000
452
496
–
187
(116)
(2,014)
5,908
4,606
2,628
44 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 45
9. Expenses
Expenses include:
Depreciation and amortisation expense
Auditor’s remuneration
– Audit fee
Foreign exchange differences
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
179
41
13
187
33
12
Auditor’s remuneration for the period in respect of the Company amounted to £15,000 (Period ended
31 December 2021: £11,000).
10. Personnel expenses
Wages and salaries
Social security costs
Pension costs
Fees
Equity-settled share-based payments (see note 27)
The average number of employees (including directors) during the period was:
Directors
Other
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
382
26
7
114
9
538
672
–
–
100
37
809
Year ended 15 months ended
31 December
2021
31 December
2022
4
2
6
4
3
7
KERAS RESOURCES PLC 45
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 46
Notes to the Consolidated Financial Statements
continued
11. Directors’ emoluments
Year ended 31 December 2022
Wages and salaries (incl. fees)
15 months ended 31 December 2021
Wages and salaries (incl. fees)
Executive
directors
£’000
Non-executive
directors
£’000
232
232
58
58
Executive
directors
£’000
Non-executive
directors
£’000
234
234
82
82
Total
£’000
290
290
Total
£’000
316
316
Fees in respect of the services of D Reeves are payable to a third party, Wilgus Investments (Pty) Limited.
These amounts are disclosed by director in the Directors’ report on page 18.
Emoluments disclosed above include the following amounts payable to the highest paid director:
Emoluments for qualifying services
12. Finance costs
Recognised in loss for period
Discount unwinding on deferred consideration and loan payable to previous
minority shareholder
Other
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
118
219
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
152
52
204
–
43
43
The Discount unwinding disclosed above relates to the deferred consideration explained in Note 17.
46 KERAS RESOURCES PLC
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13. Taxation
Current tax
Tax recognised in profit or loss
Current tax
Current period
Deferred tax
Origination and reversal of temporary differences
Total tax
Reconciliation of effective tax rate
Loss before tax (continuing operations)
Tax using the Company’s domestic tax rate of 19.0% (2021: 19.0%)
Effects of:
Expenses not deductible for tax purposes
Overseas (profits)/losses
Equity-settled share-based payments
Tax losses carried forward not recognised as a deferred tax asset
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
–
–
–
–
–
–
Year ended 15 months ended
31 December
2021
£’000
31 December
2022
£’000
(997)
(189)
29
10
2
148
–
(2,014)
(383)
2
116
7
258
–
The UK corporation tax rate was 19% throughout the year.
UK budget on 3 March 2021 announced the intention to increase the tax rate from the current rate of 19% to
25%, with effect from April 2023.
None of the components of other comprehensive income have a tax impact.
Factors that may affect future tax charges
At the year end, the Group had unused tax losses available for offset against suitable future profits of
approximately £7,907,000 (Period ended 31 December 2021: £7,128,000). A deferred tax asset has not been
recognised in respect of such losses due to uncertainty of future profit streams.
KERAS RESOURCES PLC 47
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Notes to the Consolidated Financial Statements
continued
14. Property, plant and equipment
Group
Cost
Balance at 1 October 2020
Acquisition of Falcon Isle
Additions
Disposals
Effect of movements in exchange rates
Balance at 31 December 2021
Balance at 1 January 2022
Effect of movements in exchange rates
Transfers to assets held for sale (Note 23)
Balance at 31 December 2022
Depreciation and impairment provisions
Balance at 1 October 2020
Depreciation for the year
Depreciation on disposals
Effect of movements in exchange rates
Balance at 31 December 2021
Balance at 1 January 2022
Depreciation for the period
Effect of movements in exchange rates
Transfers to assets held for sale
Balance at 31 December 2022
Carrying amounts
At 1 October 2020
At 31 December 2021
At 31 December 2022
Depreciation is recognised within administrative expenses.
