CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 28 February 2021

 

	Notes	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Cash flows from operating activities
Loss before taxation			(5 795 883)			(1 830 457)
Adjustments for:
Fair value adjustment to customer contract	5		(205 635)			-
Depreciation of property, plant and equipment	12		898 528			128 130
Impairment of exploration licences	11		3 069 232			-
Share-based payments	22		217 407			184 888
Equity-settled transactions			618 260			109 190
Finance income			-			(3 793)
Finance costs	8		184 300			40 719
Changes in working capital:
Increase in receivables	14		(352 953)			(220 634)
Increase in inventory	13		(753 688)			(241 546)
Increase in payables	17		619 573			578 828
Net cash used in operating activities			(1 500 858)			(1 254 675)
Cash flows from investing activities
Finance income			-			3 793
Purchase of intangible assets	11		(964 191)			(596 291)
Purchase of property, plant and equipment (including capitalised cash interest of £179 194 (2020: £55 235))	12		(1 990 856)			(7 159 313)
Net cash used in investing activities			(2 955 047)			(7 751 811)
Cash flows from financing activities
Finance costs	8		(37 612)			(562)
Lease payments	19		(128 600)			(68 015)
Net proceeds from issue of shares	20		2 796 683			2 876 705
Net proceeds from issue of convertible loan notes			-			3 770 645
Proceeds from borrowings	16		7 908 028			4 840 989
Repayment of borrowings	16		(5 378 742)			(3 610 028)
Net cash generated from financing activities			5 159 757			7 809 734
Net increase/(decrease) in cash and cash equivalents			703 852			(1 196 752)
Cash and cash equivalents at the beginning of the year			574 600			1 781 335
Foreign exchange differences			72 748			(9 983)
Cash and cash equivalents at the end of the year	15		1 351 200			574 600

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 28 February 2021

 

1.     Corporate information and principal activities

 

AfriTin Mining Limited ("AfriTin") was incorporated and domiciled in Guernsey on 1 September 2017, and admitted to the AIM market in London on 9 November 2017. The company's registered office is PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH and operates from Illovo Edge Office Park, 2nd Floor, Building 3, Corner Harries and Fricker Road, Illovo, Johannesburg, 2116, South Africa.

 

These financial statements are for the year ended 28 February 2021 and the comparative figures are for the year ended 29 February 2020. The financial statements for the year ended 28 February 2021 and comparative figures set out in this announcement do not constitute the Company's statutory annual report and financial statements but are extracted from the audited financial statements for those years. The 29 February 2020 accounts have been delivered to the Registrar of Companies. The statutory financial statements for 2021 will be delivered to the Registrar of Companies in due course.

 

The auditors have reported on the financial statements for the year ended 28 February 2021 and their report was unqualified. 

 

The AfriTin Group comprises AfriTin Mining Limited and its subsidiaries as noted below.

 

AfriTin Mining Limited ("AML") is an investment holding company and holds 100% of Guernsey subsidiary, Greenhills Resources Limited ("GRL").

 

GRL is an investment holding company that holds investments in resource-based tin and tantalum exploration companies in Namibia and South Africa. The Namibian subsidiary is AfriTin Mining (Namibia) Pty Limited ("AfriTin Namibia"), in which GRL holds 100% equity interest. The South African subsidiaries are Mokopane Tin Company Pty Limited ("Mokopane") and Pamish Investments 71 Pty Limited ("Pamish 71"), in which GRL holds 100% equity interest.

 

AfriTin Namibia owns an 85% equity interest in Uis Tin Mining Company Pty Limited ("UTMC"). The minority shareholder in UTMC is The Small Miners of Uis who own 15%.

 

Mokopane owns a 74% equity interest in Renetype Pty Limited ("Renetype") and a 50% equity interest in Jaxson 641 Pty Limited ("Jaxson").

 

The minority shareholders in Renetype are African Women Enterprises Investments Pty Limited and Cannosia Trading 62 CC who own 10% and 16% respectively.

 

The minority shareholder in Jaxson is Lerama Resources Pty Limited who owns a 50% interest in Jaxson. Pamish 71 owns a 74% interest in Zaaiplaats Mining Pty Limited ("Zaaiplaats"). The minority shareholder in Zaaiplaats is Tamiforce Pty Limited who owns 26%.

 

AML holds 100% of Tantalum Investment Pty Limited, a company containing Namibian exploration licenses EPL5445 and EPL5670 for the exploration of tin, tantalum and associated minerals.

 

As at 28 February 2021, the AfriTin Group comprised:

 

Company	Equity holding and voting rights	Country of incorporation	Nature of activities
AfriTin Mining Limited	N/A	Guernsey	Ultimate holding company
Greenhills Resources Limited1	100%	Guernsey	Holding company
AfriTin Mining Pty Limited1	100%	South Africa	Group support services
Tantalum Investment Pty Limited1	100%	Namibia	Tin & tantalum exploration
AfriTin Mining (Namibia) Pty Limited2	100%	Namibia	Tin & tantalum operations
Uis Tin Mining Company Pty Limited3	85%	Namibia	Tin & tantalum operations
Mokopane Tin Company Pty Limited2	100%	South Africa	Holding company
Renetype Pty Limited4	74%	South Africa	Tin & tantalum exploration
Jaxson 641 Pty Limited4	50%	South Africa	Tin & tantalum exploration
Pamish Investments 71 Pty Limited2	100%	South Africa	Holding company
Zaaiplaats Mining Pty Limited5	74%	South Africa	Property owning

 

¹ Held directly by AfriTin Mining Limited

² Held by Greenhills Resources Limited

³ Held by AfriTin Mining (Namibia) Pty Limited

⁴ Held by Mokopane Tin Company Pty Limited

⁵ Held by Pamish Investments 71 Pty Limited

 

These financial statements are presented in Pound Sterling (£) because that is the currency in which the Group has raised funding on the AIM market in the United Kingdom. Furthermore, Pound Sterling (£) is the functional currency of the ultimate holding company, AfriTin Mining Limited.

The Group's key subsidiaries, AfriTin Namibia and UTMC, use the Namibian Dollar (N$) as their functional currency. The year-end spot rate used to translate all Nambian Dollar balances was £1 = N$21.10 and the average rate for the financial year was £1 = N$21.31.

2.     Significant accounting policies

 

Basis of accounting

 

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively "IFRS") issued by the International Accounting Standards Board ("IASB") as adopted by the European Union ("EU adopted IFRS").

 

The Group has adopted the standards, amendments and interpretations effective for annual periods beginning on or after 1 March 2020. The adoption of these standards and amendments did not have a material effect on the financial statements of the Group. See Note 3.

 

The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity and areas where assumptions and estimates are significant to the consolidated financial statements are discussed further in this note. The principal accounting policies are set out below.

 

Going concern

 

These financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

 

At year end, the company had cash in the bank of £1.4m and had drawn down £1.7m of the £2m Nedbank working capital facility.

 

Subsequent to year end, an equity placement in May 2021 raised gross proceeds of £13m.

 

Furthermore, both long term liabilities and associated interest, namely the remaining 2019 convertible loan notes and the 2020 loan notes were settled on 25 May 2021. The outstanding convertible loan notes were partially settled through conversion into ordinary shares and partially settled in cash. The outstanding loan notes were all settled in cash.

 

Management have prepared a detailed cash flow forecast for the period to 31 July 2022 and stress tests of those forecasts. The forecast excludes the Group's £2.038m working capital and VAT facility that is currently due for renewal.  The Directors fully anticipate renewal of the facility based on current discussions with the lender, the security in place and the history if renewals. The base case forecast demonstrates that the Group will have sufficient funds to meet its liabilities as they fall due and includes the following key assumptions:

 

·      Prices have been set at $28,100 per tonne of tin and $150,000 per tonne of tantalum.

·      The base case forecast assumes continuing steady state production for the current mining and processing facility.

·      The base case forecast includes the procurement of long-lead items relating to the Phase 1 expansion but does not include the full capital expenditure required for the Phase 1 expansion, which remains discretionary, as management intends to finance this requirement with debt financing.

 

In addition, the Board have considered the risks and uncertainties associated with COVID-19 on the Group's operations including the potential impact of production stoppages as a result of potential outbreaks of the virus at the operation as well as downside scenarios in relation to commodity pricing and production across the period.  The scenarios demonstrated that the Group will be able to maintain liquidity without use of its working capital facilities through management of its expansionary capital project expenditure.

 

Accordingly, the Directors have concluded that the going concern basis in the preparation of the financial statements is appropriate and that there are no material uncertainties that would cast doubt on that basis of preparation.

 

Basis of consolidation

 

Subsidiaries

 

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

 

Acquisition-related costs are expensed as incurred.

 

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

 

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability are recognised either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

 

The acquisition of subsidiaries that do not meet the definition of a business and hold early stage exploration licenses are accounted for as asset purchases with the fair value of consideration being allocated to the assets.

 

Inter-company transactions, balances and unrealised gains/losses on transactions between Group companies are eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.

