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Registration number 07220790 (England and Wales)
KODAL MINERALS PLC
GROUP ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2018
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CONTENTS
Company Information
Strategic Report
Report of the Directors
Corporate Governance Report
Remuneration Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated and Parent Company Statements of Financial Position
Consolidated Statement of Changes in Equity
Parent Company Statement of Changes in Equity
Consolidated and Parent Company Statements of Cash Flows
Principal Accounting Policies
Notes to the Financial Statements
Notice of Annual General Meeting
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Kodal Minerals Report & Accounts 2018 1
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COMPANY INFORMATION
DIRECTORS
SECRETARY
Bernard Aylward
Luke Bryan
Robert Wooldridge
Qingtao Zeng
Weaver Financial Limited
Stapeley House
London Road
Nantwich CW5 7JW
COUNTRY OF INCORPORATION
England and Wales
REGISTERED NUMBER
07220790
REGISTERED OFFICE
NOMINATED ADVISER
SOLICITORS
FINANCIAL ADVISER & BROKER
AUDITOR
SHARE REGISTRARS
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Allenby Capital Limited
5 St Helen’s Place
London EC3A 6AB
Fieldfisher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey GU9 7DR
Kodal Minerals Report & Accounts 2018 2
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STRATEGIC REPORT
for the year ended 31 March 2018 – Chairman’s Statement
Chairman’s Statement
I am pleased to present the Annual Report of Kodal Minerals plc (“Kodal” or the “Company” and together with its subsidiaries, the
“Group”) for the year ended 31 March 2018.
Kodal’s principal focus for this year has been the continued exploration and development of our exciting Bougouni Lithium Project
located in southern Mali (“Bougouni” or “the Project”). The lithium market has remained strong throughout the year and we believe
our focus on a rapid exploration and development of Bougouni places us in a very strong position to take advantage of this
opportunity. The key drivers to the continued growth of the lithium market are the increasing demand for electric vehicles, battery
storage and growth in use of personal electric products driven by social choice, government regulations and an improvement in the
performance and affordability of high quality battery products.
We have had a very busy year of exploration with a total of 199 reverse circulation (“RC”) drill holes for 24,426m completed. Our
exploration efforts have been very successful in the delineation of high-grade mineralisation and we now have three advanced
prospects at Ngoualana, Sogola-Baoule and Boumou which are likely to form the basis of our maiden mineral resource estimate
expected in the autumn of 2018. In parallel with the drilling, we have also continued the development assessment work with further
metallurgical test work highlighting the quality of the spodumene concentrate produced from our samples and the key ability to
produce a battery grade lithium carbonate from the concentrate. We have also commenced extraction of a 5,000t bulk sample
designed to provide us with key mining and processing data as well as the initiation of environmental review and monitoring to assist
us in the future mining licence application.
The Company has been well supported and funded to allow us to undertake this extensive work programme. The Suay Chin
International Pte Limited (“Suay Chin”) subscription agreement was completed on 3 November 2017 with a total of £4.3 million
invested, bringing the total investment of Suay Chin to £4.825 million and giving it a 20% shareholding in the Company at the year
end. Following the end of the financial year, the Company raised an additional £1.5 million in June 2018 at a price of 0.13 pence
per share including a further subscription by Suay Chin of £1.2 million to bring its holding in the Company to 29%. This additional
funding, driven by the continued support of Suay Chin, ensures the Company can maintain the rapid exploration and development
programme at the Bougouni Lithium Project.
In addition to the lithium assets, Kodal has also maintained its gold interests in Mali and Côte d’Ivoire. In Côte d’Ivoire the joint
venture with Resolute Mining Limited (“Resolute”) is continuing and we have been very pleased with the progress, particularly at
the Niéllé prospect where exploration activity has identified a new zone of gold mineralisation. The work completed by Resolute
includes auger geochemistry and reconnaissance aircore drilling that returned promising results such as 16m at 1.16g/t gold from
surface and 4m at 3.04g/t gold from 12m. This new zone is being tested with RC drilling and we are eagerly awaiting an update.
Newcrest Mining Limited (“Newcrest”) has withdrawn from the Dabakala joint venture and the licence remains 100% owned by
Kodal. We are reviewing opportunities for our Côte d’Ivoire gold assets as well as assessing priorities for our Mali gold projects at
Nangalasso and SLAM.
Kodal has also strengthened its board of directors during the year with the appointment of Dr Qingtao Zeng. Dr Zeng is the
representative of Suay Chin and brings considerable geological experience as well as commercial skills and knowledge of the lithium
market that will be of great assistance to the board as we look to the development of our Project.
In this coming financial year, we are entering a very exciting phase for the Bougouni Lithium Project as we continue our exploration
and development programme. We anticipate being able to announce a maiden mineral resource estimate for the Project and will
be able to undertake a preliminary mining assessment that will further focus our expenditure to potential mining development. With
the continued support of our major shareholder, Suay Chin, we will be reviewing potential processing plant and treatment designs
Kodal Minerals Report & Accounts 2018 3
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Chairman’s Statement (continued)
and looking to finalise our off-take agreement for spodumene concentrate produced from our site. We anticipate significant progress
over this coming financial year and we expect to be adding significantly to the value of our Company as we transition from early
stage explorer to developer.
We look forward to being able to report back to you during the year on developments.
Robert Wooldridge
Non-executive Chairman
24 July 2018
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review
Operational Review
I am delighted to present this operational review following a very busy year of exploration and development activities. The
focus of our fieldwork this year has been the Bougouni Lithium Project where we believe we have the strong potential to
delineate high-grade lithium mineralisation that is amenable to open pit mining and production of a spodumene concentrate
on site.
We have been very encouraged by our exploration drilling results where we have been able to define three advanced targets at the
Ngoualana, Sogola-Baoule and Boumou prospects and we expect to complete a maiden mineral resource estimate in the autumn
of 2018. In addition to our advanced prospects, we have also been able to continue drilling at a range of exploration prospects as
we continue to build a pipeline of prospects that will support future mining development.
The Company is always conscious of its rights and titles to exploration ground in its West African projects located in Mali and Côte
d’Ivoire and maintains an active monitoring of its compliance and reporting. In December 2017, Kodal announced it had identified
an irregularity with the Kolossakoro concession that is part of the Bougouni Lithium Project. Following subsequent discussions with
the Directorate Nationale de la Géologie et des Mines (“DNGM”, the Malian National Directorate of Geology and Mines) the
Company established that the licence may be considered to have expired as a result of the registered holder not replying to
correspondence sent to it by DNGM. Furthermore, a local company, Triumvirat Mining Company SARL (“Triumvirat”), had made an
application to DNGM for two new licences within the Kolassokoro licence area. Kodal reached an agreement with Triumvirat under
which Triumvirat withdrew its applications and Kodal filed new applications over two new 100 square kilometre licences covering
the high priority areas within the former Kolassokoro area. Kodal subsequently received new arrêtés that are valid for an initial three-
year term, with rights to two renewals for two years each giving a total life of seven years for the new licences. The new licences
have been issued in the name of Future Minerals SARL (“Future Minerals”), a 100% owned subsidiary of Kodal, and pursuant to the
agreement with Triumvirat, Kodal has a 90% interest in these new licences with Triumvirat having a 10% interest. Kodal has maintained
full rights to the project area.
This Operational Review will summarise the status of our existing concessions and rights for both our lithium exploration projects
and our gold projects and provide an update of the exploration and development activities undertaken across all projects. Finally,
we will provide an outline of the proposed activities for the coming year.
Concession and Exploration Licence Review
Lithium Projects
Kodal’s Bougouni and Diendio lithium exploration projects are located in southern Mali, with the rights and concessions held by
subsidiary company Future Minerals, a Malian registered company owned 100% by the Group.
Within the Bougouni Project, the Dogobola and Foulaboula concessions are held directly in the name of Future Minerals, with Kodal
holding a 90% economic interest in the concessions. In addition, Future Minerals holds the rights to the Madina concession via an
option to purchase agreement that grants Kodal exclusive rights to explore and exploit all minerals in the licence areas and upon
completion of agreed staged payments allow Future Minerals to become the registered holder and owner of a 90% economic
interest in the licence.
For the Diendio project Kodal has completed the staged payments that were due under the original option to purchase
agreements and is now the beneficial owner of 100% of the licences and is finalising the transfer of the licences to the name of
Future Minerals.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review (continued)
The lithium project licences are tabled below:
Table of Concessions – Mali Lithium projects
Tenements Country
Dogobala Mali
Kodal Economic Project/
Ownership Joint Venture Validity
90% economic interest via direct
ownership following completion
of option payments
Bougouni
Foulaboula Mali
90% economic interest via direct
ownership following completion
of option payments
Bougouni
Madina Mali
Held through Option to Purchase
Agreement giving right to acquire
90% economic interest
Bougouni
Diendio Sud Mali
100% direct ownership following
completion of option payments
Diendio
Diossyan Sud Mali
100% direct ownership following
completion of option payments
Diendio
New licence replacing part of previous
Kolassokoro licence. Licence valid and in
good standing. Arrêté No. 2018-1115
granted on13 April 2018 for initial 3-year
period, with option for 2 extensions of
2 years validity each
New licence replacing part of previous
Kolassokoro licence. Licence valid and in
good standing. Arrêté No. 2018-1116
granted on 13 April 2018 for initial 3-year
period, with option for 2 extensions of
2 years validity each
Licence valid and in good standing.
Second renewal granted on 19 September
2017, valid for 2-year period. An
application for an additional year of validity
has been lodged. A letter from DNGM has
been received confirming the application
and the pre-emptive right to the ground
Licence valid and in good standing.
Second renewal granted on 17 October
2017 for a 2-year period.
Transfer to Future Minerals to be finalised
Licence valid and in good standing.
Second renewal granted on 17 October
2017 for a 2-year period
Transfer to Future Minerals to be finalised
Manankoro Mali
Nord\
100% direct ownership following
completion of option payments
Diendio
Licence valid and in good standing.
Licence is in the form of a signed
convention, valid for an initial 3 years with
option for 2 extensions of 2 years validity
each. Fixed research permit fees have
been fully paid.
Transfer to Future Minerals to be finalised
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Figure 1: Location of Kodal Bougouni Lithium projects and prospects, Mali
Gold Projects
The Group’s Gold Projects are located in Côte d’Ivoire and Mali and consist of licences either directly 100% owned by the Group
or held via option agreements granting the Group exclusive rights to explore and exploit minerals over the area and containing a
right to purchase the licences. In Mali, the licences are held through subsidiary company International Goldfields Mali SARL (“IGS
Mali”), a Malian registered company, and in Côte d’Ivoire by International Goldfields Côte d’Ivoire SARL (“IGS CIV”) and Corvette
SARL (“Corvette”), Côte d’Ivoire registered companies.
In Mali, the Group has two projects, the Nangalasso Project (including the Nangalasso, Sotian and Tiedougoubougou licence areas)
and the SLAM Project (including the Djelibani Sud and Kambali licences). The Nangalasso Project licences are held through option
to purchase agreements that grant the Company exclusive rights to explore and operate over the licences and allow the Company
to acquire the licence outright. Kodal is now the 100% beneficial owner of the Nangalasso concession following final option
payments, and transfer of title to Kodal’s Mali registered subsidiary company is in progress. For the SLAM Project, the Djelibani Sud
licence is held outright following the completion of the final option payment. The licence area has been renewed as a new mining
convention application and a new arrêté will be applied for when the paperwork confirming the grant of the convention is received.
The Kambali licence remains subject to the DNGM granting an extension and our option partner is continuing discussions with
the DNGM.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review (continued)
In Côte d’Ivoire, the Group is the 100% owner of the Korhogo and Dabakala licences having secured the licence via direct
Government application and is applying for the Boundiali licence. The Group is also continuing with an active joint venture in Côte
d’Ivoire, with Resolute responsible for the maintenance and good standing of the licences.
The gold exploration licences are tabled below:
Table of Licences – Gold Exploration projects
Tenements Country
Boundiali Côte d’Ivoire
Kodal Economic Project/
Ownership Joint Venture Validity
100% direct ownership (under
application)
Licence application submitted and in
process
Korhogo Côte d’Ivoire
100% direct ownership
Dabakala Côte d’Ivoire
100% direct ownership
Niéllé Côte d’Ivoire
100% direct ownership; may be
reduced to 25% under JV
agreement
Tiebissou Côte d’Ivoire
M’Bahiakro Côte d’Ivoire
100% direct ownership; may be
reduced to 25% under JV
agreement
100% direct ownership; may be
reduced to 25% under JV
agreement
Djelibani Sud Mali
100% direct ownership
Licence valid and in good standing.
Renewal granted on 19 September 2017
for a 3-year term
Licence valid and in good standing.
Renewal granted on 19 September 2017
for a 3-year term
Resolute JV
Licence valid and in good standing. Initial
licence expired on 7 January 2017.
Renewal application lodged, and all fees
paid. Awaiting formal notification of
renewal
Resolute JV
Licence valid and in good standing. Initial
term expires 30 September 2018.
Renewal will be applied for
Resolute JV
Licence application submitted and in
process
SLAM
Licence expired on 29 October 2017.
Application was lodged on 22 December
2017 for transfer of the licence to IGS
Mali and for extension
Kambali Mali
Held through Option Agreement
giving right to acquire 100%
ownership.
SLAM
Licence expired in 2016. Application for an
additional year of validity has been lodged;
awaiting acceptance letter from DNGM
Nangalasso Mali
100% direct ownership following
completion of option payments
Nangalasso
First renewal of licence granted on
1 November 2017; valid for 2 years with
a further 2-year renewal available
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Tenements Country
Sotian Mali
Kodal Economic Project/
Ownership Joint Venture Validity
Held through Option Agreement
giving right to acquire 100%
ownership.
Nangalasso
Tiedougou- Mali
bougou
Held through Option Agreement
giving right to acquire 100%
ownership.
Nangalasso
New licence replacing part of previous
Sotian licence. Arrêté No. 2018-1925
granted on 12 June 2018 for initial 3-year
period, with option for 2 extensions of
2 years validity each
New licence replacing part of previous
Sotian licence. Convention signed.
