Premier African Minerals Limited / Ticker: PREM / Index: AIM / Sector: Mining
For immediate release
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30 September 2020
Premier African Minerals Limited
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Final Results
Premier African Minerals Limited, the AIM-traded, multi-commodity mining and natural resource development company focused in Southern and Western Africa, is pleased to announce publication of its audited Annual Report and Accounts for the year ended 31 December 2019 (the "Annual Report").
The Annual Report is available on the Company's website, www.premierafricanminerals.com, and is in the process of being posted to Shareholders.
The Annual Report for the year ended 31 December 2019 is set out in full below.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014. The person who arranged the release of this announcement on behalf of the Company was George Roach.
Enquiries:
| George Roach | Premier African Minerals Limited | Tel: +27 (0) 100 201 281 |
| Michael Cornish / Roland Cornish | Beaumont Cornish Limited (Nominated Adviser) | Tel: +44 (0) 20 7628 3396 |
| Jerry Keen/Edward Mansfield | Shore Capital Stockbrokers Limited | Tel: +44 (0) 20 7408 4090 |
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Notes to Editors:
Premier African Minerals Limited (AIM: PREM) is a multi-commodity mining and natural resource development company focused on Southern Africa with its RHA Tungsten and Zulu Lithium projects in Zimbabwe.
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The Company has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe, encompassing brownfield projects with near-term production potential to grass-roots exploration. The Company holds 5,010,333 shares in Circum Minerals Limited, the owners of the Danakil Potash Project in Ethiopia, which has the potential to be a world class asset.
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In addition, the Company holds a 19% interest in MN Holdings Limited, the operator of the Otjozondu Manganese Mining Project in Namibia.
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Forward Looking Statements:
Certain statements in this announcement are, or may be deemed to be forward looking statements. Forward looking statements are identi?ed by their use of terms and phrases such as ''believe'' ''could'' "should" ''envisage'' ''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward looking statements re?ect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.� A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward looking statements.
Chief Executive's Statement
There remains no doubt in my mind that Premier African Minerals Limited ("Premier" or "Company") must diversify its exploration portfolio and identify revenue generating assets that are actually in production and profitable now. The initial part acquisition of MN Holdings Otjozondu mine in Namibia was a significant first step in the midst of the ongoing and very disappointing delays in Zimbabwe.
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2019 has been a very difficult year. I have already indicated in various RNS's that Premier regressed into "shrink" mode. And I have equally been clear that the intention is to have this reversed. Dependency of exploration activities based exclusively in Zimbabwe where country risk and delay deny the opportunity to add value, is clearly flawed yet exploration remains the best opportunity for substantial value generation and recovery in our Company. Our original philosophy of RHA Tungsten (Pvt) Limited ("RHA") operating as a revenue generative unit facilitating exploration activities was frustrated, not in principle but in the facts of the very well documented problems at RHA and the Tungsten mining industry as a whole. Premier's focus should be on assuring cash generation on the one hand and high grade exploration on the other and your board of directors is determined to move in this direction.
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I reported in June 2019 that in a subsequent event, Zimbabwean National Indigenisation and Economic Empowerment Fund ("NIEEF") had concluded an amended agreement that, inter alia, confirmed their stated intention to fund RHA to the extent of US$6 million and thus facilitate the return to production of the mine. The adoption in 2019 of the RTGS Dollar as the official currency of Zimbabwe held both promise and benefit to RHA. Benefit in that local debt historically incurred in country and not based on foreign direct investment, was converted from US dollar to RTGS Dollar at parity. The benefit was an effective reduction in local debt whilst the registered foreign direct loan remains intact in US Dollar. Sadly, NIEEF shortly thereafter in making a payment to RHA, did so in RTGS dollar and the six million paid equated to less than US$ 1 million and was barely adequate to cover electrification costs with further in country delays and ongoing depreciation of the RTGS Dollar.
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Similar frustration on the Exclusive Prospecting Order ("EPO") application over the extended strike at Zulu Lithium and Tantalum Project ("Zulu") persists. During 2019, Premier met frequently with the Mining Affairs board, the Permanent Secretary and the Hon. Minister of Mines; Premier attended to all questions, explanations, objections and has been assured repeatedly that the process to grant the EPO is at finality and requires only signature. To date, the EPO still requires only signature.
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This experience in Zimbabwe only underlines my comments above and the need to acquire and be in control of a cash generative asset/s and country risk mitigating exploration properties.
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The acquisition of our stake in MN Holdings Limited ("MNH"), the operator of the Otjozondu Manganese Mine was driven out of this and was supported by the models and reports provided at the time. To assure our investment, Premier based the initial purchase on an independent valuation of US$10 million, undertaken by Bara Consulting of plant and equipment that on acquisition by MNH would facilitate a rapid increase in production with the attendant benefits to revenue.� At present, Premier directly owns 19% of MNH. MNH has been clear and stated this in the public domain, that their intention was to be aligned with a public company and we continue to discuss our relationship with MNH. The knowledge we have gained over the past year, the understanding of MNH and the overall size of an optimised Otjozondu Manganese mine, make this a very attractive partnership with Premier and our relationship with MNH is considered extremely important for the Board of Directors.
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We continue to hold 5�010 333 shares in Circum Minerals Limited ("Circum"), currently valued in total at
�$6 262 916.25. Circum has undergone a change of management control and has undertaken a review of the previous studies with the specific intention of reducing capex, accelerating time to build and improving the internal rate of return ("IRR"). Circum has indicated that preliminary reports should be available in October 2020, final reports in Quarter 1 of 2021 and re-energised discussions targeted to a liquidity event possible from as early as October 2020, dependent on preliminary results.
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On a corporate level, I need to express my sincere appreciation to our directors and consultants who have all come to the party in supporting Premier through a very difficult year. Starting with myself and the other key management personnel, we have without exception taken cuts in our cash drawings, trimmed expenses, and costs agreed to be converted to equity.
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Michael Foster resigned from our board in September 2019 and I thank him for his assistance and guidance.
George Roach
Chief Executive Officer
30 September 2020
Strategic Report
The strategic report provides a detailed assessment of the activities of the Company during the period under review. It also details the main objectives of the Company related to our portfolio of assets. The principal risks and uncertainties associated with our activities are outlined in a specific principal risks and uncertainties section. This section of the annual report is produced in accordance with Guidance on the Strategic Report, July 2018 issued by United Kingdom's independent regulator, the Financial Reporting Council.
RHA Tungsten
49% Interest owned by Premier
51% Locally indigenized owned by NIEEF
2019 has been the most frustrating year to date at RHA. On the one hand, NIEEF had undertaken to fund the mine and construction of the proposed new decline shaft and on the other, had simply failed to provide the full extent of the funding that they had contractually undertaken to do. The limited funds provided by NIEEF allowed for the plant to be electrified and alleviated much of the holding costs associated with provision of security and staff salaries associated with the ongoing care and maintenance situation. Despite continued communication and perpetuated promises to either fund the mine in terms of the contract or relinquish equity and allow another party to do so, NIEEF to this day has still not taken a decision. Important to bear in mind that the plant is 100% owned by Premier's subsidiary and not by RHA, that Premier is owed money by RHA for rental of the plant and that this specific debt is secured by a cession of the RHA tenements to Premier.
Frustratingly, at the same time Premier has strong interest from both our existing offtake partner as well as two other potential offtake partners, to fund a return to production at RHA based on a lower through put and re-equipping the existing underground operations. The off takers require an update on the RHA report conducted by Bara Consulting Limited that studied this option and the completion of test work and an optimisation of the plant to function at best efficiency based on the lower tonnages. The huge negative sentiment surrounding the ownership and the ongoing refusal on the part of NIEEF to resolve the issue, is the stumbling block.
A forecast short supply of tungsten in early 2021 represents an excellent opportunity to get RHA back to production.
We continue to engage NIEEF.
Recoverability of RHA Mine Assets
The RHA mine assets remain fully impaired at this time and are likely to so remain until NIEEF either funds the operation or another sustainable arrangement, as suggested above, is concluded that allows the mine to be fully funded and returned to operations.
