PREMIER AFRICAN MINERALS LIMITED
ANNUAL REPORT
31 DECEMBER 2019
WWW.PREMIERAFRICANMINERALS .COM
(AIM:PREM)
Contents
CEO statement
Strategic report
Directors’ report
Corporate governance statement
Independent auditor’s report
Consolidated statement of financial position
Consolidated statement of profit or loss and other
comprehensive income
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
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03
09
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Chief Executive’s Statement
There remains no doubt in my mind that Premier African Minerals Limited (“Premier” or “Company”) must
diversify its exploration portfolio and identify revenue generating assets that are actually in production and
profitable now. The initial part acquisition of MN Holdings Otjozondu mine in Namibia was a significant first step
in the midst of the ongoing and very disappointing delays in Zimbabwe.
2019 has been a very difficult year. I have already indicated in various RNS’s that Premier regressed into “shrink”
mode. And I have equally been clear that the intention is to have this reversed. Dependency of exploration
activities based exclusively in Zimbabwe where country risk and delay deny the opportunity to add value, is
clearly flawed yet exploration remains the best opportunity for substantial value generation and recovery in our
Company. Our original philosophy of RHA Tungsten (Pvt) Limited (“RHA”) operating as a revenue generative unit
facilitating exploration activities was frustrated, not in principle but in the facts of the very well documented
problems at RHA and the Tungsten mining industry as a whole. Premier’s focus should be on assuring cash
generation on the one hand and high grade exploration on the other and your board of directors is determined
to move in this direction.
I reported in June 2019 that in a subsequent event, Zimbabwean National Indigenisation and Economic
Empowerment Fund (“NIEEF”) had concluded an amended agreement that, inter alia, confirmed their stated
intention to fund RHA to the extent of US$6 million and thus facilitate the return to production of the mine. The
adoption in 2019 of the RTGS Dollar as the official currency of Zimbabwe held both promise and benefit to RHA.
Benefit in that local debt historically incurred in country and not based on foreign direct investment, was
converted from US dollar to RTGS Dollar at parity. The benefit was an effective reduction in local debt whilst the
registered foreign direct loan remains intact in US Dollar. Sadly, NIEEF shortly thereafter in making a payment to
RHA, did so in RTGS dollar and the six million paid equated to less than US$ 1 million and was barely adequate
to cover electrification costs with further in country delays and ongoing depreciation of the RTGS Dollar.
Similar frustration on the Exclusive Prospecting Order (“EPO”) application over the extended strike at Zulu
Lithium and Tantalum Project (“Zulu”) persists. During 2019, Premier met frequently with the Mining Affairs
board, the Permanent Secretary and the Hon. Minister of Mines; Premier attended to all questions, explanations,
objections and has been assured repeatedly that the process to grant the EPO is at finality and requires only
signature. To date, the EPO still requires only signature.
This experience in Zimbabwe only underlines my comments above and the need to acquire and be in control of
a cash generative asset/s and country risk mitigating exploration properties.
The acquisition of our stake in MN Holdings Limited (“MNH”), the operator of the Otjozondu Manganese Mine
was driven out of this and was supported by the models and reports provided at the time. To assure our
investment, Premier based the initial purchase on an independent valuation of US$10 million, undertaken by
Bara Consulting of plant and equipment that on acquisition by MNH would facilitate a rapid increase in
production with the attendant benefits to revenue. At present, Premier directly owns 19% of MNH. MNH has
been clear and stated this in the public domain, that their intention was to be aligned with a public company and
we continue to discuss our relationship with MNH. The knowledge we have gained over the past year, the
understanding of MNH and the overall size of an optimised Otjozondu Manganese mine, make this a very
attractive partnership with Premier and our relationship with MNH is considered extremely important for the
Board of Directors.
We continue to hold 5 010 333 shares in Circum Minerals Limited (“Circum”), currently valued in total at
$6 262 916.25. Circum has undergone a change of management control and has undertaken a review of the
previous studies with the specific intention of reducing capex, accelerating time to build and improving the
internal rate of return (“IRR”). Circum has indicated that preliminary reports should be available in October 2020,
final reports in Quarter 1 of 2021 and re-energised discussions targeted to a liquidity event possible from as early
as October 2020, dependent on preliminary results.
On a corporate level, I need to express my sincere appreciation to our directors and consultants who have all
come to the party in supporting Premier through a very difficult year. Starting with myself and the other key
management personnel, we have without exception taken cuts in our cash drawings, trimmed expenses, and
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costs agreed to be converted to equity.
Michael Foster resigned from our board in September 2019 and I thank him for his assistance and guidance.
George Roach
Chief Executive Officer
30 September 2020
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Strategic Report
The strategic report provides a detailed assessment of the activities of the Company during the period under
review. It also details the main objectives of the Company related to our portfolio of assets. The principal risks
and uncertainties associated with our activities are outlined in a specific principal risks and uncertainties section.
This section of the annual report is produced in accordance with Guidance on the Strategic Report, July 2018
issued by United Kingdom’s independent regulator, the Financial Reporting Council.
RHA Tungsten
49% Interest owned by Premier
51% Locally indigenized owned by NIEEF
2019 has been the most frustrating year to date at RHA. On the one hand, NIEEF had undertaken to fund the
mine and construction of the proposed new decline shaft and on the other, had simply failed to provide the full
extent of the funding that they had contractually undertaken to do. The limited funds provided by NIEEF allowed
for the plant to be electrified and alleviated much of the holding costs associated with provision of security and
staff salaries associated with the ongoing care and maintenance situation. Despite continued communication
and perpetuated promises to either fund the mine in terms of the contract or relinquish equity and allow another
party to do so, NIEEF to this day has still not taken a decision. Important to bear in mind that the plant is 100%
owned by Premier’s subsidiary and not by RHA, that Premier is owed money by RHA for rental of the plant and
that this specific debt is secured by a cession of the RHA tenements to Premier.
Frustratingly, at the same time Premier has strong interest from both our existing offtake partner as well as two
other potential offtake partners, to fund a return to production at RHA based on a lower through put and re-
equipping the existing underground operations. The off takers require an update on the RHA report conducted
by Bara Consulting Limited that studied this option and the completion of test work and an optimisation of the
plant to function at best efficiency based on the lower tonnages. The huge negative sentiment surrounding the
ownership and the ongoing refusal on the part of NIEEF to resolve the issue, is the stumbling block.
A forecast short supply of tungsten in early 2021 represents an excellent opportunity to get RHA back to
production.
We continue to engage NIEEF.
Recoverability of RHA Mine Assets
The RHA mine assets remain fully impaired at this time and are likely to so remain until NIEEF either funds the
operation or another sustainable arrangement, as suggested above, is concluded that allows the mine to be fully
funded and returned to operations.
Zulu Lithium and Tantalum Project
Progress at Zulu has been stunted by the ongoing delays in the granting of an EPO. This coupled to the
disappointing sentiment in regard to Zimbabwe and falling spodumene and petalite prices has limited
exploration spend. Premier sees the granting of the EPO as the trigger to progress development at Zulu. It is
worth stating again that the EPO area is both an extension on strike for lithium bearing pegmatites and includes
areas prospective for other high value metals.
Premier has a number of options to further Zulu and this includes farm in type agreements related to the next
phase of drilling as well as potential Joint Venture partners.
Zulu remains fully impaired for the moment, primarily as a result of the recent price reductions for both
spodumene and petalite, and country risk discount applied to projects based in Zimbabwe. In my view, prices of
both of these important minerals will recover and the prospects for Zulu are good.
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MN Holdings Limited
Otjozondu Mine’s mine resource indicates the potential to support many years of mining at current rates of
production and with a relatively simple operation represents a major opportunity to upgrade to a substantially
higher production rate both in tonnage and grade. Premier’s acquisition of our 19% interest, to date, has assured
the availability of the plant and machinery to achieve this objective. In the latter part of the year, production was
adversely affected by a major drop in the manganese pricing and simultaneous development of logistics
challenges. The result was that MNH did not meet the original forecast production and profitability.
The same problems persisted into the early part of 2020 and, as far as the logistics aspects are concerned, the
problem was exacerbated by the Covid-19 pandemic. In the latter part of 2019 and currently, Premier set out to
assist in resolving these logistics issues and has identified a new logistics channel from mine gate to China port
that is expected to cut the logistics cost to below that currently achieved by competitive mines operating in
South Africa. At the same time, this logistics channel will immediately allow an increase in production rate to
bring the plant utilisation up from the existing 30% at which the plant is currently running. In the past three
months ended 31 August 2020, Otjozondu Mine has shipped 11 071 tons at an average grade of 32.7%
manganese. The average price paid per dmtu was $3.60 and at the constrained shipment rate, the average dmtu
production cost in August was $3.32 on a delivered China port basis.
In September 2020, the price per dmtu was $3.80 and operating costs are expected to drop quite substantially
as the surplus plant availability is utilised. MNH has forecast EBITDA for November 2020 at $88 000 and, based
on the increased shipment and plant utilisation discussed above, a further significant improvement is expected
over the next 12 months. In my view, the production cost per dmtu set out above is unduly conservative in
comparison to other South Africa operations. It is important to note that the board of director has resolved that
ongoing discussion with MNH will be focused on profit generation.
Funding
During the reporting period we raised net proceeds of $1.984 million (2018:$1.715 million).
Principal activities and strategic review of the business
The principal activity of Premier and its subsidiary companies (the Group) during the year under review is the
mining, exploration, evaluation development and investment in natural resource properties on the African
continent
Premier was incorporated on 21 August 2007 in the British Virgin Islands (BVI) as a BVI business company with
number 1426861. The registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin
Islands. The Company was admitted to trading on the London Stock Exchange’s AIM Market on 10 December
2012.
Objectives
During the current year, the primary focus will be:
To continue to engage directly with MNH;
Look to acquire potentially cash generative assets;
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• Resolve the status in Zimbabwe, either that the EPO is granted and RHA equity and funding is resolved
or seek a disposition of these assets
Identify and secure high value exploration targets in other jurisdiction.
•
Principal risks and uncertainties
The Group is subject to a number of risks and uncertainties which could have a material effect on its business,
operations or future performance, including but not limited to:
Credit Risk
Credit risk is the risk of potential loss to the Company if counterparty to a financial instrument fails to meet its
contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets, including
cash, receivables, and balances receivable from the government. The Company limits the exposure to credit risk
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in its cash by only investing its cash with high-credit quality financial institutions in business and savings accounts,
guaranteed investment certificates and in government treasury bills which are available on demand by the
Company for its programs. The Company does not invest in money market funds. The Company has no risk
exposure to asset backed commercial paper or auction rate securities.
Liquidity Risk
Liquidity risk is the risk that the Company will not have the resources to meet its obligations as they fall due. The
Company manages this risk by closely monitoring cash forecasts and managing resources to ensure that it will
have sufficient liquidity to meet its obligations. Also refer to the going concern section below.
Operating Risks
The activities of the Group are subject to all of the hazards and risks normally incidental to exploring and
developing natural resource projects. These risks and uncertainties include, but are not limited to environmental
hazards, industrial accidents, labour disputes, geo-political risks, encountering unusual or unexpected geologic
formations or other geological or grade problems, unanticipated changes in rock formation characteristics and
mineral recovery, encountering unanticipated ground or water conditions, land slips, flooding, periodic
interruptions due to inclement or hazardous weather conditions and other acts of God or un-favourable
operating conditions and losses.
Should any of these risks and hazards affect the Group’s exploration, development or mining activities, it may
cause the cost of production to increase to a point where it would no longer be economic to extract minerals
from the Group’s properties, require the Group to write-down the carrying value of one or more of its assets,
cause delays or a stoppage of mining and processing, result in the destruction of mineral properties or processing
facilities, cause death or personal injury and related legal liability, any and all of which may have a material
adverse effect on the Group.
Early-stage Business Risk
The Group’s success will depend on its ability to raise capital and generate cash flows from production in the
future at MNH and potentially RHA should NIEEF meet their funding obligations. The board of directors manages
this risk by monitoring cash levels and reviewing cash flow forecasts on a regular basis.
Market Risk (exchange rates, commodity and equity)
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign
exchange rates, and commodity and equity prices. These fluctuations may be significant.
Interest Rate Risk: The Company is exposed to interest rate risk to the extent that its cash balances bear variable
rates of interest. The interest rate risks on cash and short-term investments and on the Company’s, obligations
are not considered significant.
Foreign Currency Risk: The Company is exposed to the financial risk related to the fluctuation of foreign exchange
rates against the Company’s functional currency, which is the United States dollar (“USD”). The Company
expects to continue to raise funds in the United Kingdom. The Company conducts its business in Zimbabwe with
a significant portion of expenditures in that country historically denominated in USD and now also in RTGS Dollars
(“RTGS$”). The introduction of the RTGS$ during the financial year has resulted in the devaluation of the RTGS$
against the US Dollar. This devaluation has also resulted in the Zimbabwean economy going into
hyperinflationary status. To a large extent this is beneficial to Premier as its Zimbabwean assets are fully
impaired. The remaining liabilities are inflation adjusted at each reporting period yielding foreign exchange gains
on conversion to USD. Additionally, a portion of the Company’s business is conducted in South African Rands
(“ZAR”). As such, it is subject to risk due to fluctuations in the exchange rates between the USD and each of the
RTGS$, ZAR and GBP. A significant change in the currency exchange rates between the USD relative to foreign
currencies could have an effect on the Company’s results of operations, financial position or cash flows. The
Company has not hedged its exposure to currency fluctuations.
Commodity Price Risk - While the value of the Company’s core mineral resource properties, RHA and Zulu are
related to the price of tungsten and lithium and the outlook for these minerals, the Company currently does not
have any substantially owned operating mines and hence does not have any hedging or other commodity-based
risks in respect of its operational activities. The Company minority interest in MNH results in limited control of
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how MNH mitigate the risk associated with Manganese price fluctuations.
Early-stage Project Risk
RHA moved into production during 2017, which was then suspended on 9 January 2018. Zulu is at an early stage
of development. In advancing these projects to the stage where they may be cash generative, many risks are
faced, including the inherent uncertainty of discovering commercially viable reserves, the capital costs of
exploration, competition from other projects seeking financing and operating in remote and often politically
unstable environments. While discovery of a mineral deposit may result in substantial rewards, few properties
that are explored are ultimately developed into economically viable operating mines. Major expenditure may be
required to establish reserves and it is possible that even preliminary due diligence will show adverse results,
leading to the abandonment of projects. Whether a mineral deposit will become commercially viable depends
on a number of factors, some of which are the particular attributes of the deposit, proximity to infrastructure,
financing costs and governmental regulations. The effect of these factors can only be estimated and cannot be
accurately predicted.
Environmental Risks and Hazards
All phases of the Group’s operations are subject to environmental regulation in the areas in which it operates.
Environmental legislation is evolving in a manner that may require stricter standards and enforcement, increased
fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a
heightened degree of responsibility for companies and their officers, directors and employees. There is no
assurance that existing or future environmental regulation will not materially adversely affect the Group’s
business, financial condition and results of operations. Environmental hazards may exist on the properties on
which the Group holds interests that are unknown to the Group at present. The Board manages this risk by
working with environmental consultants and by engaging with the relevant governmental departments and
other concerned stakeholders.
Licencing Risk
The Company’s exploration and development activities are dependent upon the grant of appropriate licences,
concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitations or
performance criteria. Such licences and permits are as a practical matter subject to the discretion of the
applicable Government or Government office. The Group must comply with known standards, existing laws and
regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be
permitted. 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. Whilst the Company continually seeks to do everything within its control to ensure that the
terms of each licence are met and adhered to, third parties may seek to exploit any technical breaches in licence
terms for their own benefit. 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.
Political and Regulatory Risk
The Group’s operating activities in Africa, notably in Zimbabwe, are subject to laws and regulations governing
expropriation of property, health and worker safety, employment standards, waste disposal, protection of the
environment, mine development, land and water use, prospecting, mineral production, exports, taxes, labour
standards, occupational health standards, toxic wastes, the protection of endangered and protected species and
other matters. The Group is dependent on the political and economic situation in these countries and may be
adversely impacted by political factors such as expropriation, war, terrorism, insurrection and changes to laws
governing mineral exploration and operations.
Internal Control and Financial Risk Management
The Board has overall responsibility for the Group’s systems of internal control and for reviewing their
effectiveness. The Group maintains systems which are designed to provide reasonable but not absolute
assurance against material loss and to manage rather than eliminate risk.
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The key features of the Group’s systems of internal control are as follows:
➢ Management structure with clearly identified responsibilities;
➢ Production of management information presented to the Board;
➢ Day to day hands on involvement of the Executive Directors and Senior Management; and
➢ Regular board meetings and discussions with the Non-executive directors.
The Group’s activities expose it to a number of financial risks including cash flow risk, liquidity risk and foreign
currency risk. The Group has identified certain short coming in the financial control systems, which are currently
in the process of being addressed.
Disclosure of management’s objectives, exposure and policies in relation to these risks can be found in note 29
to these financial statements.
Environmental Policy
The Group is aware of the potential impact that its subsidiary companies may have on the environment. The
Group ensures that it complies with all local regulatory requirements and seeks to implement a best practice
approach to managing environmental aspects.
The RHA located in Zimbabwe was granted approval of its Environmental Impact Assessment and was permitted
to undertake mining operations by the Environmental Management Agency of Zimbabwe.
Health and Safety
The Group’s aim is to achieve and maintain a high standard of workplace safety. In order to achieve this objective,
the Group provides ongoing training and support to employees and sets demanding standards for workplace
safety.
Going Concern
These consolidated financial statements are prepared on the going concern basis. The going concern basis
assumes that the Group will continue in operation for the foreseeable future and will be able to realise its assets
and discharge its liabilities and commitments in the normal course of business.
The Directors have prepared cash flow forecasts for the period ending 31 December 2021, on the basis of the
following considerations, inter alia:
RHA
•
The Company has not funded any of the activities at RHA since 1 July 2019.
Zulu
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The Company will seek to secure the EPO for Zulu and thereafter fund development of Zulu on the basis
of a “farm-in” or joint venture agreement with prospective partners.
The Company will only maintain the tenements and will not provide any further funding.
The Group
•
•
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The cash flow is dependent on additional capital being raised. There remains an active and liquid market
for the Company’s shares and the Company has historically been able to raise funding through equity
placements and the Board believes that it will continue to be able secure the funds required for ongoing
working capital needs going forward.
The Company is anticipating its investment in MNH to start yielding a cash return on investment in the
last quarter of 2020.
The Company is seeking to diversify its operations and risk profile and limit the funds that need to be
raised through equity placements to provide necessary funding for the Company’s significantly reduced
fixed overhead.
