20 December 2021

Keras Resources plc ('Keras' or the 'Company')

 

Interim Results

 

Keras Resources plc (AIM: KRS) today announces its interim results for the six months ended 30 September 2021.

 

Highlights

 

Utah - Diamond Creek Phosphate Mine ("Diamond Creek") - one of the highest grade organic phosphate mines in the US, a fully integrated mine to market asset

·      Diamond Creek milling plant successfully commissioned in June 2021 producing a range of premium organic phosphate products

·      Post commissioning, commercial production commenced at the end of June 2021

·      The 2021 mining season was conducted smoothly throughout July to October - stockpiles of 3,000 tons of product are available for on demand sales and a further 5,200 tons of run-of-mine (ROM) ore is available for further processing

·      Operations at Diamond Creek are currently on hold as announced on 5 November 2021 but marketing of inventory from that facility continues and sales orders are being shipped to customers

·      An 800 tonne (16% of annual target) of #10 mesh rock phosphate order, toll processed by a third party is currently being delivered to a key customer 

·      Management recently visited the US and discussions to resolve the funding gap are ongoing.

 

Togo - Nayéga Manganese Project, production ready on receipt of the exploitation permit

·      Mr Blaise Gozan appointed as Country Manager in May 2021 to bolster Keras's in-country presence

·      Ongoing engagement with the Togolese authorities

 

Corporate

·      Mr Graham Stacey, Keras' Chief Operating Officer appointed to the Board as Executive Director

·      Keras Directors purchased further shares in the company post period, increasing management's combined holdings to 23.3%

·      Market fundamentals remain strong

 

Russell Lamming, Keras Resources CEO commented, "We have had our challenges over the past few months as detailed in recent updates but we remain fully committed to Keras and the business going forward. As recently announced, we as a Board of Directors have invested further in the Company so are very much aligned with our shareholder base and are focused on unlocking and realising the value that we see within our assets.

 

"It has been a challenge that, despite meeting all of our funding obligations, we have thus far not been able to amicably resolve our partner's funding shortfall and that operations at the Spanish Fork processing facility have had to be put on hold as a result. However, we are working diligently to resolve this issue, marketing efforts are ongoing and the Diamond Creek high grade material is still being sold into the North American organic phosphate market.  In Togo, we continue to pursue our discussions with the Government, and we will provide further updates on the progress of the Exploitation Permit approval process when we have those details."

 

 

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended). Upon the publication of this Announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

 

For further information please visit www.kerasplc.com, follow us on Twitter @kerasplc or contact the following:

 

Russell Lamming Annabel Redford	Keras Resources plc	annabel@kerasplc.com
Nominated Adviser & Joint Broker Ewan Leggat / Charlie Bouverat   Joint Broker Damon Heath / Erik Woolgar	SP Angel Corporate Finance LLP     Shard Capital Partners LLP	+44 (0) 20 3470 0470     +44 (0) 207 186 9900

 

CHAIRMAN'S REVIEW

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

                                                                                                                                                                          

I am pleased to report on our activities over the past six months. As previously announced, the financial period for Keras has been extended to 15 months and will end on 31 December 2021, enabling the accounts of Keras and all its subsidiaries to terminate on the same date.

 

Diamond Creek Phosphate Mine (Diamond Creek) - Utah, US

 

Despite the headwinds we have faced since our last Interims report, the Diamond Creek project, subject to a funding resolution, is well placed to deliver into the robust North American fertiliser market.  The mining season, conducted from the end of July through to October, went according to plan and there are now sufficient stockpiles of quality material available to market through to the end of this year's campaign and through the first half of next year. Whilst processing at Spanish Fork is on hold, we are continuing to market the 3,000 tons of product in inventory and are selling on demand, and we also have an additional 5,200 tons of run-of mine ore ready to be processed.

 

Building the mine, constructing and commissioning the milling plant and completing the second annual mining campaign within a year of investing in the project was a key achievement for the Company. As we have previously noted, a further core component of our organic fertilizer business is the construction of the granulating plant which will offer additional value to our product mix. This was expected to be commissioned in the last quarter of 2021, although this is now on hold until the funding gap is resolved. Once the funds flow again though, this will be implemented in short order as all the plant components are on site.

 

Discussions on a funding solution by our partner are underway as we look to find a way to move forward as quickly as possible for the benefit of all stakeholders. As a part of this process, we are looking at possible restructuring options to enable us to steer our 51% owned subsidiary company, Falcon Isle, the owner of Diamond Creek, in a direction we believe will increase sales and associated revenues. We will keep shareholders updated on our progress in resolving this issue and look forward to reporting positive progress in the near future.

 

Nayéga Manganese Project - Togo

 

Management has also continued to engage with the Togolese Authorities on the final permitting for the Nayéga manganese project in Togo. Blaise Gozan, our Country Manager, is continuing to progress direct communications and discussions with Government on our behalf. As reported previously, securing the final permit continues to take time, but we remain confident in the process and will provide updates as soon as we have additional information to share.