Plant and
equipment
£’000
Office and
computer
equipment
£’000
329
172
185
–
(25)
661
661
59
(323)
397
67
34
–
8
109
109
47
6
(145)
17
262
552
380
25
–
3
–
–
28
28
–
(16)
12
24
2
–
–
26
26
1
–
(16)
11
1
2
1
Total
£’000
354
172
188
–
(25)
689
689
59
(339)
409
91
36
–
8
135
135
48
6
(161)
28
263
554
381
48 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 49
Company
Cost
Balance at 1 October 2020
Transfers
Balance at 31 December 2021
Balance at 1 January 2022
Additions
Balance at 31 December 2022
Depreciation and impairment provisions
Balance at 1 October 2020
Depreciation for the year
Balance at 31 December 2021
Balance at 1 January 2022
Depreciation for the period
Balance at 31 December 2022
Carrying amounts
At 31 December 2021
At 31 December 2022
15. Right of use assets
Group
Cost
Balance at 1 October 2020
Additions
Balance at 31 December 2021
Balance at 1 January 2022
Effect of movements in exchange rates
Balance at 31 December 2022
Depreciation and impairment provisions
Balance at 1 October 2020
Depreciation for the year
Balance at 31 December 2021
Balance at 1 January 2022
Depreciation for the period
Effect of movements in exchange rates
Balance at 31 December 2022
Carrying amounts
At 1 October 2020
At 31 December 2021
At 31 December 2022
Computer
equipment
£’000
5
3
8
8
–
8
5
1
6
6
2
8
2
–
Land and
buildings
£’000
–
314
314
314
39
353
–
99
99
99
118
15
232
–
215
121
Depreciation is recognised within administrative expenses.
KERAS RESOURCES PLC 49
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Notes to the Consolidated Financial Statements
continued
16. Intangible assets – Group
Cost
Balance at 1 October 2020
Acquisition of Falcon Isle
Additions
Disposals
Effect of movement in exchange rates
Balance at 31 December 2021
Balance at 1 January 2022
Additions
Disposals
Effect of movements in exchange rates
Transfers to assets held for sale
Balance at 31 December 2022
Amortisation and impairment losses
Balance at 1 October 2020
Amortisation
Disposals
Balance at 31 December 2021
Balance at 1 January 2022
Amortisation
Effect of movements in exchange rates
Balance at 31 December 2022
Carrying amounts
At 1 October 2020
At 31 December 2021
At 31 December 2022
Prospecting
and
exploration
rights
£’000
1,227
3,046
538
(158)
(10)
4,643
4,643
–
–
349
(1,379)
3,613
158
37
(158)
37
37
13
5
55
1,069
4,606
3,558
The carrying value of the prospecting and exploration rights is supported by the estimated resource and current
market values.
Amortisation is recognised within administrative expenses.
50 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 51
17. Investments in subsidiaries and associates
Company – subsidiaries
Equity investments
Balance at beginning of period
Additions – Increased investment in Falcon Isle Resources LLC
Balance at 31 December
2022
£’000
1,959
635
2,594
2021
£’000
–
1,959
1,959
Directly
Southern Iron Limited
Falcon Isle Resources LLC
Keras US LLC
Indirectly
Société Générale des Mines SA
Falcon Isle Holdings LLC
Activity
Country of
incorporation
Ownership interest
2022
2021
Investment
Mining
Holding company
Exploration
Holding company
Guernsey
USA
USA
Togo
USA
100%
100%
100%
85%
100%
100%
51%
100%
85%
100%
Registered offices of subsidiary companies are:
•
•
•
Southern Iron Limited, 1st Floor, Elizabeth House, Les Ruettes Brayes, St Peter Port, Guernsey
Société Générale des Mines, Quartier Adidogome Apedokoe 02, BP 20022, Lome, Togo
Falcon Isle Resources LLC, Falcon Isle Holdings LLC and Keras US LLC, 8 The Green, Suite B8, Dover, Kent,
Delaware 19901, USA
Société Générale des Mines SA and Southern Iron Limited have been classified as assets held for sale at the year
end, see Note 23 for further details.
Group and Company – associates
Accounted for using the equity method
At 1 October / January
Additions – including acquisition costs
Share of loss for the period
Transfer to investment in subsidiary
At 31 December
2022
£’000
–
–
–
–
–
2021
£’000
1,622
453
(116)
(1,959)
–
The interest in Falcon Isle was acquired for nominal consideration under a binding heads of terms dated 28 July
2020. Under this agreement the Company agreed to provide US$2.5m in loans to Falcon Isle payable in agreed
tranches. Falcon Isle is the 100% owner of the Diamond Creek phosphate mine located in Utah (USA) which is a
fully permitted, high grade direct shipping ore organic phosphate operating mine.
At 30 September 2020 the Company had advanced US$ 1.9m to Falcon Isle, resulting in an equity interest of
40% and bringing the cost of the investment in the associate to £1,626,000.