Zulu Lithium and Tantalum Project
Progress at Zulu has been stunted by the ongoing delays in the granting of an EPO. This coupled to the disappointing sentiment in regard to Zimbabwe and falling spodumene and petalite prices has limited exploration spend. Premier sees the granting of the EPO as the trigger to progress development at Zulu. It is worth stating again that the EPO area is both an extension on strike for lithium bearing pegmatites and includes areas prospective for other high value metals.
Premier has a number of options to further Zulu and this includes farm in type agreements related to the next phase of drilling as well as potential Joint Venture partners.
Zulu remains fully impaired for the moment, primarily as a result of the recent price reductions for both spodumene and petalite, and country risk discount applied to projects based in Zimbabwe. In my view, prices of both of these important minerals will recover and the prospects for Zulu are good.
MN Holdings Limited
Otjozondu Mine's mine resource indicates the potential to support many years of mining at current rates of production and with a relatively simple operation represents a major opportunity to upgrade to a substantially higher production rate both in tonnage and grade. Premier's acquisition of our 19% interest, to date, has assured the availability of the plant and machinery to achieve this objective. In the latter part of the year, production was adversely affected by a major drop in the manganese pricing and simultaneous development of logistics challenges. The result was that MNH did not meet the original forecast production and profitability.
The same problems persisted into the early part of 2020 and, as far as the logistics aspects are concerned, the problem was exacerbated by the Covid-19 pandemic. In the latter part of 2019 and currently, Premier set out to assist in resolving these logistics issues and has identified a new logistics channel from mine gate to China port that is expected to cut the logistics cost to below that currently achieved by competitive mines operating in South Africa. At the same time, this logistics channel will immediately allow an increase in production rate to bring the plant utilisation up from the existing 30% at which the plant is currently running. In the past three months ended 31 August 2020, Otjozondu Mine has shipped 11 071 tons at an average grade of 32.7% manganese. The average price paid per dmtu was $3.60 and at the constrained shipment rate, the average dmtu production cost in August was $3.32 on a delivered China port basis.�
In September 2020, the price per dmtu was $3.80 and operating costs are expected to drop quite substantially� as the surplus plant availability is utilised. MNH has forecast EBITDA� for November 2020 at $88 000 and, based on the increased shipment and plant utilisation discussed above, a further significant improvement is expected over the next 12 months. In my view, the production cost per dmtu set out above is unduly conservative in comparison to other South Africa operations. It is important to note that the board of director has resolved that ongoing discussion with MNH will be focused� on profit generation.
Funding
During the reporting period we raised net proceeds of $1.984 million (2018:$1.715 million).
Principal activities and strategic review of the business
The principal activity of Premier and its subsidiary companies (the Group) during the year under review is the mining, exploration, evaluation development and investment in natural resource properties on the African continent
Premier was incorporated on 21 August 2007 in the British Virgin Islands (BVI) as a BVI business company with number 1426861. The registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands. The Company was admitted to trading on the London Stock Exchange's AIM Market on 10 December 2012.
Objectives
During the current year, the primary focus will be:
������To continue to engage directly with MNH;
������Look to acquire potentially cash generative assets;
�����Resolve the status in Zimbabwe, either that the EPO is granted and RHA equity and funding is resolved or seek a disposition of these assets
������Identify and secure high value exploration targets in other jurisdiction.
Principal risks and uncertainties
The Group is subject to a number of risks and uncertainties which could have a material effect on its business, operations or future performance, including but not limited to:
Credit Risk
Credit risk is the risk of potential loss to the Company if counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets, including cash, receivables, and balances receivable from the government. The Company limits the exposure to credit risk in its cash by only investing its cash with high-credit quality financial institutions in business and savings accounts, guaranteed investment certificates and in government treasury bills which are available on demand by the Company for its programs. The Company does not invest in money market funds. The Company has no risk exposure to asset backed commercial paper or auction rate securities.
Liquidity Risk
Liquidity risk is the risk that the Company will not have the resources to meet its obligations as they fall due. The Company manages this risk by closely monitoring cash forecasts and managing resources to ensure that it will have sufficient liquidity to meet its obligations. Also refer to the going concern section below.
Operating Risks
The activities of the Group are subject to all of the hazards and risks normally incidental to exploring and developing natural resource projects. These risks and uncertainties include, but are not limited to environmental hazards, industrial accidents, labour disputes, geo-political risks, encountering unusual or unexpected geologic formations or other geological or grade problems, unanticipated changes in rock formation characteristics and mineral recovery, encountering unanticipated ground or water conditions, land slips, flooding, periodic interruptions due to inclement or hazardous weather conditions and other acts of God or un-favourable operating conditions and losses.
Should any of these risks and hazards affect the Group's exploration, development or mining activities, it may cause the cost of production to increase to a point where it would no longer be economic to extract minerals from the Group's properties, require the Group to write-down the carrying value of one or more of its assets, cause delays or a stoppage of mining and processing, result in the destruction of mineral properties or processing facilities, cause death or personal injury and related legal liability, any and all of which may have a material adverse effect on the Group.
Early-stage Business Risk
The Group's success will depend on its ability to raise capital and generate cash flows from production in the future at MNH and potentially RHA should NIEEF meet their funding obligations. The board of directors manages this risk by monitoring cash levels and reviewing cash flow forecasts on a regular basis.
Market Risk (exchange rates, commodity and equity)
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. These fluctuations may be significant.
Interest Rate Risk: The Company is exposed to interest rate risk to the extent that its cash balances bear variable rates of interest. The interest rate risks on cash and short-term investments and on the Company's, obligations are not considered significant.
Foreign Currency Risk: The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates against the Company's functional currency, which is the United States dollar ("USD").� The Company expects to continue to raise funds in the United Kingdom. The Company conducts its business in Zimbabwe with a significant portion of expenditures in that country historically denominated in USD and now also in RTGS Dollars ("RTGS$"). The introduction of the RTGS$ during the financial year has resulted in the devaluation of the RTGS$ against the US Dollar. This devaluation has also resulted in the Zimbabwean economy going into hyperinflationary status. To a large extent this is beneficial to Premier as its Zimbabwean assets are fully impaired. The remaining liabilities are inflation adjusted at each reporting period yielding foreign exchange gains on conversion to USD. Additionally, a portion of the Company's business is conducted in South African Rands ("ZAR").� As such, it is subject to risk due to fluctuations in the exchange rates between the USD and each of the RTGS$, ZAR and GBP. A significant change in the currency exchange rates between the USD relative to foreign currencies could have an effect on the Company's results of operations, financial position or cash flows.� The Company has not hedged its exposure to currency fluctuations.
Commodity Price Risk - While the value of the Company's core mineral resource properties, RHA and Zulu are related to the price of tungsten and lithium and the outlook for these minerals, the Company currently does not have any substantially owned operating mines and hence does not have any hedging or other commodity-based risks in respect of its operational activities. The Company minority interest in MNH results in limited control of how MNH mitigate the risk associated with Manganese price fluctuations.
Early-stage Project Risk
RHA moved into production during 2017, which was then suspended on 9 January 2018. Zulu is at an early stage of development. In advancing these projects to the stage where they may be cash generative, many risks are faced, including the inherent uncertainty of discovering commercially viable reserves, the capital costs of exploration, competition from other projects seeking financing and operating in remote and often politically unstable environments. While discovery of a mineral deposit may result in substantial rewards, few properties that are explored are ultimately developed into economically viable operating mines. Major expenditure may be required to establish reserves and it is possible that even preliminary due diligence will show adverse results, leading to the abandonment of projects. Whether a mineral deposit will become commercially viable depends on a number of factors, some of which are the particular attributes of the deposit, proximity to infrastructure, financing costs and governmental regulations. The effect of these factors can only be estimated and cannot be accurately predicted.
Environmental Risks and Hazards
All phases of the Group's operations are subject to environmental regulation in the areas in which it operates. Environmental legislation is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that existing or future environmental regulation will not materially adversely affect the Group's business, financial condition and results of operations. Environmental hazards may exist on the properties on which the Group holds interests that are unknown to the Group at present. The Board manages this risk by working with environmental consultants and by engaging with the relevant governmental departments and other concerned stakeholders.