Application for arrêté completed, all fees
paid and pending receipt of signed arrêté
documents
Figure 2: Location of Kodal Gold Exploration projects, West Africa
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review (continued)
Exploration Activity Review
The focus of Kodal’s exploration activity for the year has been the advancement of the Bougouni Lithium Project. The Company has
completed a major drilling campaign totalling 199 RC drill holes for 24,426m completed. In addition, the Company has undertaken
geophysical surveys (ground magnetics and HRIP surveys) in an attempt to delineate extensions and offset positions to the known
mineralised bodies and continued geological mapping and rock chip sampling to identify and rank new prospect areas. These
exploration activities have been very successful, and the Company now has three advanced prospects at Ngoualana, Sogola-Baoule
and Boumou, and a pipeline of developing prospects including the new Bougouni South prospect where first pass reconnaissance
drilling has intersected lithium mineralisation.
In parallel to the exploration work, the Company has also continued with the metallurgical testing and commenced extraction of a
5,000t bulk sample to allow testing of the mining and processing characteristics of the Bougouni mineralisation.
Exploration activity completed by Kodal targeting our gold projects was limited to an infill and extension geochemical sampling
programme at Korhogo in central Côte d’Ivoire. This programme confirmed several anomalous areas that require further testing,
and this will be reviewed and followed up in the coming field season.
The joint venture exploration completed by Resolute has been very positive with the identification of a new zone of gold
mineralisation within the Niéllé project, located in the north of Côte d’Ivoire. This work programme is continuing to determine the
potential size and significance of this new zone.
Bougouni Lithium Project Exploration Highlights
The Bougouni Lithium Project consists of three concessions – the Madina, Dogobola and Foulalaba concessions covering a contiguous
area of 450km2, located in southern Mali. Access to the Project area is excellent with bitumen roads from the capital city of Bamako
direct to site, and good quality access roads within the Project area.
The Company has undertaken a major exploration drilling campaign during this field season, with the drilling focused mainly on our
three advanced prospects to ensure we have sufficient data to support a JORC compliant mineral resource estimate. In addition,
drilling has also targeted new exploration prospects as we continue to assess opportunities to expand the potential of the Project
to host a long-term mining operation.
The completed drilling for the 2017/2018 year is tabled below:
Prospect Reverse Circulation Drilling
Holes Metres
Ngoualana 66 7,894
Sogola-Baoule 75 9,632
Boumou 41 4,597
Filon B 6 947
Bougouni South 11 1,356
Grand Total 199 24,426
The total drilling completed at the Bougouni Lithium Project is tabled below. A total of eight prospects have now had initial drill
testing, with more detailed drilling being completed at the three advanced prospects.
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Prospect Diamond Drilling Reverse Circulation Drilling
Holes Metres Holes Metres
Ngoualana 5 362.12 108 13,830
Sogola-Baoule 89 11,959
Boumou 47 5,439
Filon B 6 947
Kola 4 196
Orchard 4 544
Sogola 6 415
Bougouni South 11 1,356
Grand Total 5 362.12 275 34,686
Exploration Drilling and Geological Exploration
Ngoualana Prospect
The Ngoualana prospect is located approximately 7km to the south of the town of Bougouni, and high-grade lithium mineralisation
has been defined over a strike length of 850m and remains open along strike to the east and at depth.
The prospect was a high priority for drill testing with the identified presence of a large outcropping pegmatite body returning high
grade rock chip samples. Drilling has consisted predominantly of RC drilling targeting the strike extensions of the pegmatite as well
as diamond drilling completed to provide further control on the geological model and continuity of mineralisation. The drilling
completed during the 2017/2018 field season has consisted of RC drilling designed principally to complete infill and definition
drilling to support a JORC compliant mineral resource estimate. It has also targeted strike extensions of the known mineralisation,
targeted offset structures and attempted to define additional mineralisation to the south of the main Ngoualana vein. Significant
mineralised intersections include:
l 31m at 1.61% Li2O from 65m in drill KLRC061
l 26m at 1.67% Li2O from 83m in drill KLRC086
l 20m at 1.71% Li2O from 25m in drill KLRC068
l 20m at 1.69% Li2O from 71m in drill KLRC060
l 19m at 1.68% Li2O from 123m in drill KLRC089
l 18m at 1.75% Li2O from 18m in drill KLRC069
l 16m at 1.65% Li2O from 59m in drill KLRC056
l 16m at 1.64% Li2O from 79m in drill KLRC057
The drilling results continue to return wide, high-grade intersections from shallow depths and confirm our geological model. The
next phase of exploration work at Ngoualana is to complete the geological interpretation and validate all geological data. This model
will then be used to undertake a JORC compliant minerals resource estimate.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review (continued)
Figure 3: Ngoualana Prospect Drill hole location and Results Update, West Africa
Figure 4: Ngoualana Prospect Drill Section (section 4 on Figure 3)
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Additional drilling is planned to continue targeting the strike extensions and offset structures that may host additional mineralised
pegmatite veins.
Sogola-Baoule Prospect
The Sogola-Baoule prospect is located approximately 15km to the southwest of the town of Bougouni. This prospect was originally
identified by outcropping pegmatite bodies returning high grade rock chip samples. Initial reconnaissance drilling and trench sampling
confirmed the presence of lithium mineralisation.
Geological mapping and interpretation of a ground magnetic survey completed at the Sogola-Baoule prospect indicated potential
fault offsets to the pegmatite bodies, and possible extensions of the mineralised zones that had not been tested in the initial
reconnaissance drilling.
The focus of the 2017/2018 field season drilling was to complete infill and extension drilling and target the extensions of the identified
mineralisation. This drilling programme has been very successful with the drilling defining an extensive pegmatite body intersected
beneath shallow cover of between 6 and 10m depth. The current strike length exceeds 1,400m and remains open at depth and
along strike. The interpretation of the Sogola-Baoule prospect is continuing to develop as we have identified a continuous main vein
up to 26m in width with additional hanging wall and footwall pegmatite veins up to 10m in width that will add to the potential
economic viability of a mining operation at this prospect.
Significant intersections from the drilling include:
l 22m at 1.58% Li2O from 110m in drill hole MDRC083
l 20m at 1.43% Li2O from 34m in drill hole MDRC084
l 15m at 1.19% Li2O from 70m and 13m at 1.76% Li2O from 117m in drill hole MDRC066;
l 13m at 1.76% Li2O from 123m in drill hole MDRC073;
l 21m at 1.60% Li2O from 87m in drill hole MDRC062
l 14m at 1.53% Li2O from 92m in drill hole MDRC064
The pegmatite bodies intersected by the drilling are typical of the Bougouni project and are spodumene rich with drill holes such
as MDRC066, MDRC073 and MDRC083 demonstrating the consistent width and tenor of mineralisation. Geological logging of
drillholes targeting the eastern extension of the prospect has revealed intersections up to 45m in down-hole width and this may
indicate the convergence of hanging wall pegmatite veins with the main vein; however, assay results for this final drilling at Sogola-
Baoule are pending at the time of this report.
It is expected that the results will support the Sogola-Baoule prospect contributing to the Company’s JORC mineral resource
estimate for Bougouni.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review (continued)
Figure 5: Sogola-Baoule Prospect Drill hole location and Results Update, West Africa
Figure 6: Sogola-Baoule Prospect Drill Section
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The next phase of exploration at Sogola-Baoule will incorporate diamond drilling to allow detailed geological logging, metallurgical
testwork and geotechnical review of ground conditions to be incorporated in a mining assessment. Exploration drilling will also focus
on infill and definition work as well as continue to test for extensions to the target zone. This drilling is expected to commence as
soon as possible following the completion of the rainy season.
Boumou Prospect
The Boumou prospect is located 3.5km to the northeast of the Sogola-Baoule prospect. Exploration activity at the prospect prior
to the RC drilling programme completed this year has consisted of geological mapping and rock chip sampling that returned high-
grade assay results up to 2.52% Li2O trenching and reconnaissance RC drill testing that confirmed mineralised pegmatite veins.
The drilling programme completed during the 2017/2018 field season consisted of 41 drill holes for 4,597m completed.
The geological logging of the drill holes indicated multiple lithium mineralised pegmatite veins had been intersected across the
prospect area, and the receipt of all assay results has confirmed the presence of lithium mineralisation. It is noted that at this stage
of exploration, drilling has targeted shallow depth mineralisation and these results confirm the continuity of the pegmatite bodies
from surface outcrop and they currently remain open at depth and along strike.
Significant intersections from the drilling include:
l 19m at 1.40% Li2O from 69m in drill hole KLRC105;
l 11m at 1.58% Li2O from 39m in drill hole KLRC108;
l 11m at 1.55% Li2O from 41m in drill hole KLRC121;
l 15m at 1.46% Li2O from 45m in drill hole KLRC129
In the southern portion of the prospect, drilling has identified four closely spaced pegmatite veins with mineralised widths up to
19m (downhole) that confirm previous reconnaissance drill testing and surface mapping. This area requires further drill testing to
target the strike extensions and the depth extensions of the veins, and geological review indicates a possible convergence of structures
to the west.
In the northern portion of the prospect a consistent pegmatite vein extending for over 400m with downhole mineralisation up to
15m width has been confirmed by drilling. Follow-up drilling will target the western extension of the zone where the structure
remains open along strike and also indicates a possible convergence of structures.
The Boumou prospect is the Company’s third advanced prospect and we anticipate continuing with exploration drilling in the
coming year.
The Company is reviewing the Boumou prospect for the potential to define a mineral resource to contribute to the Company’s
maiden JORC Mineral Resource estimate.
Bougouni South Prospect
The Bougouni South prospect was identified by geological mapping and reconnaissance sampling completed in January 2018. The
prospect is located just 3km to the south of the Bougouni town, and reconnaissance drilling has targeted several zones of outcropping
pegmatite veins. The geological reconnaissance indicates this is potentially a large prospect area, and the wide-spaced reconnaissance
drill testing has returned mineralisation and confirmed that the zones of interest are up to 30m in width.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review (continued)
Follow-up drilling is planned to target along strike of the identified veins, to target extensions to the mineralised veins and to complete
reconnaissance testing of the areas under shallow transported cover. This next phase of drilling is planned to determine the potential
of the prospect to host significant mineralisation and allow prioritisation of our growing number of exploration prospects.
Bougouni Lithium Project – Development Activities
The Company is continuing with the rapid exploration and development assessment of the Bougouni Lithium Project and in
conjunction with the exploration drilling campaign, Kodal has a range of activities occurring in parallel as the Company attempts to
fast track the development of the Bougouni project.
The extraction of the 5,000t bulk sample has commenced with the mobilisation of a mining fleet to site. Sampling will commence
with the extraction of high grade mineralisation at Ngoualana. Progress at the project has not been as rapid as expected, due to the
contractor experiencing operational difficulties. However, initial road repair and site clearing has been completed to allow truck
access for loading of material to transport to the sea port at Dakar and approximately 1,200t of material has been extracted and
crushed ready for transportation. Further updates will be provided as work progresses.
Environmental assessment has commenced with the Company contracting environmental consultants Digby Wells Environmental
(Jersey) Limited to undertake an initial review and commence site water sampling and preliminary community social consultations.
This assessment work is an important starting point for future applications for mining licences and to inform community interaction
as we look to develop the Bougouni Lithium Project.
Metallurgical Test work
In June 2017, the Company announced the results of initial metallurgical test work on samples collected from the initial RC drilling at
the Ngoualana prospect. This indicated that the ore could produce high grade spodumene concentrate with good levels of recovery.
This initial test work used flotation tests only, as the samples comprised reverse circulation drill chips which contain a significant
portion of very fine material not suitable for other techniques. The metallurgical recoveries ranged from 80% to 87% using only a
flotation process and produced high grade spodumene concentrate with grades ranging between 5.5% and 6.7% Li2O. The level of
mineralisation is of suitable grade and quality for the production of lithium carbonate to be used in the manufacture of lithium
batteries and other industrial applications.
In addition to the production of a spodumene concentrate, Kodal continued with additional metallurgical testing with the objective
of demonstrating the suitability of the Bougouni spodumene concentrate to fit into a downstream processing plant and demonstrate
the production of high quality, battery grade lithium carbonate.
This metallurgical testing was completed at the Shandong Ruifu Lithium Co Ltd (“Shandong Ruifu”) lithium carbonate and lithium
hydroxide plant in the Tai’An region of the Shandong province of China. Shandong Ruifu has a close relationship with Kodal’s major
shareholder Suay Chin. Shandong Ruifu recently completed an upgrade to the processing plant and is looking to secure supply of
quality lithium bearing mineralisation.
The lithium carbonate produced by the process is reported as a high quality, low impurity product suitable for battery production.
The final analysis of the grade of the lithium carbonate is tabled below:
Table 4: Comparison of Lithium Carbonate analysis to Industry standard
Element Li2CO3
Analysis 99.52%
Industry Standard comparison >99.5%
Na
0.020%
<0.025%
Mg Ca K Fe
0.0003% 0.0031% <0.001% 0.0002%
<0.008% <0.005% <0.001% <0.001%
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The Company is continuing metallurgical test work on samples of diamond drill core with analysis currently being completed at
laboratories in Australia and China to provide validation and confirmation of the initial results. This test work will also focus on the
potential gravity separation of the spodumene mineral and is expected to be the major component of the mineral processing on
site at Bougouni.
All results for this work are pending at the time of this report.
Gold Projects – Exploration Review
Gold exploration activity on Kodal’s projects for the year consisted of work completed by Resolute as part of it joint venture activities
in Côte d’Ivoire, and by Newcrest Mining Limited (“Newcrest”) on the Dabakala project prior to withdrawing from this joint venture.
Resolute is actively exploring the Niéllé licence, located in the north of Côte d’Ivoire approximately 50km to the north of the Tongon
Gold mine operated by Randgold Resources Limited (“Randgold”). Exploration activity completed by Resolute consists of surface
geochemical sampling, auger geochemistry and a recently completed 7,000m aircore drilling campaign completed as a reconnaissance
test of the surface geochemical anomalies.