On 31 December 2020 the Company advanced the balance of $0.6m and its equity interest has increased to a
controlling interest of 51%.
The initial acquisitions were accounted for under the equity method of accounting but upon achieving control
on 31 December 2020, the acquisition method of accounting has been applied.
The investment in associate was revalued prior to acquisition to fair value based on the price paid to acquire
the additional 11% shareholding. Under IFRS 3, on acquisition of the controlling stake, the Group remeasured
its original 40% investment in Falcon Isle. This led to a loss on change of ownership of £363,000 being recognised
in the Consolidated Statement of Comprehensive Income.
KERAS RESOURCES PLC 51
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Notes to the Consolidated Financial Statements
continued
17. Investments in subsidiaries and associates continued
On acquisition the non-controlling interest, valued based upon net assets at acquisition, was valued at £645,000.
No goodwill has arisen from the acquisition.
On 29 March 2022, the Company agreed to acquire the outstanding 49% equity interest in Falcon Isle for
consideration of $1,383,473 and loans totalling $1,816,527 made by the vendor to Falcon Isle, for total
consideration of $3.2 million, payable in four annual tranches of $800,000 commencing on 1 July 2022 and as
such the deferred consideration and loan due to the vendor has been discounted at 12% with the discount
being applied against the investment in full. As a result the non-controlling interest has been eliminated against
the consideration with the remaining balance of £199,311 transferred to retained earnings. The tranche due
on 1 July 2023 was paid late, which constituted an event of default under the agreement. This default has been
remedied within the 30 day period provided for in the agreement.
18. Lease liabilities
The following lease liabilities arose in respect of the recognition of right of use assets with a net book value of
£121k (2021 - £215k). The Group holds one lease that it accounts for under IFRS 16.
Maturity analysis
Within one year
In one to five years
Total undiscounted liabilities
Future finance charges
Lease liabilities in the financial statements
Current liabilities – Within one year
Non-current liabilities – In one to five years
2022
£’000
129
–
129
(3)
126
126
–
126
2021
£’000
115
115
230
(11)
219
107
112
219
The entities in the group were not party to any other leases as at 31 December 2022 and 31 December 2021.
19. Loans
Company - current
Balance at beginning of period
Funds advanced to subsidiaries
Impairment of loans
Purchase of subsidiary loans
Balance at 31 December
2022
£’000
2,081
756
(534)
1,383
3,686
2021
£’000
1,534
547
–
–
2,081
All loans to subsidiaries are currently unsecured and interest free and repayable on demand. All loans are
denominated in GBP with the exception of the loan purchased from the Falcon Isle Resources LLC
non-controlling interest of $1,816,527.
52 KERAS RESOURCES PLC
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20. Inventories
Phosphate, including processed material held for sale
21. Trade and other receivables
Group
Trade receivables
Other receivables
Prepayments
Company
Other receivables
Prepayments
2022
£’000
668
668
2022
£’000
69
85
37
191
2022
£’000
8
37
45
2021
£’000
273
273
2021
£’000
7
87
–
94
2021
£’000
20
–
20
Other receivables are stated at their nominal value less allowances for non-recoverability.
The Group and Company’s exposure to credit and currency risk is disclosed in note 29. Trade receivables are net
of a provision for bad debts of £nil (2021: £nil). No bad debt expense has been recognised in the current or
prior years.
22. Cash and cash equivalents
Group
Bank balances
Cash and cash equivalents
Company
Bank balances
Cash and cash equivalents
2022
£’000
207
207
2022
£’000
54
54
2021
£’000
166
166
2021
£’000
122
122
There is no material difference between the fair value of cash and cash equivalents and their book value.
KERAS RESOURCES PLC 53
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 54
Notes to the Consolidated Financial Statements
continued
23. Assets held for sale
Through its 100% owned, Guernsey incorporated subsidiary, Southern Iron Ltd, Keras holds an 85% interest in
Société Générale des Mines SA (“SGM”) which holds research permits for the Nayéga manganese project in
northern Togo (“Nayéga”). The research permits are effectively the equivalent of a mining exploration licences
and cover a 19,903 ha area in northern Togo.
Keras completed feasibility studies on Nayéga in 2015 and 2019 and completed a metallurgical bulk sample of
10,000 tonnes of saleable manganese product in 2019. In October 2019, the Council of Ministers of the Republic
of Togo published a decree granting the right for large-scale exploitation of the manganese deposit at Nayéga
to SGM. Since that date Keras has concentrated its efforts in Togo on obtaining the required exploitation permit.