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In the event that the Company is unable to obtain additional equity finance for the Group’s working capital, a
material uncertainty exists which may cast significant doubt on the ability of the Group to continue as a going
concern and therefore be unable to realise its assets and settle its liabilities in the normal course of business.
Refer to note 5 for further information.
In this regard, it should be noted that I have provided an undertaking to the Company such that I will not require
any repayment in cash of any loan balance or accrued and unpaid fees if to do so means the Company would be
unable to meet its debts as they fall due, and that I would undertake to provide working capital should the
Company so require for that purpose and the Company is unable to secure such working capital as anticipated
herein.
George Roach
Chief Executive Officer
30 September 2020
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Directors’ Report
Results
The audited financial statements for the year ended 31 December 2019 are set out on pages 26 to 77. The Group
reported a loss before and after tax of $1.209 million for the year ended 31 December 2019 (2018: $7.758
million).
The loss before and after tax includes:
• A gross trading profit after depreciation and amortisation is $nil (2018: $0.011 million);
• Administration expenses amounting to $1.871 million (2018: $2.834 million);
• Given that RHA is under care and maintenance, it was decided to impair the carrying value in full of the
RHA assets by $0.483 million (2018:$0.244 million);
Finance costs amounting to $0.140 million (2018: $0.153 million); and
Impairment of intangible assets – Zulu Lithium of $nil (2018: $4.563).
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The total comprehensive loss for the year amounted to $26.238 million (2018: $7.758 million)
Dividends
The Directors do not recommend the payment of a dividend in respect of the year under review.
Fund-raising and capital
During the 2019 financial year net funds of $1.983 million were raised through direct subscriptions from the
issue of share capital (2018: $1.415 million) were raised through the issuing of loan notes.
There remains an active and very liquid market for the Group’s shares.
Borrowings
During the prior years, George Roach had provided bridge loan financing of $0.56 million, of which $0.100 million
was converted to equity during 2017. At the year ended 31 December 2019 $0.219 million was still owing. During
the current year additional funding was procured from Brendan Roach and Regent Mercantile. The amounts
outstanding at year end were $0.128 million and $0.368 million respectively.
Further information on these transactions is included in note 17 and 31.
Other key elements of financial position
Exploration and Evaluation costs of $nil (2018: $0.272 million) were capitalised on the Zulu in Zimbabwe.
The Company’s holdings in Circum amount to $6.263 million (2018: $6.263 million).
The Company’s holdings in MN Holdings amount to $1.181 million (2018: $nil).
Some $0.483 million was invested in the acquisition of property, plant and equipment during the year (2018:
$0.196 million).
Events after the reporting date
At the date these financial statements were approved, the Directors were not aware of any significant events
after the reporting date other than those set out in note 32 to the financial statements.
Directors
The Directors of Premier who served during the period or subsequently were:
• George Roach (appointed on incorporation April 2007);
• Michael Foster (appointed 26 February 2015, resigned 23 September 2019);
• Godfrey Manhambara (appointed 27 September 2017)
• Wolfgang Hampel (appointed 10 April 2018)
• Neil Herbert (appointed 28 August 2019)
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Share capital
Premier’s shares are publicly traded on AIM with the stock ticker of PREM. As at the 31 December 2019, the
Company’s issued share capital consists of 11 266 071 579 (note 18) Ordinary Shares of no par value.
The company does not hold any Ordinary Shares in treasury.
Major Shareholders
As at 31 August 2020 the Company was aware of the following persons who hold, directly or indirectly, voting
rights representing 3% or more of the issued share capital of the Company to which voting rights are attached:
Name
Number of Ordinary Shares
% Issued Share Capital
George Roach*
James Goozee#
932 869 111
934 333 128
7%
7.1%
* George Roach and/or structures associated with G Roach. The percentage of shares not held in public hands is
8.4%.
# James Goozee and/or his wife Mrs. Elizabeth Goozee.
There are no restrictions on the transfer of the Company’s AIM securities.
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Corporate Governance Statement
Premier is committed to maintaining the highest standards in corporate governance throughout its operations
and to ensure all its practices are conducted transparently, morally and efficiently. Therefore, and in accordance
with the AIM Rules for Companies (March 2018), Premier will seek to comply with the provisions of The UK
Corporate Governance Code July 2016, as published by the Financial Reporting Council Limited, to the extent the
Board consider appropriate, given the Company's size, stage of development and resources (the "Code").
Throughout the Reporting Period, the Company has continued to adhere to this Code and the following
statement sets out how the Company complies or otherwise departs from the principles of the Code.
Premier constantly seeks to maintain the highest levels of corporate governance whereby the Company ensures
that a periodic review of the Company’s corporate governance is done. Following this recent review, there have
been no corporate governance issues identified by Premier.
Accordingly, the Company has established specific committees and implemented certain policies, to ensure that:
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it is led by an experienced Board which is collectively responsible for the long-term success of the
Company;
the Board and the committees have the appropriate balance of skills, experience, independence and
knowledge of the Company to enable them to discharge their respective duties and responsibilities
effectively;
the Board establish a formal and transparent arrangement for considering how it applies the corporate
reporting, risk management and internal control principles and for maintaining an appropriate
relationship with the Company's auditors; and
there is a dialogue with shareholders based on the mutual understanding of objectives.
During the year, the board of directors held one formal board meeting that was attended by all members in
office. The board of directors held a number of informal virtual board calls with the attendance of all directors
in office to discuss the operations of the Company. Since the year end, the board of directors have held 3 formal
board meetings and continue to implement the policy of holding informal board calls as so required. The various
committees of the Company have continued to meet from time to time in accordance with the requirements of
the Company’s ongoing operations.
In addition, the Company has adopted a comprehensive suite of policies including:
anti-corruption and bribery;
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• health and safety;
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environment and community;
IT, communications and systems; and
social media.
The Code followings 5 Main Principles, which are herein assessed in accordance with Premier commitment to
maintain the highest levels of corporate governance.
1. Leadership
The Role of the Board of Directors
The Board is responsible for the management of the business of the Company, setting its strategic direction and
establishing appropriate policies. It is the Directors’ responsibility to oversee the financial position of the
Company and monitor its business and affairs on behalf of the Shareholders, to whom they are accountable. The
primary duty of the Board is always to act in the best interests of the Company. The Board also addresses issues
relating to internal control and risk management. The Non-executive Director bring a wide range of skills and
experience to the Company, as well as independent judgment on strategy, risk and performance. The Non-
executive Director is considered by the Board to be independent at the date of this report. To achieve its
objectives, the Board strictly adheres to the Code.
The Board meets at least three times a year with supplementary meetings held as required. The agenda for the
Board meetings is prepared jointly by the Chairman and CEO. The Board maintains annual rolling plan (“Agenda”)
of items for discussion to ensure that all matters reserved for the Board, with other items as appropriate, are
addressed. The Agenda, with all accompanying documents, generally includes the following:
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• Review of previous minutes;
• Discussion on various project activities and market conditions;
• Management Accounts and Financial position;
• Corporate Matters; and
• Other business matters that Board members can freely raise beyond the defined Agenda.
The Annual Accounts of Premier best reflects the Board key types of decisions that the Board are required to
take in their pursuant of maintaining the highest levels of corporate governance. The following matters are
reserved for the Board;
Strategy, Policy and Management;
•
• Group Structure and capital requirements;
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• Board structure; and
• Corporate governance matters.
Financial reporting and controls;
Internal and External controls;
Transactions and Commercial Contracts including delegation authority;
Premier has established varies committees to assist the Board in maintain the highest levels of corporate
governance. Of these committees, the following two strongly assist the decision making of the Board;
Audit Committee
The Audit Committee (“AC”), which comprises of George Roach, Godfrey Manhambara and Neil Herbert, and is
chaired by Neil Herbert, is responsible for the appointment of auditors and the audit fee, and for ensuring that
the financial performance of the Company is properly monitored and reported. The Audit Committee, inter alia,
meets with the Company's external auditor and its senior financial management to review the annual and interim
financial statements of the Company, oversees the Company's accounting and financial reporting processes, the
Company's internal accounting controls and the resolution of issues identified by the Company's auditors.
Other key aspects of the AC include:
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reviewing the Company's accounting policies and reports produced by internal and external audit
functions;
considering whether the Company has followed appropriate accounting standards and made
appropriate estimates and judgements, considering the views of the external auditor;
reporting its views to the board of directors if it is not satisfied with any aspect of the proposed financial
reporting by the Company;
reviewing the adequacy and effectiveness of the Company’s internal financial controls and internal
control and risk management systems;
reviewing the adequacy and effectiveness of the Company's anti-money laundering systems and
controls for the prevention of bribery and receive reports on non-compliance; and
• overseeing the appointment of and the relationship with the external auditor.
Remuneration Committee
The Remuneration Committee comprises of Godfrey Manhambara and Neil Herbert and is chaired by Godfrey
Manhambara. The Remuneration Committee assumes general responsibility for assisting the Board in respect of
remuneration policies for Premier. The Committee reviews and recommends remuneration strategies for the
Company and proposals relating to compensation for the Company's officers, directors and consultants and
assesses the performance of the officers of the Company in fulfilling their responsibilities and meeting corporate
objectives. It has the responsibility for, inter alia, administering share and cash incentive plans and programmes
for Directors and employees and for approving (or making recommendations to the Board on) share and cash
awards for Directors and employees.
The Division of Responsibility of the Board of Directors
It is important that the Board itself contains the right mix of skills and experience to deliver the strategy of the
Company. The roles of the Chairman and Chief Executive Officer (“CEO”) are no longer exercised by the same
person. There is no one individual or group of individuals on the Board that have unfettered powers of discretion
12
nor is there any undue influence in the collective decision-making ability of the Board.
The responsibilities of the Chairman, CEO and Non-executive director are set out in writing and are review by
the Board annually to ensure that it remains relevant and accurate. In brief summary, they are responsible as
followings;
•
•
•
The Chairman’s role is to lead and manage the Board and play a role in facilitating the discussion of the
Company’s strategy, as set by the Board. And to effectively promote the success of the Company.
The CEO’s role, including the role of the Technical Director, is the responsibility of the day-to-day
management of the Company’s operational activities, and for the proper execution of the stagey as set
by the Board.
The Non-executive directors, act as a member of the unitary Board, however, they are required to
constructively challenge performance of management and help develop proposals on strategy, agreeing
of goals and the Company key objectives.
2. Effectiveness
The Composition of the Board
The Board and its committees should have the appropriate balance of skills, experience, independence and
knowledge of the Company to enable them to discharge their respective duties and responsibilities effectively.
As such, the Board has been structured to ensure that correct mix of skills and experience are in place to allow
it to operate effectively:
•
• A Non-Executive Chairman (Neil Herbert), whose primary responsibility to lead and manage the Board.
This remain vital in the delivery of the Company's corporate governance model. The Chairman has a
clear separation from the day-to-day business of the Company which allows him to make independent
decisions.
a CEO (George Roach), whose primary focus is communicating, on behalf of the Company, with
shareholders, government entities, and the public. Leading the development of the Company's short-
and long-term strategy.
a Technical Director (Wolfgang Hampel), whose is responsible for leading, co-ordinating and optimising
the performance of the both mining and exploration services. With a further responsibility for geological
and mine planning activities, his role is critical in ensuring the quality and efficiency of Premier geology,
and
•
• one independent Non-Executive Director (Godfrey Manhambara).
The Code requires that a smaller company (and which the Company is under the Code) should have at least two
independent non-executive directors. Godfrey Manhambara is independent under the Code. The Board also
regards Neil Herbert as independent, notwithstanding that he participates in the Company’s share option plan
and had an interest in MNH. The Board is satisfied that Neil Herbert acts independently irrespective of these
interests. The Board also notes that no single individual will dominate decision making and further notes that
there has been sufficient challenge of executive management at meetings of the Board thereby confirming that
the Board is capable of operating effectively.
The Board has not appointed a senior Finance Director but is actively seeking for the appropriate candidate.
Additionally, the Company has a Company Secretary in the UK who assists the Chairman and CEO in preparing
for and running effective board meetings, including the timely dissemination of appropriate information. The
Company Secretary provides advice and guidance to the extent required by the Board on the legal and regulatory
environment.
The Nomination Committee (“NC”) has been established to regularly review and ensure that the Board has the
appropriate balance of skills, experience and knowledge of the Company. NC meets as required to consider the
composition of and succession planning for the Board, and to lead the process of appointments to the Board.
The Committee is made up of George Roach and Wolfgang Hampel and is chaired by George Roach.
Other key aspects of the NC include:
•
regularly reviewing the structure, size and composition (including the skills, knowledge, experience and
diversity) of the board and make recommendations to the board about any changes, succession
planning and vacancies; and
13
•
identifying suitable candidates from a wide range of backgrounds to be considered for positions on the
board.
Appointments to the Board
The appointment of new Directors to the Board is led by the NC who has the responsibility for nominating
candidates for appointment. Both the NC and Board considers the need for diversity, including equality, and that
the new directors must exhibit the required skills, experience, knowledge and independence.
The Board acknowledges that the Company is not in compliance with the Code whereby the NC should comprise
a majority of independent directors. The Board considers that the NC has a strong enough independent
component with Godfrey Manhambara.
Commitment
The Board requires that all directors should be able to allocate sufficient time to the Company to discharge their
responsibilities in accordance their letter of appointment. The Company maintains records of each letter of
appointment, which can be inspected at an agreed time, at the Company’s registered office.
The NC is responsible for considering on an annual basis, whether each director is able to devote sufficient time
to their duties.
Development
All directors are required to familiarise themselves with the Board and should regularly update and refresh their
skills and knowledge. The Company provides each joining director with an induction on the Company. Each
induction is tailored to the specific background and requirements of the new director. In general, the induction
contains information on:
Structures and operations;
•
• Board procedures;
• Corporate Governance; and
• Details regarding their duties and responsibilities.
Information and Support
As Premier constantly seeks to maintain the highest levels of corporate governance, it is imperative that
information is supplied to the Board in a form and of a quality appropriate to enable the Board to discharge its
duties in a timely manner. The supply of the information is done by the Chairman with the assistance of the
Company Secretary.
Premier encourage all Board members to seek independent professional advice (at the reasonable expense of
the Company) in the furtherance of their duties. The Board is given sufficient opportunity to meet with any
manager, consultant or contractor to gain further insight into Premier.
Evaluation
The Board recognises that it should undertake a formal and rigorous annual evaluation of its own performance,
that of its committees and individual directors. The evaluation of the Board’s performance is an assessment of
the following key factors:
•
•
•
•
•
•
The Board structure;
The Board’s performance;
The Board business strategy;
Financial reporting and controls;
Performance monitoring; and
Supporting and advisory roles.
The Board is not in compliance with the Code as the evaluation process is usually conducted internally due to
the size and complexity of the operations of the Company. Furthermore, the Board believes that internal
assessment best help identify the key strength and weaknesses to allow for effective evaluation. The Board will
continue to assess the internal review process against the growth of the Company as should the Company grow
in size it may consider getting an independent assessment.
The Chairman meets annually with the Non-executive directors without the executive directors to discuss the
Board balance, monitor the powers of individual executive directors and raise any other appropriate issues. A
14
similar review is also undertaken of the Chairman whereby the senior executive director meets with the Non-
executive directors.
Re-election
The Board believe that all directors should be submitted for re-election at regular intervals, subject to the
continued satisfactory performance of the Company.
The Director longest in office since their last appointment is required to retire by rotation or stand for
reappointment at the Annual General Meeting (“AGM”).
3. Accountability
Financial and Business reporting
A key duty of the Board is to oversee the financial affairs of the Company. The Financial Statements is the Board’s
primary means of presenting a fair, balanced and understandable assessment of the Company’s positions that
also best provides the information necessary to allow shareholders to assess the Company’s performance,
business model and strategy for that period.
You can view Premier Annual Report and Financial Statements on the Company’s webpage at the following
address, www.premierafricanminerals.com. Under the Strategic Review section of the Company’s Annual Report
and Financial Statements for the year ended December 2019, the Board set outs the strategic objectives of the
Company, how these will be delivered, Premier business model and how the Company will generate and preserve
value over the longer term for shareholders.
The Board have a reasonable expectation that the Group has adequate resources to continue in operations or
existence for the foreseeable future thus continues to adopt the going concern basis in preparing its Annual
Report and Financial Statements. Refer to note 5 to the financial statements.
Risk Management and Internal Control
The Board is responsible for determining the nature and extent of the significant risks it is willing to take in
achieving its strategic objectives. The Board manages the risk through the implementation of internal control
systems.
The Board has identified the following as some of the risks and their mitigation:
• Credit Risk: Credit risk is the risk of potential loss to the Company if counterparty to a financial
instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable
to its liquid financial assets, including cash, receivables, and balances receivable from the government.
The Company limits the exposure to credit risk in its cash by only investing its cash with high-credit
quality financial institutions in business and savings accounts, guaranteed investment certificates and
in government treasury bills which are available on demand by the Company for its programs.
Liquidity Risk: Liquidity risk is the risk that the Company will not have the resources to meet its
obligations as they fall due. The Company manages this risk by closely monitoring cash forecasts and
managing resources to ensure that it will have enough liquidity to meet its obligations.
•
• Operating Risks: The activities of the Company are subject to all of the hazards and risks normally
incidental to exploring and developing natural resource projects. These risks and uncertainties include,
but are not limited to environmental hazards, industrial accidents, labour disputes, geo-political risks,
encountering unusual or unexpected geologic formations or other geological or grade problems,
unanticipated changes
in rock formation characteristics and mineral recovery, encountering
unanticipated ground or water conditions, land slips, flooding, periodic interruptions due to inclement
or hazardous weather conditions and other acts of God or un-favourable operating conditions and
losses. The Company manages the risk by closing monitoring operations and maintaining adequate
insurance cover.
Early-stage Business Risk: The Board manages this risk by monitoring cash levels and reviewing cash
flow forecasts on a regular basis.
•
• Market Risk (exchange rates, commodity and equity): Market risk is the risk of loss that may arise from
changes in market factors such as interest rates, foreign exchange rates, and commodity and equity
15
•
•
•
•
•
•
prices. The Company manages the risk by closing monitoring exchange rates, commodity and equity
markets. The Company further engages consultants to undertake commodity forecasts.
Interest Rate Risk: The Company is exposed to interest rate risk to the extent that its cash balances bear
variable rates of interest. The interest rate risks on cash and short-term investments and on the
Company’s, obligations are not considered significant and is not mitigated at this time.
Foreign Currency Risk: The Company is exposed to the financial risk related to the fluctuation of foreign
exchange rates against the Company’s functional currency, which is the United States dollar (“USD”).
The Company has not hedged its exposure to currency fluctuations.
Environmental Risks and Hazards: All phases of the Company’s operations are subject to environmental
regulation in the areas in which it operates. The Board manages this risk by working with environmental
consultants and by engaging with the relevant governmental departments and other concerned
stakeholders.