Results have been received for the initial aircore drill sections and have provided encouragement for the potential for a new gold
mineralised zone to be delineated. The drilling has tested the auger anomaly on a reconnaissance spacing of over 200m between
drill sections and 40m between drill holes. The prospect remains open along strike to the north and south and further results are
pending. Initial drill results include:
l 16m at 1.14g/t gold from surface;
l 4m at 3.40g/t gold from 12m;
l 8m at 1.53g/t gold from 16m;
l 12m at 2.39g/t gold from surface, including 4m at 6.62g/t gold from surface;
l 4m at 1.76g/t gold from 20m.
Final results are pending for the reconnaissance aircore drilling, however the combination of the auger geochemical anomaly and
these initial results indicated further exploration work is warranted. A programme of reverse circulation drilling is proposed to test
further this area of new gold anomalism.
The Niéllé project consists of one licence of 400km2 that was granted in 2014 and has recently been renewed for a further 3-year
period. Resolute is earning into the licence via the joint venture agreement, and at this stage the licence is still 100% owned by Kodal.
The area is underexplored; however it is well located in the Tongon-Banfora greenstone belt that is host to multi-million ounce gold
resources at the Tongon Gold mine (operated by Randgold) and the Banfora gold deposit (owned by Teranga Gold).
Kodal is maintaining its gold exploration projects in Mali and Côte d’Ivoire and is reviewing opportunities and strategies to realise
value for these projects.
Work programme for 2018/19
The Group has an extensive work programme for 2018/19 which is principally focussed on the Bougouni Lithium Project and
preliminary work at the Diendio Lithium Project in southern Mali. The focus of work at the Bougouni Project will be further
exploration drilling aimed at the continued infill and definition of lithium mineralisation as well as targeting new prospects. A key
component of the work programme will be the completion of additional diamond drilling that will provide key information on
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Operational Review (continued)
geological controls and ground conditions for planning of open pit mining operations at our advanced prospects. In addition,
metallurgical testing of the Sogola-Baoule and Boumou prospects is also planned to ensure compatibility of all areas in a proposed
mining hub development with a central plant treating ore from multiple sites.
The work programme is also planned to ensure that the environmental assessment and testing continues and that reporting of
activities to the DNGM continues. The aim of this work is to allow Kodal to be in a position to apply for a Mining Licence as early
as possible and continue the move towards development of the Bougouni Lithium Project.
Future Strategy
The focus of the Company is on the exploration and development of the Bougouni Lithium Project in southern Mali. The Company
has completed an extensive drilling campaign and defined advanced prospects that are expected to form the basis of a JORC
compliant maiden resource estimate. Following the resource estimate, the Company will be undertaking an assessment of the mining
potential of the project and will focus additional drilling and development activity to maximise the potential for future mine
development. The Company is currently well-funded to undertake this work and we are planning to continue with the approach of
attempting to fast track the development of this exciting project.
I look forward to being able to report back with positive news.
Bernard Aylward
Chief Executive Officer
24 July 2018
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Finance Review
Finance Review
Results of operations
For the year ended 31 March 2018, the Group reported a loss for the year of £857,000 compared to a loss of £1,178,000 in the
previous year. The loss for the year of £857,000 compared to £503,000 (excluding impairment charges) in 2017, reflected the higher
share-based payment charges of £341,000 compared to £15,000 in 2017 as a result of the grant of new share options in the year.
Operational activity has remained broadly in line with last year as the Group has continued the running of an office in Mali.
During the year, the Group invested £2,190,000 (2017: £535,000) in exploration and evaluation expenditure on its various projects,
the large majority of which related to its West African Lithium Projects. As a result, the carrying value of the Group’s capitalised
exploration and evaluation expenditure increased from £1,323,000 to £3,508,000. At 31 March 2018, the carrying value of the Gold
Projects was £977,000 (2017: £714,000) and of the Lithium Projects was £2,531,000 (2017: 609,000).
Cash balances as at 31 March 2018 were £3,124,000, an increase of £1,401,000 on the previous year’s level of £1,723,000. Net
assets of the Group at the year-end were £6,313,000 (2017: £2,737,000).
Financing
During the year, the Group has successfully completed a number of equity fundraisings.
Most significantly, in May 2017, Kodal announced the conclusion of a formal subscription agreement with Singapore-based investment
company Suay Chin International Pte Limited together with a binding off-take term sheet covering the Group’s lithium production.
Following an initial subscription in March 2017 for £0.5 million, the first stage of the investment by Suay Chin was completed in May
2017 for £3.3 million, followed in July by £1.03 million and in November 2017 by a final £0.3 million, bringing Suay Chin’s total
investment to £4,825,000. Suay Chin is now the largest shareholder in the Company, with a holding of 20% at the end of the financial
year (and now at 29% following a further subscription for shares since the year end). The net proceeds of the subscriptions from
Suay Chin will be used to continue exploration work on the lithium projects and for general corporate purposes.
Following the end of the financial year, the Company completed a fundraising of £1,500,000 through a subscription and placing of
1,153,846,149 ordinary shares.
Going concern and funding
The Group has not earned revenue during the year to 31 March 2018 as it is still in the exploration and development phases of its business.
The operations of the Group are currently being financed from funds which the Company has raised from the issue of new shares.
As at 31 March 2018, the Group held cash balances of £3,124,000 (2017: £1,723,000). The Group’s cash balances at 20 July 2018 were
£3,585,000.
The Directors have prepared cash flow forecasts for the period ending 30 September 2019. The forecasts include the costs of
progressing the Lithium Projects, further limited work on the Gold Projects as well as the overheads of the Group. Further fund
raising will be required at an appropriate time in order to undertake additional phases of the exploration and development work
and the Group has historically been successful in raising additional funds in such circumstances. However, the forecasts demonstrate
that by reducing the level of discretionary exploration and development activity the Group has sufficient cash resources available to
allow it to continue as a going concern and meet its liabilities as they fall due for a period of at least twelve months from the date
of approval of these financial statements without the need for a further fund raising. Accordingly, the financial statements have been
prepared on a going concern basis.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Finance Review (continued)
Utilising key performance indicators (“KPIs”)
The following KPIs are used by the Group to assist it in monitoring and assessing costs and exploration and development activities:
KPI 31 March 2018 31 March 2017
£ £
Cash and cash equivalents 3,123,549 1,722,950
Cash based administrative expense 517,184 488,376
Exploration and evaluation expenditure 2,190,105 857,022
The directors consider these KPIs to be satisfactory and in line with the Group’s strategy.
Financial risk management objectives and policies
The Group’s principal financial instruments comprise cash and trade and other payables. It is, and has been throughout the year
under review, the Group’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group’s
financial instruments are liquidity risk, price risk and foreign exchange risk. The Board reviews and agrees policies for managing each
of these risks and they are summarised below.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash reserves to fund the Group’s exploration and operating activities.
Management prepares and monitors forecasts of the Group’s cash flows and cash balances monthly and ensures that the Group
maintains sufficient liquid funds to meet its expected future liabilities. The Group intends to raise funds in discrete tranches to provide
sufficient cash resources to manage the activities through to revenue generation.
Price risk
The Group is exposed to fluctuating prices of commodities, including gold and lithium, and the existence and quality of these
commodities within the licence and project areas. The Directors will continue to review the prices of relevant commodities as
development of the projects continues and will consider how this risk can be mitigated closer to the commencement of mining.
Foreign exchange risk
The Group operates in a number of overseas jurisdictions and carries out transactions in a number of currencies including Sterling,
CFA Franc and US dollars. The Group does not have a policy of using hedging instruments but will continue to keep this under
review. The Group operates foreign currency bank accounts to help mitigate the foreign currency risk.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Principal Operating Risks and Uncertainties
Principal Operating Risks and Uncertainties
The Group is exposed to a number of operational risks which it seeks to mitigate as set out in the table below:
Risk
Comment and Mitigating Actions
Exploration and Development Risk
The Group is a mineral exploration company and the success of
the company is dependent on the discovery and/or acquisition
of Mineral Reserves and Mineral Resources and the successful
development of mines therefrom. Significant risk exists within
technical, legal and financial aspects of the exploration for and
the development of mines, which may have an adverse effect on
the Group’s business.
Licensing and Title Risk
The Group’s exploration and future development opportunities
are dependent upon maintaining clear tenure and access to
licences as well as ensuring the relevant operation licences,
permits and regulatory consents are valid. The licences and
regulatory permits may be withdrawn or made subject to
limitations.
The granting of licences and permits are a practical matter subject
to the discretion of the applicable Government or Government
office. The interpretations, amendments to existing laws and
regulations, or more stringent enforcement of existing laws and
regulations could have a material adverse impact on the Group’s
results of operations and financial condition.
Political Risk
The Group’s activities are subject to various laws and regulations
governing the mining industry. Although all activities are currently
carried out in material compliance with all applicable rules and
regulations, no assurance can be given that new rules and
regulations will not be enacted or that existing rules and
regulations will not be applied in a manner which could limit or
curtail the Group’s current activities and development plans and
have a material adverse impact on the Group’s financial position.
There is no assurance that the Group’s exploration and potential
future development activities will be successful, and statistically
few properties that are explored are ultimately developed into
profitable producing mines.
The Group ensures that there is regular review of projects,
expenditure and exploration activity to maintain focus on targets
and ensure best possible information in decision process to focus
resources and expenditure upon key exploration and
development targets.
The Group complies with existing laws and regulations.
The Group ensures that the regulatory reporting and the
government compliance requirements for each licence are met.
There is a risk that negotiations with a Government in relation
to the grant, renewal or extension of a licence may not result in
the grant, renewal or extension taking effect prior to the expiry
of the previous licence period, and there can be no assurance of
the terms of any extension, renewal or grant.
The Group regularly monitors the good standing of its licences.
The Group maintains an active focus on the all regulatory
developments applicable to the Group, in particular in relation
to the mining codes.
Mali is engaged in political recovery and stabilisation after a military
coup in March 2012 and a French-led military intervention against
the separatist Tuareg rebels in the north of Mali in January 2013.
Presidential elections are scheduled to be held on 29 July 2018.
The elections are expected to proceed normally, and initial
indications are all parties are supporting a well-established
process peacefully.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2018 – Principal Operating Risks and Uncertainties (continued)
Risk
Comment and Mitigating Actions
Political risk (continued)
The Group has significant activities in Mali and C te d’Ivoire in
West Africa. The success of the Group will be influenced by
associated legal, political and economic situation in Mali, C te
d’Ivoire and the wider African region. Countries in the region
have experienced political instability and economic uncertainty
in the past. Government policy in the countries in which the
Group operates can be unpredictable, and the institutions of
government and market economy may be unstable and subject
to rapid change, which may result in a material adverse effect on
the Group’s operations.
The renewal of exploration and exploitation licences is an area
of risk given the countries in which the Group operates. Whilst
the Group has in place legal titles on the assets in its portfolio,
there remains a risk to the Group that changes within regimes
could put the ownership of these assets at risk.
The Group is also at risk of taxation reviews that may change or
apply more stringently the laws and regulations of the countries
in which it operates.
Financial Risk
The Group is an exploration company and does not generate
revenue or self-sustaining funding at this stage. The Group
requires funds to support ongoing exploration and possible
future development of mineral properties. The Group’s access to
funding will depend on its ability to obtain financing through the
raising of equity capital, joint venture projects, debt financing, farm
outs or other means.
There is no assurance that the Group will be successful in
obtaining the necessary financing in a timely manner on
acceptable terms to complete its investment strategy.
If the Group is unable to obtain additional financing as needed,
some interests may be relinquished, and/or the scope of the
operations reduced.
In general, the security risk in Mali remains high and The United
Nations peacekeeping mission in Mali, established in April 2013 and
consisting of over 11,000 military and police, has helped maintain
the security situation throughout most of the country but the
situation in the north of the country remains fragile. Talks between
the government and separatist rebels aimed at bringing about
peaceful resolution ended inconclusively in March 2015 and there
has been an increase in violence in the region including some
isolated incidents in the south of the country during 2015. The most
serious incidents have been the terrorist attack on a restaurant in
Bamako in March 2015 in which seven people were killed, including
six expatriates, and an attack on the Radisson Blu hotel in Bamako
on 20 November 2015 in which 19 people were killed.
In C te d’Ivoire, the political situation has been calm since 2011.
The election in 2015 returned the Government of President
Ouattara with increased popular support. The economic situation
in C te d’Ivoire is improving dramatically with significant
Government expenditure on infrastructure and development
activity.
The Board regularly reviews the levels of discretionary spending
on capital items and exploration expenditure. This includes
regularly updating working capital models, reviewing actual costs
against budget and assessing potential impacts on future funding
requirements and performance targets.
In the past, the Group has been successful in raising additional
equity finance to support its ongoing activities.
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Risk
Comment and Mitigating Actions
Reliability of Mineral Resources and Mineral Reserves
The Group has reported mineral resources in Norway; no
mineral resource has yet been declared in West Africa. Any
estimates will be based on a range of assumptions, including
geological, metallurgical and technical factors; there can be no
assurance that the anticipated tonnages or grades will be
achieved.
Commodity Prices
A significant fall in the commodity prices could have a potential
impact on the economic viability of the Group’s projects and the
Group’s ability to raise funds for the development of its
exploration properties.
Operational Risk
A violation of health and safety laws or regulations could have a
material adverse effect on the Group’s business due to a
requirement to implement new compliance measures.
Exploration and development sites have inherent risks and
liabilities associated with environmental laws and regulations,
which are subject to ongoing Government review and
modification.
The Group is exposed to the risk of bribes both being paid on
the Group’s behalf and accepted by any persons associated with
it in any of the jurisdictions in which it has a presence.
Exposure to Cost Pressures
The Group is exposed to increases in the prices for services and
equipment (e.g. drilling contractors, drilling consumables and the
price of diesel).
The Mineral Resource estimates are prepared either by third
party consultants who have considerable experience and are
certified by appropriate bodies.
Mineral Resources are reported as general indicators and should
not be interpreted as assurances of minerals or the profitability
of current or future operations.
The Group regularly reviews changes in the commodity prices
to ensure that feasibility studies take into account the Group’s
long-term view on commodity prices.
The Group has a priority focus on the health and safety of its
employees and the environment.
The Group ensures all work practices are within Government
guidelines and regulations and are subject to the required permits
and licences.