Licencing Risk
The Company's exploration and development activities are dependent upon the grant of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitations or performance criteria. Such licences and permits are as a practical matter subject to the discretion of the applicable Government or Government office. The Group must comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted. The interpretations, amendments to existing laws and regulations, or more stringent enforcement of existing laws and regulations could have a material adverse impact on the Group's results of operations and financial condition. Whilst the Company continually seeks to do everything within its control to ensure that the terms of each licence are met and adhered to, third parties may seek to exploit any technical breaches in licence terms for their own benefit. There is a risk that negotiations with a Government in relation to the grant, renewal or extension of a licence may not result in the grant, renewal or extension taking effect prior to the expiry of the previous licence period, and there can be no assurance of the terms of any extension, renewal or grant.
Political and Regulatory Risk
The Group's operating activities in Africa, notably in Zimbabwe, are subject to laws and regulations governing expropriation of property, health and worker safety, employment standards, waste disposal, protection of the environment, mine development, land and water use, prospecting, mineral production, exports, taxes, labour standards, occupational health standards, toxic wastes, the protection of endangered and protected species and other matters. The Group is dependent on the political and economic situation in these countries and may be adversely impacted by political factors such as expropriation, war, terrorism, insurrection and changes to laws governing mineral exploration and operations.
Internal Control and Financial Risk Management
The Board has overall responsibility for the Group's systems of internal control and for reviewing their effectiveness. The Group maintains systems which are designed to provide reasonable but not absolute assurance against material loss and to manage rather than eliminate risk.
The key features of the Group's systems of internal control are as follows:
? Management structure with clearly identified responsibilities;
? Production of management information presented to the Board;
? Day to day hands on involvement of the Executive Directors and Senior Management; and
? Regular board meetings and discussions with the Non-executive directors.
The Group's activities expose it to a number of financial risks including cash flow risk, liquidity risk and foreign currency risk. The Group has identified certain short coming in the financial control systems, which are currently in the process of being addressed.
Disclosure of management's objectives, exposure and policies in relation to these risks can be found in note 29 to these financial statements.
Environmental Policy
The Group is aware of the potential impact that its subsidiary companies may have on the environment. The Group ensures that it complies with all local regulatory requirements and seeks to implement a best practice approach to managing environmental aspects.
The RHA located in Zimbabwe was granted approval of its Environmental Impact Assessment and was permitted to undertake mining operations by the Environmental Management Agency of Zimbabwe.
Health and Safety
The Group's aim is to achieve and maintain a high standard of workplace safety. In order to achieve this objective, the Group provides ongoing training and support to employees and sets demanding standards for workplace safety.
Going Concern
These consolidated financial statements are prepared on the going concern basis. The going concern basis assumes that the Group will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities and commitments in the normal course of business.
The Directors have prepared cash flow forecasts for the period ending 31 December 2021, on the basis of the following considerations, inter alia:
RHA
������ The Company has not funded any of the activities at RHA since 1 July 2019.
Zulu
������ The Company will seek to secure the EPO for Zulu and thereafter fund development of Zulu on the basis of a "farm-in" or joint venture agreement with prospective partners.
������ The Company will only maintain the tenements and will not provide any further funding.
The Group
������ The cash flow is dependent on additional capital being raised. There remains an active and liquid market for the Company's shares and the Company has historically been able to raise funding through equity placements and the Board believes that it will continue to be able secure the funds required for ongoing working capital needs going forward.
������ The Company is anticipating its investment in MNH to start yielding a cash return on investment in the last quarter of 2020.
������ The Company is seeking to diversify its operations and risk profile and limit the funds that need to be raised through equity placements to provide necessary funding for the Company's significantly reduced fixed overhead.
In the event that the Company is unable to obtain additional equity finance for the Group's working capital, a material uncertainty exists which may cast significant doubt on the ability of the Group to continue as a going concern and therefore be unable to realise its assets and settle its liabilities in the normal course of business. Refer to note 5 for further information.
In this regard, it should be noted that I have provided an undertaking to the Company such that I will not require any repayment in cash of any loan balance or accrued and unpaid fees if to do so means the Company would be unable to meet its debts as they fall due, and that I would undertake to provide working capital should the Company so require for that purpose and the Company is unable to secure such working capital as anticipated herein.
George Roach
Chief Executive Officer
30 September 2020
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Directors' Report
Results
The audited financial statements for the year ended 31 December 2019 are set out on pages 26 to 77. The Group reported a loss before and after tax of $1.209 million for the year ended 31 December 2019 (2018: $7.758 million).
The loss before and after tax includes:
������A gross trading profit after depreciation and amortisation is $nil (2018: $0.011 million);
������Administration expenses amounting to $1.871 million (2018: $2.834 million);
������Given that RHA is under care and maintenance, it was decided to impair the carrying value in full of the RHA assets by $0.483 million (2018:$0.244 million);
������Finance costs amounting to $0.140 million (2018: $0.153 million); and
������Impairment of intangible assets - Zulu Lithium of $nil (2018: $4.563).
The total comprehensive loss for the year amounted to $26.238 million (2018: $7.758 million)
Dividends
The Directors do not recommend the payment of a dividend in respect of the year under review.���
Fund-raising and capital
During the 2019 financial year net funds of $1.983 million were raised through direct subscriptions from the issue of share capital (2018: $1.415 million) were raised through the issuing of loan notes.
There remains an active and very liquid market for the Group's shares.
Borrowings
During the prior years, George Roach had provided bridge loan financing of $0.56 million, of which $0.100 million was converted to equity during 2017. At the year ended 31 December 2019 $0.219 million was still owing. During the current year additional funding was procured from Brendan Roach and Regent Mercantile. The amounts outstanding at year end were $0.128 million and $0.368 million respectively.
Further information on these transactions is included in note 17 and 31.��
Other key elements of financial position
Exploration and Evaluation costs of $nil (2018: $0.272 million) were capitalised on the Zulu in Zimbabwe.
The Company's holdings in Circum amount to $6.263 million (2018: $6.263 million).
�The Company's holdings in MN Holdings amount to $1.181 million (2018: $nil).
Some $0.483 million was invested in the acquisition of property, plant and equipment during the year (2018: $0.196 million).
Events after the reporting date
At the date these financial statements were approved, the Directors were not aware of any significant events after the reporting date other than those set out in note 32 to the financial statements.
Directors
The Directors of Premier who served during the period or subsequently were:
������ George Roach (appointed on incorporation April 2007);
������ Michael Foster (appointed 26 February 2015, resigned 23 September 2019);
������ Godfrey Manhambara (appointed 27 September 2017);
������ Wolfgang Hampel (appointed 10 April 2018); and
������ Neil Herbert (appointed 28 August 2019).
Share capital
Premier's shares are publicly traded on AIM with the stock ticker of PREM. As at the 31 December 2019, the Company's issued share capital consists of 11�266�071 579 (note 18) Ordinary Shares of no par value.
The company does not hold any Ordinary Shares in treasury.
Major Shareholders
As at 31 August 2020 the Company was aware of the following persons who hold, directly or indirectly, voting rights representing 3% or more of the issued share capital of the Company to which voting rights are attached:
| Name | Number of Ordinary Shares | % Issued Share Capital� |
| George Roach* James Goozee# | 932 869 111 934�333 128 | �7% 7.1% |
* George Roach and/or structures associated with G Roach. The percentage of shares not held in public hands is 8.4%.
# James Goozee and/or his wife Mrs. Elizabeth Goozee.
There are no restrictions on the transfer of the Company's AIM securities.
Corporate Governance Statement
Premier is committed to maintaining the highest standards in corporate governance throughout its operations and to ensure all its practices are conducted transparently, morally and efficiently. Therefore, and in accordance with the AIM Rules for Companies (March 2018), Premier will seek to comply with the provisions of The UK Corporate Governance Code July 2016, as published by the Financial Reporting Council Limited, to the extent the Board consider appropriate, given the Company's size, stage of development and resources (the "Code").
Throughout the Reporting Period, the Company has continued to adhere to this Code and the following statement sets out how the Company complies or otherwise departs from the principles of the Code.
Premier constantly seeks to maintain the highest levels of corporate governance whereby the Company ensures that a periodic review of the Company's corporate governance is done. Following this recent review, there have been no corporate governance issues identified by Premier.
Accordingly, the Company has established specific committees and implemented certain policies, to ensure that:
������ it is led by an experienced Board which is collectively responsible for the long-term success of the Company;
������ the Board and the committees have the appropriate balance of skills, experience, independence and knowledge of the Company to enable them to discharge their respective duties and responsibilities effectively;
������ the Board establish a formal and transparent arrangement for considering how it applies the corporate reporting, risk management and internal control principles and for maintaining an appropriate relationship with the Company's auditors; and
������ there is a dialogue with shareholders based on the mutual understanding of objectives.