Licencing Risk: The Company’s exploration and development activities are dependent upon the grant of
appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or
made subject to limitations or performance criteria. Such licences and permits are as a practical matter
subject to the discretion of the applicable Government or Government office. The Group must comply
with known standards, existing laws and regulations that may entail greater or lesser costs and delays
depending on the nature of the activity to be permitted. 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. Whilst the
Company continually seeks to do everything within its control to ensure that the terms of each licence
are met and adhered to, third parties may seek to exploit any technical breaches in licence terms for
their own benefit. 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.
Political and Regulatory Risk: The Company operating activities in Africa, notably in Zimbabwe, and
Namibia, are subject to laws and regulations governing expropriation of property, health and worker
safety, employment standards, waste disposal, protection of the environment, mine development, land
and water use, prospecting, mineral production, exports, taxes, labour standards, occupational health
standards, toxic wastes, the protection of endangered and protected species and other matters. The
Group is dependent on the political and economic situation in these countries and may be adversely
impacted by political factors such as expropriation, war, terrorism, insurrection and changes to laws
governing mineral exploration and operations.
Internal Control and Financial Risk Management: The Board has overall responsibility for the Group’s
systems of internal control and for reviewing their effectiveness. The Group maintains systems which
are designed to provide reasonable but not absolute assurance against material loss and to manage
rather than eliminate risk.
The Board has overall responsibility for maintaining and reviewing the Group’s system of internal control and
ensuring that the controls are robust and effective in enabling risks to be appropriately assessed and managed.
Refer to the principle risks and uncertainties as set out in the Strategic Report for additional information on these
risks.
On behalf of the Board, the AC conducts an annual review of the effectiveness of the systems of internal control
including financial, operational and compliance controls and risk management systems.
Audit Committee and Auditors
The functions of the AC are clearly described as part of the Leadership function in this note.
Whilst the Board sets the Company risk appetite, it reviews the operations and effectiveness of the Company’s
risk management activities through the AC, which undertake the day-to-day oversight of the risk management
framework on behalf of the Board. The Chairman of the AC regularly provides an update on the work carried out
by the AC to the board.
It is noted that the AC follow the recommendations of the Code whereby they monitor and review the
effectiveness of the internal audit activities. However, at this time, the Board have determined that the
appointment of internal auditor is not required due to the size of the Company.
16
4. Remuneration
The Level and Components of Remuneration
Executive directors’ remuneration should be designed to promote the long-term success of the Company.
Performance-related elements should be transparent, stretching and rigorously applied. The Board delegates
the responsibility for setting the appropriate levels of remuneration for its directors to the Remuneration
Committee.
The levels of Remuneration to directors are disclosed to shareholders in Premier Annual Report and Financial
Statements. Both the Board and Remuneration Committee seek to provide appropriate reward for the skill and
time commitment required so at to retain the right calibre of director at a cost to the Company and which reflects
the current market rates.
Procedure
The Board have a formal and transparent procedure for developing policy on the executive remuneration and
for fixing the remuneration packages of individual directors. As strict policy, no director is involved in deciding
their own remuneration.
The Remuneration Committee consider and approves the remuneration and where applicable, incentives and
benefits, and makes recommendations to the Board. The Committee will also govern employee share schemes.
The Chairman of the Committee will be consulted by the CEO in respect of the Company and director’s
performance approvals, compensation and in respect of any appointment/departures from roles.
The remuneration of non-executive directors shall be a matter for the executive members of the Board.
The Company has adopted a share dealing code to ensure directors and certain employees do not abuse, and do
not place themselves under suspicion of abusing inside information of which they are in possession and to
comply with its obligations under MAR which applies to the Company by virtue of its shares being traded on AIM.
Furthermore, the Company's share dealing code is compliant with the AIM Rules for Companies published by the
London Stock Exchange (as amended from time to time).
Under the share dealing code, the Company must:
• disclose all inside information to the public as soon as possible by way of market announcement unless
certain circumstances exist in which the disclosure of the inside information may be delayed;
keep a list of each person who is in possession of inside information relating to the Company;
•
• procure that all persons discharging managerial responsibilities and certain employees are given
clearance by the Company before they are allowed to trade in Company securities; and
• procure that all persons discharging managerial responsibilities and persons closely associated to them
notify both the Company and the Financial Conduct Authority of all trades in Company securities that
they make.
Additionally, under the share dealing code, no person discharging managerial responsibilities is permitted to deal
in Company securities (whether directly or through an investment manager) during a closed period; being the
period either: from the end of the relevant financial year up to the release of the preliminary announcement of
the Company’s annual results; from the end of the relevant financial period up to the release of the Company’s
half-yearly financial report or; 30 calendar days before the release of each of the Company’s first quarter report
and third quarter report.
For details of the directors’ remuneration refer to note 27.
5. Relations with Shareholders
Dialogue with shareholders
The Company recognises that maintaining strong communications with its shareholders promotes transparency
and will drive value in the medium to long-term. Accordingly, the Company has an established programme to
communicate with shareholders. This done by providing regular updates on the progress of the Company,
detailing recent business and strategy developments, in news releases which will be posted on the Company's
17
website and through certain social media channels. The Board has also engaged an internal Investor Relations
Officer (Fuad Sillem) who assist in maintaining the strong levels communication with shareholders.
The Disclosure Committee which comprises of George Roach and Wolfgang Hampel and is chaired by Wolfgang
Hampel is in place to assist the Board with the dialogue between the Company and its shareholders. The
Disclosure Committee assumes general responsibility for approval and monitoring compliance with the
Company’s disclosure controls and procedures. It has the responsibility, inter alia, determining whether
information is inside information, deciding whether the inside information is to be announced as soon as possible
and reviewing the scope, content and accuracy of disclosure. The Company has adopted a share dealing code
governing the share dealings of the Directors and applicable employees during close periods and is in accordance
with Rule 21 of the AIM Rules.
The Chairman and CEO are contactable via email. Their email address can be obtained at either the Company’s
registered office or by requesting them at the below address. To continually improve transparency, the Board
would be delighted to receive feedback from shareholders. Communications should be directed to
info@premierafricanminerals.com. The CEO has been appointed to manage the relationship between the
Company and its shareholders and will review and report to the Board on any communications received.
Constructive Use of General Meetings
The Company holds AGM each year, whereby all of the directors aim to attend the AGM and value the
opportunity of welcoming individual shareholders and other investors to communicate directly and address their
questions.
In addition to the mandatory information required and procedures to calling a general meeting, which can found
under the Company’s constitutional documents on the webpage, the Board ensure that a full, fair and balanced
explanation of business of all general meetings is sent in advance to shareholders.
Statement of directors’ responsibilities
The directors are responsible for preparing the annual report and financial statements and have prepared the
Group financial statements in accordance with International Financial Reporting Standards in order to give a true
and fair view of the state of affairs of the Group and of its profit or loss for that period, in accordance with the
rules of the London Stock Exchange for companies trading securities on AIM.
In preparing these financial statements the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether they have been prepared in accordance with IFRSs, subject to any material departures
disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company and the Group will continue in business.
•
The directors are responsible for keeping records that are sufficient to show and explain the Group and
Company’s transactions and will, at any time, enable the financial position of the Group and Company to be
determined with reasonable accuracy. They are also responsible for safeguarding the assets of the Company and
the Group and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company's website. Legislation in the British Virgin Islands governing the preparation and
dissemination of the Company’s financial statements and other information included in the annual reports may
differ from legislation in other jurisdictions.
The directors consider this Annual report and accounts, taken as a whole, is fair, balanced, understandable, and
provides the information necessary for shareholders to assess the company’s position, performance, business
model and strategy.
18
Statement of disclosure to auditor
The directors who were in office at the date of approval of these financial statements have confirmed that, as far
as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the directors has
confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves
aware of any relevant audit information and to establish that it has been communicated to the auditor.
Viability statement and going concern
The Board has assessed the prospects of the Group over a period of 12 months from the date of approval of these
financial statements, involving a review of the Group’s forecast prepared for the year ending 31 December 2021
and taking account of the Board’s intentions for future activities after that date. As explained further in note 5,
taking account of the Group’s current position and principal risks, over a 12 month period, the Board has a
reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due
over that period albeit additional funding will be required to enable the Group to meet all of its objectives. The
raising of additional funding is fundamental to the future success of the business and therefore gives rise to a
material uncertainty, although the Board notes the Group’s successful track record in having raised finance in the
past as necessary to meet the Group’s ongoing cash requirements.
The Board considers these periods of assessment to be appropriate because they contextualise the Company’s
financial position, business model and strategy.
George Roach
Chief Executive Officer
30 September 2020
19
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PREMIER AFRICAN MINERALS LIMITED
Opinion
We have audited the consolidated financial statements of Premier African Minerals Ltd (the ‘Group’) for the year
ended 31 December 2019 which comprise the consolidated statement of financial position, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity,
the consolidated statement of cash flows and the notes to the consolidated financial statements, including a
summary of significant accounting policies. The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
In our opinion:
•
•
the Group financial statements give a true and fair view of the state of the Group’s affairs as at 31
December 2019 and of the Group’s loss for the year then ended; and
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 5 in the Group financial statements, which indicates that the Group will need to raise
additional finance in order to maintain with its mining programmes and to meet its recurring expenditure, and
that, although the Group has been successful in the past in raising additional finance, there can be no assurance
that the funding required by the Group will be made available to it when needed or, if such funding were to be
available, that it would be offered on reasonable terms.
As stated in note 5, these conditions, along with the other matters as set forth in note 5, indicate that a material
uncertainty exists that may cast significant doubt over the Group’s ability to continue as a going concern for a
period of at least twelve months from the date when the financial statements are authorised for issue.
Whilst there is a global impact of the COVID-19 outbreak, the Group has been able to operate during the
pandemic to date. It remains difficult to assess reliably whether there will be any material disruption in the future
which could adversely impact the Group’s forecast.
See the going concern assumption key matter on pages 21 to 22 where we describe how we have evaluated
management’s assessment and the key observations arising with respect to that evaluation.
Our opinion is not modified in respect of this matter.
Our audit approach
Overview
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) 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
20
our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of
all risks identified by our audit.
• Going concern assumption
• Valuation of the rehabilitation provision
•
Fair value of investments
These are explained in more detail below.
Key audit matters
Key audit matter
Going concern assumption
How our audit addressed the key audit matter
The Group is dependent upon its ability to generate
sufficient cash flows to meet continued operational costs
and hence continue trading.
We have performed the following audit procedures:
The Directors have considered the cash requirements of
the business for the following 12 months. As part of this
process, they have taken into account existing liabilities,
along with detailed operating cashflow requirements. The
projections prepared include ongoing running costs of the
Group and committed expenditure at the date of
approving the financial statements.
The Directors have identified a variety of potential sources
of funds including issue of additional equity and/or debt
and shareholder loans.
Key assumptions that impact the conclusions are the
ability to fundraise and the ability to control operating
costs.
These are therefore inherent risks that the forecasts may
understate future costs, and that the Group will not be
able to operate within its cash resources and continue to
operate as a going concern.
The COVID-19 pandemic has created a great deal of
uncertainty regarding the future outlook of the business.
•
Evaluated the suitability of management’s model for
the forecast.
The forecast includes a number of assumptions related to
future cash flows and associated risks. Our audit work has
focused on evaluating and challenging the reasonableness
of these assumptions and their impact on the forecast
period and ensuring that all key matters are correctly
disclosed in the going concern note.
Specifically, we obtained, challenged and assessed
management’s going concern forecast and performed
procedures including:
• Verifying the consistency of key inputs and fund
raisers relating to future costs to other financial and
operational information obtained during the audit;
Corroborated with management relating to future
cash inflows.
•
• We reviewed the latest management accounts to
gauge the financial position.
• We performed sensitivity analysis on the cash flow
forecasts prepared by the directors.
• We performed a mechanical check on the cash flow
•
forecast model prepared by the directors.
Considered the Group’s historic ability to raise
funds; and
• Reviewed the financing options available to the
Group to evaluate the ability of the Group to pay
their debts as they become due.
We have enquired with management as to the impact of
COVID-19 and the steps being taken to limit the impact of
the pandemic on the business. We have reviewed
21
Key audit matter
How our audit addressed the key audit matter
forecasts and latest bank balances to ensure the Group
can cover its overheads. The forecasts have been stress
tested by management and the assumptions have been
challenged.
Due to the risks outlined above, a material uncertainty
relating to going concern is highlighted in the auditor’s
report.
Valuation of the rehabilitation provision
The Group has recognised a rehabilitation provision,
under IAS 37 – contingent liabilities and contingent assets,
of $388,000 (2018: $983,000), in relation to the future
costs to rehabilitate the current mines as per regulation.
The directors are required to assess the provision at the
end of each reporting period and adjust to reflect their
best estimates of the liability.
We have performed the following audit procedures:
• Assessed the inputs in calculation of the liability.
These were based on the original environmental
impact assessment as carried out in 2015.
• Verified that there were no applicable changes
to the regulations which would increase the
liability.
The directors consider the liability to be sufficient due to
the weakening of the RGTS (Zimbabwe currency) against
the Dollar.
• We have reviewed expert reports in relation to
the year end liability.
Fair value of investments
The Group has recognised Investments of $7,444,000
(2018: $6,263,000) as at the reporting date.
Directors are required to assess the fair value of
investments at each reporting date under IFRS 9.
As neither Circum nor MNH are traded on an active
market a level 3 valuation technique was used. The
shareholding was based on the most recent placing of
the shares in the respective companies, as well as
management’s best estimates of the fair values.
• We have reviewed calculations for the
unwinding of the provision.
Based on the audit work performed we are satisfied that
the management have appropriately considered the fair
value in accordance with accounting standards.
We have performed the following audit procedures:
• Obtain external confirmation of the latest
•
placing value from members of Circum board.
Clarified that the Group’s purchase of MNH
shares were the latest trade.
• Reviewed management assessment of the fair
values to support the value of the investments.
Traced existence and ownership to relevant
documents
•
22
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of misstatements, both individually and in
aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Group financial statements
$75,000
Based on 1% of gross assets
We believe that the gross assets is a primary measure
used by shareholders in assessing the performance of
the Group, as the group is at a pre-revenue stage and is
asset heavy.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit
above $3,750 (Group audit) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
Group financial statements. In particular, we looked at where the directors made subjective judgements, for
example in respect of significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain. As in all of our audits we also addressed the risk of management override
of internal controls, including evaluating whether there was evidence of bias by the directors that represented
a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account the structure of the Group, the accounting processes
and controls, and the industry in which they operate.
The Group financial statements are a consolidation of 3 reporting units, comprising the Group’s operating
businesses. The Group comprises the parent undertaking, incorporated in the British Virgin Islands, its principal
operating subsidiaries, RHA Tungsten (Private) Limited and Zulu Lithium (Private) Limited, and eleven non-
trading or intermediate holding companies, of which seven are registered un Mauritius and 6 in Zimbabwe. A
full scope audit to Group materiality levels was performed on the parent undertaking and the trading companies
as well as their immediate holding companies. This resulted in 100% coverage of consolidated expenditures and
100% of the Group’s gross assets.
We performed audits of the complete financial information of the Group reporting units, which were individually
financially significant and accounted for 100% of the Group’s absolute profit before tax (i.e. the sum of the
numerical values without regard to whether they were profits or losses for the relevant reporting units). We also
performed specified audit procedures over certain account balances and transaction classes that we regarded
as material to the Group at the 3 reporting units.
The Group engagement team performed all audit procedures. It is our responsibility to obtain sufficient
appropriate audit evidence regarding the financial information of the entities of the Group.
23
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the Group financial statements and our auditor’s report thereon. Our
opinion on the Group 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 Group 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 Group 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 18, the directors are
responsible for the preparation of the Group financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the Group financial statements, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the Group 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 Group financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of this report
This report is made solely to the Group's members, as a body, in accordance with our engagement letter. Our
audit work has been undertaken so that we might state to the Group's members those matters that 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 Group, or the Group's members as a body,
for our audit work, for this report, or for the opinions we have formed.
24
Sanjay Parmar
Senior Auditor
For and on behalf of
Jeffreys Henry LLP (Statutory Auditors)
Finsgate
5-7 Cranwood Street
London EC1V 9EE
30 September 2020
25
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
EXPRESSED IN US DOLLARS
ASSETS
Non-current assets
Intangible assets
Investments
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Finance lease liabilities
Deferred tax
Provisions - rehabilitation
Current liabilities
Bank overdraft
Trade and other payables
Finance lease liabilities
Borrowings
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share based payment and warrant reserve
Revaluation reserve
Foreign currency translation reserve
Accumulated loss
Total equity attributed to the owners of the parent company
Non-controlling interest
TOTAL EQUITY
2019
$ 000
2018
$ 000
Notes
8
9
10
11
12
13
14
26
15
13
16
14
17
18
19
7
20
-
7 444
-
7 444
2
18
40
60
7 504
-
-
388
388
-
1 406
35
715
2 156
2 544
4 960
-
6 263
-
6 263
26
53
16
95
6 358
34
-
983
1 017
288
2 957
60
213
3 518
4 535
1 823
48 042
2 366
711
(14 236)
(20 415)
16 468
(11 508)
45 873
2 366
711
-
(34 423)
14 527
(12 704)
4 960
1 823
These financial statements were approved and authorised for issue by the Board on 30 September 2020 and
are signed on its behalf.
George Roach
Chief Executive Officer
The notes on pages 30 to 77 are an integral part of these consolidated financial statements.
26
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes
21
22
8, 10
23
21
9
10
8
24
25
7
9
Continuing operations
EXPRESSED IN US DOLLARS
Revenue
Cost of sales excluding depreciation and amortisation
Depreciation and amortisation
Gross profit / (loss)
Administrative expenses
Operating profit / (loss)
Other income
Fair value movement FVTPL
Impairment of PPE - RHA
Impairment of current assets - RHA
Impairment of intangible assets - Zulu
Finance charges
Loss before income tax
Income tax expense
Loss from continuing operations
Loss for the year
Other comprehensive income:
Items that are or may be reclassified subsequently to profit
or loss:
Foreign exchange loss on translation
Fair value movement on investment
Total comprehensive income for the year
Loss attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests
2019
2018
$ 000
$ 000
-
-
-
-
(1 871)
(1 871)
1 285
-
(483)
-
-
(140)
662
(1 209)
-
(1 209)
168
(179)
-
(11)
(2 834)
(2 845)
-
47
(196)
(48)
(4 563)
(153)
(4 913)
(7 758)
-
(7 758)
(1 209)
(7 758)
(25 029)
-
(25 029)
(26 238)
(1 227)
18
(1 209)
(15 463)
(10 775)
-
-
-
(7 758)
(6 809)
(949)
(7 758)
(6 809)
(949)
Total comprehensive income for the year
(26 238)
(7 758)
Loss per share attributable to owners of the parent
(expressed in US cents)
Basic loss per share
Diluted loss per share
26
26
(0.01)
(0.01)
(0.1)
(0.1)
The notes on pages 30 to 77 are an integral part of these consolidated financial statements.