 

Disposal of subsidiaries

 

When the Group ceases to have control, any retained interest in the entity is measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

 

Non-controlling interests

 

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders that present ownership interests entitling their holders to a proportionate share of the net assets upon liquidation are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

 

Segment reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the management steering committee that makes strategic decisions.

 

Foreign currencies

 

Functional and presentational currency

 

The individual financial statements of each Group company are prepared in the currency of the primary economic environment in which they operate (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in Pound Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

 

Transactions and balances

 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation date where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

 

Group companies

 

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a financial currency different from the presentation currency are translated into the presentation currency as follows:

 

i)      assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

ii)     income and expenses for each income statement are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

iii)    all resulting exchange differences are recognised in other comprehensive income.

 

Revenue recognition

 

IFRS 15 "Revenue from Contracts with Customers" establishes a comprehensive framework for determining whether, how much and when revenue is recognised. The core principle is that an entity recognises revenue to depict the transfer of promised goods and services to the customer of an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Group generates revenue from its primary activity, the sale of tin concentrate, and it continued to generate immaterial revenue from the sale of sand.

 

The Group produces and sells tin concentrate from its Uis tin mine in Namibia. Once concentrate has been produced at the Uis plant, it is sampled, bagged and loaded into containers for transportation to the port in Walvis Bay for shipment.

 

The company currently has an off-take agreement with its customer, Thailand Smelting and Refining Co. ("Thaisarco"), which was signed on 1 August 2019. This contract was renewed on 1 December 2020 for a further 3 years. As per the contract, Thaisarco pays AfriTin on the basis of actual tin content in the concentrate per Thaisarco's analysis at the London Metal Exchange price less treatment charges, unit deductions and impurity charges;

 

The Group can elect for the sale of each shipment to occur under the following terms:

 

Option 1: Standard provisional payment

 

Thaisarco shall pay 90% provisional payment on the basis of actual tin content as per their own analysis. Payment is to be made within 10 working days after the arrival of concentrate at Thaisarco's works. Title shall pass to Thaisarco when the concentrate arrives at the Songkhla Port in Thailand.

 

Option 2: Provisional payment option against original bill of lading 

 

Thaisarco shall pay 90% provisional payment on the basis of provisional tin content per UTMC's analysis. The provisional payment shall be done against presentation of a provisional invoice and an original bill of lading. Title shall pass to Thaisarco when UTMC receives the 90% provisional payment.

 

Option 3: Provisional payment option against warehouse holding certificate 

 

Thaisarco shall pay 70% provisional payment on the basis of provisional tin content per UTMC's analysis. The provisional payment shall be done against presentation of provisional invoice and original warehouse holding certificate. Thaisarco shall pay an additional 20% provisional payment upon presentation of the original bill of lading. Title shall pass to Thaisarco when the UTMC receives the 70% provisional payment.

 

During the year, the Group concluded sales under either Option 2 or Option 3.

 

Revenue is recognised at a point in time when title and control of the goods has transferred to the customer, which is when the concentrate arrives at the Songkhla Port in Thailand under Option 1 or when provisional payment is received by UTMC under Option 2 and Option 3. There is limited judgement needed to identify the point at which control passes: once physical delivery of the products to the agreed location has occurred, the Group no longer has physical possession of the products. At this point, the Group will have a present right to payment and retains none of the significant risks and rewards of the goods in question.

 

Pricing for the provisional payment is determined by the published tin price on the date that title and control passes. Pricing for the final payment shall be declared within 20 market days after arrival at Thaisarco's works. The lower of the cash price and the 3-month forward-looking price is used in these calculations.

 

Variable consideration relating to final assay results is constrained in estimating revenue unless it is highly probable that there will not be a future reversal in the amount of revenue recognised when the final assay has been determined.

 

Revenue from the sale of sand is recognised at the point in time when control of the goods has transferred to the customer, which is when the sand leaves the Group's premises. At this point, the Group will have a present right to payment and retains none of the significant risks and rewards of the goods in question.

 

Taxation

 

The tax expense represents the sum of the tax currently payable and deferred tax.

 

The tax charge is based on taxable profit for the period. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the "balance sheet liability" method.

 

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled based upon rates enacted and substantively enacted at the reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items credited or charged to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

 

Intangible exploration and evaluation assets

 

All costs associated with mineral exploration and evaluation including the costs of acquiring prospecting licenses; mineral production licenses and annual license fees; rights to explore; topographical, geological, geochemical and geophysical studies; exploratory drilling; trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource; are capitalised as intangible exploration and evaluation assets and subsequently measured at cost.

 

If an exploration project is successful, the related expenditures will be transferred at cost to property, plant and equipment and amortised over the estimated life of the commercial ore reserves on a unit of production basis (with this charge being taken through profit or loss). Where capitalised costs relate to both development projects and exploration projects, the Group reclassifies a portion of the costs which are considered attributable to near term production based on a percentage of the ore resource expected to be mined in the relevant phase. Where a project does not lead to the discovery of commercially viable quantities of mineral resources and is relinquished, abandoned, or is considered to be of no further commercial value to the Group, the related costs are recognised in the income statement.

 

The recoverability of deferred exploration costs is dependent upon the discovery of economically viable ore reserves, the ability of the Group to obtain necessary financing to complete the development of ore reserves and future profitable production or proceeds from the extraction or disposal thereof.

 

Impairment of exploration and evaluation assets

 

Intangible exploration and evaluation assets are reviewed regularly for indicators of impairment following the guidance in IFRS 6 "Exploration for and Evaluation of Mineral Resources" and tested for impairment where such indicators exist.

 

In accordance with IFRS 6, the Group considers the following facts and circumstances in their assessment of whether the Group's exploration assets may be impaired:

·      whether the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed; or

·      whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted nor planned; or

·      whether exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable deposits and the Group has decided to discontinue such activities in the specific area; or

·      whether sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by sale.

 

If any such facts or circumstances are noted, the Group, as a next step, perform an impairment test in accordance with the provisions of IAS 36 "Impairment of Assets". In such circumstances, the aggregate carrying value of the mining exploration and assets is compared against the expected recoverable amount of the cash-generating unit. The recoverable amount is the higher of value in use and the fair value less costs to sell.

 

Share capital and reserves

 

i)             Warrant reserve

 

The warrants issued by the Company are recorded at fair value on initial recognition net of transaction costs. The fair value of warrants granted is recognised as an expense or as share issue costs based on their nature, with a corresponding increase in equity. The fair value of the warrants granted is measured using the Black Scholes valuation model, taking into account the terms and conditions under which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of warrants that vest.

 

ii)            Convertible loan note reserve 

 

The proceeds received on issue of the Group's convertible loan notes are allocated into their liability and equity components based on the terms of the agreement.

 

The Group takes into account:

·      whether there is a contractual obligation to settle in cash;

·      whether there is a contractual obligation to issue a variable number of shares; and

·      whether the instruments book value is variable.

 

Where none of the above criteria are met, the convertible loan notes are allocated as equity.

 

iii)           Share-based payment reserve

 

Where equity settled share options are awarded to directors or employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

 

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of comprehensive income over the remaining vesting period.

 

Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with the fair value of goods and services received.

 

Property, plant and equipment

 

Property, plant and equipment is stated at historical cost less accumulated depreciation.

 

Land is not depreciated. Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful economic life. The applicable rates are:

 

·      The mining assets are depreciated using the units of production method from the point that commercial production was achieved. This reflects the production activity in the period as a proportion of the total mining reserve. Where the units of production method is used, the assets are depreciated based on a rate determined by the tonnes of ore processed divided by the estimate of the mineral reserve.

·      Short-lived assets which are used in the mining and processing plant are depreciated over a period of between one and ten years;

·      Right-of-use asset over the period of the lease contract;

·      Computer equipment over three years;

·      Furniture over five years;

·      Vehicles over four years.

 

Mining assets under construction are not depreciated.

 

The estimated useful lives, residual values and depreciation methods are reviewed at each year end and adjusted if necessary.

 

Gains or losses on disposal are included in profit or loss.

 

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

 

Right-of-use asset

 

At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset, for a period of time, in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

·      the contract involves the use of an identified asset. This may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

·      the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

·      the Group has the right to direct the use of the asset. The Group has the right when it has the decision-making rights that are most relevant to changing how and for what purposes the asset is used. In rare cases where the decision about how and for what purpose the assets is used is predetermined, the Group has the right to direct the use of the asset if either:

·      the Group has the right to operate the asset; or

·      the Group designed the asset in a way that predetermines how and for what purpose it will be used.

 

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

 

The right-of-use asset is initially measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is annually assessed for impairment and will be adjusted for certain remeasurements of the lease liability.

 

Impairment of property, plant and equipment

 

At each statement of financial position date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

Where there has been a change in economic conditions that indicate a possible impairment in a cash-generating unit, the recoverability of the net book value relating to that mine is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future commodity prices and future costs.