During the year, the board of directors held one formal board meeting that was attended by all members in office. The board of directors held a number of informal virtual board calls with the attendance of all directors in office to discuss the operations of the Company. Since the year end, the board of directors have held 3 formal board meetings and continue to implement the policy of holding informal board calls as so required. The various committees of the Company have continued to meet from time to time in accordance with the requirements of the Company's ongoing operations.
In addition, the Company has adopted a comprehensive suite of policies including:
������ anti-corruption and bribery;
������ health and safety;
������ environment and community;
������ IT, communications and systems; and
������ social media.
The Code followings 5 Main Principles, which are herein assessed in accordance with Premier commitment to maintain the highest levels of corporate governance.
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1.��� Leadership
The Role of the Board of Directors
The Board is responsible for the management of the business of the Company, setting its strategic direction and establishing appropriate policies. It is the Directors' responsibility to oversee the financial position of the Company and monitor its business and affairs on behalf of the Shareholders, to whom they are accountable. The primary duty of the Board is always to act in the best interests of the Company. The Board also addresses issues relating to internal control and risk management. The Non-executive Director bring a wide range of skills and experience to the Company, as well as independent judgment on strategy, risk and performance. The Non-executive Director is considered by the Board to be independent at the date of this report. To achieve its objectives, the Board strictly adheres to the Code.
The Board meets at least three times a year with supplementary meetings held as required. The agenda for the Board meetings is prepared jointly by the Chairman and CEO. The Board maintains annual rolling plan ("Agenda") of items for discussion to ensure that all matters reserved for the Board, with other items as appropriate, are addressed. The Agenda, with all accompanying documents, generally includes the following:
������ Review of previous minutes;
������ Discussion on various project activities and market conditions;
������ Management Accounts and Financial position;
������ Corporate Matters; and
������ Other business matters that Board members can freely raise beyond the defined Agenda.
The Annual Accounts of Premier best reflects the Board key types of decisions that the Board are required to take in their pursuant of maintaining the highest levels of corporate governance. The following matters are reserved for the Board;
������ Strategy, Policy and Management;
������ Group Structure and capital requirements;
������ Financial reporting and controls;
������ Internal and External controls;
������ Transactions and Commercial Contracts including delegation authority;
������ Board structure; and
������ Corporate governance matters.
Premier has established varies committees to assist the Board in maintain the highest levels of corporate governance. Of these committees, the following two strongly assist the decision making of the Board;
Audit Committee
The Audit Committee ("AC"), which comprises of George Roach, Godfrey Manhambara and Neil Herbert, and is chaired by Neil Herbert, is responsible for the appointment of auditors and the audit fee, and for ensuring that the financial performance of the Company is properly monitored and reported. The Audit Committee, inter alia, meets with the Company's external auditor and its senior financial management to review the annual and interim financial statements of the Company, oversees the Company's accounting and financial reporting processes, the Company's internal accounting controls and the resolution of issues identified by the Company's auditors.
Other key aspects of the AC include:
������ reviewing the Company's accounting policies and reports produced by internal and external audit functions;
������ considering whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, considering the views of the external auditor;
������ reporting its views to the board of directors if it is not satisfied with any aspect of the proposed financial reporting by the Company;
������ reviewing the adequacy and effectiveness of the Company's internal financial controls and internal control and risk management systems;
������ reviewing the adequacy and effectiveness of the Company's anti-money laundering systems and controls for the prevention of bribery and receive reports on non-compliance; and
������ overseeing the appointment of and the relationship with the external auditor.
Remuneration Committee
The Remuneration Committee comprises of Godfrey Manhambara and Neil Herbert and is chaired by Godfrey Manhambara. The Remuneration Committee assumes general responsibility for assisting the Board in respect of remuneration policies for Premier. The Committee reviews and recommends remuneration strategies for the Company and proposals relating to compensation for the Company's officers, directors and consultants and assesses the performance of the officers of the Company in fulfilling their responsibilities and meeting corporate objectives. It has the responsibility for, inter alia, administering share and cash incentive plans and programmes for Directors and employees and for approving (or making recommendations to the Board on) share and cash awards for Directors and employees.
The Division of Responsibility of the Board of Directors
It is important that the Board itself contains the right mix of skills and experience to deliver the strategy of the Company. The roles of the Chairman and Chief Executive Officer ("CEO") are no longer exercised by the same person. There is no one individual or group of individuals on the Board that have unfettered powers of discretion nor is there any undue influence in the collective decision-making ability of the Board.
The responsibilities of the Chairman, CEO and Non-executive director are set out in writing and are review by the Board annually to ensure that it remains relevant and accurate. In brief summary, they are responsible as followings;
������ The Chairman's role is to lead and manage the Board and play a role in facilitating the discussion of the Company's strategy, as set by the Board. And to effectively promote the success of the Company.
������ The CEO's role, including the role of the Technical Director, is the responsibility of the day-to-day management of the Company's operational activities, and for the proper execution of the stagey as set by the Board.�
������ The Non-executive directors, act as a member of the unitary Board, however, they are required to constructively challenge performance of management and help develop proposals on strategy, agreeing of goals and the Company key objectives.
2.��� Effectiveness
The Composition of the Board
The Board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the Company to enable them to discharge their respective duties and responsibilities effectively.
�As such, the Board has been structured to ensure that correct mix of skills and experience are in place to allow it to operate effectively:
������ A Non-Executive Chairman (Neil Herbert), whose primary responsibility to lead and manage the Board. This remain vital in the delivery of the Company's corporate governance model. The Chairman has a clear separation from the day-to-day business of the Company which allows him to make independent decisions.
������ a CEO (George Roach), whose primary focus is communicating, on behalf of the Company, with shareholders, government entities, and the public. Leading the development of the Company's short- and long-term strategy.
������ a Technical Director (Wolfgang Hampel), whose is responsible for leading, co-ordinating and optimising the performance of the both mining and exploration services. With a further responsibility for geological and mine planning activities, his role is critical in ensuring the quality and efficiency of Premier geology, and
������ one independent Non-Executive Director (Godfrey Manhambara).
The Code requires that a smaller company (and which the Company is under the Code) should have at least two independent non-executive directors. Godfrey Manhambara is independent under the Code. The Board also regards Neil Herbert as independent, notwithstanding that he participates in the Company's share option plan and had an interest in MNH. The Board is satisfied that Neil Herbert acts independently irrespective of these interests. The Board also notes that no single individual will dominate decision making and further notes that there has been sufficient challenge of executive management at meetings of the Board thereby confirming that the Board is capable of operating effectively.
The Board has not appointed a senior Finance Director but is actively seeking for the appropriate candidate. Additionally, the Company has a Company Secretary in the UK who assists the Chairman and CEO in preparing for and running effective board meetings, including the timely dissemination of appropriate information. The Company Secretary provides advice and guidance to the extent required by the Board on the legal and regulatory environment.
The Nomination Committee ("NC") has been established to regularly review and ensure that the Board has the appropriate balance of skills, experience and knowledge of the Company. NC meets as required to consider the composition of and succession planning for the Board, and to lead the process of appointments to the Board. The Committee is made up of George Roach and Wolfgang Hampel and is chaired by George Roach.
Other key aspects of the NC include:
������ regularly reviewing the structure, size and composition (including the skills, knowledge, experience and diversity) of the board and make recommendations to the board about any changes, succession planning and vacancies; and
������ identifying suitable candidates from a wide range of backgrounds to be considered for positions on the board.
Appointments to the Board
The appointment of new Directors to the Board is led by the NC who has the responsibility for nominating candidates for appointment. Both the NC and Board considers the need for diversity, including equality, and that the new directors must exhibit the required skills, experience, knowledge and independence.
The Board acknowledges that the Company is not in compliance with the Code whereby the NC should comprise a majority of independent directors. The Board considers that the NC has a strong enough independent component with Godfrey Manhambara.
Commitment
The Board requires that all directors should be able to allocate sufficient time to the Company to discharge their responsibilities in accordance their letter of appointment. The Company maintains records of each letter of appointment, which can be inspected at an agreed time, at the Company's registered office.