It is the Group's policy to conduct all of its business in an honest
and ethical manner and it takes a zero-tolerance approach to
bribery. In particular, as a UK listed company, the Company takes
steps to ensure compliance with the UK Bribery Act 2010 (the
“Bribery Act”), in respect of its conduct both in the UK and
overseas.
The Group maintains strong relationships with experienced
contractors who provide high quality service and reliability. The
Group monitors all costs in relation to its activities and
negotiates rates.
Signed on behalf of the Board
Bernard Aylward
Chief Executive Officer
24 July 2018
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REPORT OF THE DIRECTORS
for the year ended 31 March 2018
The Directors present their report, together with the audited consolidated financial statements for Kodal Minerals Plc for the year
ended 31 March 2018.
Principal activity
The Company was incorporated for the purposes of exploring and developing mineral assets. The Company’s shares are traded
on AIM.
Domicile and principal place of business
Kodal Minerals Plc is domiciled in the United Kingdom. Its principal place of business as at 31 March 2018 was West Africa.
Directors
The current membership of the board and the Directors who held office during the year are set out below:
Bernard Aylward
Luke Bryan
Robert Wooldridge
Qingtao Zeng Appointed 20 November 2017
Biographical details of the Directors
Bernard Michael Aylward (Chief Executive Officer)
Bernard is a geologist with over 20 years’ experience as a manager and exploration geologist in the mining and exploration industry
in a variety of commodities. Bernard’s experience includes serving as the Managing Director of Taruga Gold Limited from its initial
listing on the ASX, Chief Operating Officer of International Goldfields Ltd, General Manager of Azumah Resources Ltd (Ghana), and
Exploration Manager for Croesus Mining NL. Bernard has been involved in the discoveries and management of the Bepkong, Julie,
Collette and Kunche deposits in Ghana, as well as the Deep South gold deposit, Gladstone North deposit, St Patrick’s, Norseman
Reef, and the Safari Bore gold deposit in Western Australia. Bernard has experience operating in Europe (Greece Sappes deposit),
Siberia, South America and extensive experience throughout West Africa.
Luke Robert Bryan (Technical Director)
Luke is a mining engineer with over 20 years of international experience. Most recently he was chief executive officer of North
River Resources plc, an AIM quoted mineral exploration company and prior to that he worked as an independent consultant. Luke
has worked in Africa, Australia, the Former Soviet Union and Europe. He holds degrees in Mining Engineering and Economics from
Auckland University. Luke is based in London and is a Fellow of the Geological Society.
Robert Ian Wooldridge (Non-executive Chairman)
Robert is currently a partner at SP Angel Corporate Finance LLP. After graduating with a degree in Natural Sciences from Cambridge
University, he spent eight years at PricewaterhouseCoopers International Limited, qualifying as a Chartered Accountant in 1989. He
left in 1994 to join the international equity capital markets division of HSBC Investment Bank where he spent a further eight years
and was responsible for completing a number of landmark equity transactions across Europe, India and the Middle East & Africa. In
2003 he joined an investment banking boutique, to head up its corporate finance and securities operation and was then one of the
founding partners of SP Angel in 2006. SP Angel is an independent corporate finance and broking operation which focuses on
advising small and mid-cap companies in the mining, oil and gas, property and technology sectors.
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Qingtao Zeng (Non-executive Director)
Dr Zeng completed a PhD in geology at the University of Western Australia in 2013. Dr Zeng has been engaged as a consulting
geologist, principally working with CSA Global based in Perth, Australia, and has a range of geological and commercial specialities.
Since 2015, Dr Zeng has been extensively involved in the lithium exploration and development sector and through his strong network
of contacts throughout China has helped clients complete a range of contracts relating to the supply or purchase of lithium in the
form of concentrate or direct shipping ores.
Directors' interests
The beneficial interests in the Company's shares of the current Directors and their families, as at 31 March 2018 are as follows:
Directors Shares Shares
31 March 2018 31 March 2017 Notes
Bernard Aylward 94,834,948 94,834,948
Luke Bryan 48,500,000 48,500,000 1
Robert Wooldridge 76,938,144 50,417,949
Notes:
1: These shares are held by Novoco Mine Engineering Limited (“Novoco”), a company wholly owned by Luke Bryan.
Events after the reporting period
Events after the reporting period are outlined in note 17 to the financial statements on page 61.
Directors’ and Officers’ liability insurance
The Group has Directors’ and Officers’ liability insurance to cover claims up to a maximum of £1.0 million.
Strategic Report
The Directors have chosen to include information required by s414(c) of the Companies Act in the Strategic Report.
Statement as to disclosure of information to auditors
The Directors have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware.
Each of the Directors has confirmed that he has taken all the steps that he ought to have taken as a Director, in order to make
himself aware of any relevant audit information and to establish that it has been communicated to the auditor.
Directors’ responsibilities statement
The Directors are responsible for preparing the Strategic Report and the Directors’ Report and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. The Directors are
required by the AIM Rules of the London Stock Exchange to prepare Group financial statements in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and have elected under company law to prepare
the Company financial statements in accordance with IFRS as adopted by the EU.
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REPORT OF THE DIRECTORS (continued)
for the year ended 31 March 2018
The Group financial statements are required by law and IFRS as adopted by the EU to present fairly the financial position of the
Group and the Company and the financial performance of the Group. The Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their
achieving a fair presentation.
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 the Company and of the profit or loss of the Group for that period.
In preparing the Group and Company financial statements, the Directors are required to:
l select suitable accounting policies and then apply them consistently;
l make judgments and accounting estimates that are reasonable and prudent;
l state whether they have been prepared in accordance with IFRS as adopted by the EU; and
l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company 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 Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Auditors and Annual General Meeting
RSM UK Audit LLP offer themselves for reappointment as auditors in accordance with section 489(4) of the Companies Act 2006.
A resolution to reappoint RSM UK Audit LLP will be proposed at the Annual General Meeting.
Approved by the board of directors and signed on behalf of the board on 24 July 2018.
Robert Wooldridge
Director
24 July 2018
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CORPORATE GOVERNANCE REPORT
for the year ended 31 March 2018
Introduction
While not mandatory for an AIM company, the Directors take due regard, where practical for a company of this size and nature, of
certain provisions of the principles of good governance and code of best practices under the UK Corporate Governance Code. The
disclosures presented herein are limited and are not intended to constitute a corporate governance statement.
Directors
The Company supports the concept of an effective board leading and controlling the Group. The Board is responsible for approving
Group policy and strategy. It meets on a regular basis and has a schedule of matters specifically reserved for decision. Procedures
are in place for operational management to supply the Board with appropriate and timely information and the Directors are free
to seek any further information they consider necessary.
The Directors that served during the year are detailed on page 24. The Non-Executive Chairman of the Board is Robert Wooldridge.
Relations with shareholders
The Company values the views of its shareholders and recognises their interest in the Group’s strategy and performance. The Annual
General Meeting will be used to communicate with private investors and they are encouraged to participate. The Directors will be
available to answer questions. Separate resolutions will be proposed on each issue so that they can be given proper consideration
and there will be a resolution to approve the annual report and accounts.
Internal control
The Board is responsible for maintaining a strong system of internal control to safeguard shareholders’ investments and the Group’s
assets and for reviewing its effectiveness. The system of internal financial control is designed to provide reasonable, but not absolute,
assurance against material misstatement or loss.
The Audit and Risk Committee comprises Robert Wooldridge and Bernard Aylward and is chaired by Robert Wooldridge. It meets
at least twice a year to consider the integrity of the financial statements of the Group, including its annual and interim accounts, the
effectiveness of the Group’s internal controls and risk management systems, auditor reports, and terms of appointment and
remuneration for the auditors.
Remuneration
The Remuneration Committee performs both remuneration and nomination functions, and comprises Robert Wooldridge and Luke
Bryan and is chaired by Robert Wooldridge. It meets as and when required. The purpose of the remuneration function is to ensure
that the executive directors are fairly rewarded for their individual contributions to the overall performance of the Group, to
determine all elements of the remuneration of the executive directors and to demonstrate to the Group's shareholders that the
remuneration of the executive directors is set by a Board committee whose Chairman has no personal interest in the outcome of
the committee's decision and will have appropriate regard to the interests of the shareholders.
The purpose of the nomination function is to identify and nominate new directors to the Board as considered necessary.
The Board has considered the need for an internal audit function but has decided the size and complexity of the Group do not
justify it at present. However, it will keep this decision under annual review.
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REMUNERATION REPORT
for the year ended 31 March 2018
Directors’ remuneration
The Board recognises that Directors’ remuneration is of legitimate concern to shareholders and is committed to following current
best practice. The Group operates within a competitive environment and its performance depends on the individual contributions
of the Directors.
Policy on Directors’ remuneration
The policy of the Board is to provide executive remuneration packages designed to attract, motivate and retain directors of the
calibre necessary to maintain the Group’s position and to reward them for enhancing shareholder value and return. It aims to provide
sufficient levels of remuneration to do this, but to avoid paying more than is necessary. The remuneration will also reflect the Directors’
responsibilities and contain incentives to deliver the Group’s objectives.
The amounts shown as “Share option expense” relate to a theoretical calculation of the non-cash cost to the Group of the share
options granted to the directors, further details of which are provided in Note 5. These do not represent cash payments to the
Directors either made in the past or due in the future.
The remuneration of the Directors of the Company who served during the year ended 31 March 2018 was as follows:
Fees and Share based
salary year to payments year to Total year to Total year to
31 March 2018 31 March 2018 31 March 2018 31 March 2017
£ £ £ £
Bernard Aylward (1) 33,750 114,108 147,858 31,667
Luke Bryan (2) 20,000 114,108 134,108 38,744
Robert Wooldridge 44,167 57,055 101,222 30,635
Qingtao Zeng 24,236 17,933 42,169 –
Markus Ekberg – – – 1,667
David Jones – – – 8,769
122,153 303,204 425,357 111,482
1 In addition to the amounts included above, Matlock Geological Services Pty Ltd, a company wholly owned by Bernard Aylward,
provided consultancy services to the Group during the year and received fees of £82,982 (2017: £91,106).
2 In addition to the amounts included above, Novoco Mine Engineering Limited, a company wholly owned by Luke Bryan, provided
consultancy services to the Group during the year and received fees of £13,400 (2017: £24,300).
Notice periods of the Directors
Bernard Aylward’s appointment will continue until the earlier of: (i) the termination of the consultancy agreement between the
Company and Matlock Geological Services Pty Ltd (a company wholly owned by Mr Aylward); and (ii) termination by either the
Company or Mr Aylward on three months' prior written notice. Luke Bryan’s, Robert Wooldridge’s and Qingtao Zeng’s service
agreements are subject to three months’ notice of termination by either party.
Pensions
In compliance with the Pensions Act 2008 the Company has established a Workplace Pension Scheme for its UK based employees
and Directors with effect from 1 July 2017. Prior to this date, the Company has not made any pension arrangements for the Directors.
The Company made no contributions into the scheme on behalf of the Directors in the year.
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 March 2018
Opinion
We have audited the financial statements of Kodal Minerals Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 March 2018 which comprise the Consolidated Statement of Comprehensive Income, Statements of Financial Position
(Consolidated and Parent Company), Statements of Changes in Equity (Consolidated and Parent Company), Statements of Cash
Flows (Consolidated and Parent Company) and notes to the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
In our opinion:
l 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 March
2018 and of the group’s loss for the year then ended;
l the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
l the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the provisions of the Companies Act 2006; and
l 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 and parent company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities and we
have fulfilled our other ethical responsibilities in accordance with these requirements. 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
l the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
l the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt
about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are authorised for issue.
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.
Valuation of intangible exploration and evaluation assets
IFRS 6 requires that exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that
the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Given the judgment required in
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INDEPENDENT AUDITOR’S REPORT (continued)
for the year ended 31 March 2018
making this assessment and the significance of these assets to the Statement of Financial Position, the valuation of intangible exploration
and evaluation assets was considered to be a key audit matter.
Our work included:
l Discussing exploration results and future work plans with management to understand the outlook for each project
l Reviewing copies of correspondence with relevant licensing authorities and the terms of the licence agreements
l Considering the results of exploration activities, changes in commodity prices and foreign exchange fluctuations
l Audit of the disclosures included in the financial statements with reference to IFRS 6
The related disclosures are included in note 7 in the financial statements.
Valuation of warrants and share options
Accounting for the new warrants and share options issued in the year required management to make significant judgments and
estimates in their valuations. As a result, the valuation of the warrants and share options was considered to be a key audit matter.
Our work included:
l Assessing the appropriateness of the valuation model used by management
l Obtaining the share options agreements and checking inputs used in the valuation model
l Challenging management where appropriate on the underlying assumptions in the calculations
l Audit of the disclosures included in the financial statements with reference to IFRS 2
The related disclosures are included in note 5 in the financial statements.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of
our audit procedures and to evaluate the effects of misstatements, both individually and on the financial statements as a whole.
During planning we determined a magnitude of uncorrected misstatements that we judge would be material for the financial
statements as a whole (FSM). During planning FSM was calculated as £71,000, which was not changed during the course of our
audit. We agreed with the Audit Committee that we would report to them all unadjusted differences in excess of £5,000, as well as
differences below those thresholds that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
The audit was scoped to ensure that we obtained sufficient and appropriate audit evidence in respect of:
l the significant business operations of the group;
l other operations which, irrespective of size, are perceived as carrying a significant level of audit risk whether through susceptibility
to fraud, or for other reasons; and
l the appropriateness of the going concern assumption used in the preparation of the financial statements.
The audit was scoped to support our audit opinion on the group and company financial statements of Kodal Minerals Plc and was
based on group materiality and an assessment of risk at group level.
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Other information
The directors are responsible for the other information. The other information comprises the information included in the annual
report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, 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 audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other
information. 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:
l the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
l 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:
l 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
l the parent company financial statements are not in agreement with the accounting records and returns; or
l certain disclosures of directors’ remuneration specified by law are not made; or
l we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on pages 25 to 26, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative
but to do so.
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INDEPENDENT AUDITOR’S REPORT (continued)
for the year ended 31 March 2018
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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: http://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.