27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
EXPRESSED IN US DOLLARS
At 1 January 2018
Loss for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with Owners
Issue of equity shares
Share issue costs
Warrant options cancelled
Share based payments
At 31 December 2018
Effect of change in the functional currency of
subsidiaries
Loss for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with Owners
Issue of equity shares
Share issue costs
At 31 December 2019
Foreign
currency
translation
reserve
$ 000
-
-
-
-
-
-
-
-
-
-
-
(14 236)
(14 236)
-
-
(14 236)
Share
capital
$ 000
44 158
-
-
-
1 838
(123)
-
-
45 873
-
-
-
-
2 237
(68)
48 042
Share
option
and
warrant
reserve
$ 000
2 393
-
-
-
-
-
(204)
177
2 366
-
-
-
-
-
-
2 366
Revaluation
reserve
$ 000
711
-
-
-
Accumulated
loss
$ 000
(27 614)
(6 809)
-
(6 809)
Total
attributable
to owners
of parent
$ 000
19 648
(6 809)
-
(6 809)
Non-
controlling
interest
("NCI")
$ 000
(11 755)
(949)
-
(949)
-
-
-
-
711
-
-
-
-
-
-
711
-
-
-
-
(34 423)
15 235
(1 227)
-
(1 227)
-
-
(20 415)
1 838
(123)
(204)
177
14 527
15 235
(1 227)
(14 236)
(15 463)
2 237
(68)
16 468
-
-
-
-
(12 704)
11 971
18
(10 793)
(10 775)
-
-
(11 508)
Total
equity
$ 000
7 893
(7 758)
-
(7 758)
1 838
(123)
(204)
177
1 823
27 206
(1 209)
(25 029)
(26 238)
2 237
(68)
4 960
The notes on pages 30 to 77 are an integral part of these consolidated financial statements.
28
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
EXPRESSED IN US DOLLARS
Net cash outflow from operating activities
Investing activities
Acquisition of property plant and equipment
Acquisition of intangible assets
Acquisition of investment
Proceeds on sale of investment
Net cash used in investing activities
Financing activities
Repayment of borrowings
Repayment of warrant liability
Proceeds from borrowings granted
Net proceeds from issue of share capital
Finance charges
Repayment of finance lease
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate variation
Notes
28
10
8
9
9
17
19
17
18
14
14
2019
$ 000
2018
$ 000
(404)
(1 558)
(483)
-
(1 181)
-
(1 664)
-
-
468
1 984
(12)
(60)
2 380
312
(272)
-
(196)
(272)
-
243
(225)
(25)
(204)
300
1 415
(38)
(71)
1 377
(406)
134
-
Net cash and cash equivalents at end of year
40
(272)
The notes on pages 30 to 77 are an integral part of these consolidated financial statements.
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Reporting entity
Premier African Minerals Limited (‘Premier’ or ‘the Company’), together with its subsidiaries (the ‘Group’), was
incorporated in the Territory of the British Virgin Islands under the BVI Business Companies Act, 2004. The address
of the registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands.
The Group’s operations and principal activities are the mining and development of mineral reserves on the African
continent.
Premier’s shares were admitted to trading on the London Stock Exchange’s AIM market on 10 December 2012.
2.
Basis of accounting
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) in issue and as endorsed by the European Union (“EU”). They were authorised for issue by the
Company’s board of directors on 30 September 2020.
Details of the Group’s accounting policies are detailed below.
This is the first set of the Group’s financial statements in which IFRS 16 Leases has been applied. There were no
significant changes to the implementation related to this accounting standard.
The preparation of financial statements in conformity with EU adopted IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies.
The accounting policies set out below are applied consistent across the Group and to all periods presented in these
consolidated financial statements.
Functional and presentation currency
The Group’s presentation currency and the functional currency of the majority of the group’s entities is
US dollars. All amounts have been rounded to the nearest thousand, unless otherwise indicated. The Zimbabwean
subsidiaries’ functional currency was changed by the Zimbabwean government from USD to RTGS dollar during
the financial year. Refer to note 7 for detailed information.
Use of judgements and estimates
In preparing these consolidated financial statements, management has made judgements, estimates and
assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised
prospectively.
For details of the use of judgments and estimates refer to note 4 and detailed notes on the Intangible assets and
goodwill (note 8), Investments (note 9), Property, plant and equipment (note 10), Inventories (note 11), Trade
and other receivables (note 12) and Share based payment and warrant reserve (note 19).
3.
3.1
Significant accounting policies
Change in significant accounting policies
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning that
would be expected to have a material impact on the Group. The new IFRSs adopted during the year are as follows:
•
•
IFRS 16 – Leases
IAS 19 – Employee Benefits (amendment)
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
IFRS 16 Leases is effective for periods beginning on or after 1 January 2019 and therefore being adopted for the
first time in these financial statements. Under IFRS 16, lessees may elect not to recognise assets and liabilities for
leases with a lease term of 12 months or less. The Company’s office premises are on a rolling one month contract
so the Group has taken the IFRS 16 scope exemption and have chosen to recognise the lease payments in profit
and loss on a straight-line basis over the lease term.
The following new standards, amendments to standards and interpretations have been issued, but are not
effective for the financial period beginning 1 December 2019 and have not been early adopted. The Directors
anticipate that the adoption of these standard and the interpretations in future periods will have no material
impact on the financial statements of the Group.
The new standards include:
IFRS 3
IFRS 17
IAS 1
IAS 8
Business Combinations1
Insurance Contracts2
Presentation of Financial Statements1
Accounting Policies, Changes in Accounting Estimates and Errors1
1 Effective for annual periods beginning on or after 1 January 2020
2 Effective for annual periods beginning on or after 1 January 2021
3.2
Basis of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to,
or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The existence and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing whether the Group controls another entity. The Group also assesses
existence of control where it does not have more than 50% of the voting power but is able to govern the financial
and operating policies by virtue of de-facto control. This is evidenced with RHA Tungsten (Private) Limited which
the Group owns 49% of but is consolidated into the Group (note 4.7).
Subsidiaries are consolidated, using the acquisition method, from the date that control is gained and non-
controlling interests are apportioned on a proportional basis.
When necessary amounts reported by subsidiaries have been adjusted to conform to the Group’s accounting
policies.
3.3
Business combinations and goodwill
The Group applies the acquisition method to account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date.
3.4
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date on which control commences until the date on which control ceases.
3.5
Non-controlling interests (“NCI”)
Non-controlling interests are measured initially at their proportionate share of the acquiree’s identifiable net
assets at the date of acquisition.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions.
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.6
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised gains arising from transactions with equity accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
3.7
Foreign currency
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at
the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a
foreign currency are translated into the functional currency at the exchange rate when the fair value was
determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated
at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit
or loss.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated into dollars at the exchange rates at the reporting date. The income and expenses of foreign
operations are translated into dollars at the exchange rates at the dates of the transactions.
Foreign currency differences are recognised in Other Comprehensive Income (“OCI”) and accumulated in the
translation reserve, except to the extent that the translation difference is allocated to NCI.
Where the functional currency of a company is in a hyperinflationary economy IAS 29 Financial Reporting in
Hyperinflationary Economies is applied. Under this standard the results are restated to reflect the current cost of
the various elements of the financial statements. For the Statement of comprehensive income the cost of sales
and depreciation are recorded at current costs at the time of consumption; sales and other expenses are recorded
at their money amounts when they occurred. Therefore all amounts need to be restated into the measuring unit
current at the end of the reporting period by applying a general price index.
Monetary items stated in the Statement of financial position that are stated at current cost are not restated
because they are already expressed in terms of the measuring unit current at the end of the reporting period. All
non-monetary items in the statement of financial position are restated by applying an index at the time of their
acquisition to the reporting date. Any resulting gain or loss on the net monetary position is included in profit or
loss reserve.
In accordance with IAS29, corresponding figures for the previous reporting period, whether they were based on a
historical cost approach or a current cost approach, are restated by applying a general price index so that the
comparative financial statements are presented in terms of the measuring unit current at the end of the reporting
period. Information that is disclosed in respect of earlier periods is also expressed in terms of the measuring unit
current at the end of the reporting period.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint
control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to
profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but
retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group
disposes of only part of an associate or joint venture while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to profit or loss.
3.8
Discontinued operation
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be
clearly distinguished from the rest of the Group and which:
• represents a separate major line of business or geographic area of operations;
•
is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of
operations; or
is a subsidiary acquired exclusively with a view to re-sale.
•
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria
to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI
is re-presented as if the operation had been discontinued from the start of the comparative year.
3.9
Revenue
Performance obligations and service recognition policies
Revenue is measured based on the consideration specified in a contract with a customer in line with IFRS 15. The
Group recognises revenue when it transfers control over of goods or services to a customer.
The following table provides information about the nature and timing of the satisfaction of performance
obligations in contracts with customers, including significant payment terms, and the related revenue recognition
policies.
Type of product/
service
Nature and timing of satisfaction of performance
obligations, including significant payment terms
Revenue recognition under
IFRS 15
Revenue
Wolframite sales
Scrap sales
Customers obtain control of the wolframite ore when
the ore has been delivered to and have been accepted
at their premises or the agreed point of delivery.
Invoices are generated at that point in time based on
the agreed upon weight of the ore. Invoices are
generally payable within 30 days. No discounts are
provided for.
The sale of the ore is not subject to a return policy.
Revenue is recognised when
the goods are delivered and
have been accepted by the
customers at their premises
or the agreed point of
delivery.
Customers obtain control of the scrap when the scrap
has been delivered to and have been accepted at their
premises or the agreed point of delivery. Invoices are
generated at that point in time based upon the agreed
upon weight of the scrap. Invoices are generally
payable within 30 days. No discounts are provided for.
Revenue is recognised when
the goods are delivered and
have been accepted by the
customers at their premises
or the agreed point of
delivery.
The sale of the scrap is not subject to a return policy.
Reserve Bank of
Zimbabwe Export
Incentive
The Export Incentive is provided on an individual basis
and has to be applied for. It is based on the export
sales of the company. As such the revenue from the
RBZ is not guaranteed.
The Group gains control
over the export incentive
when it is received in the
Group’s bank accounts.
Other Income
Government Grants
The Group has no control over the timing of the grants
nor any payment terms.
Prescription of debts Management periodically reviews all outstanding
payables and identifies any potential debts that may
have prescribed.
The Group gains control
over the Government grant
when it is received in the
Group’s bank accounts.
Debts are considered
prescribed if the creditor
has not claimed payment for
a period in excess of the
relevant prescription period.
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.10
Employee benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably.
Share-based payment arrangements
The Group operates an equity-settled share option plan and issues warrants from time to time either with direct
subscriptions in equity or as finance related packages. The fair value of the service received in exchange for the
grant of options or issue of warrants is recognised as an expense or recognised as a deduction from equity or an
addition to intangible assets depending on the nature of the services received.
Share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date
of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the
Group’s estimate of shares that will eventually vest.
Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
The warrants issued as part of the loan note agreements contain certain re-set provisions as to exercise price
and/or number of warrants issued depending on certain conditions. Any share subscriptions priced at a price lesser
than the warrant exercise price will trigger a re-set of the exercise price to the lower share subscription price. The
warrants exercise price was re-set for all remaining Darwin warrants issued under the loan notes to a new exercise
price of 0.375p being the lowest subscription price on 16 December 2016. There were no re-set events during
2018 nor 2019.
Any adjustments are recognised through the profit and loss. The fair value is reassessed annually.
3.11
Finance income and finance costs
The Group’s finance income and finance costs include:
•
•
•
interest income;
Interest expense;
dividend income;
Interest income and expense is recognised using the effective interest method. Dividend income is recognised in
profit or loss on the date on which the Group’s right to receive payment is established.
The “effective interest rate” is the rate that exactly discounts estimated future cash payments or receipts through
the expected life of the financial instrument to:
•
•
the gross carrying amount of the financial asset; or
the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of
the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial
assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by
applying the effective interest rate to the amortised cost of the financial asset, if the asset is no-longer credit-
impaired, then the calculation of interest income reverts to the gross basis.
3.12
Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that
it relates to a business combination, or items recognised directly in equity or in OCI.
3.12.1 Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related
to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
3.12.2 Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent
that the Group is able to control the timing of the reversal of the temporary differences and it is probable
that they will not reverse in the foreseeable future; and –– taxable temporary differences arising on the
initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits will be available against which they can be used. Future
taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of
taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits,
adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual
subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the
probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
3.13
Intangible assets and goodwill
All costs of Exploration and Evaluation (“E&E”) are initially capitalised as intangible assets, such as payments to
acquire the legal right to explore, costs of technical services and studies, seismic acquisition, exploratory drilling
and testing. The costs include directly attributable overheads together with the cost of other materials consumed
during the exploration and evaluation phases.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to profit or loss as
they are incurred.
E&E assets are not amortised.
Intangible assets related to each exploration licence or pool of licences are carried forward, until the existence (or
otherwise) of commercial reserves has been determined. Once the technical feasibility and commercial viability
of extracting a mineral resource is demonstrable, the related E&E assets are assessed for impairment on an
individual licence or cost pool basis, as appropriate, as set out below and any impairment loss is recognised in
profit or loss.
The Group considers each licence, or where appropriate, a pool of licences, separately, for the purposes of
determining whether impairment of E&E assets has occurred.
Intangible assets are assessed for impairment when facts and circumstances suggest that the carrying amount may
exceed its recoverable amount. Such indicators include, but are not limited to, those situations outlined in
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
paragraph 20 of IFRS 6 Exploration for and Evaluation of Mineral Resources and include the point at which a
determination is made as to whether or not commercial reserves exist.
When impairment indicators 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 commercial reserves.
When a licence or pool of licences is abandoned or there is no planned future work, the costs associated with the
respective licences are written off in full and recognised in profit or loss.
Any impairment loss is recognised in profit or loss and separately disclosed.
3.14
Impairment
3.14.1 Non-derivative financial assets
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities
at FVOCI are credit-impaired. A financial asset is “credit-impaired” when one or more events that have a
detrimental impact on the estimated future cash flows of the financial assets have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
•
•
•
•
•
significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or being more than 90 days past due;
the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for a security because of financial difficulties.
A 12 months approach is followed in determining the Expected Credit Loss (“ECL”).
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of
the assets.
For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually
makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable
expectation of recovery from the amount written off. However, financial assets that are written off could still be
subject to enforcement activities in order to comply with the Group’s procedures of recovery of the amounts due.
3.14.2 Financial assets measured at amortised cost
The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All
individually significant assets are individually assessed for impairment. Those found not to be impaired are then
collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are
not individually significant are collectively assessed for impairment. Collective assessment is carried out by
grouping together assets with similar risk characteristics.
In assessing collective impairment, the Group uses historical information on the timing of recoveries and the
amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the
actual losses are likely to be greater or lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of
the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in
profit or loss and reflected in an allowance account. When the Group considers that there are no realistic prospects
of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised,
then the previously recognised impairment loss is reversed through profit or loss.
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.14.3 Available for sale financial asset
Impairment losses on available-for-sale financial assets are recognised, only when fair value is less than carrying
value and this is significant over a prolonged period, by reclassifying the losses accumulated in the fair value
reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal
repayment and amortisation) and the current fair value, less any impairment loss previously recognised in profit
or loss.
3.14.4 Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories)
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. Goodwill is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising
from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the
synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less cost of disposal.
Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any
goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro
rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to
the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.15 Cash and cash equivalents
The Cash and cash equivalent comprises of bank accounts and bank overdraft. Cash and cash equivalent are
measured at amortised cost.
3.16
Inventory
Inventory is measured at the lower of cost and net realisable value. The cost of inventories is based on the first-
in, first-out principle. The cost of inventories includes the cost of consumables and cost of production. Net
realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
Inventory consists of mining consumables.
3.17
Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less
accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted
for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Subsequent expenditure
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Group.
Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit
or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably
certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:
•
Land – indefinite useful life
• Buildings – 10 years
•
Plant & equipment – 4/6 years
• Mine development - depreciated over the life of the mine currently assessed at 10 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
3.18 Financial instruments
The Group classifies non-derivative financial assets into the following categories: loans and receivables and FVTPL
and FVTOCI financial assets.
The Group classifies non-derivative financial liabilities into the following category: other financial liabilities.
3.18.1 Non-derivative financial assets and financial liabilities – Recognition and derecognition
The Group initially recognises loans and receivables on the date when they are originated. All other financial assets
and financial liabilities are initially recognised on the trade date when the entity becomes a party to the contractual
provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of
the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such
derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Gains or losses on derecognition of financial liabilities are recognised in profit or loss as a finance charge.
Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally enforceable right to offset the amounts and
intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
3.18.2 Loans and receivables- Measurement
These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at amortised cost using the effective interest method.
3.18.3 Assets at FVOCI - Measurement
These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at fair value and changes therein, other than impairment losses, are
recognised in OCI and accumulated in the revaluation reserve.
When these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
3.18.4 Non-derivative financial liabilities – Measurement
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction
costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest
method.
3.18.5 Convertible loan notes and derivative financial instruments
The presentation and measurement of loan notes for accounting purposes is governed by IAS 32 and IAS 39. These
standards require the loan notes to be separated into two components:
• A derivative liability, and
• A debt host liability.
This is because the loan notes are convertible into an unknown number of shares, therefore failing the ‘fixed-for-
fixed’ criterion under IAS 32. This requires the ‘underlying option component’ of the loan note to be valued first
(as an embedded derivative), with the residual of the face value being allocated to the debt host liability (refer
financial liabilities policy above).
Compound financial instruments issued by the Group comprise convertible notes denominated in dollars that can
be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and
does not vary with changes in fair value.
The liability component of compound financial instruments is initially recognised at the fair value of a similar
liability that does not have an equity conversion option. The equity component is initially recognised at the
difference between the fair value of the compound financial instrument as a whole and the fair value of the liability
component. Any directly attributable transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial instrument is
not remeasured.
Interest related to the financial liability is recognised in profit or loss. On conversion at maturity, the financial
liability is reclassified to equity and no gain or loss is recognised.