The terms of the permit and associated protocols have been agreed; however, the exploitation permit approval
has not been forthcoming.
Keras will no longer pursue the Nayéga exploitation permit and will sell all the IP comprising reports, feasibility
studies etc to a newly formed mining company set up by the state for $1.7m less costs leaving net proceeds of
$1.33m and as such no impairment has been recognised and all assets and liabilities of SGM have been classified
as held for sale as follows:
Property, plant and equipment
Prospecting and exploration rights
Cash and cash equivalents
Trade and other payables
2022
£’000
178
1,379
1
1,558
(471)
1,087
The operating, financing and investing cashflows in respect of discontinued operations were immaterial in 2022
and in 2021 amounted to £233k, £88k and (£329k) respectively.
24. Retirement benefit schemes
Defined contribution schemes
Charge to profit or loss in respect of defined contribution schemes
2022
£’000
7
2021
£’000
7
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the
scheme are held separately from those of the Group in an independently administered fund.
At the year end, an amount of £2,042 (2021 - £2,042) was held in trade and other payables in respect of accrued
unpaid pension contributions.
54 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 55
25. Capital and reserves
Share capital
In issue at beginning of period
Issued for cash
Issued in settlement of debt
In issue at 31 December/ - fully paid
Number of ordinary shares
Presented
after share
consolidation
31 December
2022 Shares
of 1p each
Presented
before share
consolidation
31 December
2022 Shares
of 0.01p each
31 December
2021 Shares
of 0.01p each
62,960,731
16,775,000
–
6,296,073,068
1,677,500,000
–
4,866,007,851
1,369,565,217
60,500,000
79,735,731
7,973,573,100
6,296,073,068
All ordinary shares rank equally with regard to the Company’s residual assets. The holders of ordinary shares
are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at general
meetings of the Company.
Issues of ordinary shares
On 5 May 2022 1,000,000,000 ordinary shares of 0.01p each were issued at 0.12p per share of which
880,000,000 were issued for cash, 83,333,333 to settle loans and 36,666,667 to settle creditors.
On 17 May 2022 677,500,000 ordinary shares of 0.01p each were issued at 0.12p per share of which 521,366,666
were issued for cash and 156,133,333 to settle creditors.
Consolidation of shares
On 25 July 2022 every 100 existing ordinary shares of 0.01p each was consolidated into 1 ordinary share of
1p each. The figures presented in the 31 December 2022 column above are shown after the consolidation.
Warrants
31 December 2022 31 December 2021
Presented after Presented before
share consolidation share consolidation
Average
exercise
price
Average
exercise
price
Average
exercise
price
Number
Number
Number
In issue at beginning of period 18p
Issued in period 18p
Lapsed 18p
4,347,856
16,775,000
(4,347,856)
434,785,608
0.18p
0.18p 1,677,500,000
(434,785,608)
0.18p
984,357,334
0.24p
0.20p
684,785,608
0.23p (1,234,357,334)
In issue at 31 December 18p
16,775,000
0.18p 1,677,500,000
0.18p
434,785,608
The figures presented in the 31 December 2022 column above are shown after the consolidation and as such
each exercise price has been multiplied by 100 and each number of shares divided by 100.
On 16 April 2022 1,000,000,000 warrants were agreed to be issued to subscribers for the Ordinary Shares agreed
to be issued for cash on 16 April 2022 on the basis of 1 warrant for every 2 shares subscribed. The warrants are
exercisable at price of 0.18p at any time up to 31 May 2024.
On 18 May 2022 677,500,000 warrants were agreed to be issued to subscribers for the Ordinary Shares agreed
to be issued for cash on 18 May 2022 on the basis of 1 warrant for every 2 shares subscribed. The warrants are
exercisable at price of 0.18p at any time up to 31 May 2024.
The warrants had a fair value of £nil at the balance sheet date and were considered to fall outside the scope
of IFRS2.
The weighted average remaining contractual life of the warrants outstanding is 1 year and 152 days.
KERAS RESOURCES PLC 55
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 56
Notes to the Consolidated Financial Statements
continued
25. Capital and reserves continued
Other reserves
Share option/warrant reserve
The share option/warrant reserve comprises the cumulative entries made to the consolidated statement of
comprehensive income in respect of equity-settled share-based payments as adjusted for share options
cancelled.