GRAHAM RICKETTS (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
24 July 2018
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2018
Note Year ended Year ended
31 March 31 March
2018 2017
£ £
Continuing operations
Revenue – –
Impairment of exploration and evaluation assets 7 – (675,236)
Administrative expenses (517,184) (488,376)
Share based payments 5 (341,372) (14,667)
OPERATING LOSS (858,556) (1,178,279)
Finance income 1,499 –
LOSS BEFORE TAX 2 (857,057) (1,178,279)
Taxation 6 – –
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (857,057) (1,178,279)
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss
Currency translation loss (18,002) (5,497)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (875,059) (1,183,776)
Loss per share
Basic and diluted – loss per share on total earnings (pence) 4 (0.0136) (0.0299)
The loss for the current and prior years and the total comprehensive income for the current and the prior years are wholly
attributable to owners of the parent company.
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CONSOLIDATED AND PARENT COMPANY STATEMENTS
OF FINANCIAL POSITION
as at 31 March 2018
Registered number: 07220790
Group Group Company Company
31 March 31 March 31 March 31 March
2018 2017 2018 2017
Note £ £ £ £
NON-CURRENT ASSETS
Intangible assets 7 3,508,499 1,323,226 – –
Property, plant and equipment 8 3,085 – – -
Amounts due from
subsidiary undertakings – – 2,950,132 921,198
Investments in subsidiary
undertakings 9 – – 512,373 512,373
3,511,584 1,323,226 3,462,505 1,433,571
CURRENT ASSETS
Other receivables 10 8,765 16,229 8,765 33,238
Cash and cash equivalents 3,123,549 1,722,950 3,074,325 1,693,016
3,132,314 1,739,179 3,083,090 1,726,254
TOTAL ASSETS 6,643,898 3,062,405 6,545,595 3,159,825
CURRENT LIABILITIES
Trade and other payables 11 (331,391) (325,213) (79,733) (321,898)
TOTAL LIABILITIES (331,391) (325,213) (79,733) (321,898)
NET ASSETS 6,312,507 2,737,192 6,465,862 2,837,927
EQUITY
Attributable to owners of the parent:
Share capital 12 2,038,903 1,683,206 2,038,903 1,683,206
Share premium account 12 10,467,337 6,784,682 10,467,337 6,784,682
Share based payment reserve 581,356 169,334 581,356 169,334
Translation reserve (21,599) (3,597) – –
Retained deficit (6,753,490) (5,896,433) (6,621,734) (5,799,295)
TOTAL EQUITY 6,312,507 2,737,192 6,465,862 2,837,927
The Company’s loss for the year ended 31 March 2018 was £822,439 (2017: £1,087,958).
The financial statements were approved and authorised for issue by the board of directors on 24 July 2018 and signed on its
behalf by
Robert Wooldridge
Director
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
Attributable to the owners of the Parent
Share Share based
Share premium payment Translation Retained Total
capital account reserve reserve deficit equity
£ £ £ £ £ £
GROUP
At 31 March 2016 328,080 4,937,405 154,667 1,900 (4,718,154) 703,898
Comprehensive income
Loss for the year – – – – (1,178,279) (1,178,279)
Other comprehensive income
Currency translation loss – – – (5,497) – (5,497)
Total comprehensive income
for the year – – – (5,497) (1,178,279) (1,183,776)
Transactions with owners
Shares in settlement of services 8,771 22,629 – – – 31,400
Share based payment – – 14,667 – – 14,667
Proceeds from shares issued 1,346,355 1,993,645 – – – 3,340,000
Share issue expenses – (168,997) – – – (168,997)
At 31 March 2017 1,683,206 6,784,682 169,334 (3,597) (5,896,433) 2,737,192
Comprehensive income
Loss for the year – – – – (857,057) (857,057)
Other comprehensive income
Currency translation loss – – – (18,002) – (18,002)
Total comprehensive income
for the year – – – (18,002) (857,057) (875,059)
Transactions with owners
Share based payment – – 412,022 – – 412,022
Proceeds from shares issued 355,697 3,969,567 – – – 4,325,264
Share issue expenses – (286,912) – – – (286,912)
At 31 March 2018 2,038,903 10,467,337 581,356 (21,599) (6,753,490) 6,312,507
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PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
Share Share based
Share premium payment Retained Total
capital account reserve deficit equity
£ £ £ £ £
COMPANY
At 31 March 2016 328,080 4,937,405 154,667 (4,711,337) 708,815
Comprehensive income
Loss for the year – – – (1,087,958) (1,087,958)
Total comprehensive income
for the year – – – (1,087,958) (1,087,958)
Transactions with owners
Shares in settlement of services 8,771 22,629 – – 31,400
Share based payment – – 14,667 – 14,667
Proceeds from shares issued 1,346,355 1,993,645 – – 3,340,000
Share issue expenses – (168,997) – – (168,997)
At 31 March 2017 1,683,206 6,784,682 169,334 (5,799,295) 2,837,927
Comprehensive income
Loss for the year – – – (822,439) (822,439)
Total comprehensive income
for the year – – – (822,439) (822,439)
Transactions with owners
Share based payment – – 412,022 – 412,022
Proceeds from shares issued 355,697 3,969,567 – – 4,325,264
Share issue expenses – (286,912) – – (286,912)
At 31 March 2018 2,038,903 10,467,337 581,356 (6,621,734) 6,465,862
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CONSOLIDATED AND PARENT COMPANY STATEMENTS
OF CASH FLOWS
for the year ended 31 March 2018
Group Group Company Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
Note £ £ £ £
Cash flows from operating activities
Loss before tax (857,057) (1,178,279) (822,439) (1,087,958)
Adjustments for non-cash items:
Loss on sale of property,
plant and equipment – 41,994 – –
Impairment of exploration
and evaluation assets 7 – 675,236 – –
Impairment of investments
in subsidiaries and
intercompany balances – – – 653,887
Share based payments 341,372 14,667 341,372 14,667
Equity settled transactions – 20,000 – 20,000
Operating cash flow before
movements in working capital (515,685) (426,382) (481,067) (399,404)
Movement in working capital
Decrease/(increase) in receivables 7,464 (13,245) 24,473 (17,255)
Increase/(decrease) in payables 6,178 220,858 (242,165) 223,131
Net movements in working capital 13,642 207,613 (217,692) 205,876
Net cash outflow from
operating activities (502,043) (218,769) (698,759) (193,528)
Cash flows from investing activities
Purchase of subsidiary undertakings – – – (102,373)
Disposal of property, plant and equipment – 10,000 – –
Purchase of tangible assets (3,702) – – –
Purchase of intangible assets (2,190,105) (961,205) –
Loans to subsidiary undertakings – – (2,028,934) (906,609)
Net cash outflow from investing activities (2,193,807) (951,205) (2,028,934) (1,008,982)
Cash flow from financing activities
Net proceeds from share issues 12 4,109,002 2,761,003 4,109,002 2,761,003
Net cash inflow from financing activities 4,109,002 2,761,003 4,109,002 2,761,003
Increase in cash and cash equivalents 1,413,152 1,591,029 1,381,309 1,558,493
Cash and cash equivalents at
beginning of the year 1,722,950 134,801 1,693,016 134,523
Exchange loss on cash (12,553) (2,880) – –
Cash and cash equivalents at
end of the year 3,123,549 1,722,950 3,074,325 1,693,016
Cash and cash equivalents comprise cash on hand and bank balances.
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PRINCIPAL ACCOUNTING POLICIES
for the year ended 31 March 2018
The Group has adopted the accounting policies set out below in the preparation of the financial statements. All of these policies
have been applied consistently throughout the period unless otherwise stated.
Basis of preparation
The consolidated financial statements of Kodal Minerals Plc are prepared in accordance with the historical cost convention and in
accordance with International Financial Reporting Standards (“IFRSs”), as adopted by the European Union (“EU”) and in accordance
with the provisions of the Companies Act 2006. The Company’s ordinary shares are quoted on AIM, a market operated by the
London Stock Exchange.
Going concern
The Group has not earned revenue during the year to 31 March 2018 as it is still in the exploration and development phases of
its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue
of new shares.
As at 31 March 2018, the Group held cash balances of £3,123,549 (2017: £1,722,950). The Group’s cash balances at 20 July 2018
were £3,585,000.
The Directors have prepared cash flow forecasts for the period ending 30 September 2019. The forecasts include the costs of
progressing the Lithium Projects, further limited work on the Gold Projects as well as the overheads of the Group. Further fund
raising will be required at an appropriate time in order to undertake additional phases of the exploration and development work
and the Group has historically been successful in raising additional funds in such circumstances. However, the forecasts demonstrate
that by reducing the level of discretionary exploration and development activity the Group has sufficient cash resources available to
allow it to continue as a going concern and meet its liabilities as they fall due for a period of at least twelve months from the date
of approval of these financial statements without the need for a further fund raising. Accordingly, the financial statements have been
prepared on a going concern basis.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the statement
of financial position date. Subsidiary undertakings are entities over which the Group has the power to control the financial and
operating policies so as to obtain benefits from their activities. The Group obtains and exercises control through voting rights.
Unrealised gains on transactions between the Company and its subsidiaries are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the
financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted
by the Group.
Foreign currency translation
Items included in the Group’s consolidated financial statements are measured using the currency of the primary economic
environment in which the Group operates (“the functional currency”). The financial statements are presented in pounds sterling
(“£”), which is the functional and presentational currency of the Parent Company and the presentational currency of the Group.
End of year balances in the Group’s Norwegian subsidiary undertakings were converted using an end of year rate of NOK 1 : £0.0910
(2017: NOK 1 : £0.0926) and its West African subsidiary undertakings were converted using an end of year rate of XOF 1 : £0.00134
(2017: XOF 1 : £0.00130).
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Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the reporting date and the gains or
losses on translation are included in profit and loss. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the original transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation,
which is included in administrative expenses, is charged so as to write off the costs of assets, over their estimated useful lives, using
the straight-line method, on the following basis:
Plant and machinery 4 years
Motor vehicles 4 years
Fixtures, fittings and equipment 4 years
Where property, plant and equipment are used in exploration and evaluation activities, the depreciation of the assets is capitalised
as part of the cost of exploration and evaluation assets. The assets’ residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment. Where the recoverable amount of the investment is
less than the carrying amount, an impairment is recognised.
Exploration and evaluation expenditure
In accordance with IFRS 6 (Exploration for and Evaluation of Mineral Resources), exploration and evaluation costs incurred before
the Group obtains legal rights to explore in a specific area (a “project area”) are taken to profit or loss.
Upon obtaining legal rights to explore in a project area, the fair value of the consideration paid for acquiring those rights and
subsequent exploration and evaluation costs are capitalised as exploration and evaluation assets. The costs of exploring for and
evaluating mineral resources are accumulated with reference to appropriate cost centres being project areas or groups of
project areas.
Upon the technical feasibility and commercial viability of extracting the relevant mineral resources becoming demonstrable, the
Group ceases further capitalisation of costs under IFRS 6.
Exploration and evaluation assets are not amortised prior to the conclusion of appraisal activities, but are carried at cost less
impairment, where the impairment tests are detailed below.
Exploration and evaluation assets are carried forward until the existence (or otherwise) of commercial reserves is determined:
l where commercial reserves have been discovered, the carrying value of the exploration and evaluation assets are reclassified as
development and production assets and amortised on an expected unit of production basis; or
l where a project area is abandoned, or a decision is made to perform no further work, the exploration and evaluation assets are
written off in full to profit or loss.
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PRINCIPAL ACCOUNTING POLICIES (continued)
for the year ended 31 March 2018
Exploration and evaluation assets – impairment
Project areas, or groups of project areas, are determined to be cash generating units for the purposes of assessment of impairment.
With reference to a project area or group of project areas, the exploration and evaluation assets (along with associated production
and development assets) are assessed for impairment when such facts and circumstances suggest that the carrying amount of the
assets may exceed the recoverable amount.
Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 and include the point at which a
determination is made as to whether or not commercial reserves exist.
The aggregate carrying value is compared against the expected recoverable amount, generally by reference to the present value of
the future net cash flows expected to be derived from production of the commercial reserves. Where the carrying amount exceeds
the recoverable amount, an impairment is recognised in profit or loss.
Intangible assets and impairment
Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.
Amortisation, which is included in administrative expenses, is charged so as to write off the costs of intangible assets, over their
estimated useful lives, using the straight-line method, on the following basis:
Software
3 years
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax is
realised, or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available against which the
temporary differences can be utilised.
Financial instruments
Financial assets and financial liabilities are recognised on the Statement of Financial Position when the Group becomes a party to
the contractual provisions of the instrument.
IFRS 7 (Financial Instruments: Disclosures) requires information to be disclosed about the impact of financial instruments on the
Group’s risk profile, how the risks arising from financial instruments might affect the entity’s performance, and how these risks are
being managed. The required disclosures have been made in note 14 to the financial statements.
The Group’s policies include that no trading in derivative financial instruments shall be undertaken.
Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand.
Kodal Minerals Report & Accounts 2018 40
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Other receivables
Other receivables are carried at amortised cost less provision made for impairment of these receivables. A provision for impairment
of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according
to the original terms of the receivables. The amount of the provision is the difference between the assets’ carrying amount and the
recoverable amount. Provisions for impairment of receivables are included in profit or loss.
Trade and other payables
Trade payables and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these
goods and services. These amounts are carried at amortised cost. The amounts are unsecured and are usually paid within 30 days
of recognition.
Provisions
A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable
that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the
amount of the obligation.
When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting
period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value
amount arising from the passage of time is included in profit or loss.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.
Equity settled transactions (Share based payments)
The Group has issued shares as consideration for services received. Equity settled share-based payments are measured at fair value
at the date of issue.
The Group has also granted equity settled options and warrants. The cost of equity settled transactions is measured by reference
to the fair value at the date on which they were granted and is recognised as an expense over the vesting period, which ends on
the date the recipient becomes fully entitled to the award. Fair value is determined by using the Black-Scholes option pricing model.
In valuing equity settled transactions, no account is taken of any service and performance conditions (vesting conditions), other than
performance conditions linked to the price of the shares of the Company (market conditions). Any other conditions which are
required to be met in order for the recipients to become fully entitled to an award are considered to be non-vesting conditions.
Market performance conditions and non-vesting conditions are taken into account in determining the grant value.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or
non-vesting condition, which are vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided
that all other performance or service conditions are satisfied.