 

Sustainability

 

We are aware of our responsibility as an employer and a mining company, and we are committed to upholding best practice across our business. We care about all our stakeholders and are focused on looking to create value and benefits for all whilst seeking to manage and mitigate the potential impacts that our operations may have. Our assets are diverse in commodity and location but have important similarities - mining essential resources that can contribute to a more sustainable future, running simple operations with minimal processing requirements and looking to maintain a low carbon footprint. We are focused on meeting our commitments across the ESG space and will continue to be proactive in this area as we look to develop and sustain a positive legacy.

 

Financial Review

 

The results for the 6 months ended 30 September 2021 show a loss of £345,000, a substantial reduction from the 6 months ended 31 March 2021 (loss: £560,000) and from the year ended 30 September 2020 (loss: £1,252,000). The reduction is primarily due to improved performance at Falcon Isle. This bodes well for future periods when Falcon Isle is able to operate at full capacity.

 

As noted above, the current financial period for Keras has been extended to 15 months and will end on 31 December 2021, enabling the accounts of all subsidiaries to terminate on the same date.

 

We were very pleased to appoint Graham Stacey, our Chief Operating Officer, as Executive Director in November, his in-depth knowledge of our assets and technical expertise being invaluable to our business. He has also shown his alignment with the Company in taking shares in lieu of past fees and we are delighted to have him as a core member of our team.

 

Looking Forward

 

We remain fully committed to our business and our projects in both Utah and Togo. The fundamentals of the phosphate and fertilizer markets in the US and globally continue to be strong from both a supply and demand perspective. The Diamond Creek mine produces high quality organic rock phosphate that can be simply mined, crushed and applied to enhance yields and enrich the soil in an environmentally friendly way. Awareness of the sustainable practices adopted in organic farming also continues to grow which is driving growth in this market and further underpins the inherent value of our asset.

 

The manganese market also remains strong looking forward, for steel alloys but also importantly from the battery metals sector, a smaller but vital segment, and we continue to look to capitalise on these dynamics from the Nayega project in the future.

 

Finally, I would like to welcome Graham Stacey to the Board, to take this opportunity to thank the rest of the Board and management for their ongoing hard work and shareholders for their continuing support.

 

Brian Moritz

Chairman

17 December 2021

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

 

 

 

 

									Six months ended		Six months ended		Year ended
									30-Sep-21 (unaudited) £'000		31-Mar-21 (unaudited) £'000		30-Sep-20 (audited) £'000
Continuing operations
Revenue									311		31		-
Cost of production									(229)		(74)		-
Gross profit/(loss)									82		(43)		-
Administrative and exploration expenses									(426)		(446)		(1,235)
Loss from operating activities									(344)		(489)		(1,235)
Finance income									-		-		-
Finance costs									(1)		-		(3)
Net finance costs									(1)		-		(3)
Share of net loss of associate accounted for using the equity method									-		(71)		(4)
Loss before taxation									(345)		(560)		(1,242)
Taxation									-		-		-
Loss for the period									(345)		(560)		(1,242)
Other comprehensive income - items that may be subsequently reclassified to profit or loss
Exchange translation on foreign operations									108		(47)		(15)
Change in fair value of available for sale financial assets									-		-		-
Items that will not be reclassified to profit or loss
Change in fair value of equity investments at fair value through other comprehensive income									-		-		-
Total comprehensive (loss) for the period									(237)		(607)		(1,257)
(Loss)/profit attributable to:
Owners of the Company									(382)		(497)		(1,181)
Non-controlling interests									37		(63)		(61)
(Loss)/profit for the period									(345)		(560)		(1,242)
Total comprehensive income/(loss) attributable to:
Owners of the Company									(268)		(556)		(1,194)
Non-controlling interests									31		(51)		(63)
Total comprehensive loss for the period									(237)		(607)		(1,257)
Earnings per share - continuing operations
Basic and diluted (loss)/earnings per share (pence)									(0.006)		(0.017)		(0.040)

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2021

 

 

						Notes		30-Sep-21 (unaudited) £'000		31-Mar-21 (unaudited) £'000		30-Sep-20 (audited) £'000
Assets
Non-current assets
Intangible assets						7		4,282		3,637		1,069
Property, plant and equipment						8		691		493		263
Investments accounted for using the equity method						9		-		-		1,622
								4,973		4,130		2,954
Current assets
Inventory						10		245		135		-
Other investments						11		-		-		-
Trade and other receivables						12		243		391		83
Cash and cash equivalents								299		886		438
								787		1,412		521
Total assets								5,760		5,542		3,475
Equity
Equity attributable to owners of the Company
Share capital						13		629		629		487
Share premium						13		4,027		4,027		2,637
Other reserves								95		68		16
Retained deficit								(878)		(590)		8
								3,873		4,134		3,148
Non-controlling interests								965		934		(140)
Total equity								4,838		5,068		3,008
Liabilities
Current liabilities
Trade and other payables						14		922		474		467
								922		474		467
Total liabilities								922		474		467
Total equity and liabilities								5,760		5,542		3,475