 

The recoverable amount is determined on the fair value less cost to develop basis. In assessing the recoverable amount, which is determined on a fair value less costs to develop basis, the expected future post-tax cashflows from the asset are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The Life of Mine ("LoM") plan is the approved management plan at the reporting date for ore extraction and its associated capital expenditure. The capital expenditure included in the impairment model does not include capital expenditure to enhance the asset performance outside of the existing LoM plan. The ore tonnes included in the LoM plan are those as per the Reserve Statement, which management considers economically viable.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease to the extent that it reverses gains previously recognised in other comprehensive income.

 

Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.

 

Inventories

 

Inventory consists of tin concentrate on hand, the run of mine stockpile and consumable items.

 

The tin concentrate is carried at the lower of cost or net realizable value. The cost of the concentrate includes direct materials, direct labour, depreciation and overhead costs relating to processing and engineering activities. Net realizable value is the estimated selling price net of any estimated selling costs in the ordinary course of business.

 

The run of mine stockpile is carried at the lower of cost or net realizable value. The cost of the stockpile includes direct materials, direct labour, depreciation and overhead costs relating to mining activities. Net realizable value is the estimated selling price net of necessary processing costs and any estimated selling costs in the ordinary course of business.

 

Consumables are valued at the lower of cost (determined on the weighted average basis) and

net realizable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Replacement cost is used as the best available measure of net realizable value.

 

Financial instruments

 

Financial instruments are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

 

Financial assets

 

The Company classifies its financial assets in the following measurement categories:

·      those to be measured subsequently at amortized cost, and

·      those to be measured subsequently at fair value through profit or loss

 

The classification depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows.

 

Financial assets are classified as at amortised cost only if the asset is held to collect the contractual cash flows and the contractual terms of the asset give rise to cash flows that are solely payments of principal and interest. At subsequent reporting dates, financial assets at amortised cost are measured at amortised cost less any impairment losses.

 

For assets measured at fair value, gains and losses will be recorded in profit or loss.

 

Impairment of financial assets

 

The Group assesses on a forward-looking basis the expected credit losses, defined as the difference between the contractual cash flows and the cash flows that are expected to be received, associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables only, the simplified approach permitted by IFRS 9 "Financial Instruments" is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Losses are recognised in the income statement. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the income statement.

 

Trade and other receivables

 

Trade and other receivables are initially recognised at the fair value of the consideration receivable less any impairment.

 

Trade and other receivables are subsequently measured at amortised cost or at fair value through profit or loss.

 

Under its offtake arrangement, the Group receives a provisional payment upon satisfaction of its performance obligations based on the tin price at that date. This occurs prior to the final price determination and the Group then subsequently receives the difference between the final price and quantity and the provisional payment. As a result of the pricing structure, the instrument is classified at fair value through profit or loss and changes in fair value are recorded as other revenue.

 

Trade and other receivables are classified as a current asset as these are expected to be settled within a year.

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash at hand and deposits on a term of not greater than three months.

 

Financial liabilities

 

Financial liabilities include trade and other payables, borrowings and other longer-term financing, classified into one of the following categories:

 

Fair value through profit and loss: The liabilities are carried in the statement of financial position at fair value with changes in fair value recognised in the income statement. The Group currently has no financial liabilities carried at fair value through profit and loss.

 

Financial liabilities carried at amortised cost:

 

Trade and other payables

 

Trade and other payables are initially recognised at fair value and are subsequently measured at amortised cost, calculated using the effective interest rate method.

 

Borrowings

 

Interest bearing debt is initially recorded at fair value, less transaction costs and is subsequently measured at amortized cost, calculated using the effective interest rate method.

 

Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalized up to the date when the qualifying asset is ready for its intended use.

 

Derecognition

 

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

·      The rights to receive cash flows from the asset have expired: or

·      The company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party; and either

-  The company has transferred substantially all the risks and rewards of the asset, or

-  The company has neither transferred nor retained substantially all the risks and rewards of the asset; but has transferred control of the asset.

 

A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled.

 

Any gain or loss on derecognition is taken to the profit or loss.

 

Rehabilitation provision

 

The net present value of estimated future rehabilitation costs is provided for in the financial statements and capitalised within property, plant and equipment on initial recognition. Rehabilitation will generally occur on closure or after closure of a mine.

 

Initial recognition is at the time of the construction or disturbance occurring and thereafter as and when additional construction or disturbances take place. The estimates are reviewed annually to take into account the effects of inflation and changes in the estimated cost of the rehabilitation works and are discounted using rates that reflect the time value of money. Annual increases in the provision due to the unwinding of the discount are recognised in the statement of comprehensive income as a finance cost. The present value of additional disturbances and changes in the estimate of the rehabilitation liability are recorded to mining assets against an increase/decrease in the rehabilitation provision.

 

The rehabilitation asset is amortised over the life of the mine once commercial production commences. Rehabilitation projects undertaken, included in the estimates, are charged to the provision as incurred. Environmental liabilities, other than rehabilitation costs, which relate to liabilities arising from specific events, are expensed when they are known, probable and may be reasonably estimated.

 

Lease liability

 

The lease liability is initially measured at the present value of the remaining lease payments, discounted using the interest rate implicit in the lease. The liability is subsequently measured at amortized cost using the effective interest method. Lease payments are apportioned between the finance charges and reduction of the lease liability using the incremental borrowing rate to achieve a constant rate of interest on the remaining balance of the liability.

 

Critical accounting estimates and judgements

 

In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. In particular, information about significant areas of estimation uncertainty considered by management in preparing the financial statements is described below.

 

Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the year in which the estimates are revised if the revision affects only that year, or in the year of revision and in future years if the revision affects both current and future years.

 

i)      Going concern and liquidity

 

Significant estimates were required in forecasting cash flows used in the assessment of going concern including tin and tantalum prices, the levels of production, operating costs and capital expenditure requirements. Additionally, judgement has been applied in assessing the risks associated with COVID-19, together with mitigating steps available to the Group if required. Refer to going concern considerations noted earlier in Note 2 for further details.

 

ii)     Decommissioning and rehabilitation obligations

 

Estimating the future costs of environmental and rehabilitation obligations is complex and requires management to make estimates and judgements as most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. The resulting provisions (see Note 18) are further influenced by changing technologies, political, environmental, safety, business and statutory considerations.

 

The Group's rehabilitation provision is based on the net present value of management's best estimates of future rehabilitation costs. Judgement is required in establishing the disturbance and associated rehabilitation costs at period end, timing of costs, discount rates and inflation. In forming estimates of the cost of rehabilitation which are risk adjusted, the Group assessed the Environmental Management Plan and reports provided by internal and external experts. Actual costs incurred in future periods could differ materially from the estimates, and changes to environmental laws and regulations, life of mine estimates, inflation rates, and discount rates could affect the carrying amount of the provision.

 

The carrying amount of the rehabilitation obligations for the Group at 28 February 2021 was £180 917 (2020: £86 005). In determining the amount attributable to the rehabilitation liability, management used a discount rate of 12.8% (2020: 9.35%), an inflation rate of 6% (2020: 5.5%) and an estimated mining period of 18 years, being the Phase 1 expansion life of mine. A 1% increase or decrease in the inflation rate used would result in a £34 074 difference in the liability. A 2% increase or decrease in the discount rate used would result in a £49 935 difference in the liability.

 

iii)    Impairment indicator assessment for exploration & evaluation assets

 

Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including specific impairment indicators prescribed in IFRS 6: Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future tin prices, future capital expenditures, environmental and regulatory restrictions, and the successful renewal of licences. The Group considers the South African exploration and evaluation assets to be non-core as it continues to primarily focus on developing its Namibian assets. Accordingly, the capitalised exploration and evaluation expenditure relating to the South African assets has been impaired to nil on the basis that the Group does not intend to incur any further expenditure on its South African licences The directors have concluded that there are no indications of impairment in respect of the carrying value of Namibian intangible assets at 28 February 2021 based on planned future development of the Namibian projects, and current and forecast tin prices. Exploration and evaluation assets are disclosed fully in Note 11. 

 

iv)   Impairment assessment for property, plant and equipment

 

Management have reviewed the Uis mine for indicators of impairment and have considered, among other factors, the operations to date at the Uis mine, planned Phase 1 Stage II expansion of the Uis operations, forecast commodity prices and market capitalisation of the group. In undertaking the indicator review, Management have also reviewed the underlying LoM valuation model for Uis and have concluded that no indicators of impairment have been noted at year end. The LoM valuation model is on a fair value less cost to develop basis and included assessments of different scenarios associated with capital development and expansion opportunities.

 

The forecasts required estimates regarding forecast tin and tantalum prices, ore resources and production, and operating and capital costs. The  discounted cash flows use a discount rate of 11.7% post tax nominal. Under the base case forecast using a forecast tin price of $23 889 rising to $24 505 by 2025 and forecast tantalum price of $150 000, the forecast indicates headroom as at 28 February 2021. Whilst the valuation based on the operations limited to Phase 1 Stage II expansion is sensitive to pricing with a 6% reduction being required to reach break-even point, the planned additional expansion indicates significant headroom and reduced pricing sensitivity.