At each reporting date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has
expired and management’s best estimate of the number of equity instruments that will ultimately vest. The movement in the
cumulative expense since the previous reporting date is recognised in profit and loss, with a corresponding entry in equity.
Kodal Minerals Report & Accounts 2018 41
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PRINCIPAL ACCOUNTING POLICIES (continued)
for the year ended 31 March 2018
Where the terms of the equity-settled award are modified, or a new award is designated as replacing a cancelled or settled award,
the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of the modified award, both as measured on the date of the
modification. No reduction is recognised if the difference is negative.
Where an equity-based award is cancelled (including when a non-vesting condition within the control of the entity or employee is
not met), it is treated as if it had vested on the date of the cancellation, and the cost not yet recognised in profit and loss for the
award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is
deducted from equity, with any excess over fair value being treated as an expense.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors, which has
been identified as the Chief Operating Decision Maker. The Board of Directors is responsible for allocating resources and assessing
performance of the operating segments in line with the strategic direction of the company.
Critical accounting judgements and estimates
The preparation of these consolidated financial statements in accordance with International Financial Reporting Standards requires
the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
consolidated financial statements and the reported amounts of income and expenses during the reporting period. Although these
estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those
estimates. IFRSs also require management to exercise its judgement in the process of applying the Group’s accounting policies.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and
liabilities within the next financial year are addressed below.
Exploration and evaluation expenditure
In accordance with the Group’s accounting policy for exploration and evaluation expenditure, after obtaining licences giving legal
rights to explore in the project area, all exploration and evaluation costs for each project are capitalised as exploration and
evaluation assets.
The exploration and evaluation assets for each project are assessed for impairment when such facts and circumstances suggest that
the carrying value of the assets may exceed the recoverable amount.
In connection with the preparation of the financial statements for the year ended 31 March 2017, the directors undertook an
impairment review of the carrying value of the Grimeli Project in Norway. The impairment review was conducted following an
assessment by the directors of the exploration data on the Grimeli Project which led to a decision not to commit any further
expenditure to the project. The Group has subsequently relinquished these licence areas.
The directors have assessed the Group’s Gold Projects in Mali and Côte d’Ivoire that are not part of the joint venture agreements
and determined that they remain prospective. Accordingly, the directors have determined to continue to maintain these licences
and explore ways for the Group to advance these prospective areas most effectively. Accordingly, no impairment review has been
conducted on these assets.
The directors have assessed the Group’s Lithium Projects in Mali. These projects are currently under development and there is no
indication of impairment. Accordingly, no impairment review has been conducted on these assets.
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The Group’s exploration activities and future development opportunities are dependent upon maintaining the necessary licences
and permits to operate, which typically require periodic renewal or extension. In Mali and Côte d’Ivoire, the process of renewal or
extension of a licence can only be initiated on expiry of the previous term and takes time to be processed by the relevant government
authority. Until formal notification is received there is a risk that renewal or extension will not be granted.
As detailed in the Operational Review, at the date of these financial statements, the Group’s key exploration licences are current. As
detailed in note 7, the total carrying value of the exploration and evaluation assets at 31 March 2018 was £3.5 million
(2017: £1.3 million). The Group complies with the prevailing laws and regulations relating to these licences and ensures that the
regulatory reporting and government compliance requirements for each licence are met.
Valuation of warrants and share options
In accordance with the Group’s accounting policy for equity settled transactions, all equity settled share based payments are measured
at fair value at the date of issue. Fair value is determined by using the Black-Scholes option pricing model based on the terms of the
options and warrants, the Company’s share price at the time and assumptions for volatility and exercise date. The assumptions used
to value the options and warrants are detailed in note 5.
For options awarded to the directors, the award has been considered to be in relation to their overall contribution to the Group
and, accordingly, the charge has been included within operating costs in the Consolidated Statement of Comprehensive Income
rather than treated as an exploration and evaluation cost and capitalised against specific projects. For the award of warrants associated
with the raising of funds through the issue of new shares, the charge has been treated as a share issue expense and offset against
the share premium account.
New standards and interpretations not applied
At the date of authorisation of these consolidated financial statements, certain new standards, amendments and interpretations to
existing standards have been published but are not yet effective and have not been adopted early by the Group. These are listed below.
The Board anticipates that all of the pronouncements will be adopted in the Group’s accounting policies for the first period beginning
after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact
on the Group’s consolidated financial statements.
Annual periods
Standard Details of amendment / New Standards and Interpretations beginning on or after
IFRS 2 Classification and
Measurement of Share-
based Payment
Transactions
To clarify the effects of vesting and non-vesting conditions on the
measurement of cash-settled share-based payment (SBP) transactions, the
accounting for SBP transactions with a net settlement feature for withholding
tax obligations, and the effect of a modification to the terms and conditions
of a SBP that changes the classification of the transaction from cash-settled to
equity-settled.
1 January 2018
IFRIC 22 Foreign
Currency Transactions and
Advance Consideration
New Interpretation
To provide guidance clarifying that the exchange rate to use in transactions
that involve advance consideration paid or received in a foreign currency is
the one at the date of initial recognition of the non-monetary prepayment
asset or deferred income liability.
1 January 2018
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PRINCIPAL ACCOUNTING POLICIES (continued)
for the year ended 31 March 2018
Annual periods
Standard Details of amendment / New Standards and Interpretations beginning on or after
IFRIC 23 Uncertainty over
Income Tax Treatments
New Interpretation
To provide guidance on how to reflect the effects of uncertainty in accounting
for income taxes under IAS 12, in particular (i) whether uncertain tax
treatments should be considered separately, (ii) assumptions for taxation
authorities’ examinations, (iii) determination of taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits, and tax rates, and (iv) effect of
changes in facts and circumstances.
1 January 2019
IFRS 9 Financial
Instruments
New Standard
Requirements for the classification and measurement of financial assets and
financial liabilities, impairment, hedge accounting, recognition and derecognition.
1 January 2018
There are other standards in issue but not yet effective, which are not likely to be relevant to the Group which have therefore not
been listed.
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NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2018
1.
SEGMENTAL REPORTING
The operations and assets of the Group in the year ended 31 March 2018 are focused in the United Kingdom, West Africa and
Norway and comprise one class of business: the exploration and evaluation of mineral resources. Management has determined
that the Group had four operating segments being the West African Gold Projects, the West African Lithium Projects, the
Norway Projects and the UK administration operations. The Parent Company acts as a holding company. At 31 March 2018,
the Group had not commenced commercial production from its exploration sites and therefore had no revenue for the year.
Year ended 31 March 2018
Administrative expenses
Share based payments
Finance income
Loss for the year
At 31 March 2018
Other receivables
Cash and cash equivalents
Trade and other payables
Tangible assets
Intangible assets - exploration
and evaluation expenditure
UK
£
(492,819)
(341,372)
1,499
(832,692)
8,765
3,074,325
(36,317)
–
West Africa
Gold
£
West Africa
Lithium
£
(7,283)
–
–
(7,283)
–
25,437
–
–
(3,143)
–
–
(3,143)
–
23,761
(295,042)
3,085
–
977,192
2,531,307
Net assets at 31 March 2018
3,046,773
1,002,629
2,263,111
Year ended 31 March 2017
Administrative expenses
Impairment charge
Share based payments
Loss for the year
At 31 March 2017
Other receivables
Cash and cash equivalents
Trade and other payables
Intangible assets - exploration
and evaluation expenditure
UK
£
(443,035)
–
(14,667)
(457,702)
13,189
1,693,016
(170,137)
–
Net assets at 31 March 2017
1,536,068
West Africa
Gold
£
West Africa
Lithium
£
(160)
–
–
(160)
–
11,423
–
714,085
725,508
(160)
–
–
(160)
1,040
11,423
(155,076)
609,141
466,528
Norway
£
(13,939)
–
–
Total
£
(517,184)
(341,372)
1,499
(13,939)
(857,057)
–
26
(32)
–
–
(6)
8,765
3,123,549
(331,391)
3,085
3,508,499
6,312,507
Norway
£
(45,021)
(675,236)
–
Total
£
(488,376)
(675,236)
(14,667)
(720,257)
(1,178,279)
2,000
7,088
–
16,229
1,722,950
(325,213)
–
1,323,226
9,088
2,737,192
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
2.
LOSS BEFORE TAX
The loss before tax from continuing activities is stated after charging:
Group Group
Year ended Year ended
31 March 2018 31 March 2017
£ £
Impairment of intangible assets – 675,236
Fees payable to the Company’s auditor 29,500 37,500
Share based payments (note 5) 341,372 14,667
Directors’ salaries and fees 101,903 96,815
Employer’s National Insurance 3,602 2,311
Amounts payable to RSM UK Audit LLP and its associates in respect of both audit and non-audit services are as follows:
Group Group
Year ended Year ended
31 March 2018 31 March 2017
£ £
Audit services
– statutory audit of parent and consolidated accounts 29,500 27,500
– statutory audit of subsidiaries – 2,500
– review of interim accounts – 7,500
29,500 37,500
3.
EMPLOYEES’ AND DIRECTORS’ REMUNERATION
The average number of people employed in the Group is as follows:
Group Group Company Company
31 March 2018 31 March 2017 31 March 2018 31 March 2017
Number Number Number Number
Average number of employees
(including directors): 6 6 3 3
The remuneration expense for directors of the Company is as follows:
Year ended Year ended
31 March 2018 31 March 2017
£ £
Directors’ remuneration 101,903 96,815
Directors’ social security costs 3,602 2,311
Total 105,505 99,126
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3.
EMPLOYEES’ AND DIRECTORS’ REMUNERATION (continued)
In addition to the amounts included above, £20,250 (2017: £19,000) of the directors’ remuneration cost has been treated as
Exploration and Evaluation expenditure.
Directors’ Share based
salary and fees payments Total
year ended year ended year ended
31 March 2018 31 March 2018 31 March 2018
(see note 5)
£ £ £
Luke Bryan (1) 20,000 114,108 134,108
Robert Wooldridge 44,167 57,055 101,222
Bernard Aylward (2) 33,750 114,108 147,858
Qingtao Zeng 24,236 17,933 42,169
122,153 303,204 425,357
Directors’ Share based
salary and fees payments Total
year ended year ended year ended
31 March 2017 31 March 2017 31 March 2017
£ £ £
Luke Bryan (1) 24,077 14,667 38,744
Markus Ekberg 1,667 – 1,667
David Jones 8,769 – 8,769
Robert Wooldridge 30,635 – 30,635
Bernard Aylward (2) 31,667 – 31,667
96,815 14,667 111,482
1
2
In addition to the amounts included above, Novoco Mine Engineering Limited, a company wholly owned by Luke Bryan,
provided consultancy services to the Group during the year and received fees of £13,400 (2017: £24,300).
In addition to the amounts included above, Matlock Geological Services Pty Ltd, a company wholly owned by Bernard
Aylward, provided consultancy services to the Group during the year and received fees of £82,982 (2017: £91,106).
Kodal Minerals Report & Accounts 2018 47
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
4.
LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year.
The following reflects the result and share data used in the computations:
Weighted Basic
average number loss per
Loss of shares share (pence)
£
Year ended 31 March 2018 (857,057) 6,324,339,191 0.0136
Year ended 31 March 2017 (1,178,279) 3,942,928,822 0.0299
Diluted loss per share is calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Options in issue are not
considered diluting to the loss per share as the Group is currently loss making. Diluted loss per share is therefore the same as
the basic loss per share.
5.
SHARE BASED PAYMENTS
The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees,
including key management personnel, as part of their remuneration.
Year ended Year ended
31 March 2018 31 March 2017
Share options outstanding Number Number
Opening balance 40,000,000 40,000,000
Issued in the year 155,000,000 –
Closing balance 195,000,000 40,000,000
Year ended Year ended
31 March 2018 31 March 2017
Warrants outstanding Number Number
Opening balance – –
Issued in the year 25,000,000 –
Closing balance 25,000,000 –
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5.
SHARE BASED PAYMENTS (continued)
Options outstanding for each of the directors at the year end are outlined below:
Robert
Exerciseable between Bernard Aylward Luke Bryan Wooldridge Qingtao Zeng
30 Dec 2014 – 30 Dec 2024 – 13,333,333 – –
30 Dec 2015 – 30 Dec 2025 – 13,333,333 – –
30 Dec 2016 – 30 Dec 2026 – 13,333,333 – –
8 May 2017 – 8 May 2022 25,000,000 25,000,000 12,500,000 –
8 May 2018 – 8 May 2023 12,500,000 12,500,000 6,250,000 –
8 May 2019 – 8 May 2024 12,500,000 12,500,000 6,250,000 –
20 Nov 2017 – 20 Nov 2022 – – – 5,000,000
20 Nov 2018 – 20 Nov 2023 – – – 2,500,000
20 Nov 2019 – 20 Nov 2024 – – – 2,500,000
Closing balance 50,000,000 89,999,999 25,000,000 10,000,000
The total value of options and warrants granted in the year was £412,022. Included within operating losses is a charge for
issuing share options and making share-based payments of £341,372 (2017: £14,667). In addition, a charge of £70,650 (2017:
£nil) has been allocated against the Share Premium reserve in respect of warrants issued in consideration for services provided
to the Company in connection with the issue of shares in the Company.
Details of share options and warrants outstanding at 31 March 2018:
Date of grant
Number of options Option price
Exercisable between
20 December 2013
20 December 2013
20 December 2013
8 May 2017
8 May 2017
8 May 2017
22 May 2017
22 May 2017
22 May 2017
20 November 2017
20 November 2017
20 November 2017
13,333,333
13,333,333
13,333,333
72,500,000
36,250,000
36,250,000
12,500,000
6,250,000
6,250,000
5,000,000
2,500,000
2,500,000
0.7 pence
0.7 pence
0.7 pence
0.38 pence
0.38 pence
0.38 pence
0.38 pence
0.38 pence
0.38 pence
0.38 pence
0.38 pence
0.38 pence
30 Dec 2014 – 30 Dec 2024
30 Dec 2015 – 30 Dec 2025
30 Dec 2016 – 30 Dec 2026
8 May 2017 – 8 May 2022
8 May 2018 – 8 May 2023
8 May 2019 – 8 May 2024
22 May 2017 – 22 May 2022
22 May 2018 – 22 May 2023
22 May 2019 – 22 May 2024
20 Nov 2017 – 20 Nov 2022
20 Nov 2018 – 20 Nov 2023
20 Nov 2019 – 20 Nov 2024
Additional disclosure information:
Weighted average exercise price of share options and warrants:
l outstanding at the beginning of the period
l granted during the period
l outstanding at the end of the period
l exercisable at the end of the period
Weighted average remaining contractual life of
share options outstanding at the end of the period
0.7 pence
0.38 pence
0.44 pence
0.48 pence
5.41 years
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
5.