3.19
Provisions - Rehabilitation
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
An obligation to incur environmental restoration, rehabilitation and decommissioning costs arises when
disturbance is caused by the development or on-going production of a mining property. Such costs arising from
the decommissioning of plant and other site preparation work, discounted to their net present value, are provided
for and capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are
recognised in profit or loss over the life of the operation, through the depreciation of the asset and the unwinding
of the discount on the provision. Costs for restoration of subsequent site damage which is created on an ongoing
basis during production are provided for at their net present values and recognised in profit or loss as extraction
progresses.
Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work
(that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate) are
added to or deducted from the cost of the related asset in the current period. If a decrease in the liability exceeds
the carrying amount of the asset, the excess is recognised immediately in profit or loss. If the asset value is
increased and there is an indication that the revised carrying value is not recoverable, an impairment test is
performed in accordance with the accounting policy above.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount
is recognised as finance cost in profit or loss.
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.20
Equity
Equity comprises the following:
• Share capital - ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
• Share-options and warrant reserve - represents equity-settled share-based payments.
• Accumulated loss represent retained profits less retained losses.
• Revaluation reserve represents the difference between the nominal value of shares issued by the
Company to the shareholders of ZimDiv Holdings Limited (“Zimdiv”) and the nominal value of the ZimDiv
shares taken in exchange.
• Non-controlling interests represents the share of retained profits less retained losses of the non -
controlling interests.
• Foreign currency translation reserve represents the other comprehensive income gains or losses arising
on the conversion of the functional currencies of the subsidiaries to the holding company’s functional
currency of USD.
3.21
Leases
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether the arrangement is or contains a lease.
At inception or on reassessment of an arrangement that contains a lease, the Group separates payments and other
consideration required by the arrangement into those for the lease and those for other elements on the basis of
their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments
reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset;
subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is
recognised using the Group’s incremental borrowing rate.
Prior to 1 January 2019, leases in which a significant proportion of the risks and rewards are retained by the lessor
are classified as operating leases. Payments made under operating leases are charged to the statement of
comprehensive income on a straight line basis over the period of the lease. Finance leases are recognised as assets
of the Group at the fair value at the inception of the lease or, if lower, at the present value of the minimum lease
payments. The related liability to the lessor is included in the statement of financial position as a finance lease
obligation. Lease payments are apportioned between interest expense and capital redemption of the liability.
Interest is recognised immediately in the statement of comprehensive income unless attributable to qualifying
assets, in which case they are capitalised to the cost of those assets.
Since 1 January 2019, assets held under leases are recognised as assets of the Group at the fair value at the
inception of the lease or, if lower, at the present value of the minimum lease payments. Lease payments are
apportioned between interest expense and capital redemption of the liability. Interest is recognised immediately
in the statement of comprehensive income unless attributable to qualifying assets, in which case they are
capitalised to the cost of those assets.
Exemptions are applied for short life leases and low value assets made under operating leases charged to the
statement of comprehensive income on a straight line basis over the period of the lease.
Payments made under non-capitalised leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term
of the lease.
Minimum lease payments made are apportioned between the finance expense and the reduction of the
outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a
constant periodic rate of interest on the remaining balance of the liability.
3.22 Operating segments
Segmental information is provided for the Group on the basis of information reported internally to the chief
operating decision-maker for decision-making purposes. The Group considers that the role of chief operating
decision-maker is performed by the Group’s board of directors.
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4.
Significant accounting judgements, estimates and assumptions
In preparing these consolidated financial statements, management has made judgements, estimates and
assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised
prospectively.
4.1.
Judgements
Information about judgements made in applying accounting policies that have the most significant effects on the
amounts recognised in the consolidated financial statements is included in the following notes:
- Note 4.7 - consolidation: whether the Group has de facto control over an investee; and
- Note 14 - leases: whether an arrangement contains a lease.
4.2.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities within the year ended 31 December 2019 is included
in the following notes:
• Note 25 - recognition of deferred tax assets: availability of future taxable profit against which tax losses
carried forward can be used;
• Note 4.4 - Recoverability of exploration and evaluation assets: key assumptions underlying recoverable
amounts;
• Note 4.5 - Recoverability of RHA Cash-Generating Unit “CGU”: key assumptions underlying recoverable
amounts
• Note 15 – recognition and measurement of provisions and contingencies: key assumptions about the likelihood
and magnitude of an outflow of resources.
• Note 19 – share based payments assumptions regarding the various inputs into the Black Scholes model used
to determine the option value.
4.3. Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy
as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
• Note 19 - share-based payment arrangements;
• Note 29 - financial instruments.
4.4
Recoverability of exploration and evaluation assets
Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there
are any indicators of impairment, including by reference to specific impairment indicators prescribed in IFRS 6
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an
impairment test is required based on value in use of the asset or fair value less cost to sell.
The carrying amount of exploration and evaluation assets at 31 December 2019 amounted to nil (2018: $nil). Refer
to note 8 for the assumptions used.
4.5
Recoverability of RHA Cash-Generating Unit “CGU”
Determining whether a CGU is impaired requires an assessment of whether there are any indicators of
impairment, including by reference to specific impairment indicators prescribed in IAS36 Impairment of Assets. If
there is any indication of potential impairment, an impairment test is required based on the greater of fair value
less cost of disposal, and, value in use of the asset. The value in use calculation requires the entity to estimate the
future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
the present value.
During 2017 the operating losses at RHA were higher than predicted due to operations in the open pit and
underground failing to deliver both the ore volumes and the anticipated grade. The operating losses are an
indicator of potential impairment. In December 2017, due to the lower ore delivery, anticipated grade and
operating losses, the Board of Directors decided to place the RHA Tungsten mine under care and maintenance.
As a result, management completed an impairment review.
The impairment review concluded that four months further capex will be required in order to open the existing
underground mining of 6 000 tons per month run of mine ore. Concurrently additional plant upgrades and a
connection to the national grid would result in a 40 000 ton per month run of mine ore operation. A further option
to construct a new decline vehicle access was not considered during this review.
Key assumptions used in calculating the initial impairment included:
• 7 265 mtu concentrate production per month; 10 year mine plan; APT price of $275 per metric ton unit (‘mtu’);
• 20% discount rate; and a zero growth rate in operating cash flow after the plant is fully operational, forecast
to be for the full year 2019. Other key factors include attainment of forecast grade as set out in our resource
statement and plant operating parameters being achieved.
• The XRT sorter installation is a significant element in increasing confidence in RHA in that 70% of the anticipated
run of mine feed target of 40 000 ton per month is passed through the sorter, which is able to recover
approximately 90% of the mineralisation in a mass pull of some 5%.
• The model assumes annual revenues of $13.1m from 2020. Revenue generation is dependent on a number of
inter-linked assumptions and a combination of negative changes in those assumptions would result in further
impairment charges.
As the mine is not operating, these assumptions were not revisited and the mine remains fully impaired.
Sensitivity analysis was conducted on the volume, grade, concentrate production per month and APT price
assumptions in the model.
The management of RHA concluded its negotiations with NIEEF during the year, however at the date of this report
the full amount of the agreed upon funding has yet to be received. Accordingly, management felt that it was
prudent to maintain the impairment until such time as the counterparty has fulfilled its contractual obligations.
The company has not funded any of the activities at RHA since 1 July 2019 and is awaiting the fulfilment of NIEEF’s
obligations to fund the operations.
4.6
Estimation of useful life for mine assets
Mine assets are depreciated /amortised on a straight-line basis over the life of the mine concerned. Judgement is
applied in assessing the mine’s useful life and in the case of RHA, the Group’s only operating concern, is based on
the initial Preliminary Economic Assessment (‘PEA’) first published in August 2013 that initially modelled an 8 year
life of mine. The life of mine reassessed annually based on levels of production.
4.7
Basis of consolidation
RHA Tungsten (Private) Limited
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During 2013, Premier concluded a shareholders’ agreement with NIEEF whereby NIEEF acquired 51% of the shares
of RHA. The principal terms of the agreement are as follows:
• ZimDiv Holdings Limited (‘ZimDiv’), a wholly owned subsidiary, is appointed as the Manager of the project for
an initial 5 year term.
• ZimDiv has marketing rights to the product.
• Each shareholder can appoint up to two directors each, with a 5th director who is rotated between each
shareholder. The 5th director will not have a vote.
• Although the local Zimbabwean company is responsible for financing and repayment of such. Premier has
secured the funding to advance RHA to production.
• There has been no operational change since the agreements were signed and Premier continues to fund RHA
until it becomes cash generative.
At the financial year-end, one director of RHA was from the Premier Group and one director from NIEEF. There is
no majority vote at board level and Premier still retains operational and management control through its
shareholders’ agreement. Following the assessment, the Directors concluded that Premier, through its wholly
owned subsidiary ZimDiv, retained control and should continue to consolidate 100% of RHA and recognise non-
controlling interests of 51% in the consolidated financial statements.
4.8
Valuations
•
•
Investments – Premier’s investment in Circum Minerals Limited (‘Circum’) is classified as an FVOCI as such is
required to be measured at fair value at the reporting date. As Circum is unlisted there are no quoted market
prices. In previous years the fair value of the Circum shares was derived using the most recent placing price.
The Fair value of the Circum shares as at 31 December 2019 was derived using the most recent placing price in
April 2019.
Investments – Premier’s investment in MN Holdings (‘MNH’) is classified as an FVOCI as such is required to be
measured at fair value at the reporting date. As MNH is unlisted there are no quoted market prices. The Fair
value of the MNH shares as at 31 December 2019 was derived using the purchase price in July 2019.
• Valuation of warrants, share options and ordinary shares issued as consideration – judgement is applied in
determining appropriate assumptions to be used in calculating the fair value of the warrants, shares and share
options issued. Refer accounting policy note and note 20.
• Provision for Rehabilitation - A provision is recognised for site rehabilitation and decommissioning of current
mining activities based on current environmental and regulatory requirements. The net present value of the
provision is calculated at a discount rate of 10% over an 8 year life of mine.
• The life of mine has subsequently been reassessed to a total of 10 years. The corresponding rehabilitation
assets was capitalised to property, plant and equipment and is depreciated over the life of the mine.
5.
Going Concern
These consolidated financial statements are prepared on the going concern basis. The going concern basis assumes
that the Group will continue in operation for the foreseeable future and will be able to realise its assets and
discharge its liabilities and commitments in the normal course of business.
The Group has incurred operating losses from continuing operations amounting to $1.871 million (2018: $2.845
million) and negative cash flows from operations amounting to $0.404 million for the year ended 31 December
2019 (2018: $1.558 million) as the Group continued to maintain RHA in care and maintenance, attempted to
advance Zulu through the proposed EPO and external partners joint venture processes described above in this
report and explored new opportunities to diversify and mitigate general risks associated with its Zimbabwe based
projects.
As at 31 December 2019, current liabilities exceeded current assets by $2.096 million (2018: $3.423 million). The
Group raised $1.984 million (2018: $1.715 million) in net funding through share subscriptions to fund holding costs
at RHA inclusive of substantial additional debt incurred through RHA operations during the latter part of 2017,
general group maintenance and preservation of assets and to investigate and assess potential diversification,
through potential investments in cash generating assets, as discussed above.
The Directors have prepared cash flow forecasts for the period ending 31 December 2021, on the basis of the
following considerations.
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RHA
The Company has not funded any of the activities at RHA since 1 July 2019.
•
• RHA concluded an agreement with NIEEF on 30 April 2019 in terms of which NIEEF undertook to provide
$6 million funding to offset local costs and to bring RHA back into production. The amount received was
RTGS $6 million, which, on conversion, amounted to less than the agreed upon amount.
• RHA has not been included in the cash flow forecasts for the above reasons.
Zulu
•
•
The Company will seek to secure the EPO for Zulu and thereafter fund development of Zulu on the basis
of a “farm-in” or joint venture agreement with prospective partners.
The Company will only maintain the tenements and will not provide any further funding.
MNH
•
The Group is anticipating deriving a return on its current investment in MNH in the latter portion of
2020 and into 2021.
The Group
•
•
•
The cash flow is dependent on additional capital being raised and any cash flows derived from its
investment in the trading company. There remains an active and liquid market for the Company’s shares
and the Company has historically been able to raise funding through equity placements and the Board
believes that it will continue to be able secure the funds required for ongoing working capital needs going
forward.
The Company will seek to diversify its operations and risk profile and limit the funds that need to be raised
through equity placements to provide necessary funding for the Company’s significantly reduced fixed
overhead.
Subsequent to the year end, as disclosed in note 32, the Company purchased an investment in Lithium
Consolidated Limited (“Li3”) and is anticipating deriving revenues from that investment during 2021.
In the event that the Company is unable to obtain additional equity finance for the Group’s working capital, a
material uncertainty exists which may cast significant doubt on the ability of the Group to continue as a going
concern and therefore be unable to realise its assets and settle its liabilities in the normal course of business.
The CEO has agreed to defer any repayment of his loan account until such time as the company has the cash to
repay that loan. Additionally, he has agreed to provide temporary working capital funding should it be required.
6.
Operating segments
The group has the following three reportable segments that are managed separately due to the different
jurisdictions.
Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis.
Reportable segments
RHA and RHA Mauritius
Zulu and Zulu Mauritius
Head office
Operations
Development and mining of Wolframite
Development of Lithium and Tantalite
General administration and control
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
By operating segment
2019
Result
Revenue
Operating loss / (income)
Other income
Fair value movement on investment
Impairment of RHA
Finance charges
Impairment of Zulu
Loss before taxation
Assets
Exploration and evaluation assets
Investments
Inventories
Trade and other receivables
Cash
Total assets
Liabilities
Other financial liabilities
Borrowings
Bank overdraft
Trade and other payables
Provisions
Total liabilities
Net assets
Other information
Depreciation and amortisation
Property plant and equipment additions
Costs capitalised to intangible assets
RHA
Tungsten
Mine
Zimbabwe
and RHA
Mauritius*
Exploration
Zulu Lithium
Zimbabwe
and Zulu
Mauritius
Total
continued
operations
Unallocated
Corporate
$ 000
$ 000
$ 000
$ 000
-
1 293
(612)
-
-
34
-
715
-
7 444
-
16
19
7 479
-
(715)
-
(1 085)
-
(1 800)
5 679
-
-
-
-
526
(673)
-
483
106
-
442
-
-
2
2
20
24
(35)
-
-
(318)
(388)
(741)
(717)
-
483
-
-
52
-
-
-
-
-
52
-
-
-
-
1
1
-
-
-
(3)
-
(3)
(2)
-
-
272
-
1 871
(1 285)
-
483
140
-
1 209
-
7 444
2
18
40
7 504
(35)
(715)
-
(1 406)
(388)
(2 544)
4 960
-
483
272
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
By operating segment
2018
Result
Revenue
Operating loss
Other income
Fair value movement on investment
Impairment of RHA
Finance charges
Impairment of Zulu
Loss before taxation
Assets
Exploration and evaluation assets
Investments
Inventories
Trade and other receivables
Cash
Total assets
Liabilities
Other financial liabilities
Borrowings
Bank overdraft
Trade and other payables
Provisions
Total liabilities
Net assets
Other information
Depreciation and amortisation
Property plant and equipment additions
Costs capitalised to intangible assets
RHA
Tungsten
Mine
Zimbabwe
and RHA
Mauritius*
$ 000
Exploration
Zulu
Lithium
Zimbabwe
and Zulu
Mauritius
$ 000
Total
continued
operations
$ 000
Unallocated
Corporate
$ 000
-
1 791
-
(47)
-
7
-
(168)
1 053
-
-
244
146
-
1 751
1 443
-
6 263
-
15
2
6 280
-
(213)
-
(1 313)
-
(1 526)
4 754
-
-
-
-
-
26
38
11
75
(94)
-
(288)
(1 645)
(983)
(3 009)
(2 934)
-
196
-
-
-
-
-
-
-
4 563
4 563
-
-
-
-
2
2
-
-
-
-
-
-
2
-
-
272
(168)
2 844
-
(47)
244
153
4 563
7 757
-
6 263
26
53
16
6 358
(94)
(213)
(288)
(2 957)
(983)
(4 535)
1 823
-
196
272
*Represents 100% of the results and financial position of RHA Tungsten (Private) Limited (“RHA”) whereas the
Group owns 49%. Non-controlling interests are disclosed in note 20.
RHA Revenue is generated from sales to Noble Minerals, in line with RHA’s off-take agreement.
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.
Hyper-inflationary accounting
In terms of IAS29, Hyperinflation is indicated by characteristics of the economic environment of a country which
include, but are not limited to, the following:
a)
b)
c)
d)
e)
the general population prefers to keep its wealth in non‑monetary assets or in a relatively stable foreign
currency. Amounts of local currency held are immediately invested to maintain purchasing power;
the general population regards monetary amounts not in terms of the local currency but in terms of a
relatively stable foreign currency. Prices may be quoted in that currency;
sales and purchases on credit take place at prices that compensate for the expected loss of purchasing
power during the credit period, even if the period is short;
interest rates, wages and prices are linked to a price index; and
the cumulative inflation rate over three years is approaching, or exceeds, 100%.
As stated in the 2018 annual financial statements, with effect of the 21st of February 2019 Zimbabwe implemented
the Real Time Gross Settlement of US Dollars (“RTGS”) at an official exchange rate of 1:1. At that time the official
inflation
to
RTGS 17 2322 : US$1 whilst the official inflation rate has moved to 521.2% on a year on year basis. The table below
details the exchange rates and inflation rates, as published by https://tradingeconomics.com/zimbabwe/inflation-
cpi, on a monthly basis for the year ended 31 December 2019.
rate has moved
the official
rate was
exchange
0%. At
year
end
the
Month ending
Inflation rate
Exchange Rate
RTGS : US$
January 2019
February 2019
March 2019
April 2019
May 2019
June 2019
July 2019
August 2019
September 2019
October 2019
November 2019
December 2019
0.00%
0.00%
0.00%
75.86%
97.85%
175.66%
230.54%
288.50%
353.00%
440.10%
480.70%
521.20%
1.0000
1.0000
3.0120
3.2614
5.2635
6.6220
9.1856
10.7139
15.1979
16.1152
16.7012
17.2322
Two of the group’s subsidiaries, namely RHA Tungsten and Zulu Lithium, operate in Zimbabwe.
In accordance with IAS29 the group has implemented the Historical Cost approach in restating the subsidiary
accounts as at the 31 December 2019. Due to the timing of the implementation of RTGS, no restatement of the
2018 financial statements is required.
The financial statements reflect the reduction in the purchasing power of RTGS which have been remeasured, in
terms of IAS 29, as at 31 December 2019.
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8.