The NC is responsible for considering on an annual basis, whether each director is able to devote sufficient time to their duties.
Development
All directors are required to familiarise themselves with the Board and should regularly update and refresh their skills and knowledge. The Company provides each joining director with an induction on the Company. Each induction is tailored to the specific background and requirements of the new director. In general, the induction contains information on:
������ Structures and operations;
������ Board procedures;
������ Corporate Governance; and
������ Details regarding their duties and responsibilities.
Information and Support
As Premier constantly seeks to maintain the highest levels of corporate governance, it is imperative that information is supplied to the Board in a form and of a quality appropriate to enable the Board to discharge its duties in a timely manner. The supply of the information is done by the Chairman with the assistance of the Company Secretary.
Premier encourage all Board members to seek independent professional advice (at the reasonable expense of the Company) in the furtherance of their duties. The Board is given sufficient opportunity to meet with any manager, consultant or contractor to gain further insight into Premier.
Evaluation
The Board recognises that it should undertake a formal and rigorous annual evaluation of its own performance, that of its committees and individual directors. The evaluation of the Board's performance is an assessment of the following key factors:
������ The Board structure;
������ The Board's performance;
������ The Board business strategy;
������ Financial reporting and controls;
������ Performance monitoring; and
������ Supporting and advisory roles.
The Board is not in compliance with the Code as the evaluation process is usually conducted internally due to the size and complexity of the operations of the Company. Furthermore, the Board believes that internal assessment best help identify the key strength and weaknesses to allow for effective evaluation. The Board will continue to assess the internal review process against the growth of the Company as should the Company grow in size it may consider getting an independent assessment.
The Chairman meets annually with the Non-executive directors without the executive directors to discuss the Board balance, monitor the powers of individual executive directors and raise any other appropriate issues. A similar review is also undertaken of the Chairman whereby the senior executive director meets with the Non-executive directors.
Re-election
The Board believe that all directors should be submitted for re-election at regular intervals, subject to the continued satisfactory performance of the Company.
The Director longest in office since their last appointment is required to retire by rotation or stand for reappointment at the Annual General Meeting ("AGM").
3.��� Accountability
Financial and Business reporting
A key duty of the Board is to oversee the financial affairs of the Company. The Financial Statements is the Board's primary means of presenting a fair, balanced and understandable assessment of the Company's positions that also best provides the information necessary to allow shareholders to assess the Company's performance, business model and strategy for that period.
You can view Premier Annual Report and Financial Statements on the Company's webpage at the following address, www.premierafricanminerals.com. Under the Strategic Review section of the Company's Annual Report and Financial Statements for the year ended December 2019, the Board set outs the strategic objectives of the Company, how these will be delivered, Premier business model and how the Company will generate and preserve value over the longer term for shareholders.
The Board have a reasonable expectation that the Group has adequate resources to continue in operations or existence for the foreseeable future thus continues to adopt the going concern basis in preparing its Annual Report and Financial Statements. Refer to note 5 to the financial statements.
Risk Management and Internal Control
The Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The Board manages the risk through the implementation of internal control systems.
The Board has identified the following as some of the risks and their mitigation:
�����Credit Risk: Credit risk is the risk of potential loss to the Company if counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets, including cash, receivables, and balances receivable from the government. The Company limits the exposure to credit risk in its cash by only investing its cash with high-credit quality financial institutions in business and savings accounts, guaranteed investment certificates and in government treasury bills which are available on demand by the Company for its programs.
�� � �Liquidity Risk: Liquidity risk is the risk that the Company will not have the resources to meet its obligations as they fall due. The Company manages this risk by closely monitoring cash forecasts and managing resources to ensure that it will have enough liquidity to meet its obligations.
�����Operating Risks: The activities of the Company are subject to all of the hazards and risks normally incidental to exploring and developing natural resource projects. These risks and uncertainties include, but are not limited to environmental hazards, industrial accidents, labour disputes, geo-political risks, encountering unusual or unexpected geologic formations or other geological or grade problems, unanticipated changes in rock formation characteristics and mineral recovery, encountering unanticipated ground or water conditions, land slips, flooding, periodic interruptions due to inclement or hazardous weather conditions and other acts of God or un-favourable operating conditions and losses. The Company manages the risk by closing monitoring operations and maintaining adequate insurance cover.
�����Early-stage Business Risk: The Board manages this risk by monitoring cash levels and reviewing cash flow forecasts on a regular basis.
�����Market Risk (exchange rates, commodity and equity): Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. The Company manages the risk by closing monitoring exchange rates, commodity and equity markets. The Company further engages consultants to undertake commodity forecasts.�
�����Interest Rate Risk: The Company is exposed to interest rate risk to the extent that its cash balances bear variable rates of interest. The interest rate risks on cash and short-term investments and on the Company's, obligations are not considered significant and is not mitigated at this time.
������Foreign Currency Risk:� The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates against the Company's functional currency, which is the United States dollar ("USD").� The Company has not hedged its exposure to currency fluctuations.
������Environmental Risks and Hazards: All phases of the Company's operations are subject to environmental regulation in the areas in which it operates. The Board manages this risk by working with environmental consultants and by engaging with the relevant governmental departments and other concerned stakeholders.
�� � �Licencing Risk: The Company's exploration and development activities are dependent upon the grant of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitations or performance criteria. Such licences and permits are as a practical matter subject to the discretion of the applicable Government or Government office. The Group must comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted. The interpretations, amendments to existing laws and regulations, or more stringent enforcement of existing laws and regulations could have a material adverse impact on the Group's results of operations and financial condition. Whilst the Company continually seeks to do everything within its control to ensure that the terms of each licence are met and adhered to, third parties may seek to exploit any technical breaches in licence terms for their own benefit. There is a risk that negotiations with a Government in relation to the grant, renewal or extension of a licence may not result in the grant, renewal or extension taking effect prior to the expiry of the previous licence period, and there can be no assurance of the terms of any extension, renewal or grant.
�����Political and Regulatory Risk: The Company operating activities in Africa, notably in Zimbabwe, and Namibia, are subject to laws and regulations governing expropriation of property, health and worker safety, employment standards, waste disposal, protection of the environment, mine development, land and water use, prospecting, mineral production, exports, taxes, labour standards, occupational health standards, toxic wastes, the protection of endangered and protected species and other matters. The Group is dependent on the political and economic situation in these countries and may be adversely impacted by political factors such as expropriation, war, terrorism, insurrection and changes to laws governing mineral exploration and operations.
�����Internal Control and Financial Risk Management: The Board has overall responsibility for the Group's systems of internal control and for reviewing their effectiveness. The Group maintains systems which are designed to provide reasonable but not absolute assurance against material loss and to manage rather than eliminate risk.
The Board has overall responsibility for maintaining and reviewing the Group's system of internal control and ensuring that the controls are robust and effective in enabling risks to be appropriately assessed and managed.
Refer to the principle risks and uncertainties as set out in the Strategic Report for additional information on these risks.
On behalf of the Board, the AC conducts an annual review of the effectiveness of the systems of internal control including financial, operational and compliance controls and risk management systems.
Audit Committee and Auditors�
The functions of the AC are clearly described as part of the Leadership function in this note.
Whilst the Board sets the Company risk appetite, it reviews the operations and effectiveness of the Company's risk management activities through the AC, which undertake the day-to-day oversight of the risk management framework on behalf of the Board. The Chairman of the AC regularly provides an update on the work carried out by the AC to the board.
It is noted that the AC follow the recommendations of the Code whereby they monitor and review the effectiveness of the internal audit activities. However, at this time, the Board have determined that the appointment of internal auditor is not required due to the size of the Company.
4.��� Remuneration
The Level and Components of Remuneration
Executive directors' remuneration should be designed to promote the long-term success of the Company. Performance-related elements should be transparent, stretching and rigorously applied. The Board delegates the responsibility for setting the appropriate levels of remuneration for its directors to the Remuneration Committee.
The levels of Remuneration to directors are disclosed to shareholders in Premier Annual Report and Financial Statements. Both the Board and Remuneration Committee seek to provide appropriate reward for the skill and time commitment required so at to retain the right calibre of director at a cost to the Company and which reflects the current market rates.