SHARE BASED PAYMENTS (continued)
Options issued in the year to 31 March 2018
The Company entered into option agreements dated 8 May 2017 with directors and certain key personnel. Options over a
total of 145 million ordinary shares were granted, including 50 million options to each of the executive directors, Bernard
Aylward and Luke Bryan, and 25 million options to the Chairman, Rob Wooldridge. All the options are exercisable at a price
of 0.38 pence per share and have a life of 5 years from vesting. 50 per cent. of the options vested immediately, with a further
25 per cent. vesting in one year and the remaining 25 per cent. vesting in two years’ time.
The Company entered into a warrant agreement dated 22 May 2017 with SP Angel Corporate Finance LLP (“SP Angel”)
under which the Company granted warrants over 25,000,000 shares to SP Angel. The warrants are exercisable at a price of
0.38 pence per share and have a life of five years from vesting. 50 per cent. of the warrants vested immediately, with a further
25 per cent. vesting in one year and the remaining 25 per cent. vesting in two years’ time.
The Company entered into option agreements dated 20 November 2017 with Qingtao Zeng, non-executive director, under
which options over 10,000,000 shares were granted. The options are exercisable at a price of 0.38 pence per share and have
a life of 5 years from vesting. 50 per cent. of the options vested immediately, with a further 25 per cent. vesting in one year and
the remaining 25 per cent. vesting in two years’ time.
The fair values of the options and warrants granted were calculated using the Black-Scholes valuation model. The inputs into
the model were:
8 May 2017 22 May 2017 20 November 2017
Strike price 0.38p 0.38p 0.38p
Share price 0.31p 0.32p 0.205p
Volatility 143% 143% 129%
Expiry date 8 May 2022 22 May 2022 20 November 2022
Risk free rate 0.87% 0.80% 1.09%
Dividend yield 0.0% 0.0% 0.0%
Options issued in the year to 31 March 2014
In respect of services provided in connection with the Company’s admission to AIM, the Company entered into option
agreements dated 20 December 2013 between the Company and Novoco Mine Engineering Limited (“Novoco”), a company
wholly owned by Luke Bryan, and between the Company and David Hakes (a consultant to the Group at the time). Under
these agreements, the Company granted to Novoco and David Hakes respectively options over 25,000,000 shares and
15,000,000 shares (“Option Shares”) at an exercise price of 0.7 pence per share. The options become exercisable in respect
of one third of the total number of Option Shares on each of the first, second and third anniversaries of 30 December 2013.
The options are exercisable for a period of ten years from the date on which they vest and become exercisable.
Tetra Option Agreement
In December 2013, the Group entered into an option agreement (the “Agreement”) with Tetra Minerals Oy (“Tetra”) a company
registered in Finland, under which it granted to Tetra an option (the “Option”) to subscribe for new shares in the Company.
Under the terms of the Agreement, which is governed by English law, Tetra could not assign its right to the Option to another
party. In March 2017, Kodal was informed that on 1 February 2017, under a demerger plan in accordance with Finnish law,
Tetra’s assets had been transferred equally to two new Finnish companies and Tetra had been dissolved. The Company believes,
based on legal advice, that as a result of the restriction in the Agreement on assigning the Option and the dissolution of Tetra,
the Option is no longer capable of being exercised.
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6. TAXATION
Group Group
Year ended Year ended
31 March 2018 31 March 2017
£ £
Taxation charge for the year – –
Factors affecting the tax charge for the year
Loss from continuing operations before income tax (857,057) (1,178,279)
Tax at 19% (2017: 20%) (162,841) (235,656)
Expenses not deductible 1,596 232
Losses carried forward not deductible 96,384 89,044
Deferred tax differences 64,861 137,981
Non-current assets temporary differences – 8,399
Income tax expense – –
The Group has tax losses and other potential deferred tax assets totalling £1,128,000 (2017: £790,000) which will be able to
be offset against future income. No deferred tax asset has been recognised in respect of these losses as the timing of their
utilisation is uncertain at this stage.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
7.
INTANGIBLE ASSETS
Exploration and
evaluation Software Total
GROUP £ £ £
COST
At 1 April 2016 4,058,645 27,295 4,085,940
Additions in the year – acquisition of IG Bermuda 535,134 – 535,134
Additions in the year – other expenditure 857,022 – 857,022
Disposals in the year – (27,295) (27,295)
Effects of foreign exchange 9,751 – 9,751
At 1 April 2017 5,460,552 – 5,460,552
Additions in the year 2,190,105 – 2,190,105
Effects of foreign exchange (4,832) – (4,832)
At 31 March 2018 7,645,825 – 7,645,825
AMORTISATION
At 1 April 2016 3,462,090 22,459 3,484,549
Amortisation charge – 3,306 3,306
Disposals in the year – (25,765) (25,765)
Impairment (see note below) 675,236 – 675,236
At 31 March 2017 and 2018 4,137,326 – 4,137,326
NET BOOK VALUES
At 31 March 2018 3,508,499 – 3,508,499
At 31 March 2017 1,323,226 – 1,323,226
At 31 March 2016 596,555 4,836 601,391
In connection with the preparation of the financial statements for the year ended 31 March 2017, the directors undertook an
impairment review of the carrying value of the Grimeli Project in Norway. The impairment review was conducted following an
assessment by the directors of the exploration data on the Grimeli Project which led to a decision not to commit any further
expenditure to the project. The Company has subsequently relinquished these licence areas. At 31 March 2018, the carrying
value of the Grimeli Project was £nil compared to £nil in 2017. No further expenditure is being incurred on the Grimeli Project.
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8.
PROPERTY, PLANT AND EQUIPMENT
Fixtures, fittings Plant and Motor
and equipment machinery vehicles Total
GROUP £ £ £ £
COST
At 1 April 2016 96,597 30,758 19,851 147,206
Disposals in the year (96,597) (30,758) (19,851) (147,206)
At 1 April 2017
Additions in the year – 3,702 – 3,702
At 31 March 2018 – 3,702 – 3,702
DEPRECIATION
At 1 April 2016 53,832 18,964 10,829 83,625
Depreciation charge 8,704 2,248 2,668 13,620
Disposals in the year (62,536) (21,212) (13,497) (97,245)
At 1 April 2017
Depreciation charge – 617 – 617
At 31 March 2018 – 3,085 – 3,085
NET BOOK VALUES
At 31 March 2018 – 3,085 – 3,085
At 31 March 2017 – – – –
At 31 March 2016 42,765 11,794 9,022 63,581
For those tangible assets wholly associated with exploration and development projects, the amounts charged in respect of
depreciation are capitalised as evaluation and exploration assets within intangible assets. The assets disposed of in 2017 all
related to the projects in Norway.
The Company did not have any Property, Plant and Equipment as at 31 March 2016, 2017 and 2018.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
9.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
The consolidated financial statements include the following subsidiary companies:
Country of Equity Nature of
Company Subsidiary of incorporation Registered office holding business
Kodal Norway (UK) Ltd Kodal Minerals Plc
United
Kingdom
Kodal Mining AS Kodal Norway (UK) Ltd
Norway
Kodal Phosphate AS Kodal Norway (UK) Ltd
Norway
International
Goldfields (Bermuda)
Limited
Kodal Minerals Plc
Bermuda
International
Goldfields Côte
d’Ivoire SARL
International Goldfields
(Bermuda) Limited
Côte d’Ivoire
International
Goldfields Mali SARL
International Goldfields
(Bermuda) Limited
Mali
Jigsaw Resources CIV
Ltd
International Goldfields
(Bermuda) Limited
Bermuda
Corvette CIV SARL
International Goldfields
(Bermuda) Limited
Côte d’Ivoire
Future Minerals
SARL
International Goldfields
(Bermuda) Limited
Mali
Prince Frederick House,
35-39 Maddox Street,
London W1S 2PP
c/o Tenden Advokatfirma
ANS, 3210 Sandefjord
Norway
c/o Tenden Advokatfirma
ANS, 3210 Sandefjord
Norway
100%
Operating
company
100%
Mining
exploration
100%
Mining
exploration
100%
MQ Services Ltd
Victoria Place,
31 Victoria Street,
Hamilton HM 10
Bermuda
Holding
company
Abidjan Cocody Les
Deux Plateaux 7eme
Tranche BP Abidjan
Côte d’Ivoire
Bamako, Faladi, Mali
Univers, Rue 886 B,
Porte 487 Mali
100%
Mining
exploration
100%
Mining
exploration
100%
MQ Services Ltd
Victoria Place,
31 Victoria Street,
Hamilton HM 10
Bermuda
Mining
exploration
Abidjan Cocody Les
Deux Plateaux 7eme
Tranche BP Abidjan
Côte d’Ivoire
Bamako, Faladi, Mali
Univers, Rue 886 B,
Porte 487 Mali
100%
Mining
exploration
100%
Mining
exploration
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9.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued)
Kodal Minerals plc has issued a guarantee under section 479C to its subsidiary, Kodal Norway (UK) Ltd (“Kodal Norway”,
company number 08491224) in respect of its activities for the year ended 31 March 2018 to allow Kodal Norway to take
advantage of the exemption under s479A of the Companies Act 2006 from the requirements of the Act relating to audit of
its individual accounts for the year ended 31 March 2018.
Year ended Year ended
Carrying value of investment in subsidiaries 31 March 2018 31 March 2017
£ £
Opening balance 512,373 476,752
Acquisition of IG Bermuda (see below) – 512,373
Impairment in the year – (476,752)
Closing balance 512,373 512,373
Acquisition of International Goldfields (Bermuda) Limited (“IG Bermuda”)
On 20 May 2016, Kodal Minerals Plc completed the acquisition of IG Bermuda which through its four subsidiaries has interests
in a number of gold exploration projects in Mali and C te d’Ivoire in Western Africa. The consideration of £410,000 was satisfied
by the issue of 1,025,000,000 ordinary shares of the Company, which were issued to Taruga Gold Limited (“Taruga”), a company
listed on the Australian Stock Exchange and the previous owner of IG Bermuda. The consideration shares were subsequently
distributed by Taruga to its shareholders as an in specie distribution. Due to the lack of processes and outputs relating to IG
Bermuda at the time of purchase, the Board does not consider the entities acquired to meet the definition of a business. As
such, the Group accounted for the acquisition of IG Bermuda as an asset purchase.
Including fees and expenses, the total cost of the acquisition was £512,373. The relative fair values of the identifiable assets and
liabilities acquired and included in the consolidation were:
£
Intangible assets – exploration and evaluation 535,134
Cash 39
Other liabilities (22,800)
512,373
10. OTHER RECEIVABLES
Group Group Company Company
31 March 2018 31 March 2017 31 March 2018 31 March 2017
£ £ £ £
Other receivables 8,765 16,229 8,765 33,238
8,765 16,229 8,765 33,238
All receivables at each reporting date are current. No receivables are past due. The Directors consider that the carrying amount
of the other receivables approximates their fair value.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
11. TRADE AND OTHER PAYABLES
Group Group Company Company
31 March 2018 31 March 2017 31 March 2018 31 March 2017
£ £ £ £
Trade payables 212,381 238,200 21,514 238,200
Other payables 119,010 87,013 58,219 83,698
331,391 325,213 79,733 321,898
All trade and other payables at each reporting date are current. The Directors consider that the carrying amount of the trade
and other payables approximates their fair value.
12. SHARE CAPITAL
GROUP AND COMPANY
Allotted, issued and fully paid:
Nominal Number of
Value Ordinary Shares Share Capital Share Premium
£ £
At 31 March 2017 5,386,254,850 1,683,206 6,784,682
Issue (Note 1) £0.0003125 868,421,052 271,382 2,863,618
Issue (Note 2) £0.0003125 182,709,973 57,097 515,288
Issue (Note 3) £0.0003125 87,096,953 27,218 303,749
At 31 March 2018 6,524,482,828 2,038,903 10,467,337
Share issue costs, including the charge for the issue of warrants to SP Angel outlined in note 5, have been allocated against the
Share Premium reserve.
Note 1: On 8 May 2017, a total of 868,421,052 shares were issued to Suay Chin International Pte Ltd at an issue price of
£0.0038 per share.
Note 2: On 31 July 2017, a total of 182,709,973 shares were issued to Suay Chin International Pte Ltd at an issue price of
£0.0038 per share.
Note 3: On 3 November 2017, a total of 87,096,953 shares were issued to Suay Chin International Pte Ltd at an issue price
of £0.0038 per share.
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13. RESERVES
Reserve
Description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value.
Share based payment reserve
Translation reserve
Retained earnings
Cumulative fair value of options and share rights recognised as an expense. Upon exercise
of options or share rights, any proceeds received are credited to share capital. The
share-based payment reserve remains as a separate component of equity.
Gains/losses arising on re-translating the net assets of overseas operations into sterling.
Cumulative net gains and losses recognised in the consolidated statement of financial
position.
14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise cash and cash equivalents, other receivables and trade and other payables.
The main purpose of cash and cash equivalents is to finance the Group’s operations. The Group’s other financial assets and
liabilities such as other receivables and trade and other payables, arise directly from its operations.
It has been the Group’s policy, throughout the periods presented in the consolidated financial statements, that no trading in
financial instruments was to be undertaken, and no such instruments were entered in to.
The main risk arising from the Group’s financial instruments is market risk. The Directors consider other risks to be more minor,
and these are summarised below. The Board reviews and agrees policies for managing each of these risks.
Market risk
Market risk is the risk that changes in market prices, and market factors such as foreign exchange rates and interest rates will
affect the Group’s results or the value of its assets and liabilities.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters while
optimising the return.
Interest rate risk
The Group does not have any borrowings and does not pay interest.