 

v)    Depreciation

 

Judgement is applied in making assumptions about the depreciation charge for mining assets when using the unit-of-production method in estimating the ore tonnes held in reserves. The relevant reserves are those included the in current approved LoM plan which relates to the Phase 1 expansion. Judgement is also applied when assessing the estimated useful life of individual assets and residual values. The assumptions are reviewed at least annually by management and the judgement is based on consideration of the LoM plan, as well as the nature of the assets. The reserve assumptions included in the LoM plan are evaluated by management.

 

vi)   Commercial production           

 

Judgement is required to determine when a construction asset is in the location and condition intended. No specific guidance exists within IFRS, particularly as to what it means for an asset to be "in the location and condition necessary for it to be capable of operating as intended by management", but it is common to simply refer to the achievement of "commercial production" as the point at which the assets are commissioned, i.e. ready for their intended use.

 

In determining the commercial production date, management uses certain criteria that are required to be met before commercial production is achieved. Commercial production is determined to have been reached when the asset is operating at its designed production level. The Uis Mine achieved commercial production based on production levels at 1 December 2020 and commercial production was declared. At that date capitalisation of cost to the mining asset ceased and depreciation commenced.

 

vii)  Determination of ore reserves

 

The estimation of ore reserves primarily impacts the depreciation charge of evaluated mining assets, which are depreciated based on the quantity of ore reserves. Reserve volumes are also used in calculating whether an impairment charge should be recorded where an impairment indicator exists.

 

The Group estimates its ore reserves and mineral resources based on information, compiled by appropriately qualified persons, relating to geological and technical data on the size, depth, shape and grade of the ore body and related to suitable production techniques and recovery rates. The estimate of recoverable reserves is based on factors such as tin prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body.

 

There are numerous uncertainties inherent in estimating ore reserves and mineral resources. Consequently, assumptions that are valid at the time of estimation may change significantly if or when new information becomes available.

 

viii) Valuation of inventories

 

Judgement is applied in making assumptions about the value of inventories and inventory stockpiles, including tin prices, plant recoveries and processing costs, to determine the extent to which the Group values inventory and inventory stockpiles. The Group uses forecast tin prices to determine the net realisable value of the ROM stockpile and the tin concentrate inventory on hand at year end. Inventory stockpiles are measured using actual mining and processing costs.

 

ix)   Determining the lease term

 

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise, or not to exercise, an extension option. Extension options are only included in the lease term where the company is reasonably certain that it will extend or will not terminate the lease when the lease expires. For all leases, the most relevant factors include:

·      If there are significant penalties to terminate, the group is typically reasonably certain to extend.

·      The group considers other factors including historical lease durations, related costs and the possible business disruption as a result of replacement of the leased asset.

 

The lease term is reassessed on an ongoing basis, especially when the option to extend becomes exercisable or on occurrence of a significant event or a significant change in circumstances which affects this assessment, and that is within the control of the group.

 

x)    Determining the incremental borrowing rate to measure lease liabilities

 

Interest rate implicit in leases is not available, therefore, the group uses the relevant incremental borrowing rate (IBR) to measure its lease liabilities. The IBR is estimated to be the interest rate that the group would pay to borrow:

·      over a similar term

·      with similar security

·      the amount necessary to obtain an asset of a similar value to the right of use asset

·      in a similar economic environment

 

The IBR, therefore, is considered to be the best estimate of the incremental rate and requires management's judgement as there are no observable rates available.

 

xi)   Determining the fair value of trade receivables classified at fair value through profit and loss

 

The consideration receivable in respect of certain sales for which performance obligations have been satisfied at year end and for which the Group has received prepayment under the terms of the offtake agreement, remain subject to pricing adjustments with reference to market prices at the date of finalisation. Under the Group's accounting policies, the fair value of the consideration is determined, and the remaining receivable is adjusted to reflect fair value. Management estimated the forward price based on the LME 3-month tin price at year end. As at 28 February 2021 the Group recognised a receivable at fair value through profit or loss of £531 583 (2020: nil).

 

3.     Adoption of new and revised standards

 

The Company adopted the following amendments to standards that became effective for periods commencing on or after 1 March 2020:

 

IFRS 3	Amendments to IFRS 3 "Business Combinations": Definition of business	1 January 2020
IAS 1 and IAS 8	Amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors": Definition of material	1 January 2020
Conceptual Framework	Amendments to References to the Conceptual Framework in IFRS Standards	1 January 2020

 

The adoption of these amendments did not have a material impact on the financial statements of the Group

 

Accounting standards and interpretations not applied

 

Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group:

 

Annual Improvements to IFRS: 2018-2020 Cycle	1 January 2022
Conceptual Framework for Financial Reporting (Amendments to IFRS 3)	1 January 2022
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment - Onerous Contracts - Cost of Fulfilling a Contract)	1 January 2022
IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Use)	1 January 2022
IFRS 17 Insurance Contracts	1 January 2023
IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-Current)	1 January 2023

 

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group based on current operations.

 

4.     Segmental reporting

 

The reporting segments are identified by the management steering committee (who are considered to be the chief operating decision-makers) by the way that the Group's operations are organised. As at 28 February 2021, the Group operated within two operating segments: tin exploration and mining activities in Namibia and South Africa.

 

Segment results

 

The following is an analysis of the Group's results by reportable segment.

 

	South Africa		Namibia		Total
	£		£		£
Year ended 28 February 2021
Results
Revenue	34 863		4 950 244		4 985 107
Associated costs	(8 786)		(5 715 954)		(5 724 740)
Impairment of exploration licence	(3 069 232)		-		(3 069 232)
Segmental profit/(loss)	(3 043 155)		(765 710)		(3 808 865)
Year ended 29 February 2020
Results
Revenue	21 696		47 336		69 032
Associated costs	(14 006)		(436 922)		(450 928)
Segmental profit/(loss)	7 690		(389 586)		(381 896)

 

The reconciliation of segmental gross loss to the Group's loss before tax is as follows:

 

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Segmental profit/(loss)		(3 808 865)			(381 896)
Unallocated costs		(1 802 718)			(1 411 635)
Finance income		-			3 793
Finance costs		(184 300)			(40 719)
Loss before tax		(5 795 883)			(1 830 457)

 

Unallocated costs mainly comprise of corporate overheads and costs associated with being listed in London.

 

Other segmental information

	South Africa		Namibia		Total
	£		£		£
As at 28 February 2021
Intangible assets - exploration and evaluation	11 309		5 229 152		5 240 461
Other reportable segmental assets	76 460		15 494 907		15 571 367
Other reportable segmental liabilities	(62 302)		(1 651 016)		(1 713 318)
Unallocated net liabilities	-		-		(2 608 263)
Total consolidated net assets	25 467		19 073 043		16 490 247
As at 29 February 2020
Intangible assets - exploration and evaluation	3 108 713		4 332 305		7 441 018
Other reportable segmental assets	60 323		13 041 793		13 102 116
Other reportable segmental liabilities	(64 997)		(774 676)		(839 673)
Unallocated net liabilities	-		-		(759 812)
Total consolidated net assets	3 104 039		16 599 422		18 943 649

 

Unallocated net assets/liabilities are mainly comprised of cash and cash equivalents and the working capital facility which are managed at a corporate level.

5.     Revenue

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Revenue from the sale of tin		4 744 609			47 336
Revenue from the sale of sand		34 863			21 696
Total revenue from customers		4 779 472			69 032
Other revenue - change in fair value of customer contract		205 635			-
Total revenue		4 985 107			69 032

 

The revenue from the sale of tin and sand is recognised at the point in time at which control transfers. Refer to Note 2 for further details.

 

Other revenue relates to the change in the fair value of amounts receivable under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date. Refer to Note 2 for details of trade receivables recorded at fair value through profit or loss.

 

6.     Other administrative expenses

 

The loss for the year has been arrived at after charging:

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Staff costs		1 201 489			793 687
Depreciation of property, plant & equipment		275 987			128 130
Professional fees		127 902			88 550
Travelling expenses		44 793			98 988
Uis administration expenses		361 509			199 984
Auditor's remuneration		69 250			52 873
Other costs		458 832			453 015
		2 539 762			1 815 227

 

Other costs mainly comprise of corporate overheads necessary to run the South African head office and the costs associated with being listed in London.

 

7.     Staff costs

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Staff costs capitalised under property, plant and equipment		1 094 729			1 185 121
Staff costs capitalised under intangible assets		261 844			104 521
Staff costs recognised as administrative expenses		666 746			575 561
Staff costs included in cost of sales		285 216			-
Share-based payment charge capitalised under property, plant and equipment		45 820			186 835
Share-based payment charge capitalised under intangible assets		18 204			31 839
Share-based payment charge recognised as administrative expenses		207 407			184 888
Share issue charge (including amounts capitalised in the prior year)		327 336			65 470
		2 907 301			2 334 235

 

Key management personnel have been identified as the Board of Directors, Frans van Daalen (Chief Operating Officer of the Group) and Robert Sewell (Chief Financial Officer of the Group). Details of key management remuneration are shown in Note 26.

 

The average number of staff during the period was 108 (2020: 66) with an average total cost per employee for the year of £26 862 (2020: £25 970).