Exchange reserve
The exchange reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
26. Earnings per share
Basic and diluted earnings/(loss) per share
The calculation of basic earnings/(loss) per share at 31 December 2022 is based on the following (loss)/profit
attributable to ordinary shareholders and a weighted average number of ordinary shares in issue.
Loss attributable to ordinary shareholders (£)
Continuing operations
Discontinued operations
Loss attributable to ordinary shareholders
Basic weighted average number of ordinary shares
Issued ordinary shares at beginning of year
Effect of shares issued
Weighted average number of ordinary shares
Diluted weighted average number of shares
Basic weighted average number
Effect of share options in issue
Effect of warrants in issue
Weighted average number of ordinary shares
Year ended 15 months ended
31 December
2021
31 December
2022
(751,000)
(96,000)
(847,000)
(1,948,000)
–
(1,948,000)
Year ended 15 months ended
31 December
2021
31 December
2022
62,960,731
10,807,397
48,660,079
10,854,832
73,768,128
59,514,911
Year ended
31 December 2022
73,768,128
1,300,000
11,510,197
86,578,325
As a result of the group being loss making the earning per share is presented on a basic weighted average
number of shares basis and not diluted.
Consolidation of shares
On 25 July 2022 every 100 existing ordinary shares of 0.01p each was consolidated into 1 ordinary share of
1p each. The figures presented in the table above for both the current and prior period are shown after the
impact of the consolidation.
56 KERAS RESOURCES PLC
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27. Share-based payments
Number of share options Average exercise price
Presented
after share
consolidation
2022
Presented
before share
consolidation
2022
Presented
after share
consolidation
2022
pence
Presented
before share
consolidation
2022
Pence
2021
Outstanding at
1 January 2022
Granted in the
period
Forfeited in the
period
1,450,000
145,000,000 120,000,000
–
–
25,000,000
(150,000)
(15,000,000)
–
Outstanding at
31 December 2022 1,300,000
Exercisable at
31 December 2022 1,033,333
130,000,000 145,000,000
103,333,333
70,000,000
16
–
12
16
16
0.16
–
0.12
0.16
0.16
2021
pence
0.16
0.12
–
0.16
0.16
The figures presented in the 31 December 2022 column above are shown after the consolidation of shares
completed in July 2022 and as such each exercise price has been multiplied by 100 and each number of shares
divided by 100.
The Company established an Enterprise Management Incentive Scheme to incentivise Directors and senior
executives. On 17 January 2020, 120,000,000 options were granted at £0.001639 with 10,000,000 vesting
immediately, 30,000,000 vesting on 9 March 2020, 30,000,000 vesting on 17 January 2021, 30,000,000 vesting
on 17 January 2022 and 20,000,000 vesting on 17 January 2023. The options lapse if not exercised within 5 years.
Of the total, 90,000,000 options were granted to R Lamming, a Director.
The Black Scholes pricing model was used to calculate the share based payment charge incorporating an annual
volatility rate of 55%, expected life of between 2 and 5 years and risk free investment rate of between 0.23%
and 0.39%. The charge for the year ended 31 December 2022 for these rights which was included in
administrative and exploration expenses amounted to £4,485 (2021 – £25,233).
On 7 April 2021, 10,000,000 options were granted at £0.001183 with 3,333,333 vesting on 1 April 2022,
3,333,333 vesting on 1 April 2023 and 3,333,334 vesting on 1 April 2024. The options lapse if not exercised
within 5 years. The Black Scholes pricing model was used to calculate the share based payment charge
incorporating an annual volatility rate of 57%, expected life of between 4 and 6 years and risk free investment
rate of between 0.6% and 0.93%. The charge for the period ended 31 December 2022 for these rights which
was included in administrative and exploration expenses amounted to £4,370 (2021 - £5,450).
On 27 May 2021, 15,000,000 options were granted at £0.001121 with 5,000,000 vesting on 17 May 2022,
5,000,000 vesting on 17 May 2023 and 5,000,000 vesting on 17 May 2024. The Black Scholes pricing model was
used to calculate the share based payment charge incorporating an annual volatility rate of 57%, expected life
of between 4 and 6 years and risk free investment rate of between 0.6% and 0.93%. The charge for the year
ended 31 December 2022 for these rights which was included in administrative and exploration expenses
amounted to £nil (2021 - £6,706). The employee which these options were granted to left the company during
the year and as such the options lapsed and the balance within the share based payment reserve relating to
these options of £6,706 was transferred to retained earnings.