The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s cash and cash equivalents
with a floating interest rate. These financial assets with variable rates expose the Group to interest rate risk. All other financial
assets and liabilities in the form of receivables and payables are non-interest bearing.
In regard to its interest rate risk, the Group periodically analyses its exposure. Within this analysis consideration is given to
alternative investments and the mix of fixed and variable interest rates. The Group does not engage in any hedging or derivative
transactions to manage interest rate risk.
The Group in the year to 31 March 2018 earned interest of £1,499 (2017: £nil). Due to the Group’s relatively low level of
interest bearing assets and the very low interest rates available in the market the Group is not exposed to any significant
interest rate risk.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
Credit risk
Credit risk refers to the risk that a counterparty could default on its contractual obligations resulting in financial loss to the
Group. The Group’s principal financial assets are cash balances and other receivables.
The Group has adopted a policy of only dealing with what it believes to be creditworthy counterparties and would consider
obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s
exposure to and the credit ratings of its counterparties are continuously monitored. An allowance for impairment is made
where there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
the receivables concerned.
Other receivables consist primarily of prepayments and other sundry receivables and none of the amounts included therein
are past due or impaired.
Financial instruments by category – Group
Other financial
Loans and liabilities at
receivables amortised cost Total
31 March 2018 £ £ £
Assets
Other receivables 8,765 – 8,765
Cash and cash equivalents 3,123,549 – 3,123,549
Total 3,132,314 – 3,132,314
Liabilities
Trade and other payables – 331,391 331,391
Total – 331,391 331,391
31 March 2017
Assets
Other receivables 16,229 – 16,229
Cash and cash equivalents 1,722,950 – 1,722,950
Total 1,739,179 – 1,739,179
Liabilities
Trade and other payables – 325,213 325,213
Total – 325,213 325,213
Foreign exchange risk
Throughout the periods presented in the consolidated financial statements, the functional currency for the Group’s Norwegian
subsidiaries has been the Norwegian Kronor (“NOK”) and for the Group’s West African subsidiaries has been the CFA Franc (“XOF”).
The Group incurs certain exploration costs in the CFA Franc and US Dollars and has exposure to foreign exchange rates
prevailing at the dates when Sterling funds are translated into other currencies. The Group has not hedged against this foreign
exchange risk as the Directors do not consider that the level of exposure poses a significant risk.
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14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
The Group continues to keep the matter under review as further exploration and evaluation work is performed in West Africa,
Norway and other countries, and will develop currency risk mitigation procedures if the significance of this risk materially increases.
The Group’s consolidated financial statements have a low sensitivity to changes in exchange due to the low value of assets and
liabilities (principally cash balances) maintained in foreign currencies. Once any project moves into the development phase a greater
proportion of expenditure is expected to be denominated in foreign currencies which may increase the foreign exchange risk.
Financial instruments by currency – Group
GBP NOK XOF
denominated denominated denominated Total
31 March 2018 £ £ £ £
Assets
Other receivables 8,765 – – 8,765
Cash and cash equivalents 3,074,325 26 49,198 3,123,549
Total 3,083,090 26 49,198 3,132,314
Liabilities
Trade and other payables 331,358 33 – 331,391
31 March 2017
Assets
Other receivables 15,189 – 1,040 16,229
Cash and cash equivalents 1,693,016 7,088 22,846 1,722,950
Total 1,708,205 7,088 23,886 1,739,179
Liabilities
Trade and other payables 325,213 – – 325,213
Liquidity risk
Liquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due.
The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient liquidity to
meet its liabilities when they fall due, under both normal and stressed conditions.
The Group has established policies and processes to manage liquidity risk. These include:
l Monitoring the maturity profiles of financial assets and liabilities in order to match inflows and outflows;
l Monitoring liquidity ratios (working capital); and
l Capital management procedures, as defined below.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2018
14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
Capital management
The Group’s objective when managing capital is to ensure that adequate funding and resources are obtained to enable it to
develop its projects through to profitable production, whilst in the meantime safeguarding the Group’s ability to continue as a
going concern. This is to enable the Group, once projects become commercially and technically viable, to provide appropriate
returns for shareholders and benefits for other stakeholders.
The Group has historically relied on equity to finance its growth and exploration activity, raised through the issue of shares. In
the future, the Board will utilise financing sources, be that debt or equity, that best suits the Group’s working capital requirements
and taking into account the prevailing market conditions.
Fair value
The fair value of the financial assets and financial liabilities of the Group, at each reporting date, approximates to their carrying
amount as disclosed in the Statement of Financial Position and in the related notes.
The fair values of the financial assets and liabilities are included at the amounts at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale.
The cash and cash equivalents, other receivables, trade payables and other current liabilities approximate their carrying value
amounts largely due to the short-term maturities of these instruments.
Disclosure of financial instruments and financial risk management for the Company has not been performed as they are not
significantly different from the Group’s position described above.
15. RELATED PARTY TRANSACTIONS
The Directors represent the key management personnel of the Group and details of their remuneration are provided in note 3.
Robert Wooldridge, a Director, is a member of SP Angel Corporate Finance LLP (“SP Angel”) which acts as financial adviser
and broker to the Company. During the year ended 31 March 2018, the Company paid fees to SP Angel of £31,052 (2017:
£148,891) and issued warrants over 25,000,000 ordinary shares (2017: nil) to SP Angel for its services as broker.
Novoco Mine Engineering Limited (“Novoco”), a company wholly owned by Luke Bryan, a Director, provided consultancy
services to the Group during the year ended 31 March 2018 and received fees of £13,400 (2017: £24,300).
Matlock Geological Services Pty Ltd (“Matlock”) a company wholly owned by Bernard Aylward, a Director, provided consultancy
services to the Group during the year ended 31 March 2018 and received fees of £82,982 (2017 £91,106).
During the year, Suay Chin International Pte (“Suay Chin”), which currently owns 29% of the Company’s issued share capital,
transferred £20,000 (2017: £nil) to the Company which amount was paid by the Company to RSM Corporate Finance LLP to
settle corporate finance fees owed to RSM Corporate Finance LLP by Suay Chin. There were no outstanding balances between
the Group and Suay Chin as at 31 March 2018 (2017: £nil).
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16. CONTROL
No one party is identified as controlling the Group.
17. EVENTS AFTER THE REPORTING PERIOD
On 26 June 2018 the Company announced a fundraising to raise gross proceeds of £1,500,000 through a subscription and
placing of 1,153,846,149 ordinary shares.
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NOTICE OF ANNUAL GENERAL MEETING
Kodal Minerals plc
(Registered in England and Wales No. 07220790)
Notice is hereby given that the Annual General Meeting of Kodal Minerals plc (the “Company”) will be held at Fieldfisher LLP,
9th Floor, Riverbank House, 2 Swan Lane, London EC4R 3TT on Thursday 6 September 2018 at 1.00 p.m. for the purposes of
considering and, if thought fit, passing the following resolutions, of which Resolutions 1 to 5 (inclusive) will be proposed as ordinary
resolutions and Resolution 6 will be proposed as a special resolution:
Ordinary Business
1. To receive and adopt the audited financial statements of the Company for the financial period ended 31 March 2018 and the
reports of the directors of the Company (the “Directors”) and the auditors thereon.
2. To re-appoint Robert Ian Wooldridge as a Director, who retires in accordance with article 30.2 of the articles of association of
the Company (the “Articles”) and offers himself for re-appointment.
3. To re-appoint Dr Qingtao Zeng as a Director, who retires in accordance with article 24.2 of the Articles and offers himself for
re-appointment.
4. To re-appoint RSM UK Audit LLP as the auditors of the Company until the next Annual General Meeting and to authorise the
Directors to fix their remuneration.
Special Business
5. That the Directors, and any committee to which the Directors delegate relevant powers, be and they are hereby, generally and
unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the “Act”) to allot shares in the Company
or grant rights to subscribe for or convert any security into shares in the Company (“Rights”) up to a maximum aggregate
nominal amount of £1,799,608 and this authority will (unless renewed, revoked or varied by the Company in general meeting)
expire at the conclusion of the Annual General Meeting of the Company to be held in 2019 but the Company may, before this
authority expires, make an offer or agreement which would or might require shares to be allotted or Rights to be granted after
the authority expires and the Directors may allot shares or grant Rights pursuant to such offer or agreement as if the authority
conferred hereby had not expired, such authority to be in substitution for any existing authorities conferred on the Directors
pursuant to section 551 of the Act.
6. That, conditional on the passing of Resolution 5, the Directors, and any committee to which the Directors delegate relevant
powers, be and they are hereby generally empowered pursuant to section 570 of the Act to allot equity securities (as defined
in section 560 of the Act) for cash pursuant to the authority conferred by Resolution 5 above as if section 561(1) of the Act did
not apply to any such allotment, provided that this power shall be in substitution for any previous powers conferred on the
Directors pursuant to section 570 of the Act and shall be limited to:
(a)
the allotment of equity securities in connection with an issue in favour of the holders of ordinary shares of the Company
in proportion (as nearly as may be) to their respective holdings of ordinary shares, subject only to such exclusions or
other arrangements as the Directors may deem necessary or expedient to deal with fractional entitlements, legal or
practical problems arising in any overseas territory or the requirements of any regulatory body or stock exchange in any
territory; and
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(b)
the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount
of £1,199,739
and the power hereby granted shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2019
save that the Company may before such expiry make an offer or agreement which would or might require equity securities to
be allotted after such expiry but otherwise in accordance with the foregoing provisions of this power in which case the Directors
may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired.
BY ORDER OF THE BOARD
Weaver Financial Limited
Company Secretary
30 July 2018
Registered Office:
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
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NOTICE OF ANNUAL GENERAL MEETING (continued)
Notes:
Entitlement to attend, speak and vote
1.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), the Company has specified that only those members entered on the
register of members at 1:00pm on 4 September 2018 (or in the event that this meeting is adjourned, on the register of members 48 hours excluding non-business
days before the time of any adjourned meeting) shall be entitled to attend, speak and vote at the meeting in respect of the number of ordinary shares in the
capital of the Company held in their name at that time. Changes to the register after 1:00pm on 4 September 2018 shall be disregarded in determining the
rights of any person to attend, speak and vote at the meeting.
Appointment of proxies
2. Members are entitled to appoint a proxy or proxies to exercise all or any of their rights to attend, speak and vote at the meeting. A proxy need not be a
shareholder of the Company. A shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed
to exercise the rights attached to a different share or shares held by that shareholder. Please see the instructions on the enclosed Form of Proxy.
3. The completion and return of a Form of Proxy whether in hard copy form or in CREST will not preclude a member from attending in person at the meeting
and voting should he or she wish to do so.
Appointment of proxies using hardcopy proxy form
4.
Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not
exceed the number of shares held by you) in the boxes indicated on the form. Please also indicate if the proxy instruction is one of multiple instructions being
given. To appoint more than one proxy please see the instructions on the enclosed Form of Proxy. All forms must be signed and should be returned together in
the same envelope.
5. To be valid, the Form of Proxy and the power of attorney or other authority (if any) under which it is signed or a certified copy of such power or authority must
be lodged at the offices of the Company’s registrars, Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR by hand, or sent by
post, so as to be received not less than 48 hours excluding non-business days before the time fixed for the holding of the meeting or any adjournment thereof
(as the case may be).
Appointment of proxies using CREST
6. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the meeting and any
adjournment(s) of it by using the procedures described in the CREST Manual (available from https://www.euroclear.com/site/public/EUI). CREST Personal
Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
7.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly
authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described
in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID: 7RA36) by 1.00pm on 4 September 2018. For this
purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which
the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
8. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make
available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST Personal Member or sponsored
member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary
to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their
CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST
system and timings.
9. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations
2001.
Corporate representatives
10. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided
that no more than one corporate representative exercises powers over the same share.
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Resolutions
11. Resolution 1 - This resolution seeks approval from shareholders of the directors’ and auditors’ reports and the financial statements for the year ended
31 March 2018.
12. Resolution 2 - This resolution seeks approval from shareholders to re-appoint Robert Ian Wooldridge as a director of the Company who retires and offers
himself for re-appointment pursuant to Article 30.2 of the Company’s Articles of Association.
13. Resolution 3 - This resolution seeks approval from the shareholders to re-appoint Dr Qingtao Zeng as a director of the Company who retires and offers
himself for re-appointment pursuant to Article 24.2 of the Company’s Articles of Association.
14. Resolution 4 - This resolution seeks approval from shareholders to reappoint RSM UK Audit LLP as the auditors of the Company and to authorise the
directors to fix their remuneration as they see fit.
15. Resolution 5 - This resolution, to be proposed as an ordinary resolution, relates to the grant to the Directors of the authority to allot ordinary shares and
grant rights to subscribe for or convert securities into ordinary shares with such authority expiring at the conclusion of the Annual General Meeting of the
Company to be held in 2019, unless the authority is renewed or revoked prior to such time. This authority is limited to the issue of a maximum of
5,758,746,733 ordinary shares (representing approximately 75 per cent. of the Company’s entire issued share capital as at the date of this notice).
16. Resolution 6 - The Companies Act 2006 (the “Act”) requires that, if the Directors decide to allot ordinary shares in the Company for cash, the shares
proposed to be issued be first offered to existing shareholders in proportion to their existing holdings. These are known as shareholders’ pre-emption
rights. However, to act in the best interests of the Company the Directors may require flexibility to allot shares for cash without regard to the provisions
of Section 561(1) of the Act. Therefore, this resolution, to be proposed as a special resolution, seeks authority to enable the Directors to allot equity
securities for cash free of such pre-emption rights, with such authority expiring at the conclusion of the Annual General Meeting of the Company to be
held in 2019 .This authority is limited to the allotment of a maximum of 3,839,164,489 ordinary shares for cash, free of pre-emption rights (representing
approximately 50 per cent. of the Company’s entire issued share capital as at the date of this notice).
Issued shares and total voting rights
17. As at 6.00 p.m. on 27 July 2018, the Company’s issued share capital comprised 7,678,328,977 ordinary shares of £0.0003125 each fully paid. Each ordinary share
carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company as at 6.00 p.m. on 27 July
2018 is 7,678,328,977. The Company does not hold any shares in treasury.
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Perivan Financial Print 251003