 

Emoluments of £289 104 including £172 323 of share options and shares to be issued (2020: £190 932 including £65 281 of share options and shares to be issued) were paid in respect of the highest-paid director during the year.

 

8.     Finance cost

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Interest on lease liability		39 691			33 128
Interest on environmental rehabilitation liability		7 593			7 029
Bank interest		31 696			562
Interest on loan notes		49 863			-
Amortisation of warrant charge		49 541			-
Other interest		5 916			-
		184 300			40 719

 

9.     Taxation

 

The tax expense represents the sum of the tax currently payable and deferred tax.

 

	Year ended 28 February 2021			Year ended 29 February 2020
Factors affecting tax for the year:		£			£
The tax assessed for the year at the Guernsey corporation tax charge rate of 0%, as explained below:
Loss before taxation		(5 795 883)			(1 830 457)
Loss before taxation multiplied by the Guernsey corporation tax charge rate of 0%		-			-
Effects of:
Differences in tax rates (overseas jurisdictions)		(549 615)			(327 821)
Tax losses carried forward		549 615			327 821
Tax for the year		-			-

 

Accumulated losses in the subsidiary undertakings for which there is an unrecognised deferred tax asset are £3 244 873 (2020: £1 797 379).

 

10.  Loss per share from continuing operations

 

The calculation of a basic loss per share of 0.76 pence (2020: loss per share of 0.29 pence), is calculated using the total loss for the year attributable to the owners of the Company of £5 694 962 (2020: £1 781 962) and the weighted average number of shares in issue during the year of 749 085 933 (2020: 623 591 330).

 

Due to the loss for the year, the diluted loss per share is the same as the basic loss per share. The number of potentially dilutive ordinary shares, in respect of share options, warrants and shares to be issued as at 28 February 2021 is 86 882 728 (2020: 69 080 819). These potentially dilutive ordinary shares may have a dilutive effect on future earnings per share.

 

11.  Intangible assets

	Exploration and evaluation assets			Computer software		Total
		£		£		£
As at 28 February 2019		7 012 317		-		7 012 317
Additions for the year		522 131		125 894		648 025
Exchange differences		(209 954)		(9 370)		(219 324)
As at 29 February 2020		7 324 494		116 524		7 441 018
Additions for the year		977 797		4 598		982 395
Impairment for the year		(3 069 232)		-		(3 069 232)
Exchange differences		(108 373)		(5 347)		(113 720)
As at 28 February 2021		5 124 686		115 775		5 240 461

 

For the purposes of impairment testing, the intangible exploration and evaluation assets are allocated to the Group's cash-generating units, which represent the lowest level within the Group at which the intangible exploration and evaluation assets are measured for internal management purposes, which is not higher than the Group's operating segments as reported in Note 4.

 

The amounts for intangible exploration and evaluation assets represent costs incurred on active exploration projects. Amounts capitalised are assessed for impairment indicators under IFRS 6 at each year end as detailed in the Group's accounting policy.

 

The Group considers the South African exploration and evaluation assets to be non-core as it continues to primarily focus on developing its Namibian assets. Accordingly, the capitalised exploration and evaluation expenditure relating to the South African assets of £3.069m has been impaired to nil on the basis that the Group does not intend to incur any further expenditure on its South African licences.

 

The directors have concluded that there are no indicators of impairment in respect of the carrying value of the Namibian exploration and evaluation assets at 28 February 2021 based on planned future development of the projects and current and forecast tin prices.

 

12.  Property, plant and equipment

	Land	Mining asset under construction	Mining asset	Decommissioning asset	Right-of-use Asset	Computer Equipment	Furniture	Vehicles	Total
Cost
As at 28 February 2019	13 439	5 495 771	-	75 180	-	66 198	71 234	85 504	5 807 326
Additions for the year	-	7 370 105	-	10 715	276 547	35 768	20 290	-	7 713 425
Foreign exchange differences	(1 001)	(864 947)	-	(6 398)	(20 583)	(7 593)	(6 776)	(6 369)	(931 667)
As at 29 February 2020	12 438	12 000 929	-	79 497	255 964	94 373	84 748	79 135	12 607 084
Additions for the year	-	2 028 009	123 803	90 323	259 957	46 543	21 598	-	2 570 233
Disposals for the year	-	-	-	-	-	(1 955)	-	-	(1 955)
Transfer between categories of assets	-	(13 550 114)	13 550 114	-	-	-	-	-	-
Foreign exchange differences	(576)	(478 824)	1 236	(2 777)	(9 250)	(3 903)	(3 681)	(3 662)	(501 437)
As at 28 February 2021	11 862	-	13 675 153	167 043	506 671	135 058	102 665	75 473	14 673 925
Accumulated Depreciation
As at 28 February 2019	-	-	-	-	-	11 040	4 116	7 127	22 283
Charge for the year	-	-	-	-	58 220	32 573	15 962	21 375	128 130
Foreign exchange differences	-	-	-	-	(4 333)	(3 274)	(1 468)	(2 122)	(11 197)
As at 29 February 2020	-	-	-	-	53 887	40 339	18 610	26 380	139 216
Charge for the year	-	-	717 864	-	108 794	35 622	17 566	18 682	898 528
Foreign exchange differences	-	-	6 118	-	(1 407)	(1 528)	(669)	(1 034)	1 480
As at 28 February 2021	-	-	723 982	-	161 274	74 433	35 507	44 028	1 039 224
Net Book Value
As at 28 February 2021	11 862	-	12 951 171	167 043	345 397	60 625	67 158	31 445	13 634 701
As at 29 February 2020	12 438	12 000 929	-	79 497	202 077	54 034	66 138	52 755	12 467 868
As at 28 February 2019	13 439	5 495 771	-	75 180	-	55 158	67 118	78 377	5 785 043

 

The Uis tin mine reached commercial production on 1 December 2020. Nameplate capacity (taking into account mining volumes, plant throughput and recovery) of Stage I of Phase 1 was defined as 60 tonnes of tin concentrate at a grade of 60% tin in concentrate per month (36 tonnes of contained tin). 63.9 tonnes of tin concentrate was produced in November 2020 and production of 60 tonnes or more per month has been consistently achieved subsequently. Management has therefore determined that commercial production was reached at this point. Up to this date, costs directly related to the development of the mine were capitalised to the mining asset. Included in these costs was capitalised interest of £254 539 (2020: £55 235).

 

A deduction to assets under construction of £2 805 630 (2020: £38 143) has been recorded in respect of the revenues generated during the development phase prior to commercial production being established with a corresponding charge to cost of sales to reflect the contribution to development cost provided by such revenues.

 

From 1 December 2020, depreciation of the mining asset commenced in accordance with IAS 16. The total depreciation charge for the year was split between administrative expenses and cost of sales.  £275 987 was included in administrative expenses, while the balance of £622 541 was included in cost of sales as it was a cost that was incurred for mining and processing purposes.

 

13.  Inventories

	28 February 2021 £			29 February 2020 £
Tin concentrate on hand		373 310			185 338
Run-of-mine stockpile		427 423			-
Consumables		195 965			61 572
		996 698			246 910

 

14.  Trade and other receivables

	28 February 2021 £			29 February 2020 £
Trade receivables		185 451			42 772
Trade receivables at fair value through profit or loss		531 583			-
Other receivables		204 779			111 614
VAT receivables		266 339			494 336
		1 188 152			648 722

 

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value due to their short-term nature. No allowance for any expected credit losses against any of the receivables is provided due to no history of default or non-payment from Thaisarco. The trade receivable from Thaisarco was settled after year-end.  

 

Trade receivables at fair value through profit or loss relates to the change in the fair value of trade receivables under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date.

 

The total trade and other receivables denominated in South African Rand amount to £79 888 (2020: £65 288), denominated in Namibian Dollars amount to £429 819 (2020: £517 322) and denominated in US Dollars amount to £627 566 (2020: nil).

 

15.  Cash and cash equivalents

	28 February 2021 £			29 February 2020 £
Cash on hand and in bank		1 351 200			574 600

 

Cash and cash equivalents (which are presented as a single class of assets on the face of the Statement of Financial Position) comprise cash at bank. The Directors consider that the carrying amount of cash and cash equivalents approximates their fair value. The total cash and cash equivalents denominated in South African Rand amount to £119 976 (2020: £48 887), the total cash and cash equivalents denominated in Namibian Dollars amount to £13 156 (2020: £240 623) and the total cash and cash equivalents denominated in US Dollars amount to £551 832 (2020: £132).

 

16.  Borrowings

	28 February 2021 £			29 February 2020 £
Working capital facility		1 710 247			1 230 961
Loan note instrument		2 159 242			-
		3 869 489			1 230 961

 

On 16 August 2019, a working capital facility of N$35 000 000 (c. £1.659 million) and a VAT facility for N$8 000 000 (c. £379 000) was entered into between the Company's subsidiary, AfriTin Mining (Namibia) Proprietary Limited and Nedbank Namibia.