Intangible assets and goodwill
Exploration and evaluations assets
Total intangible assets
Opening carrying value 2018
Expenditure on Exploration and evaluation
Impairment of Exploration and evaluation assets
Closing carrying value 2018
Expenditure on Exploration and evaluation
Impairment of Exploration and evaluation assets
Closing carrying value 2019
2019
$ 000
-
-
Exploration
& Evaluation
assets
$ 000
4 291
272
(4 563)
-
-
-
-
2018
$ 000
-
-
Total
$ 000
4 291
272
(4 563)
-
-
-
-
The impairment loss amounted to $nil (2018 $4.563 million) Exploration and evaluation assets at 31
December 2019 comprise of Zulu located in Zimbabwe. In the prior year the exploration and evaluation
assets comprised the Zulu and the limestone licence in Mozambique.
Zulu Lithium and Tantalite Project
During the year nil (2018: $0.272 million) exploration costs were incurred and capitalised to Zulu. Exploration work
conducted during the year indicated that both lithium and tantalum recovery may be a viable option. The Group
views this project as strategic and exploration work will be continued in the future, cash flow permitting.
The drop in the price of Spodumene to $400/t coupled with the political uncertainty and resulting country risk
included in the discount rate applied to Zimbabwe has resulted in the directors deciding to impair Zulu in full for
the year ended 31 December 2018. The impairment amounted to $nil million (2018 - $4.291 million).
Key assumptions applied in calculating the discounted cash flow analysis included:
Targeted annual production of spodumene concentrate
Targeted annual production of petalite concentrate
Price of spodumene concentrate
Price of petalite concentrate
•
•
•
•
• Discount rate
• Operating costs per combined tonnage of concentrate
•
• Average strip ratio of
Estimated 15 year life of mine
84 000 tonnes
32 500 tonnes
$800/t
$400/t
10%
$486/t
5.5:1
The EPO as discussed above as at the reporting date has not been granted, accordingly the above assumptions did
not warrant reassessment.
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9.
Investments
Opening carrying value 2018
Shares acquired
Fair value adjustment
Shares disposed (9)(10)(11)(12)(13)
Closing carrying value 2018
Shares acquired
Fair value adjustment
Closing carrying value 2019
Reconciliation of movements in investments
Investment in Circum Minerals Limited –
15 May 2014 (1)
Fair value adjustment - February 2015(2)
Fair value adjustment – June 2015(3)
Investment in Casa Mining Limited(4)
Acquisition at fair value (5)
Acquisition at fair value 2017(6)
Issue of Premier shares (6)
Fair value adjustment – 31 December
2017(7)(8)
Opening carrying value 2018
Fair value adjustment – 31 December
2018(8)
Sale of shares (9)(10)(11)(12)(13)
Opening carrying value 2019
Acquisition at fair value 2019(14)
Circum
Minerals
Manganese
Namibian
Holdings
Arc Minerals *
Mining
Total
$ 000
6 263
-
-
-
6 263
-
-
6 263
1 400
1 100
1 500
-
-
2 936
1 216
(1 889)
6 263
-
-
6 263
-
6 263
$ 000
-
-
-
-
-
1 181
-
1 181
-
-
-
-
-
-
-
-
-
-
-
-
1 181
1 181
$ 000
196
-
47
(243)
-
-
-
-
-
-
-
250
50
-
-
(104)
196
47
(243)
-
-
-
$ 000
6 459
-
47
(243)
6 263
1 181
-
7 444
1 400
1 100
1 500
250
50
2 936
1 216
(1 993)
6 459
47
(243)
6 263
1 181
7 444
Arc Minerals (formerly known as Ortac Resources Limited) was designated on 1 January 2018 as FVTPL.
Circum Minerals was designated on 1 January 2018 as FVOCI.
(1) Represents 2 million shares in unlisted entity Circum Minerals Limited (‘Circum’).
(2) As Circum is unlisted there are no quoted market prices. Fair value of the shares was therefore estimated using
the price at which warrants in Circum shares were exercised by a third party in February 2015 at $1.25 per share.
(3) Fair value of the shares was adjusted to the most recent placing price of $2 per share during August 2015.
(4) Represents a 4.5% interest in Casa acquired in October 2016.
(5) Represents a 0.5% interest in Casa acquired in 2017.
(6) Represents a further 3 010 333 shares in Circum Minerals Limited settled by the issue of Premier’s shares at
$1,50 per share being a premium to the prevailing market price to compensate for potential market fluctuations
in the price of the company’s shares.
(7) As Circum is unlisted there are no quoted market prices. Fair value of the shares was therefore estimated using
the latest price at which the Company acquired shares during 2017 (at $1.25 per share).
(8) The fair value of the Casa Mining Limited shares were derived from the swop values of shares acquired
(9) Sale of Arc Minerals Shares 2 500 000 @ 0.0315 GBP
(10) Sale of Arc Minerals Shares 500 000 @ 0.03225 GBP
(11) Sale of Arc Minerals Shares 651 456 @ 0.0285 GBP
(12) Sale of Arc Minerals Shares 2 200 000 @ 0.03025 GBP
(13) Sale of Arc Minerals Shares 277 366 @ 0.0301 GBP
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(14) Represents a purchase of 11% interest in MNH.
The shares are considered to be level 3 financial assets under the IFRS 13 categorisation of fair value
measurements.
Premier continues to hold 5 010 333 shares in Circum currently valued in total at $6.263 million. Circum has
published a general update to shareholders in June 2019 and the major shareholders and directors are now fully
coordinated in their intention to generate a liquidity event for shareholders.
The fair value of these investments at 31 December 2019 amounted to $7.444 million (2018: $6.263 million).
Premier’s investment in Circum is classified as FVOCI and as such is required to be measured at fair value at each
reporting date. As Circum is unlisted there are no quoted market prices. The fair value of the Circum shares was
derived using the previous issue price and validating it against the most recent placing price on 30 April 2019.
Premier’s investment in MNH is classified as FVOCI and as such is required to be measured at fair value at each
reporting date. As MNH is unlisted there are no quoted market prices. The fair value of the MNH shares was based
on the latest transactions and supported by an external evaluation conducted by Bara Consulting.
Sensitivity analysis
The investments are subject to changes in market prices. A 10% reduction in market prices would result in a $0.744
million (2018: $0.625 million) charge to Other Comprehensive Income, and nil (2018: $nil) in profit and loss.
10.
Property, plant and equipment
Mine
Development
$ 000
Plant and
Equipment
$ 000
Land and
Buildings
$ 000
Cost
At 1 January 2018
Additions
Disposals
At 31 December 2018
Exchange differences (1)
Transfer from Capital Work in Progress
Additions
Disposals
At 31 December 2019
Accumulated Depreciation and Impairment Losses
At 1 January 2018
Impairment of RHA
At 31 December 2018
Exchange differences (1)
Charge for the year
Impairment of RHA
Net Book Value
At 31 December 2018
At 31 December 2019
Refer to note 7 Hyperinflationary Accounting.
8 408
1
-
8 409
(4 986)
62
31
-
3 516
8 408
1
8 409
(4 986)
-
93
3 516
-
-
4 115
195
-
4 310
(967)
(62)
452
-
3 733
4 115
195
4 310
(967)
-
390
3 733
-
-
852
-
-
852
(547)
-
-
-
305
852
-
852
(547)
-
-
305
-
-
Total
$ 000
13 375
196
-
13 571
(6 500)
-
483
-
7 554
13 375
196
13 571
(6 500)
-
483
7 554
-
-
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The impairment assessment is detailed in note 4.5, Significant accounting judgements, estimates and assumptions.
Refer note 14, Other financial liabilities for capitalised lease assets.
11.
Inventories
Mine consumables
12.
Trade and other receivables
Indirect tax receivable
Other receivables
Prepayments
Current
Non-current
2019
$ 000
2
2
2019
$ 000
2
-
16
18
18
-
18
2018
$ 000
26
26
2018
$ 000
21
7
25
53
53
-
53
The receivables are considered to be held within a held-to-collect business model consistent with the Group’s
continuing recognition of the receivables.
As at 31 December 2019 the Group does not have any contract assets nor any contract liabilities arising out of
contracts with customers relating to the Group’s right to receive consideration for work completed but not billed.
Credit and market risks, and impairment losses
The Group did not impair any of its trade receivables as at 31 December 2019, as all trade receivables generated
during the financial year were settled in full prior to the year-end.
Information about the Group’s exposure to credit and market risks and impairment losses for trade receivables is
included in Note 29.
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
13.
Cash and cash equivalents
Bank balances
Bank overdrafts
Cash and cash equivalents per the statement of cash flows
2019
$ 000
40
-
40
2018
$ 000
16
(288)
(272)
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The bank overdraft facility of RHA amounting to $nil (2018: $0.300 million) held with Nedbank Zimbabwe was not
renewed in the 2019 year.
14.
Finance lease liabilities
Finance lease
During 2015, the Group entered into a finance lease with Board Market Trading 258 (Pty) Ltd for the purchase of
two generators with a net book value of $0.124 million to be used at RHA. The finance lease is for a term of 48
months with interest charged at 19.5% per annum with monthly repayments of $0.006 million beginning from 1
August 2016. Depreciation of leased assets amounted to nil (2018: $nil) due to the assets being fully impaired in a
prior period.
The agreement is classified as a finance lease as the rental period equal the estimated useful life of the assets
concerned and the Group has the right to purchase the assets outright at the end of the minimum lease term by
paying a nominal amount.
In terms of IFRS 16 Leases, short term lease agreements which are less than one month or with total present value
of lease payments not exceeding $0.005 million are excluded from capitalisation.
Future lease payments are due as follows:
2019
Not later than one year
Between one year and five years
2018
Not later than one year
Between one year and five years
Reconciliation
Minimum
lease
payments
$ 000
36
-
36
Minimum
lease
payments
$ 000
72
36
108
Present
value of
minimum
lease
payments
$ 000
35
-
35
Present
value of
minimum
lease
payments
$ 000
60
34
94
Interest
$ 000
1
-
1
Interest
$ 000
12
2
14
Minimum
lease
payments
Present value
of minimum
lease
payments
Interest
Balance as at 31 December 2017
Payments made during the year
Balance as at 31 December 2018
Payments made during the year
Balance as at 31 December 2019
185
77
108
72
36
30
16
14
13
1
155
61
94
59
35
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Finance lease liability
Other financial liabilities
Current
Non-current
Non-Capitalised lease payments during the year
Short term non-capitalised lease payments
15.
Provisions – rehabilitation
As at 1 January
Foreign Exchange variation on translation
Unwinding of discount
As at 31 December
2019
$ 000
35
35
35
-
35
2018
$ 000
94
94
60
34
94
94
94
2019
$ 000
983
(684)
89
388
2018
$ 000
917
-
66
983
A provision is recognised for site rehabilitation and decommissioning of current mining activities based on current
environmental and regulatory requirements. The gross provision was based upon an environmental impact
assessment (“EIA”) conducted and calculated in 2014 and discounted to a net present value using a discount rate
of 10% over a life of mine of 8 years. The corresponding rehabilitation assets was capitalised to property, plant
and equipment and is depreciated over the life of the mine. The initial provision for rehabilitation was performed
in the then functional currency of USD. With the implementation of RTGS this provision was restated in terms of
note 7 on Hyperinflationary accounting. With RHA currently under care and maintenance the directors reassessed
the final provision based upon actual volumes extracted versus projected volumes. This reassessment will be done
annually taking into consideration the remaining volume of ore to be extracted, the current level of mining that
has already been conducted and the estimated costs involved in rehabilitating the land.
16.
Trade and other payables
Trade payables *
Accrued expenses
Payroll liabilities
2019
$ 000
1 065
303
38
1 406
2018
$ 000
1 188
1 211
558
2 957
All trade and other payables at 31 December 2019 are due within one year, non-interest bearing, and comprise
amounts outstanding for mine purchases and on-going costs, except as described further below. The Directors
consider that the carrying amount of trade and other payables approximates their fair value.
* On 11 March 2019, amounts owing to JRG Consulting amounted to $0.190 million and ZAR 0.245 million
(exchange rate of 0.0694 amounts to $0.017 million). Interest is charged at 12% per annum, compounded
monthly. Repayments are agreed at $0.055 million per month. At year-end $nil (2018: $0.207) was outstanding
in terms of the Memorandum of Agreement.
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
* In April 2018 Brendan Roach loaned the company GBP 0.084 million. In the current year this loan was converted
to an interest bearing loan.
* At 31 December 2019 there was an amount outstanding of $0.398 relating to consulting fees. In August 2020
most of these fees were settled through shares.
17.
Borrowings
Loan G. Roach – see related party transactions
Loan B. Roach – see related party transactions
Loan Regent Mercantile
Reconciliation of movement in borrowings
As at 1 January
Loans received (3) (4)
Loans repaid through conversion to equity (1) (2)
Repayment
Implementation fee
Accrued interest
As at 31 December
Current
Non-current
2019
$ 000
219
128
368
715
213
468
-
-
-
34
715
715
-
715
2018
$ 000
213
-
-
213
216
300
(300)
(25)
15
7
213
213
-
213
Borrowings comprise loans from a related party and a non-related party. Loans from a related party are further
disclosed in Note 31, Related Party Transactions.
On 15 September 2015, George Roach provided a $0.300 million loan direct to Premier for the use at RHA.
(1)
The loan is unsecured and accrues interest at a rate of 3% per annum. As at 28 March 2017, the loan and accrued
interest totalled $ 0.309 million. On 28 March 2017 the Company announced that it had amended the terms of
the existing Loan Agreement ("Loan") with George Roach through the grant of conversion rights. The Board
granted conversion rights in respect of the Loan, which can now be converted into new ordinary shares at a price
of 0.5p per new ordinary share. On 15 December 2017 the company announced that George Roach had elected
to convert $0.100 million of the $0.300 million he provided to the Company. The outstanding loan balance of
$0.219 million continues to accrue interest at 3% (2018: $0.213 million).
On 5 June 2018 the Company entered into a loan with a company owned by a Trust of which George Roach
(2)
is a beneficiary, for a gross value of $0.300 million to assist with its cash flow requirements. The Loan carries an
implementation fee of US$0.015 million (5%) and a redemption fee of US$0.015 million (5%). On 9 November
2018, the Company converted the George Roach loan by issuing 142 045 455 shares at an issue price of 0.16p per
share for a total value of $0.300 million.
On 21 June 2019 the company reported that it has issued a convertible loan note for US$0.350 million with
(3)
Regent Mercantile Holdings Limited. The annual interest rate payable on the outstanding loan will be 10% per
annum. The principal amount of US$0.350 million will be made available to the Company in one advance with no
deductions. No warrants have been issued to Regent under the Convertible loan note.
The principal amount (plus any accrued interest) under the Loan Agreement is repayable in two equal payments
on 1 August 2019 and 1 September 2019. Failing direct repayment of the loan by Premier, Regent at its sole
discretion may convert any percentage of a repayment within applicable share authorities into new Premier shares
at a conversion price equal to 90 per cent of the daily volume weighted average price ("VWAP") during the five
days trading days immediately prior to the relevant repayment date.
The Loan Agreement is subject to normal events of default and the Company has provided a number of standard
warranties and undertakings to Regent in respect of the Group. The Loan Agreement is secured over 350 000
shares of Circum Minerals Limited held by Premier.
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During 2018 Brendan Roach converted his current accounts payable liability to a loan. The value of the
(4)
loan converted amounted to GBP 0.084 million (USD $0.118 million). The loan accrues interest from the 1st of
January 2019 at 8% and is repayable on demand. The outstanding loan balance of $0.128 million continues to
accrue interest.
18.
Share capital
Authorised share capital
11.26 billion (2018: 9 billion) ordinary shares of no par value.
Issued share capital
As at 1 January 2018
Shares issued on warrant exercise (1)
Shares issued under subscription agreement (2)
Shares issued on conversion of loan (3)
Number of
Shares
‘000
6 574 967
250 000
416 667
142 045
Value
$ 000
46 960
563
975
300
As at 31 December 2018
7 383 679
48 798
Shares issued under subscription agreement (4)
Shares issued on conversion for fees (5)
Shares issued on conversion of loan (6)
Shares issued on conversion of loan (7)
Shares issued under subscription agreement (8)
Shares issued under subscription agreement (9)
As at 31 December 2019
Less cumulative share costs
Net share capital as at 31 December 2019
444 444
161 986
1 009 890
753 779
1 250 000
262 293
525
185
569
306
310
342
11 266 071
51 035
(2 993)
48 042
(1) On 16 March 2018, the Company issued 250 000 000 shares to Darwin Strategic Limited on conversion of warrants at an issue price of
0.16p per share.
(2) On 14 August 2018, the Company issued 416 666 667 shares under a subscription agreement at a price of 0.18p per share.
(3) On 09 November 2018, the Company issued 142 045 455 shares at an issue price of 0.16p per share for a total value of $0.300 million
to George Roach for conversion of his loan.
(4) On the 07 March 2019, the Company issued 444 444 444 shares under a subscription agreement at a price of 0.9p per share.
(5) On the 29 May 2019, the company issued 161 985 963 shares for a total value of $ 0.185 million for conversion of fees.
(6) On 07 July 2019, the Company issued 1 009 889 850 shares at an issue price of 0.45p per share for a total value of $0.569 million for
conversion of loan.
(7) On 28 August 2019, the Company issued 753 778 580 shares at an issue price of 0.45p per share for a total value of $0.306 million for
conversion of loan.
(8) On the 03 October 2019, the Company issued 1 250 000 000 shares under a subscription agreement for a total value of $0.310 million
(9) On the 19 December 2019, the Company issued 262 293 000 shares under a subscription agreement at a price of 0,01p for a total
value of $0.343 million
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation to balance as stated in the consolidated statement of financial position
As at 1 January
Shares issued under subscription agreements – cash flow
Shares issued to settle trade payables
Shares issued on conversion of loans and loan notes (note 17) - non-
cash
Shares issued on exercise of warrants – cash flow
Shares issued to purchase Investment in MNH
Share issue costs – cash flow
As at 31 December
19.
Share based payment and warrant reserve
Share options and warrants reserve beginning of year
Warrants granted
Share options
Warrants cancelled
Share options and warrants reserve end of year
Share options and warrant arrangements are set out below.
Equity-settled Share base payment arrangement
2019
$ 000
45 873
1 177
185
-
-
875
(68)
48 042
2019
$ 000
2 366
-
-
-
2 366
2018
$ 000
44 158
975
-
300
563
-
(123)
45 873
2018
$ 000
2 393
-
177
(204)
2 366
The Company adopted an incentive share option plan (the ‘Plan’) during 2012. The essential elements of the Plan
provide that the aggregate number of common shares of the Company’s capital stock issuable pursuant to options
granted under the Plan may not exceed 15% of the issued and outstanding Ordinary Shares at the time of any
grant of options. Options granted under the Plan will have a maximum term of 10 years. All options granted to
Directors and management are subject to vesting provisions of one to two years.
All options are to be settled by the physical delivery of shares.
The fair value of all the share options has been measured using the Black-Scholes Model.