KERAS RESOURCES PLC 57
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Notes to the Consolidated Financial Statements
continued
28. Trade and other payables
Group - Current
Trade payables
Accrued expenses
Amounts due to Falcon Isle Resources’ minority interest
Other payables
Deferred consideration and loans to previous minority shareholders
Group – Non-Current
Amounts due to Falcon Isle Resources’ minority interest
Other payables
Deferred consideration and loans to previous minority shareholders
Company - Current
Trade payables
Accrued expenses
Other payables
Deferred consideration and loans to previous minority shareholders
Company – Non-Current
Deferred consideration and loans to previous minority shareholders
2022
£’000
262
59
–
209
628
1,158
2022
£’000
–
83
1,065
1,148
2022
£’000
68
60
11
628
767
2022
£’000
1,065
1,065
2021
£’000
962
93
593
11
–
1,658
2021
£’000
749
–
–
749
2021
£’000
46
91
13
–
150
2021
£’000
–
–
There is no material difference between the fair value of trade and other payables and accruals and their book
value. The Group’s and Company’s exposure to currency and liquidity risk related to trade and other payables
is disclosed in Note 29.
Deferred consideration and loans to previous minority shareholders relates to the acquisition of the outstanding
49% equity interest in Falcon Isle and loans totalling $1,816,527 made by the vendor to Falcon Isle, for total
consideration of $3.2 million, payable in four annual tranches of $800,000 commencing on 1 July 2022 and as
such the deferred consideration and loans to previous minority shareholders has been discounted at 12%.
58 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 59
29. Financial instruments
Financial risk management
The Group’s operations expose it to a variety of financial risks that include liquidity risk. The Group has in place
a risk management programme that seeks to limit the adverse effect of such risks on its financial performance.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was as follows.
Group
Credit risk
Trade and other receivables
Cash and cash equivalents
Expected credit loss assessment
Trade receivables
Current
1-30 days overdue
31-60 days overdue
61-90 days overdue
Over 90 days overdue
Financial assets at
amortised cost
Carrying amount
2022
£’000
191
207
398
2021
£’000
94
166
260
Expected loss
rate %
Balance
£’000
Loss
allowance
£’000
19
7
28
9
6
69
–
–
–
–
–
–
–
–
–
–
–
–
The director considers that the carrying amount of trade and other receivables is approximately equal to their
fair value.
Company
Loans
Trade and other receivables
Cash and cash equivalents
Financial assets at
amortised cost
Carrying amount
2022
£’000
2,586
45
54
2,685
2021
£’000
2,081
20
122
2,223
KERAS RESOURCES PLC 59
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Notes to the Consolidated Financial Statements
continued
29. Financial instruments continued
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset.
The Group reviews its facilities regularly to ensure it has adequate funds for operations and expansion plans.
The following are the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements.
Group
2022
Non-derivative financial assets
Inventory
Trade and other receivables
Assets held for sale
Cash and cash equivalents
Non-derivative financial liabilities
Trade and other payables
Liabilities held for sale
Lease liabilities
Liquidity gap
Group
2021
Carrying
amount
£’000
Contractual
cash flows
£’000
3 months
or less
£’000
3-12 months
£’000
2-5 years
£’000
668
191
1,558
207
2,624
2,306
471
126
2,903
(279)
668
191
1,558
207
2,624
2,306
471
126
2,903
(279)
668
191
1,558
207
2,624
331
471
31
833
–
–
–
–
–
828
–
95
923
–
–
–
–
–
1,147
–
–
1,147
1,791
(923)
(1,147)
Carrying
amount
£’000
Contractual
cash flows
£’000
2 months
or less
£’000
2-12 months
£’000
2-5 years
£’000
Non-derivative financial assets
Inventory
Trade and other receivables
Cash and cash equivalents
Non-derivative financial liabilities
Trade and other payables
Lease liabilities
273
94
166
533
2,407
219
2,626
273
94
166
533
2,407
219
2,626
Liquidity gap
(2,093)
(2,093)
273
94
166
533
168
19
187
346
–
–
–
–
1,490
88
1,578
(1,578)
–
–
–
–
749
112
861
(861)
60 KERAS RESOURCES PLC
266424 Keras Resources pp33-imprint.qxp 06/07/2023 14:30 Page 61
Company
2022
Non-derivative financial assets
Loans
Trade and other receivables
Cash and cash equivalents
Non-derivative financial assets
Trade and other payables
Liquidity gap
Company
2021
Carrying
amount
£’000
Contractual
cash flows
£’000
3 months
or less
£’000
3-12 months
£’000
2-5 years
£’000
3,686
45
54
3,785
1,832
1,832
1,953
3,686
45
54
3,785
1,832
1,832
1,953
3,686
45
54
3,785
139
139
3,646
–
–
–
–
628
628
(628)
–
–
–
–
1,065
1,065
(1,065)
Carrying
amount
£’000
Contractual
cash flows
£’000
2 months
or less
£’000
2-12 months
£’000
2-5 years
£’000
Non-derivative financial assets
Loans
Trade and other receivables
Cash and cash equivalents
Non-derivative financial liabilities
Trade and other payables
Liquidity gap
2,081
20
122
2,223
150
150
2,073
2,081
20
122
2,223
150
150
2,073
2,081
20
122
2,223
25
25
2,198
–
–
–
–
125
125
(125)
–
–
–
–
–
–
–
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return.