 

The VAT facility is secured by assessed/audited VAT returns (refunds) which have not been paid by Namibia Inland Revenue. Nedbank Namibia provides a facility amounting to 70% of the total unpaid refunds. Any drawdowns against this facility are repaid to the bank upon receipt of cash from Namibia Inland Revenue.

 

The working capital facility and the VAT facility were reviewed on 31 July 2020 and were renewed for a further 12-month period. The facility is due for annual review in July 2021 and discussions are currently underway with the lender in securing the rollover of the facility. Interest accrues on these loans at the prime rate charged by Nedbank Namibia.

 

Both AfriTin, as the parent company of AfriTin Mining (Namibia) Proprietary Limited, and Bushveld Minerals Limited ("Bushveld"), a shareholder holding approximately 5% of the Company provide collateral in the form of a joint suretyship.

 

In addition to the facility amount of N$35 000 000, Nedbank Namibia have provided AfriTin Mining (Namibia) Pty Limited with a N$4 117 500 guarantee to Namibia Power Corporation Pty Limited in relation to a deposit for the supply of electrical power. As a result of the guarantee provided by Nedbank Namibia, no cash was paid over for the deposit.

 

On 5 May 2020, £2.05 million financing was secured by way of a loan note facility. The notes, which are issued in tranches of £50 000, bear an interest rate of 10% per annum to be accrued and payable in full on redemption, and have a 12-month term.

 

Reconciliation of net cash flow to movement in borrowings

 

Balance at 29 February 2020		1 230 961
Cash flows
Proceeds from working capital facility		5 858 028
Proceeds from loan note instrument		2 050 000
Repayment of working capital facility		(5 378 742)
Non-cash flows
Interest accrued on loan note instrument		146 836
Warrants issued during the year		(162 480)
Warrants charge amortised during the year		124 886
Balance at 28 February 2021		3 869 489

 

17.  Trade and other payables

	28 February 2021 £			29 February 2020 £
Trade payables		1 094 390			570 779
Other payables		141 677			71 117
Accruals		248 415			252 934
		1 484 482			894 830

 

Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for trade purchases is 30 days.

 

The Group has financial risk management policies in place to ensure that payables are paid within the pre-arranged credit terms. No interest has been charged by any suppliers as a result of late payment of invoices during the year.

 

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

 

The total trade and other payables denominated in South African Rand amount to £232 071 (2020: £165 988) and £1 185 802 (2020: £622 762) is denominated in Namibian Dollars.

 

18.  Environmental rehabilitation liability

	£
Balance at 28 February 2019	75 180
Increase in provision	10 717
Interest expense	7 029
Foreign exchange differences	(6 921)
Balance at 29 February 2020	86 005
Increase in provision	90 323
Interest expense	7 593
Foreign exchange differences	(3 004)
Balance at 28 February 2021	180 917

 

Provision for future environmental rehabilitation and decommissioning costs are made on a progressive basis. Estimates are based on costs that are regularly reviewed and adjusted appropriately for new circumstances. The environmental rehabilitation liability is based on disturbances and the required rehabilitation as at 28 February 2021.

 

The rehabilitation provision represents the present value of decommissioning costs relating to the dismantling of mechanical equipment and steel structures related to the Phase 1 Pilot Plant, the demolishing of civil platforms and reshaping of earthworks. A provision for this requires estimates and assumptions to be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. In calculating the appropriate provision, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability. In determining the amount attributable to the rehabilitation liability, management used a discount rate of 12.8% (2020: 9.35%), an inflation rate of 6% (2020: 5.5%) and an estimated mining period of 18 years, being the Phase 1 expansion life of mine. Actual rehabilitation and decommissioning costs will ultimately depend upon future market prices for the necessary rehabilitation works and timing of when the mine ceases operation.

 

19.  Lease liability

 

The Company assessed all rental agreements and concluded that the following rentals fall within the scope of IFRS 16: Leases and therefore a lease liability has been recognised:

 

	Lease term	Option to extend/terminate	Incremental borrowing rate
Office building	5 years	Option to extend not specified in contract. Term of lease determined to be 5 years.	13.75%
Workshop facility	2 years	Option to extend not specified in contract. Term of lease determined to be 2 years.	7.5%
Residential housing	5 years	The lease will continue automatically after the initial period for an open-ended period. Either party must provide written notice if they wish to terminate. Lease term determined to be 5 years.	8.5%

 

	Office Building		Workshop		Housing		Total
	£		£		£		£
Balance at 28 February 2019	-		-		-		-
Additions	276 547		-		-		276 547
Interest expense	33 128		-		-		33 128
Lease payments	(68 015)		-		-		(68 015)
Foreign exchange differences	(17 987)		-		-		(17 987)
Balance at 29 February 2020	223 673		-		-		223 673
Additions	-		108 252		151 705		259 957
Interest expense	24 419		3 923		11 349		39 691
Lease payments	(64 201)		(30 319)		(34 080)		(128 600)
Foreign exchange differences	(10 749)		818		1 287		(8 644)
Balance at 28 February 2021	173 142		82 674		130 261		386 077

 

The following is the split between the current and the non-current portion of the liability:

 

	28 February 2021 £		29 February 2020 £
Non-current liability	260 512		181 544
Current liability	125 565		42 129
	386 077		223 673

 

A total of £168 792 (2020: £113 205) was included in administrative expenses during the year for the cost of short-term rentals for vehicles and lifting equipment.

 

20.  Share capital

	Number of ordinary shares of no par value issued and fully paid		Share Capital £
Balance at 28 February 2019	544 588 525		17 337 718
Capital raise - 22 May 2019	99 613 074		2 988 392
Share issue costs	-		(111 687)
Shares issued to Hannam & Partners	327 868		10 000
Shares issued to directors/employees	8 616 906		262 816
Balance at 29 February 2020	653 146 373		20 487 239
Capital Raise - 3 August 2020	145 238 089		3 050 000
Shares issued to suppliers	15 273 480		320 743
Share issue costs	-		(253 317)
Shares issued to directors/employees	16 133 440		403 336
Loan note conversion	44 898 630		1 600 000
Balance at 28 February 2021	874 690 012		25 608 001

 

Authorised: 1 220 486 913 ordinary shares of no par value

Allotted, issued and fully paid: 874 690 012 shares of no par value

 

On 22 May 2019, AfriTin Mining Limited completed an equity fundraising by way of a direct subscription of 99 613 074 ordinary shares of no par value in the Company at a price of 3 pence per share.

 

On 10 December 2019, 8 616 906 ordinary shares of no par value were issued to various directors and employees in lieu of payment of director fees and part settlement of salaries. Furthermore 327 868 shares were issued to Hannam and Partners, in accordance with the terms of their broker agreement with the Company. These shares were issued at a price of 3.05 pence per share.

 

On 3 August 2020, the Company completed an equity fundraising by way of a placing and direct subscription of 145 238 089 ordinary shares of no par value in the Company at a price of 2.1 pence per share.

 

On 3 August 2020, 15 273 480 ordinary shares of no par value were issued to various suppliers as settlement of invoices for services rendered. These shares were issued at a price of 2.1 pence per share.

 

On 4 January 2021, 16 133 440 ordinary shares of no par value were issued to various directors and employees in lieu of payment of director fees and part settlement of salaries. These shares were issued at a price of 2.5 pence per share.

 

On 15 February 2021, AfriMet Resources AG elected to convert its portion of outstanding convertible loan notes, totalling £1 600 000 into fully paid ordinary shares. These shares were issued at a price of 4 pence per share.

 

21.  Warrants

 

The following warrants were granted during the year ended 28 February 2021:

 

Date of grant	10 December 2020	7 July 2020	31 May 2020	5 May 2020
Number granted	2 500 000	2 500 000	2 500 000	13 000 000
Contractual life	2.4 years	2.8 years	2.9 years	3 years
Estimated fair value per warrant (£)	0.0101	0.0122	0.0068	0.0069

 

The warrants in issue during the year are as follows:

 

Outstanding at 28 February 2019	5 671 939
Exercisable at 28 February 2019	5 671 939
Granted during the year	-
Expired during the year	-
Exercised during the year	-
Outstanding at 29 February 2020	5 671 939
Exercisable at 29 February 2020	5 671 939
Granted during the year	20 500 000
Expired during the year	(1 871 939)
Exercised during the year	-
Outstanding at 28 February 2021	24 300 000
Exercisable at 28 February 2021	24 300 000

 

The warrants outstanding at the year-end have an average exercise price of £0.023, with a weighted average remaining contractual life of 2.14 years.

 

In the year ended 28 February 2021, there was a charge of £162 480 (2020: nil) accounted for due to the issue of warrants.

 

On 22 April 2021, notice was received from warrant holders to exercise 1 186 666 warrants at an exercise price of 4.5 pence and 500 000 warrants at an exercise price of 1.95 pence.