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price,
particularly over the historical period commensurate with the expected term. The expected term of the
instruments has been based on historical experience and general option holder behaviour
The Company has granted the following share options during the years up to 31 December 2019:
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Issued to
Date Granted
Vesting
Term
Employees and
consultants
Directors
Directors
Employees and
associates
Directors
Directors
Management
Management
Directors
Directors
Management
Management
Directors
Consultants
Directors
Consultants
Totals options issued
10/02/2011
1 year
04/12/2012 See 1 below
04/12/2012 See 2 below
See 3 below
04/12/2012
29/07/2014 See 4 below
29/07/2014 See 5 below
29/07/2014 See 4 below
29/07/2014 See 5 below
13/03/2015 See 4 below
13/03/2015 See 5 below
13/03/2015 See 4 below
13/03/2015 See 5 below
19/01/2017 See 5 below
19/01/2017 See 5 below
19/01/2017 See 5 below
19/01/2017 See 5 below
Issued to:
- Directors
-
- Management
Employees and consultants
Total options issued
Less:
- Options exercised in prior years
- Options cancelled in prior years
Total options in issue at 31 December 2019
Number of
Options Granted
‘000
2 250
Exercise
Price
Expiry Date
Estimated
Fair Value
1.135p
09/02/2014
0.87p
Nil
2p
03/12/2022
03/12/2022
Nil
1.15p
1.50p
1.15p
1.50p
0.9p
1.17p
0.9p
1.17p
0.28p
0.28p
0.40p
0.40p
03/12/2022
28/07/2024
28/07/2024
28/07/2024
28/07/2024
12/03/2025
12/03/2025
12/03/2025
12/03/2025
18/01/2027
18/01/2027
18/01/2027
18/01/2027
1.11p
1.85p
1.85p
1.15p
1.15p
1.15p
1.15p
0.67p
0.64p
0.67p
0.64p
0.278p
0.278p
0.28p
0. 28p
20 386
20 386
5 536
6 000
6 000
6 500
6 500
2 000
2 000
3 250
3 250
30 500
50 439
30 500
50 439
245 936
111 772
114 664
19 500
245 936
27 257
18 330
200 349
1. These share options vest on the two-year anniversary of the grant date. The options are exercisable at any
time after vesting during the grantee’s period as an eligible option holder, and must be exercised no later than
10 years after the date of grant, after which the options will lapse.
2. These share options vest in equal instalments annually on the anniversary of the grant date over a two year
period. The options are exercisable at any time after vesting during the grantee’s period as an eligible option
holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
3. These share options vested on the grant date. The options are exercisable at any time after vesting during the
grantee’s period as an eligible option holder, and must be exercised no later than 10 years after the date of
grant, after which the options will lapse.
4. These share options vest on the one-year anniversary of the grant date. The options are exercisable at any
time after vesting during the grantee’s period as an eligible option holder, and must be exercised no later than
10 years after the date of grant, after which the options will lapse.
5. These share options vest on the two-year anniversary of the grant date. The options are exercisable at any
time after vesting during the grantee’s period as an eligible option holder, and must be exercised no later than
10 years after the date of grant, after which the options will lapse.
No share options were granted during the year ended 31 December 2019 (2018 – none issued).
The fair value of the options granted during the year ended 31 December 2019 was $nil (2018: $nil). The assessed
fair value of options granted to directors and management was determined using the Black-Scholes Model that
takes into account the exercise price, the term of the option, the share price at grant date, the expected price
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
volatility of the underlying share, the expected dividend yield and the risk-free rate interest rate for the term of
the option.
In issue prior
to 1 January
2019
Exercised
during the
year
Cancelled /
lapsed during
the year
Granted
during the
year
In issue as at
31 December
2019
Directors:
- G. Roach
- G. Manhambara
- N. Herbert
- W. Hampel
- M. Foster (resigned)
- Resigned directors
Other option holders
21 517
-
4 000
8 000
18 000
40 941
107 891
200 349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group has the following share options outstanding:
Grant Date
Expiry Date
Exercise Price Number of options
outstanding
‘000
04/12/2012
04/12/2012
29/07/2014
29/07/2014
13/03/2015
13/03/2015
19/01/2017
19/01/2017
03/12/2022
03/12/2022
28/07/2024
28/07/2024
12/03/2025
12/03/2025
18/01/2027
18/01/2027
Nil
2p
1.15p
1.50p
0.9p
1.17p
0.28p
0.40p
2 013
12 458
3 000
10 500
5 250
5 250
80 939
80 939
200 349
-
-
-
-
-
-
-
-
21 517
-
4 000
8 000
18 000
40 941
107 891
200 349
Number of options
vested and
exercisable
‘000
2 013
12 458
3 000
10 500
5 250
5 250
80 939
80 939
200 349
The following table lists the inputs into the valuation model.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Share price at grant date
19 Jan
2017
Issue
-
236.0
1.43
0.28p
19 Jan
2017
Issue
-
236.0
1.43
0.28p
13 Mar
2015
Issue
-
100.0
1.71
0.9p
13 Mar
2015
Issue
-
100.0
1.71
0.9p
29 Jul
2014
Issue
-
148.0
1.71
1.15p
29 Jul
2014
Issue
-
148.0
1.71
1.15p
Exercise price
0.28p
0.40p
0.9p
1.17p
1.15p
1.5p
4 Dec
2012
Issue
-
75.0
1.81
1.85p
2p and
nil
The shares that the options are based on are quoted in GBP and so the option agreement is stated in GBP. As such
they are presented in GBP despite the presentational currency of the Group being USD.
The number and weighted-average exercise prices of share options under the share option programmes and
replacement awards were as follows:
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Options outstanding, beginning of year
Granted
Options outstanding, end of year
2019
Weighted
Average
Exercise Price
0.55p
-
0.55p
Shares
‘000
200 349
-
200 349
2018
Weighted
Average
Exercise Price
0.55p
-
0.55p
Shares
‘000
200 349
-
200 349
The weighted-average life of the options in issue as at 31 December 2019 is 5 years and 27 days (2018 – 6 years
and 27 days.)
Warrants
The Company did not grant warrant options during the year (2018: nil)
A summary of the status of the Company’s share warrants as of 31 December 2019 and changes during the year
are as follows:
Warrants outstanding, beginning of year
Granted
Expired
Exercised
Cancelled *
Warrants outstanding, end of year
2019
‘000
23 000
-
(23 000)
-
-
-
2018
‘000
234 704
-
-
(6 350)
(205 354)
23 000
During the year ending 31 December 2019 23 million warrants granted to an advisor expired. A payment of $0.204
million was made during 2018 for the cancellation of the warrants above.
There are no warrants outstand in favour of the Directors.
Premier’s share price opened at 0.1060p in January 2019, traded at an average of 0.1030p, with a high of 0.1970
and low of 0.0220p during the year and closed at 0.0850p on 31 December 2019.
20.
Non-controlling interest
At 1 January
Effect of change in the functional currency of subsidiaries
Non-controlling interest in share of profit / (losses) for the year - RHA
Non-controlling interest in share of other comprehensive income for the
period
At 31 December
2019
$ 000
(12 704)
11 971
18
(10 793)
2018
$ 000
(11 755)
-
(949)
-
(11 508)
(12 704)
The following table summarises the information relating to each of the Group’s subsidiaries that has material Non-
controlling interest, before any intra-group eliminations.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Non-controlling Interest percentage
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Net assets attributed to Non-controlling Interest
Revenue
Profit / (Loss)
Other Comprehensive Income /(Loss)
Total comprehensive income
Loss allocated to NCI
2019
RHA
51%
-
24
(18 346)
(4 241)
(22 563)
2018
RHA
51%
-
75
(19 791)
(5 094)
(24 810)
(11 508)
(12 704)
-
36
(21 126)
(21 126)
(10 775)
168
(1 860)
-
(1 860)
(949)
The share of losses in the year represents the losses attributable to non-controlling interests in RHA for the year
(2018 – RHA for the year).
21.
Revenue
Major product/service lines
Sale of Wolframite
Sale of scrap
Reserve Bank of Zimbabwe Export Incentive
Total revenue
NIEEF refund of expenses
Prescription of debts
Total other income
Gross revenue
Primary Geographical Markets
Africa
22.
Cost of sales excluding depreciation and amortisation
Mining contractor
Staff costs
Consumables
Equipment hire and maintenance
Mining services
Plant services
Selling costs
Net realisable value adjustment of cost of inventory sold
Inventory write-down / (write-up)
RHA mine is under care and maintenance and accordingly there are no cost of sales.
2019
$ 000
-
-
-
-
404
881
1 285
1 285
1 285
1 285
2018
$ 000
155
1
12
168
-
-
-
336
336
336
2019
$ 000
2018
$ 000
-
-
-
-
-
-
-
-
-
-
24
66
17
57
3
2
2
8
-
179
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23.
Administrative expenses
Staff costs
Consulting and advisory fees
Directors’ fees
Audit, accounting and legal fees
Marketing and public relations
Travel
Costs incurred to cease operations
Security costs
Vehicle operating costs
Insurance
Office and administration
Short term non-capitalised lease payments (note 14)
Foreign exchange losses
Share based payment (note 20)
24.
Finance charges
Interest charged by suppliers
Interest on borrowings
Derivative financial liability transaction costs
Unwinding of discount on provisions
Loss on extinguishment of debt
Interest on finance lease
25.
Taxation
Deferred tax
As at 1 January
As at 31 December
Income Tax
Taxation charge for the year
2019
$ 000
94
1 061
61
274
7
174
-
10
(4)
38
61
94
1
-
1 871
2018
$ 000
222
1 107
97
303
64
268
174
24
64
43
200
94
(3)
177
2 834
2019
$ 000
2018
$ 000
-
39
-
89
-
12
140
6
52
-
88
-
7
153
2019
$ 000
2018
$ 000
-
-
-
-
-
-
There is no taxation charge for the year ended 31 December 2019 (2018: Nil) because the Group is registered in
the British Virgin Islands where no corporate taxes or capital gains tax are charged. However, the Group may be
liable for taxes in the jurisdictions of the underlying operations.
The Group has incurred tax losses in West Africa and Zimbabwe; however a deferred tax asset has not been
recognised in the accounts due to the unpredictability of future profit streams. The accumulative tax losses not
recognised at RHA amount to $16.126 million (2018: $15.684 million).
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of effective tax rate
2019
Loss before tax from continuing operations
Tax using the Zimbabwean company tax rate
Tax effect of:
Effects of tax rates in foreign jurisdictions
(1 209)
25%
(25%)
0%
Contingent liability
2019
$ 000
-
302
(302)
-
2018
(7 758)
25%
(25%)
0%
2018
$ 000
-
1 940
(1 940)
-
The Group operates across different geographical regions and is required to comply with tax legislation in various
jurisdictions. The determination of the Group’s tax is based on interpretations applied in terms of the respective
tax legislations and may be subject to periodic challenges by tax authorities which may give rise to tax exposures.
26.
Loss per share
The calculation of loss per share is based on the loss after taxation attributable to shareholders, divided by the
weighted average number of shares in issue during the year:
2019
2018
Net loss attributable to owners of the company ($ 000)
(1 227)
(6 809)
Weighted average number of Ordinary Shares in calculating basic earnings
per share (‘000)
8 902 140
6 954 725
Basic loss per share (US cents)
Diluted loss per share (US cents)
Weighted average number of ordinary shares
Issued ordinary shares at 1 January ('000)
Weighted average of shares issued during the year ('000)
Weighted average number of ordinary shares at 31 December ('000)
(0.01)
(0.01)
(0.1)
(0.1)
7 383 679
1 518 461
8 902 140
6 574 967
379 758
6 954 725
As the Group incurred a loss for the year, there is no dilutive effect from share options and warrants in issue or
the shares issued after the reporting date.
Potential dilutive effect on earnings per share
Options issued
Warrants issued
Convertible loan notes
Total potentially dilutive shares
2019
$ 000
2018
$ 000
200 349
-
587 000
787 349
200 349
23 000
-
223 349
Refer to note 32 Post balance sheet events for additional potentially dilutive transactions.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27.
Directors’ remuneration
2019
Executive Directors
George Roach
Non-Executive Directors
Michael Foster (*)
Godfrey Manhambara
Wolfgang Hampel
Neil Herbert (*)
2018
Executive Directors
George Roach
Non-Executive Directors
John (Ian) Stalker (*)
Michael Foster
Russel Swarts (*)
Directors’
fees
$ 000
Consultancy
Fees
$ 000
Share
Options
$ 000
Total
$ 000
-
22
25
-
-
47
-
11
33
12
56
230
-
-
33
10
273
240
-
-
-
240
-
-
-
-
-
-
-
-
-
-
-
230
22
25
33
10
320
240
11
33
12
297
(*) These directors were not employed during the full financial year.
The Directors’ fees disclosed in note 23 include $0.013 million (2018: $0.015 million) being the fees paid to
Directors of RHA, who are not directors of the parent company.
The 2019 Directors fees noted above remain unpaid at the financial year-end. No pension benefits are provided
for any Directors or other employee benefits.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
28. Notes to the statement of cash flows
Cash and cash equivalents comprise cash at bank, bank overdrafts and short term bank deposits with an original
maturity of three months or less. The carrying value of these assets is approximately equal to their fair value.
Loss before tax
Adjustments for:
Finance charges
Foreign exchange variations
Loan implementation fee
Impairment of PPE - RHA
Impairment of current assets - RHA
Impairment of intangible assets - Zulu
Fair value movement of investments
Share based payments and warrant liabilities
Operating cash flows before movements in working capital
(Increase)/decrease in inventories
(Increase)/decrease in receivables
Increase/(decrease) in provisions from mine de-establishment
Increase/(decrease) in payables
Net cash (outflow) from operating activities
(1 209)
(7 758)
140
2 269
-
483
-
-
-
-
1 683
24
35
(595)
(1 551)
(404)
153
-
15
196
48
4 563
(47)
177
(2 653)
(26)
138
(23)
1 006
(1 558)
29.
Financial Instruments – Fair values and risk management
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including
their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial
liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
Trade and other receivables and trade and other payables classified as held-for-sale are not included in the table
below. As at 31 December 2019 the Group did not have any trade and other receivables nor any trade and other
payables that were classified as held-for-sale.
The Group has not disclosed the fair values of financial instruments such as short-term trade receivables and
payables, because their carrying amounts are a reasonable approximation of their fair value.
64
Fair value
Level 1
Level 2
Level 3
Total
$ 000
$ 000
$ 000
$ 000
-
-
7 444
7 444
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Carrying
value
FVOCI -
equity
instruments
$ 000
Financial
assets at
amortised
cost
$ 000
Other
financial
liabilities
$ 000
Note
31 December 2019
Financial assets measured at fair value
FVOCI
7 444
7 444
Financial assets not measured at fair value
Trade and other receivables
Cash and cash equivalents
Financial liabilities measured at fair
value
Financial liabilities not measured at fair value
Bank overdrafts
Unsecured loans from shareholders
Secured loan
Trade and other payables
-
-
-
-
-
-
-
-
-
-
-
-
18
-
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(347)
(368)
(1 406)
(2 121)
Total
$ 000
7 444
7 444
18
-
18
-
-
-
(347)
(368)
(1 406)
(2 121)
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 December 2018
Note
Financial assets measured at fair value
Available-for-sale
Carrying
value
FVOCI -
equity
instruments
$ 000
6 263
6 263
Financial assets not measured at fair value
Trade and other receivables
Cash and cash equivalents
Financial liabilities measured at fair
value
Financial liabilities not measured at fair value
Bank overdrafts
Unsecured loans from shareholders
Trade and other payables
-
-
-
-
-
-
-
-
-
Fair value
Financial
assets at
amortised
cost
$ 000
Other
financial
liabilities
$ 000
Total
$ 000
Level 1
Level 2
Level 3
Total
$ 000
$ 000
$ 000
$ 000
-
-
6 263
6 263
-
-
53
16
69
-
-
-
-
-
-
-
-
-
-
-
-
-
6 263
6 263
53
16
69
-
-
(288)
(213)
(2 957)
(3 458)
(288)
(213)
(2 957)
(3 458)
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial instruments – Fair values and risk management
B.
Measurement of fair values
i.
Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 3 fair values for financial instruments
measured at fair value in the statement of financial position, as well as the significant unobservable inputs used.
Related valuation processes are described in Note 4.8.
Financial instruments measured at fair value
Type
Valuation technique
Significant unobservable
inputs
Inter-relationship between
significant unobservable
inputs and fair value
measurement
None
None
Unlisted
Equity
investments
Current market value
technique:
The valuation model is based
upon the latest price at which
raised
the unlisted entity
capital.
ii.
Transfers between Levels 1 and 2
There were no transfers between Levels 1 and 2 in either the current financial year or in the prior financial year.
C.
Financial Risk Management
The Group has exposure to the following risks arising from financial instruments:
– credit risk;
– liquidity risk; and
– market risk.
Risk management framework
The Company’s board of directors has overall responsibility for the establishment and oversight of the Group’s
risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to
set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies
and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Group’s audit committee oversees how management monitors compliance with the Group’s risk
management policies and procedures, and reviews the adequacy of the risk management framework in relation
to the risks faced by the Group. The Group’s audit committee undertake ad hoc reviews of risk management
controls and procedures, the results of which are reported to the audit committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from the Group’s receivables from customers and
investments in debt securities.
The carrying amounts of financial assets represent the maximum credit exposure.
In the current year there was no impairment loss (2018 - $0.048 million comprising of $0.041 million for
unrecoverable accrued VAT and $0.007 million) for unrecoverable sundry debtors.
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trade receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the factors that may influence the credit risk of its customer base,
including the default risk associated with the industry and country in which its customers operate. Details of
concentration of revenue are included in Note 21.
The Group has established a credit policy under which each new customer is analysed individually for
creditworthiness before the Group’s standard payment terms and conditions are offered. The Group’s review
includes external ratings, if they are available, financial statements, credit agency information, industry
information and in some cases bank references. Sales limits are established for each customer and are reviewed
regularly.
The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period
of one month.
The Group is monitoring the economic environment in Zimbabwe, where its exploration and mining operations
are based.
The Group does not require collateral in respect of trade and other receivables. The Group does not have trade
receivables for which a no allowance is recognised because of collateral.
At 31 December 2019 the exposure to credit risk for
trade receivables by geographic region was as follows:
Zimbabwe
Other
At 31 December 2019 the exposure to credit risk for
trade receivables by counterparty was as follows:
Zimbabwe Revenue Authority
Other
At 31 December 2019 the exposure to credit risk for
trade receivables by credit rating was as follows:
External credit ratings
Other
2019
$ 000
2018
$ 000
18
-
18
2
-
2
-
18
18
53
-
53
21
7
28
-
53
53
Expected credit loss assessment for corporate customers as at 1 January 2019 and 31 December 2019
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the
risk of loss (including but not limited to external ratings, audited financial statements, management accounts
and cash flow projections and available press information about customers) and applying experienced credit
judgement. Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk
of default.