Procedure
The Board have a formal and transparent procedure for developing policy on the executive remuneration and for fixing the remuneration packages of individual directors. As strict policy, no director is involved in deciding their own remuneration.
The Remuneration Committee consider and approves the remuneration and where applicable, incentives and benefits, and makes recommendations to the Board. The Committee will also govern employee share schemes. The Chairman of the Committee will be consulted by the CEO in respect of the Company and director's performance approvals, compensation and in respect of any appointment/departures from roles.
The remuneration of non-executive directors shall be a matter for the executive members of the Board.
The Company has adopted a share dealing code to ensure directors and certain employees do not abuse, and do not place themselves under suspicion of abusing inside information of which they are in possession and to comply with its obligations under MAR which applies to the Company by virtue of its shares being traded on AIM. Furthermore, the Company's share dealing code is compliant with the AIM Rules for Companies published by the London Stock Exchange (as amended from time to time).
Under the share dealing code, the Company must:
����disclose all inside information to the public as soon as possible by way of market announcement unless certain circumstances exist in which the disclosure of the inside information may be delayed;
������keep a list of each person who is in possession of inside information relating to the Company;
�����procure that all persons discharging managerial responsibilities and certain employees are given clearance by the Company before they are allowed to trade in Company securities; and
������procure that all persons discharging managerial responsibilities and persons closely associated to them notify both the Company and the Financial Conduct Authority of all trades in Company securities that they make.
Additionally, under the share dealing code, no person discharging managerial responsibilities is permitted to deal in Company securities (whether directly or through an investment manager) during a closed period; being the period either: from the end of the relevant financial year up to the release of the preliminary announcement of the Company's annual results; from the end of the relevant financial period up to the release of the Company's half-yearly financial report or; 30 calendar days before the release of each of the Company's first quarter report and third quarter report.
For details of the directors' remuneration refer to note 27.
5.��� Relations with Shareholders
Dialogue with shareholders
The Company recognises that maintaining strong communications with its shareholders promotes transparency and will drive value in the medium to long-term. Accordingly, the Company has an established programme to communicate with shareholders. This done by providing regular updates on the progress of the Company, detailing recent business and strategy developments, in news releases which will be posted on the Company's website and through certain social media channels. The Board has also engaged an internal Investor Relations Officer (Fuad Sillem) who assist in maintaining the strong levels communication with shareholders.
The Disclosure Committee which comprises of George Roach and Wolfgang Hampel and is chaired by Wolfgang Hampel is in place to assist the Board with the dialogue between the Company and its shareholders. The Disclosure Committee assumes general responsibility for approval and monitoring compliance with the Company's disclosure controls and procedures. It has the responsibility, inter alia, determining whether information is inside information, deciding whether the inside information is to be announced as soon as possible and reviewing the scope, content and accuracy of disclosure. The Company has adopted a share dealing code governing the share dealings of the Directors and applicable employees during close periods and is in accordance with Rule 21 of the AIM Rules.
The Chairman and CEO are contactable via email. Their email address can be obtained at either the Company's registered office or by requesting them at the below address. To continually improve transparency, the Board would be delighted to receive feedback from shareholders. Communications should be directed to [email protected]. The CEO has been appointed to manage the relationship between the Company and its shareholders and will review and report to the Board on any communications received.
Constructive Use of General Meetings
The Company holds AGM each year, whereby all of the directors aim to attend the AGM and value the opportunity of welcoming individual shareholders and other investors to communicate directly and address their questions.
In addition to the mandatory information required and procedures to calling a general meeting, which can found under the Company's constitutional documents on the webpage, the Board ensure that a full, fair and balanced explanation of business of all general meetings is sent in advance to shareholders.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and financial statements and have prepared the Group financial statements in accordance with International Financial Reporting Standards in order to give a true and fair view of the state of affairs of the Group and of its profit or loss for that period, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
�
In preparing these financial statements the directors are required to:
������ select suitable accounting policies and then apply them consistently;
������ make judgements and accounting estimates that are reasonable and prudent;
������ state whether they have been prepared in accordance with IFRSs, subject to any material departures disclosed and explained in the financial statements; and
������ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.
�
The directors are responsible for keeping records that are sufficient to show and explain the Group and Company's transactions and will, at any time, enable the financial position of the Group and Company to be determined with reasonable accuracy. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
�
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the British Virgin Islands governing the preparation and dissemination of the Company's financial statements and other information included in the annual reports may differ from legislation in other jurisdictions.
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The directors consider this Annual report and accounts, taken as a whole, is fair, balanced, understandable, and provides the information necessary for shareholders to assess the company's position, performance, business model and strategy.
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Statement of disclosure to auditor
The directors who were in office at the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the directors has confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.
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Viability statement and going concern
The Board has assessed the prospects of the Group over a period of 12 months from the date of approval of these financial statements, involving a review of the Group's forecast prepared for the year ending 31 December 2021 and taking account of the Board's intentions for future activities after that date. As explained further in note 5, taking account of the Group's current position and principal risks, over a 12 month period, the Board has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over that period albeit additional funding will be required to enable the Group to meet all of its objectives. The raising of additional funding is fundamental to the future success of the business and therefore gives rise to a material uncertainty, although the Board notes the Group's successful track record in having raised finance in the past as necessary to meet the Group's ongoing cash requirements.
�
The Board considers these periods of assessment to be appropriate because they contextualise the Company's financial position, business model and strategy.
George Roach
Chief Executive Officer
30 September 2020
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PREMIER AFRICAN MINERALS LIMITED
�
Opinion
We have audited the consolidated financial statements of Premier African Minerals Ltd (the 'Group') for the year ended 31 December 2019 which comprise the consolidated statement of financial position, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and the notes to the consolidated financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
�
In our opinion:
������ the Group financial statements give a true and fair view of the state of the Group's affairs as at 31 December 2019 and of the Group's loss for the year then ended; and
������ the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
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Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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Material uncertainty related to going concern
We draw attention to note 5 in the Group financial statements, which indicates that the Group will need to raise additional finance in order to maintain with its mining programmes and to meet its recurring expenditure, and that, although the Group has been successful in the past in raising additional finance, there can be no assurance that the funding required by the Group will be made available to it when needed or, if such funding were to be available, that it would be offered on reasonable terms.
�
As stated in note 5, these conditions, along with the other matters as set forth in note 5, indicate that a material uncertainty exists that may cast significant doubt over the Group's ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue.
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Whilst there is a global impact of the COVID-19 outbreak, the Group has been able to operate during the pandemic to date. It remains difficult to assess reliably whether there will be any material disruption in the future which could adversely impact the Group's forecast.
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See the going concern assumption key matter on pages 21 to 22� where we describe how we have� evaluated management's assessment and the key observations arising with respect to that evaluation.
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Our opinion is not modified in respect of this matter.
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Our audit approach
Overview
Key audit matters
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Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
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������ Going concern assumption
������ Valuation of the rehabilitation provision
������ Fair value of investments
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These are explained in more detail below.