 

22.  Share-based payment reserve

 

Director share options

 

The following director share options were granted during the year ended 29 February 2020:

 

Date of grant	18 October 2019	18 October 2019	18 October 2019
Number granted	3 200 000	3 200 000	3 200 000
Vesting period	1 year	2 years	3 years
Contractual life	5 years	5 years	5 years
Estimated fair value per option (pence)	1.4790	1.3340	1.2510

 

The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were:

 

Date of grant	18 October 2019	18 October 2019	18 October 2019
Share price at grant date (pence)	3.15	3.15	3.15
Exercise price (pence)	3.75	4.50	5.00
Expiry date	18 October 2024	18 October 2024	18 October 2024
Expected volatility	60%	60%	60%
Expected dividends	Nil	Nil	Nil
Risk-free interest rate	1.24%	1.24%	1.24%

 

The director share options in issue during the year are as follows:

 

Outstanding at 28 February 2019	17 500 000
Exercisable at 28 February 2019	-
Granted during the year	9 600 000
Forfeited during the year	-
Exercised during the year	-
Expired during the year	-
Outstanding at 29 February 2020	27 100 000
Exercisable at 29 February 2020	13 125 000
Granted during the year	-
Forfeited during the year	-
Exercised during the year	-
Expired during the year	-
Outstanding at 28 February 2021	27 100 000
Exercisable at 28 February 2021	8 389 999

 

On 4 January 2021, 10 600 000 share options held by the Chief Executive Officer, Anthony Viljoen were repriced by the Remuneration Committee to align company and shareholder expectations with long-term incentivisation goals. The exercise price and the first exercise date were changed, however, the contractual life of the options remained unchanged. The fair value of the re-priced options (calculated using the Black Scholes method) decreased from the initial fair valuation. As such, no adjustment to amortising of the initial fair value over the vesting period was made.

 

The director share options outstanding at the year-end have an average exercise price of £0.045 (2020: £0.053), with a weighted average remaining contractual life of 2.77 years (2020: 3.77 years).

 

The director must remain as a director of the Company for the share options to vest. In the event that a director ceases to be a director during the vesting period, the Board reserves the right to determine whether the share options will be terminated or not. There are no market-based vesting conditions on the share options.

 

Employee share options

 

The following employee share options were granted during the year ended 29 February 2020:

 

Date of grant	18 October 2019	18 October 2019	18 October 2019
Number granted	4 110 001	4 110 000	4 109 999
Vesting period	1 year	2 years	3 years
Contractual life	5 years	5 years	5 years
Estimated fair value per option (pence)	1.4790	1.3340	1.2510

 

The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were:

 

Date of grant	18 October 2019	18 October 2019	18 October 2019
Share price at grant date (pence)	3.15	3.15	3.15
Exercise price (pence)	3.75	4.50	5.00
Expiry date	18 October 2024	18 October 2024	18 October 2024
Expected volatility	60%	60%	60%
Expected dividends	Nil	Nil	Nil
Risk-free interest rate	1.24%	1.24%	1.24%

 

The employee share options in issue during the year are as follows:

 

Outstanding at 28 February 2019	22 500 000
Exercisable at 28 February 2019	-
Granted during the year	12 330 000
Forfeited during the year	-
Exercised during the year	-
Expired during the year	-
Outstanding at 29 February 2020	34 830 000
Exercisable at 29 February 2020	11 250 000
Granted during the year	-
Forfeited during the year	-
Exercised during the year	-
Expired during the year	-
Outstanding at 28 February 2021	34 830 000
Exercisable at 28 February 2021	-

 

On 4 January 2021, 34 830 000 share options held by employees were repriced by the Remuneration Committee to align company and shareholder expectations with long-term incentivisation goals. The exercise price and the first exercise date were changed, however the contractual life of the options remained unchanged. The fair value of the re-priced options (calculated using the Black Scholes method) decreased from the initial fair valuation. As such, no adjustment to amortising of the initial fair value over the vesting period was made.

 

The employee share options outstanding at the year-end have an average exercise price of £0.034 (2020: £0.053), with a weighted average remaining contractual life of 2.96 years (2020: 3.96 years).

 

The employee must remain in employment with the Company for the share options to vest. There are no market-based vesting conditions on the share options.

 

Director shares to be issued

 

Directors' fees of £16 342 (2020: £24 050) are owing to the directors at the end of the year. These fees will be settled through the issuing of shares. The corresponding credit has been recorded in the share-based payment reserve.

 

Employee shares to be issued

 

Employee salaries of £17 720 (2020: £13 961) are owing to employees at the end of the year. These salaries will be settled through the issuing of shares. The corresponding credit has been recorded in the share-based payment reserve.

 

23.  Non-controlling Interests

 

Non-controlling interest that is material in the group relates to the Small Miners of Uis ("SMU") who own 15% of UTMC. SMU is a non-profit association incorporated in Namibia. The entity was set up by the Ministry of Mines and Energy to act on behalf of small-scale miners across Namibia.

 

Other includes the following minority interests which are not material:

·      Cannosia Trading 62 CC who own 16% of Renetype

·      African Women Enterprise Investments (Pty) Ltd who own 10% of Renetype

·      Lerama Resources (Pty) Ltd who own 50% of Jaxson

·      Tamiforce (Pty) Ltd who own 26% of Zaaiplaats

 

As at 28 February 2021
	UTMC		Other		Total
Amount attributable to all shareholders:
Loss after tax	(659 673)		(7 150)		(666 822)
Non-current assets	2 678 021		15 233		2 693 254
Current assets	2 524 054		-		2 524 054
Total assets	5 202 076		15 233		5 217 308
Non-current liabilities	5 136 254		43 275		5 179 529
Current liabilities	997 620		11 964		1 009 584
Total liabilities	6 133 874		55 239		6 189 113
Net liabilities	931 798		40 006		971 804
Amount attributable to non-controlling interest:
Loss after tax	(98 951)		(1 970)		(100 921)
Net liabilities	139 770		11 574		151 344

 

As at 29 February 2020
	UTMC		Other		Total
Amount attributable to all shareholders:
Loss after tax	(299 949)		(13 243)		(313 192)
Non-current assets	2 165 378		1 037 166		3 202 544
Current assets	699 699		-		699 699
Total assets	2 865 077		1 037 166		3 902 243
Non-current liabilities	2 531 291		1 057 484		3 588 775
Current liabilities	612 209		14 058		626 267
Total liabilities	3 143 500		1 071 542		4 215 042
Net liabilities	278 423		34 376		312 799
Amount attributable to non-controlling interest:
Loss after tax	(44 992)		(3 502)		(48 495)
Net liabilities	41 764		10 049		51 812

 

24.  Financial instruments

 

The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and processes of the Group for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

 

Capital risk management

 

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing returns to shareholders. In order to maintain or adjust the capital structure, the Group may issue new shares or arrange debt financing.

 

The capital structure of the Group consists of cash and cash equivalents and equity, comprising issued capital, issued convertible loan notes, borrowings and retained losses.

 

The Group is not subject to any externally imposed capital requirements.

 

Significant accounting policies

 

Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement and the basis for recognition of income and expenses for each class of financial asset, financial liability and equity instrument are disclosed in Note 2.

 

Principal financial instruments

 

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

·      Trade and other receivables

·      Cash and cash equivalents

·      Trade and other payables

·      Borrowings

·      Lease liability

·      Convertible loan notes

 

Categories of financial instruments

 

The Group holds the following financial assets:

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Measured at amortised cost:
Trade and other receivables		390 230			154 386
Cash and cash equivalents		1 351 200			574 600
Measured at fair value through profit or loss:
Trade and other receivables		531 583			-
Total financial assets		2 273 013			728 986

 

Under its customer sale arrangement, the Group receives a provisional payment upon satisfaction of its performance obligations based on the spot price at that date. This occurs prior to the final price determination, with the Group then subsequently receiving or paying the difference between the final price and quantity and the provisional payment. As a result of the pricing structure, the instrument is classified at fair value through profit or loss and measured at fair value with resulting changes in fair value recorded as other revenue.

 

Trade receivables at fair value through profit or loss fail the criteria for being measured at amortised cost owing to the variability resulting from final pricing adjustments. Financial instruments measured at fair value are presented by level within which the fair value measurement is categorized. The levels of fair value measurement are determined as follows:

·      Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

·      Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

·      Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

The Group's contract receivable at 28 February 2021 is recorded at fair value through profit or loss and fair valued based on the estimated forward prices that will apply under the terms of the sales contracts on the product reaching the port of destination. The trade receivables fair value reflects amounts receivable from the customer adjusted for forward prices expected to be realised.

 

The forward price is based on the LME 3-month tin price as at 28 February 2021. Given the short period to final pricing, the time value of money is not considered to be significant.

 

Fair value of this trade receivable at fair value through profit or loss is categorized at Level 1. During the year there were no transfers between levels of fair value hierarchy.

 

The Group holds the following financial liabilities:

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Measured at amortised cost:
Trade and other payables		1 484 482			894 830
Borrowings		3 869 489			1 230 961
Lease liability		386 077			223 673
Total financial liabilities		5 740 048			2 349 464

 

Maturity analysis of the contractual undiscounted cashflows:

 

	Up to 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Total
Trade and other payables	1 484 482	-	-	-	1 484 482
Borrowings	2 159 242	1 710 247	-	-	3 869 489
Lease Liability	29 834	95 730	128 066	132 447	386 077
	3 673 558	1 805 977	128 066	132 447	5 740 048

 

General objectives, policies and processes

 

The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The Board receives reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

 

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

 

Credit risk

 

The Group's principal financial assets are bank balances and trade and other receivables.