The company had no exposure to credit risk for the year ended 31 December 2019 (2018 - nil)
Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables during the year amounted to nil
(2018 – nil).
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalents
As at 31 December 2019, the Group held $0.040 million in cash and cash equivalents (2018: $0.016 million) and
had a nil bank overdraft (2018: $0.288 million). The cash and cash equivalents are held with bank and financial
institution counterparties which are rated BB to BAA (according to Standard and Poor’s).
Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the
short maturities of the exposures. The Group considers that its cash and cash equivalents have low credit risk
based on the external credit ratings of the counterparties. On the implementation of IFRS 9 the Group did not
impair any of its cash and cash equivalents.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
Exposure to liquidity risk
The following table presents the remaining contractual maturities of financial liabilities at the reporting date.
The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of
netting agreements.
31 December 2019
Contractual cash flows
Carrying
value
$ 000
2
Months
or less
$ 000
Total
$ 000
2 to 12
Months
$ 000
1 to 2
Years
$ 000
2 to 5
Years
$ 000
More
than 5
years
$ 000
Non- derivative financial
liabilities
Bank overdrafts
Unsecured shareholder's
loan
Unsecured loans
Secured loans
Trade payables
Derivative financial
liabilities
-
-
-
219
128
368
1 406
2 121
(219)
(347)
(368)
(1 406)
(2 340)
(219)
(347)
(368)
(1 406)
(2 340)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 December 2018
Contractual cash flows
Carrying
value
$ 000
2
Months
or less
$ 000
Total
$ 000
2 to 12
Months
$ 000
1 to 2
Years
$ 000
2 to 5
Years
$ 000
More
than 5
years
$ 000
Non- derivative financial
liabilities
Bank overdrafts
Unsecured shareholder's
loan
Trade payables
288
(288)
(288)
-
213
2 957
3 458
(213)
(2 957)
(3 458)
-
-
(288)
(213)
(2 957)
(3 170)
Derivative financial
liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The interest payments on the financial liabilities represent the fixed interest rates as per the respective contracts.
The Group aims to maintain the level of its cash and cash equivalents and other highly marketable debt
investments at an amount in excess of expected cash outflows on financial liabilities other than trade payables.
The Group also monitors the level of expected cash inflows on trade and other receivables together with
expected cash outflows on trade and other payables.
Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and equity
prices – will affect the Group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return.
Currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the
currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional
currencies of Group companies. The functional currencies of Group companies are primarily Pound Sterling and
the US Dollar. The Zimbabwean trading companies functional currency is RTGS. The currencies in which these
transactions are primarily denominated are Euro, US Dollar, South African Rand, RTGS and Pound Sterling.
The Company conducts its business in Zimbabwe with a significant portion of expenditures in that country
historically denominated in USD and now also in RTGS. The introduction of the RTGS$ during the financial year
has resulted in the devaluation of the RTGS$ against the US Dollar. This devaluation has also resulted in the
Zimbabwean economy going into hyperinflationary status. To a large extent this is beneficial to Premier as its
Zimbabwean assets are fully impaired. The remaining liabilities are inflation adjusted at each reporting period
yielding foreign exchange gains on conversion to USD.
All transactions are subject to spot rates and with no hedging transactions taking place.
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Exposure to currency risk
31 December 2019
31 December 2018
EUR
'000
GBP
'000
USD
'000
ZAR
'000
RTGS
'000
EUR
'000
GBP
'000
USD
'000
ZAR
'000
-
-
(77)
-
-
(352)
18
(715)
(781)
-
-
(1 282)
-
-
(72 502)
-
-
(43)
-
-
(325)
53
(213)
(2 395)
-
-
(733)
(77)
(352)
(1 478)
(1 282)
(72 502)
(43)
(325)
(2 555)
(733)
-
-
-
-
-
-
-
(1 245)
(1 205)
(15 262)
-
-
-
-
-
-
(1 245)
(1 205)
-
-
(1 245)
(1 205)
(15 262)
-
-
(1 245)
(1 205)
Trade receivables
Unsecured loans
Trade payables
Net statement of
financial position
exposure
Next 6 months
forecast sales
Next 6 months
forecast purchases
Net forecast
transaction
exposure
Net exposure
(77)
(352)
(2 723)
(2 487)
(87 764)
(43)
(325)
(3 800)
(1 938)
The summary quantitative data about the Group’s exposure to currency risk as reported to the management of
the Group is as follows:
The following significant exchange rates in relation to the reporting currency are applicable:
Euro
GBP
ZAR
RTGS
Average rate for the year
Year end spot rate
2019
2018
2019
2018
1.1201
1.1804
1.1220
1.2769
1.2769
1.3368
1.3263
1.2747
0.0693
0.0755
0.0714
0.0694
8.1792
1.0000
17.2322
1.0000
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at
the reporting date are as follows:
Liabilities
2019
‘000
2018
‘ 000
Assets
2019
‘000
2018
‘000
Sterling (£)
Euro (€)
South African Rand (ZAR)
Real Time Gross Settlement of USD
(RTGS)
352
77
1 282
79 197
325
43
733
-
-
-
-
25
-
-
-
-
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The presentation currency of the Group is US dollars.
The Group is exposed primarily to movements in USD for trade, RTGS for the Zimbabwean companies and GBP
for all fund raising activities.
Sensitivity analysis
Financial instruments affected by foreign currency risk include financial investments (see note 9) cash and cash
equivalents, other receivables, trade and other payables and convertible loan notes. The following analysis,
required by IFRS 7 Financial Instruments: Disclosures, is intended to illustrate the sensitivity of the Group’s
financial instruments (at year end) to changes in market variables, being exchange rates.
The following assumptions were made in calculating the sensitivity analysis:
All income statement sensitivities also impact equity
Translation of foreign subsidiaries and operations into the Group’s presentation currency have been excluded
from this sensitivity as they have no monetary effect on the results.
Income Statement / Equity
Exchange rates:
+10% $ Sterling (GBP)
-10% $ Sterling (GBP)
+10% $ RTGS
-10% $ RTGS
2019
$ 000
(35)
35
(87 764)
87 764
2018
$ 000
(42)
42
-
-
The above sensitivities are calculated with reference to a single moment in time and will change due to a number
of factors including:
•
•
•
Fluctuating other receivable and trade payable balances
Fluctuating cash balances
Changes in currency mix
Interest rate risk
The Group has entered into fixed rate agreements for its finance leases and shareholders loans. The Group does
not hedge its interest rate exposure by entering into variable interest rate swaps.
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments as reported to the management of
the Group is as per the table below.
Fixed rate instruments
Financial assets
Financial liabilities
2019
$ 000
-
750
750
2018
$ 000
-
310
310
Fair value sensitivity analysis for fixed-rate instruments
The Group does not account for any fixed-rate financial assets of financial liabilities at FVTPL. Therefore, a change
in interest rates at the reporting date would not affect profit or loss.
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other market price risk
The Group is exposed to equity price risk, which arises from equity securities at FVOCI are held as a long-term
investment.
The Group’s investments in equity securities comprise small shareholdings in unlisted companies. The shares are
not readily tradable and any monetisation of the shares is dependent on finding a willing buyer.
Valuation techniques and assumptions applied for the purposes of measuring fair value
Due to the short term nature, the fair value of cash and receivables and liabilities approximates the carrying
values disclosed in the financial statements.
The fair value of financial assets is estimated by using other readily available information. As the Circum and
MNH shares are in privately held exploration companies, the fair values were estimated using observable placing
prices where available.
Circum and MNH are unlisted and there are no quoted market prices. The fair value of the Circum shares was
derived using the previous issue price and validating it against the most recent placing price on 30 April 2019.
The fair value of MNH shares was derived from the latest placing and supported by an external valuation
conducted by Bara Consulting.
Capital management
The Group manages its capital resources to ensure that entities in the Group will be able to continue as a going
concern, while maximising shareholder return.
The capital structure of the Group consists of equity attributable to shareholders, comprising issued share capital
and reserves. The availability of new capital will depend on many factors including a positive mineral exploration
environment, positive stock market conditions, the Group’s track record, and the experience of management.
There are no externally imposed capital requirements. The Directors are confident that adequate cash resources
exist or will be made available to finance operations but controls over expenditure are carefully managed.
30.
Subsidiaries
Premier had investments in the following subsidiary undertakings as at 31 December 2019, which principally
affected the losses and net assets of the Group:
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name
ZimDiv Holdings Limited
RRCC Ltd
Regent Resources Capital Corporation SAU
G and B African Resources Benin SARL
Zulu Lithium Mauritius Holdings Limited
RHA Tungsten Mauritius Limited
Kavira Minerals Holdings Limited
Tinde Fluorspar Holdings Limited
Lubimbi Minerals Holdings Limited
Gwaaii River Minerals Holdings Limited
Zulu Lithium (Private) Limited
RHA Tungsten (Private) Limited
Katete Mining (Private) Limited
Tinde Fluorspar (Private) Limited
LM Minerals (Private) Limited
BM Mining & Exploration (Private) Limited
Country of
incorporation and
operation
Proportion of voting
interest %
Activity
2019 2018
Mauritius
BVI
Togo
Benin
Mauritius
Mauritius
Mauritius
Mauritius
Mauritius
Mauritius
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
100
100
100
100
100
100
100
100
100
100
100
49*
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Holding Company
Holding Company
Exploration
Exploration
Holding Company
Holding Company
Holding Company
Holding Company
Holding Company
Holding Company
Exploration
49*
Production
100
100
100
100
Exploration
Exploration
Exploration
Exploration
* Accounted as a controlled subsidiary, refer note 4- Significant accounting policies, estimates and
assumptions and note 4.7 - Basis of consolidation.
31.
Related party transactions
Ultimate controlling party
There is no single ultimate controlling party.
Transactions with key management personnel
Loans from directors
On 15 September 2015, George Roach provided a $0.300 million loan direct to Premier for the use at RHA. The
loan is unsecured and accrues interest at a rate of 3% per annum. As at 28 March 2017, the loan and accrued
interest totalled $0.309 million. On 28 March 2017 the Company announced that it had amended the terms of
the existing loan agreement with George Roach through the grant of conversion rights. The Board granted
conversion rights in respect of the Loan, which can now be converted into new ordinary shares at a price of 0.5p
per new ordinary share. On 15 December 2017 the company announced that George Roach had elected to
convert $0.100 million of the $0.300 million ("Loan") he provided to the Company. The outstanding loan balance
of $0.219 million continues to accrue interest at 3% (2018: $0.213 million).
Supplies and Services
During 2019, administration fees of $0.114 (2018: $0.114 million) were paid by Premier to a trading business in
which George Roach, Director, is the beneficial owner. Administration fees comprised allocated rental costs and
administrative support services. At the financial year-end the amount outstanding is $115 575 (2018: $nil).
The amount outstanding at 31 December 2019 for Brendan Roach for directors fees of RHA Tungsten is $62 542
(2018 - $nil).
The amount outstanding at 31 December 2019 for Godfrey Manhambara for directors fees of is $29 544 (2018 -
$9 673).
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The amount outstanding at 31 December 2019 for Wolfgang Hampel for directors fees of is $80 000 (2018 -
$15 000).
The amount outstanding at 31 December 2019 for Neil Herbert for directors fees of is $9 631 (2018 - $ni).
Borrowings
In April 2018 Brendan Roach loaned the company GBP 0.084 million. The outstanding loan balance as at 31
December 2019 is $0.128 million.
Remuneration of key management personnel
The remuneration of the Directors and other key management personnel of the Group are set out below for
each of the categories specified in IAS 24 Related Party Disclosures.
Consulting Fees
Staff costs
Directors' fees (Note 27)
32.
Events after the reporting date
32.1
RHA Tungsten (Pvt) Ltd
2019
$ 000
230
129
47
406
2018
$ 000
240
126
56
422
In February 2020 the Honourable Minister of the Ministry of Industry and Commerce on behalf of the National
Indigenisation and Economic Empowerment Fund ("NIEEF"), undertook a site visit to evaluate the progress to
re-commence the reprocessing of the tailings at RHA.
In May 2020 the Ministry of Commerce and Industry in Zimbabwe indicated that whilst they cannot conclude
the negotiation in regard to RHA under the Covid-19 lock down, and provided RTGS $2.5 million (equivalent to
US$108 806 at the official bank exchange rate), as interim funds to cover holding and security costs at RHA for
an extended period.
32.2
Corporate matters
Premier reached an agreement Regent Mercantile Holdings Limited ("Regent") in January 2020 to extend the
repayment terms of the convertible loan note for US$350 000 from 31 January 2020 until the 31 March 2020. In
April 2020, the Company reached a further verbal agreement with Regent for a further extension to the
repayment terms of the convertible loan note for US$350 000.
Premier concluded a loan instrument of US$200 000 in April 2020 with a company owned by a Trust of which
George Roach is a beneficiary, for a gross value of US$200 000. The proceeds of the New were used to support
ongoing development and provide additional general working capital for the Company. The annual interest rate
payable on the outstanding amounts under the New Loan is 10% per annum.
In May 2020, Premier concluded an investment agreement of US$290 000 before costs with D-Beta One EQ (“D-
Beta”), Ltd, YA II PN (“YA”), Ltd and Riverfort Global Opportunities PCC Limited (“Riverfort”). The annual interest
rate payable on the outstanding investment amount is 10%. The principal amount (plus any accrued interest)
under the Investment Agreement is repayable six months from the date of this announcement. The proceeds of
the Investment Agreement were used to reduce existing liabilities and general working capital for the Company.
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In June 2020, Premier entered into a conditional sale and purchase agreement to acquire a portfolio of hard-
rock lithium assets located in Zimbabwe and Mozambique from Lithium Consolidated Ltd ("Li3") following Li3's
strategic shift of focus to their Australian based projects. Premier conditionally agreed to purchase the Li3 African
projects for a gross consideration of AUD$150 000, (approximately US$104 000) that was to be satisfied through
issuance of new ordinary shares in Premier. Premier completed the purchase in July 2020 by the issuance of
124 512 702 new ordinary shares in favour of Li3.
On the 22nd June 2020 Premier was granted an extension of three months for the reporting and filing of its
financial results for the year ended 31 December 2019.
On the 25th June 2020 Premier confirmed the appointment of Neil Herbert (an existing Non-Executive Director)
as Non-Executive Chairman of the Company.
In June 2020, Premier entered into a conditional sale and purchase agreement to acquire a portfolio of hard-
rock lithium assets located in Zimbabwe and Mozambique from Lithium Consolidated Ltd ("Li3") following Li3's
strategic shift of focus to their Australian based projects. Premier conditionally agreed to purchase the Li3 African
projects for a gross consideration of AUD$ 150 000, (approximately US$104 000) that was to be satisfied through
issuance of new ordinary in Premier. Premier completed the purchase in July 2020 by the issuance of 124 512 702
in favour of Li3.
On 24 July 2020, the Company received a notice of exercise by Regent to convert their loan plus accrued interest
in the amount of US$390 040.92 (£305 836.77) in accordance with the terms of the loan agreement as
announced on the 21 June 2019 into new ordinary shares in the Company. The Company therefor has issued
431 241 920 new ordinary shares to Regent at an issue price of 0.07092p per share.
On 27 July 2020, the Company received a notice of exercise by D-Beta One EQ, Ltd, YA II PN, Ltd and Riverfort
Global Opportunities PCC Limited, collectively referred to as the ("Investors") to convert US$50 000 of the
investment plus accrued interest of US$6 276.71, amounting to US$56 276.71 (£44 115.31) in accordance with
the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company.
The Company therefor has issued 70 426 740 new ordinary shares to the Investors an issue price of 0.062640p
per share.
On 30 July 2020, the Company received a notice of exercise by the company owned by a trust of which George
Roach is a beneficiary to convert the loan, plus accrued interest, amounting to US$206 027 (£159 131.07) in
accordance with the terms of the loan agreement as announced on the 9 April 2020 into new ordinary shares in
the Company. The Company therefor has issued 232 647 763 new ordinary shares to the company an issue price
of 0.0684 per share.
On 11 August 2020, the Company received a notice of exercise by the Investors to convert a further US$50 000
of the investment plus accrued interest of US$1 183.56, amounting to US$51 183.56 (£39 165.66) in accordance
with the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company.
The Company therefor has issued 64 470 222 new ordinary shares to the Investors an issue price of 0.06075p
per share.
On 11 August 2020, the Company issued new ordinary shares to Directors, employees, and other creditors in
settlement of accrued but unpaid contractual amounts due, amounting in aggregate to £337 428. The Company
issued 374 920 533 new shares in settlement of accrued but unpaid fees at an issue price of 0.09p per share.
On 18 August 2020, the Company received a notice of exercise by the Investors to convert a further US$50 000
of the investment plus accrued interest of US$312.33, amounting to US$50 312.33 (£38 388.31) in accordance
with the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company.
The Company therefor has issued 62 450 479 new ordinary shares to the Investors an issue price of 0.06147p
per share.
On 21 August 2020, the Company received a notice of exercise by the Investors to convert a further US$75 000
of the investment plus accrued interest of US$1 189.04, amounting to US$76 189.04 (£58 810.32) in accordance
with the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company.
The Company therefor has issued 125 905 202 new ordinary shares to the Investors an issue price of 0.04671p
per share.
32.3 Circum Minerals Limited investment
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On the 15th of June 2020 the Board of Premier African Minerals Limited provided an update from the Board of
Circum that a combination of factors in the later part of 2019 and the effects of Covid-19, has led the Circum
Board to decide to execute a new set of strategic objectives to develop its potash asset, set to ultimately ensure
that all investors who financially supported Circum so far, are given a better chance to earn the expected returns
through a future liquidity event, in the shortest possible time.
32.4 MN Holdings Limited
In February 2020, Premier acquired a further 2% in MNH for US$200 000 that was satisfied through the issue of
171 074 444 new ordinary shares at an agreed issue price of 0.09p per share for an aggregate consideration of
£153 967 payable in new on. Premier's interest in MNH has increase to 12%.
In May 2020, Premier acquired a further 7% in MNH, the purchase consideration of US$700 000 was payable in
Premier shares but was subject to shareholder approval at special general meeting held in June 2020. Following
the approval of the Agreement by shareholders at the Company's General Meeting, Premier satisfied the
purchase consideration of US$700 000 in the form of 498 229 730 new ordinary Premier shares issued at an issue
price of 0.0111p , being Premier's quoted closing share price on the 4th of June 2020. On completion, Premier's
interest in MNH will increase to 19%.
33.
Ultimate Controlling Company
There is no single ultimate controlling company for Premier African Minerals Limited.
77