Currency risk
The Group is exposed to foreign currency risk on purchases that are denominated in currencies other than GBP.
The currencies giving rise to this risk are primarily the CFA Franc and the US dollar.
The carrying amounts of the group’s foreign currency denominated monetary assets and liabilities at the
reporting date are as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
GBP
£’000
52
46
(138)
40
USD
£’000
155
145
(2,168)
(1,868)
CFA
£’000
–
–
–
–
KERAS RESOURCES PLC 61
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Notes to the Consolidated Financial Statements
continued
29. Financial instruments continued
Fair values
The fair values of financial instruments such as trade and other receivables/payables are substantially equivalent
to carrying amounts reflected in the balance sheet.
Capital management
The Group’s objective when managing capital is to safeguard its accumulated capital in order to provide an
adequate return to shareholders by maintaining a sufficient level of funds, in order to support continued
operations.
The Group considers its capital to be total shareholders’ equity which at 31 December 2022 for the Group
totalled £3,927,000 (2021: £3,053,000) and for the Company totalled £4,547,000 (2021: £4,034,000).
30. Related parties
The Group’s related parties include its key management personnel and others as described below.
No guarantees have been given or received and all outstanding balances are usually settled in cash.
As part of a placing in April 2022 which raised a total of £1,200,000 by the issue of 1,000,000,000 new ordinary
shares (before consolidation) at 0.12p per share, the Directors subscribed for 200,000,000 Placing Shares in
aggregate. Brian Moritz, Russell Lamming and Dave Reeves subscribed for 35,000,000 (£42,000), 45,000,000
(£54,000) and 120,000,000 (£144,000) new ordinary shares respectively.
Azets, a firm in which Claire Parry is a partner, charged the Company £9,340 plus VAT for accounting services
during the period from 1 September to 31 December 2022.
Other related party transactions
Transactions with Group companies
The Company had the following related party balances from financing activities:
Southern Iron Limited
– Loans and receivables (interest free)
Falcon Isle Resources LLC
– Loans and receivables (interest free)
2022
£’000
2021
£’000
1,100
1,622
2,586
459
Southern Iron Limited had the following related party balances from financing activities:
Société Générale des Mines SA
– Loans and receivables (interest free)
1,100
1,777
62 KERAS RESOURCES PLC
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31. Subsequent events
On 17 May 2023 Keras signed an agreement with the Republic of Togo (the “State”) relating to the Nayéga
Manganese project (“Nayéga”) in Northern Togo. Under this agreement Keras agreed that Nayéga is a Togolese
strategic asset and Keras will no longer pursue the Nayéga exploitation permit. Keras agreed to transfer all its
intellectual knowledge on Nayéga to the State and provide advisory and brokerage services to expedite the
development of Nayéga.
The State agreed to pay Keras a cash consideration of $1,700,000 which was received in July 2023, and
thereafter;
•
•
Keras will be paid an advisory fee of 1.5% of gross revenue generated from the Nayéga mine for the
provision of advisory services for three years; and
Keras will be paid 6.0% of gross revenue generated from the Nayéga mine for the provision of brokerage
services for the lesser of three and a half years or 900,000 tonnes of beneficiated manganese ore produced
and sold from Nayéga.
In addition, Keras will liquidate its interest in Société Générale des Mines SA, the company through which Keras
holds its interest in Nayéga.
KERAS RESOURCES PLC 63
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