 

Credit risk arises principally from the Group's cash balances. Credit risk is the risk that the counterparty fails to repay its obligation to the Group in respect of amounts owed. The Group gives careful consideration to which organisations it uses for its banking services in order to minimize credit risk. Credit risk relating to other receivables is minimal.

 

The concentration of the Group's credit risk is considered by counterparty, geography and by currency. The Group has split its cash reserves across multiple banks in an effort to mitigate credit risk. The Pound Sterling and US Dollar accounts are held with a bank in Mauritius which has a rating of Baa1(Moody's), the Rand account is held with a bank in South Africa which has a rating of Ba2 (Moody's), and the Namibian Dollar account is held with a bank in Namibia with a rating of Ba3 (Moody's). While the credit ratings of the countries in which the cash is held have been downgraded during the year, the banks chosen remain stable and do not present any further risks.

 

The concentration of credit risk was as follows:

	28 February 2021 £			29 February 2020 £
Currency
Sterling		666 236			284 958
USD		551 832			132
South African Rand		119 976			48 887
Namibian Dollars		13 156			240 623
		1 351 200			574 600

 

Please refer to note 14 for the concentration of credit risk relating to trade receivables.  

 

At 28 February 2021, the Group held no collateral as security against any financial asset. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group's maximum exposure to credit risk without taking account of the value of any collateral obtained. The Group applies IFRS 9 to measure expected credit losses for receivables and these are regularly monitored and assessed. There has been no impairment of financial assets during the year. Management considers the above measures to be sufficient to control the credit risk exposure.

 

Liquidity risk

 

Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Board manages liquidity risk by regularly reviewing the Group's gearing levels, cash-flow projections and associated headroom and ensuring that excess banking facilities are available for future use.

 

The Group maintains good relationships with its banks and its cash requirements are anticipated via the budgetary process. At 28 February 2021, the Group had £1 351 200 (2020: £574 600) of cash reserves.

 

Market risk

 

The Group's activities expose it primarily to the financial risk of changes in commodity prices, foreign currency exchange rates and interest rates.

 

Interest rate risk

 

The Group was exposed to minimal interest rate risk during the year. For this reason, no sensitivity analysis has been performed regarding interest rate risk.

 

Foreign exchange risk

 

The Group has foreign currency denominated assets and liabilities. Exposure to exchange rate fluctuations therefore arise. The carrying amount of the Group's foreign currency denominated monetary assets and liabilities, all in Pound Sterling, are shown below.

 

	Year ended 28 February 2021 £			Year ended 29 February 2020 £
Cash and cash equivalents		684 964			289 642
Other receivables		1 137 272			88 274
Trade and other payables		(1 417 873)			(788 750)
Borrowings		(1 710 247)			(1 230 961)
		(1 305 884)			(1 641 795)

 

The Group is exposed to a level of foreign currency risk. Due to the minimal level of foreign exchange transactions, the Directors currently believe the foreign currency risk is at an acceptable level.

 

The Group does not enter into any derivative financial instruments to manage its exposure to foreign currency risk.

 

The following table details the Group's sensitivity to a 10% increase and decrease in the Pound Sterling against the Rand and the Namibian Dollar. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonable possible change in foreign currency rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates.

 

	Rand denominated monetary items £		Rand currency impact Strengthening £		Rand currency impact Weakening £
Assets		199 863		219 849		179 877
Liabilities		(232 071)		(255 278)		(208 864)
		(32 208)		(35 429)		(28 987)
	Namibian dollar denominated monetary items £		Namibian dollar currency impact Strengthening £		Namibian dollar currency impact Weakening £
Assets		442 975		487 273		398 678
Liabilities		(2 896 049)		(3 185 654)		(2 606 444)
		(2 453 074)		(2 698 381)		(2 207 767)

 

25.  Events after balance sheet date

 

Exercise of warrants

On 22 April 2021, notice was received from warrant holders to exercise 1 186 666 warrants at an exercise price of 4.5 pence and 500 000 warrants at an exercise price of 1.95 pence.

 

Equity Fundraising

On 12 May 2021, £13 million (before expenses) was raised by way of a private placement. 216 666 667 ordinary shares of no-par value in the company at a price of 6 pence per share were issued.

 

Settlement of convertible loan notes

On 25 May 2021, the remaining £2.2m of the £3.8m 2019 convertible loan notes was settled. £0.759m of the outstanding amount was settled through the issuing of 18 963 699 ordinary shares of no par value in the Company at a conversion price of 4 pence per ordinary share and the remaining portion totalling £1.8m (including £0.328m of accrued interest) was redeemed in cash.

 

Settlement of loan notes

On 25 May 2021, the 2020 loan note facility of £2.05m and associated interest of £0.216m was settled in full in cash.

 

Issue of shares

On 25 May 2021, 327 868 ordinary shares of no-par value were issued in lieu of broker fees at a price of 6 pence.

 

26.  Related-party transactions

 

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

 

Goldiblox Pty Limited ("Goldiblox") is a related party due to Frans van Daalen, key management personnel of AfriTin Mining Limited being a 50% shareholder of Goldiblox. During the prior year, the Group acquired a DMS plant from Goldiblox for £155 678. There were no transactions during the current year. At year end, the Group did not owe Goldiblox any funds (2020: nil).

 

Bushveld Minerals Limited ("Bushveld") is a related party due to Anthony Viljoen, Chief Executive Officer, being a Non-Executive Director on the Bushveld Board. During the period, Bushveld charged the Group £82 423 (2020: £85 596) for the use of office space. At period end, the Group owed Bushveld £112 962 (2020: £71 762). Furthermore, Bushveld provide suretyship of N$30m (approx £1.42m) as collateral for the Nedbank Namibia working capital facility.

 

The remuneration of the key management personnel of the Group, which includes the Directors, Frans van Daalen and Robert Sewell, is set out below.

 

28 February 2021	Share Option Charge £		Shares Issued in Relation to Director Fees/Salary £		Shares Issued in Relation to Bonus £			Director Fees/ Salary £		Other Fees £		Total £
Non-Executive Directors
Glen Parsons (Chairman)		10 893		40 000		-		-		-		50 893
Terence Goodlace		10 761		-		-		28 750		-		39 511
Laurence Robb		10 761		13 000		-		12 000		-		35 761
Roger Williams (resigned 28 September 2020)		10 761		-		-		14 583		-		25 344
Executive Director
Anthony Viljoen (Chief Executive Officer)		26 090		17 365		128 868		116 781		-		289 104
Other key management personnel
Robert Sewell (Chief Financial Officer)		19 599		-		65 919		86 745		-		172 263
Frans van Daalen (Chief Operating Officer)		22 099		-		81 178		112 322		-		215 599
		110 964		70 365		275 965		371 181		-		828 475

 

29 February 2020		Share Option Charge £	Shares Issued in Relation to Director Fees/Salary £		Shares Issued in Relation to Bonus £		Director Fees/ Salary £		Other Fees £			Total £
Non-Executive Directors
Glen Parsons (Chairman)		17 626		40 000		-		-		-		57 626
Terence Goodlace		15 471		-		-		28 772		-		44 243
Laurence Robb		15 471		13 000		-		12 000		22 000		62 471
Roger Williams		15 471		25 000		-		-		-		40 471
Executive Director
Anthony Viljoen (Chief Executive Officer)		41 440		23 841		-		125 650		-		190 932
Other key management personnel
Robert Sewell (Chief Financial Officer)		43 078		55 147		-		87 257		-		185 482
Frans van Daalen (Chief Operating Officer)		68 944		10 994		-		114 656		-		194 594
		217 501		167 983		-		368 335		22 000		775 819

 

27.  Reserves within equity

 

Share capital

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

 

Convertible loan note reserve

 

The convertible loan note reserve represents net proceeds on outstanding convertible loan notes.

 

On 26 November 2019, the Group raised £3.8m through the issuing of convertible loan notes which mature in May 2021. The instruments entitle the holders to a 10% coupon. Under the terms of the instrument the Group can elect to settle the loan note into a fixed number of shares at a 4 pence conversion rate. The Group can elect to redeem the loan notes early in cash at a premium of 10%. As there is no obligation to settle in cash the loan notes have been accounted for in equity as an increase in the convertible loan note reserve.

 

Warrant reserve

 

The warrant reserve represents the cumulative charge to date in respect of unexercised share warrants at the balance sheet date.

 

Share-based payment reserve

 

The share-based payment reserve represents the cumulative charge to date in respect of unexercised share options at the balance sheet date as well as fees/salaries owed to directors/employees to be settled through the issuing of shares.

 

Foreign currency translation reserve

 

The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of entities with a functional currency other than Pound Sterling.

 

Retained earnings/accumulated deficit

 

The retained earnings/accumulated deficit represents the cumulative profit and loss net of distribution to owners.