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Key audit matters
| Key audit matter | How our audit addressed the key audit matter |
| Going concern assumption � The Group is dependent upon its ability to generate sufficient cash flows to meet continued operational costs and hence continue trading. � The Directors have considered the cash requirements of the business for the following 12 months. As part of this process, they have taken into account existing liabilities, along with detailed operating cashflow requirements. The projections prepared include ongoing running costs of the Group and committed expenditure at the date of approving the financial statements. � The Directors have identified a variety of potential sources of funds including issue of additional equity and/or debt and shareholder loans. � Key assumptions that impact the conclusions are the ability to fundraise and the ability to control operating costs. � These are therefore inherent risks that the forecasts may understate future costs, and that the Group will not be able to operate within its cash resources and continue to operate as a going concern. � The COVID-19 pandemic has created a great deal of uncertainty regarding the future outlook of the business. � | � � We have performed the following audit procedures: � ������ Evaluated the suitability of management's model for the forecast. � The forecast includes a number of assumptions related to future cash flows and associated risks. Our audit work has focused on evaluating and challenging the reasonableness of these assumptions and their impact on the forecast period and ensuring that all key matters are correctly disclosed in the going concern note. � Specifically, we obtained, challenged and assessed management's going concern forecast and performed procedures including: ������ Verifying the consistency of key inputs and fund raisers relating to future costs to other financial and operational information obtained during the audit; ������ Corroborated with management relating to future cash inflows. ������ We reviewed the latest management accounts to gauge the financial position. ������ We performed sensitivity analysis on the cash flow forecasts prepared by the directors. ������ We performed a mechanical check on the cash flow forecast model prepared by the directors. ������ Considered the Group's historic ability to raise funds; and ������ Reviewed the financing options available to the Group to evaluate the ability of the Group to pay their debts as they become due. � We have enquired with management as to the impact of COVID-19 and the steps being taken to limit the impact of the pandemic on the business. We have reviewed forecasts and latest bank balances to ensure the Group can cover its overheads. The forecasts have been stress tested by management and the assumptions have been challenged. � Due to the risks outlined above, a material uncertainty relating to going concern is highlighted in the auditor's report. � |
| Valuation of the rehabilitation provision � The Group has recognised a rehabilitation provision, under IAS 37 - contingent liabilities and contingent assets, of $388,000 (2018: $983,000), in relation to the future costs to rehabilitate the current mines as per regulation. � The directors are required to assess the provision at the end of each reporting period and adjust to reflect their best estimates of the liability. � The directors consider the liability to be sufficient due to the weakening of the RGTS (Zimbabwe currency) against the Dollar. � � | � � We have performed the following audit procedures: � ������ Assessed the inputs in calculation of the liability. These were based on the original environmental impact assessment as carried out in 2015. � ������ Verified that there were no applicable changes to the regulations which would increase the liability. � ������ We have reviewed expert reports in relation to the year end liability. � ������ We have reviewed calculations for the unwinding of the provision. � Based on the audit work performed we are satisfied that the management have appropriately considered the fair value in accordance with accounting standards. |
| Fair value of investments The Group has recognised Investments of $7,444,000 (2018: $6,263,000) as at the reporting date. Directors are required to assess the fair value of investments at each reporting date under IFRS 9. As neither Circum nor MNH are traded on an active market a level 3 valuation technique was used. The shareholding was based on the most recent placing of the shares in the respective companies, as well as management's best estimates of the fair values. | � We have performed the following audit procedures: ������ Obtain external confirmation of the latest placing value from members of Circum board. ������ Clarified that the Group's purchase of MNH shares were the latest trade. ������ Reviewed management assessment of the fair values to support the value of the investments. ������ Traced existence and ownership to relevant documents |
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Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
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Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
| � | Group financial statements |
| Overall materiality | $75,000 |
| How we determined it | Based on 1% of gross assets |
| Rationale for benchmark applied | We believe that the gross assets is a primary measure used by shareholders in assessing the performance of the Group, as the group is at a pre-revenue stage and is asset heavy. |
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We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $3,750 (Group audit) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
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An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the Group financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which they operate.
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The Group financial statements are a consolidation of 3 reporting units, comprising the Group's operating businesses. The Group comprises the parent undertaking, incorporated in the British Virgin Islands, its principal operating subsidiaries, RHA Tungsten (Private) Limited and Zulu Lithium (Private) Limited, and eleven non-trading or intermediate holding companies, of which seven are registered un Mauritius and 6 in Zimbabwe. A full scope audit to Group materiality levels was performed on the parent undertaking and the trading companies as well as their immediate holding companies. This resulted in 100% coverage of consolidated expenditures and 100% of the Group's gross assets.
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We performed audits of the complete financial information of the Group reporting units, which were individually financially significant and accounted for 100% of the Group's absolute profit before tax (i.e. the sum of the numerical values without regard to whether they were profits or losses for the relevant reporting units). We also performed specified audit procedures over certain account balances and transaction classes that we regarded as material to the Group at the 3 reporting units.
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The Group engagement team performed all audit procedures. It is our responsibility to obtain sufficient appropriate audit evidence regarding the financial information of the entities of the Group.
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Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the Group financial statements and our auditor's report thereon. Our opinion on the Group financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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In connection with our audit of the Group financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the Group financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
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We have nothing to report in this regard.
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Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 18, the directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
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In preparing the Group financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
�
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the Group financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
�
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
�
A further description of our responsibilities for the audit of the Group financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
�
Use of this report
This report is made solely to the Group's members, as a body, in accordance with our engagement letter. Our audit work has been undertaken so that we might state to the Group's members those matters that we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, or the Group's members as a body, for our audit work, for this report, or for the opinions we have formed.
�
�
Sanjay Parmar
Senior Auditor
For and on behalf of
Jeffreys Henry LLP (Statutory Auditors)
Finsgate
5-7 Cranwood Street
London� EC1V 9EE
30 September 2020�����������
�
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | � | � | � |
| AS AT 31 DECEMBER 2019 | � | � | � |
| � | � | 2019 | 2018 |
| EXPRESSED IN US DOLLARS | � | $ 000 | $ 000 |
| � | Notes | � | � |
| ASSETS | � | � | � |
| Non-current assets | � | � | � |
| Intangible assets | 8 | - | - |
| Investments | 9 | 7 444 | 6 263 |
| Property, plant and equipment | 10 | - | - |
| � | � | 7 444 | 6 263 |
| Current assets | � | � | � |
| Inventories | 11 | 2 | 26 |
| Trade and other receivables | 12 | 18 | 53 |
| Cash and cash equivalents | 13 | 40 | 16 |
| � | � | 60 | 95 |
| TOTAL ASSETS | � | 7 504 | 6 358 |
| � | � | � | � |
| LIABILITIES | � | � | � |
| Non-current liabilities | � | � | � |
| Finance lease liabilities | 14 | - | 34 |
| Deferred tax | 26 | - | - |
| Provisions - rehabilitation | 15 | 388 | 983 |
| � | � | 388 | 1 017 |
| Current liabilities | � | � | � |
| Bank overdraft | 13 | - | 288 |
| Trade and other payables | 16 | 1 406 | 2 957 |
| Finance lease liabilities | 14 | 35 | 60 |
| Borrowings | 17 | 715 | 213 |
| � | � | 2 156 | 3 518 |
| TOTAL LIABILITIES | � | 2 544 | 4 535 |
| � | � | � | � |
| NET ASSETS | � | 4 960 | 1 823 |
| � | � | � | � |
| EQUITY | � | � | � |
| Share capital | 18 | 48 042 | 45 873 |
| Share based payment and warrant reserve | 19 | 2 366 | 2 366 |
| Revaluation reserve | � | 711 | 711 |
| Foreign currency translation reserve | 7 | (14 236) | - |
| Accumulated loss | � | (20 415) | (34 423) |
| Total equity attributed to the owners of the parent company | � | 16 468 | 14 527 |
| Non-controlling interest | 20 | (11 508) | (12 704) |
| � | � | � | � |
| TOTAL EQUITY | � | 4 960 | 1 823 |
�
�
These financial statements were approved and authorised for issue by the Board on 30 September 2020 and are signed on its behalf.
�
George Roach
Chief Executive Officer
�
The notes on pages 30 to 77 are an integral part of these consolidated financial statements.�
�
| CONSOLIDATED� STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME | |||
| FOR THE YEAR ENDED 31 DECEMBER 2019 | � | � | � |
| � | � | � | � |
| � | � | 2019 | 2018 |
| Continuing operations | Notes | � | � |
| EXPRESSED IN US DOLLARS | � | $ 000 | $ 000 |
| � | � | � | � |
| Revenue | 21 | - | 168 |
| Cost of sales excluding depreciation and amortisation | 22 | - | (179) |
| Depreciation and amortisation | 8, 10 | - | - |
| Gross profit / (loss) | � | - | (11) |
| Administrative expenses | 23 | (1 871) | (2 834) |
| Operating profit / (loss) | � | (1 871) | (2 845) |
| � | � | � | � |
| Other income | 21 | 1 285 | - |
| Fair value movement FVTPL | 9 | - | 47 |
| Impairment of PPE - RHA | 10 | (483) | (196) |
| Impairment of current assets - RHA | � | - | (48) |
| Impairment of intangible assets -� Zulu | 8 | - | (4 563) |
| Finance charges | 24 | (140) | (153) |
| � | � | 662 | (4 913) |
| Loss before income tax | � | (1 209) | (7 758) |
| Income tax expense | 25 | - | - |
| Loss from continuing operations | � | (1 209) | (7 758) |
| � | � | � | � |
| Loss for the year | � | (1 209) | (7 758) |
| Other comprehensive income: | � | � | � |
| Items that are or may be reclassified subsequently to profit or loss: | � | � | � |
| Foreign exchange loss on translation | 7 | (25 029) | - |
| Fair value movement on investment | 9 | - | - |
| � | � | (25 029) | - |
| Total comprehensive income for the year | � | (26 238) | (7 758) |
| � | � | � | � |
| Loss attributable to: | � | � | � |
| Owners of the Company | � | (1 227) | (6 809) |
| Non-controlling interests | � | 18 | (949) |
| � | � | (1 209) | (7 758) |
| � | � | � | � |
| Total comprehensive income attributable to: | � | � | � |
| Owners of the Company | � | (15 463) | (6 809) |
| Non-controlling interests | � | (10 775) | (949) |
| � | � | � | � |
| Total comprehensive income for the year | � | (26 238) | (7 758) |
| � | � | � | � |
| Loss per share attributable to owners of the parent (expressed in US cents) | � | � | � |
| Basic loss per share | 26 | (0.01) | (0.1) |
| Diluted loss per share | 26 | (0.01) | (0.1) |
�
�
�The notes on pages 30 to 77 are an integral part of these consolidated financial statements.
�
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||
| FOR THE YEAR ENDED 31 DECEMBER 2019 | � | � | � | � | � | � | � | � |
| � | � | � | � | � | � | � | � | � |
| � | Share capital | Foreign currency translation reserve | Share option and warrant reserve | Revaluation reserve | Accumulated loss | Total attributable to owners of parent | Non-controlling interest ("NCI") | Total equity |
| EXPRESSED IN US DOLLARS | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 |
| At 1 January 2018 | 44 158 | -� | 2 393 | 711 | (27 614) | 19 648 | (11 755) | 7 893 |
| Loss for the period | -� | -� | -� | -� | (6 809) | (6 809) | (949) | (7 758) |
| Other comprehensive income for the period | -� | -� | -� | -� | -� | -� | -� | -� |
| Total comprehensive income for the period | -� | -� | -� | -� | (6 809) | (6 809) | (949) | (7 758) |
| Transactions with Owners | � | � | � | � | � | � | � | � |
| Issue of equity shares | 1 838 | -� | -� | -� | -� | 1 838 | -� | 1 838 |
| Share issue costs | (123) | -� | -� | -� | -� | (123) | -� | (123) |
| Warrant options cancelled | -� | -� | (204) | -� | -� | (204) | -� | (204) |
| Share based payments | -� | -� | 177 | -� | -� | 177 | -� | 177 |
| At 31 December 2018 | 45 873 | -� | 2 366 | 711 | (34 423) | 14 527 | (12 704) | 1 823 |
| Effect of change in the functional currency of subsidiaries | -� | -� | -� | -� | 15 235 | 15 235 | 11 971 | 27 206 |
| Loss for the period | -� | -� | -� | -� | (1 227) | (1 227) | 18 | (1 209) |
| Other comprehensive income for the period | -� | (14 236) | -� | -� | -� | (14 236) | (10 793) | (25 029) |
| Total comprehensive income for the period | -� | (14 236) | -� | -� | (1 227) | (15 463) | (10 775) | (26 238) |
| Transactions with Owners | � | � | � | � | � | � | � | � |
| Issue of equity shares | 2 237 | -� | -� | -� | -� | 2 237 | -� | 2 237 |
| Share issue costs | (68) | -� | -� | -� | -� | (68) | -� | (68) |
| At 31 December 2019 | 48 042 | (14 236) | 2 366 | 711 | (20 415) | 16 468 | (11 508) | 4 960 |
�
�
The notes on pages 30 to 77 are an integral part of these consolidated financial statements.
�
| CONSOLIDATED STATEMENT OF CASH FLOWS | � | � | � |
| FOR THE YEAR ENDED 31 DECEMBER 2019 | � | � | � |
| � | � | � | � |
| � | � | 2019 | 2018 |
| EXPRESSED IN US DOLLARS | � | $ 000 | $ 000 |
| � | Notes | � | � |
| � | � | � | � |
| Net cash outflow from operating activities | 28 | (404) | (1 558) |
| � | � | � | � |
| Investing activities | � | � | � |
| � | � | � | � |
| Acquisition of property plant and equipment | 10 | (483) | (196) |
| Acquisition of intangible assets | 8 | - | (272) |
| Acquisition of investment | 9 | (1 181) | - |
| Proceeds on sale of investment | 9 | - | 243 |
| � | � | � | � |
| Net cash used in investing activities | � | (1 664) | (225) |
| � | � | � | � |
| Financing activities | � | � | � |
| Repayment of borrowings | 17 | - | (25) |
| Repayment of warrant liability | 19 | - | (204) |
| Proceeds from borrowings granted | 17 | 468 | 300 |
| Net proceeds from issue of share capital | 18 | 1 984 | 1 415 |
| Finance charges | 14 | (12) | (38) |
| Repayment of finance lease | 14 | (60) | (71) |
| � | � | � | � |
| Net cash from financing activities | � | 2 380 | 1 377 |
| � | � | � | � |
| Net increase / (decrease) in cash and cash equivalents | � | 312 | (406) |
| � | � | � | � |
| Cash and cash equivalents at beginning of year | � | (272) | 134 |
| Effect of foreign exchange rate variation | � | - | - |
| Net cash and cash equivalents at end of year | � | 40 | (272) |
�
The notes on pages 30 to 77 are an integral part of these consolidated financial statements.
1.����������� Reporting entity
Premier African Minerals Limited ('Premier' or 'the Company'), together with its subsidiaries (the 'Group'), was incorporated in the Territory of the British Virgin Islands under the BVI Business Companies Act, 2004. The address of the registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands.
The Group's operations and principal activities are the mining and development of mineral reserves on the African continent.
Premier's shares were admitted to trading on the London Stock Exchange's AIM market on 10 December 2012.
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2.����������� Basis of accounting
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue and as endorsed by the European Union ("EU"). They were authorised for issue by the Company's board of directors on 30 September 2020.
Details of the Group's accounting policies are detailed below.
This is the first set of the Group's financial statements in which IFRS 16 Leases has been applied. There were no significant changes to the implementation related to this accounting standard.
The preparation of financial statements in conformity with EU adopted IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.
The accounting policies set out below are applied consistent across the Group and to all periods presented in these consolidated financial statements.
Functional and presentation currency
The Group's presentation currency and the functional currency of the majority of the group's entities is
US dollars. All amounts have been rounded to the nearest thousand, unless otherwise indicated. The Zimbabwean subsidiaries' functional currency was changed by the Zimbabwean government from USD to RTGS dollar during the financial year. Refer to note 7 for detailed information.
| Use of judgements and estimates |
| In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. For details of the use of judgments and estimates refer to note 4 and detailed notes on the Intangible assets and goodwill (note 8), Investments (note 9), Property, plant and equipment (note 10), Inventories (note 11), Trade and other receivables (note 12) and Share based payment and warrant reserve (note 19). |
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3.����������� Significant accounting policies
3.1��������� Change in significant accounting policies
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning that would be expected to have a material impact on the Group. The new IFRSs adopted during the year are as follows:
���� IFRS 16 - Leases
���� IAS 19 - Employee Benefits (amendment)
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IFRS 16 Leases is effective for periods beginning on or after 1 January 2019 and therefore being adopted for the first time in these financial statements. Under IFRS 16, lessees may elect not to recognise assets and liabilities for leases with a lease term of 12 months or less. The Company's office premises are on a rolling one month contract so the Group has taken the IFRS 16 scope exemption and have chosen to recognise the lease payments in profit and loss on a straight-line basis over the lease term.
�
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial period beginning 1 December 2019 and have not been early adopted. The Directors anticipate that the adoption of these standard and the interpretations in future periods will have no material impact on the financial statements of the Group.
�
The new standards include:
IFRS 3�������������������� Business Combinations1
IFRS 17������������������ Insurance Contracts2
IAS 1 ��������������������� Presentation of Financial Statements1
IAS 8���������������������� Accounting Policies, Changes in Accounting Estimates and Errors1
�
1 Effective for annual periods beginning on or after 1 January 2020
2 Effective for annual periods beginning on or after 1 January 2021
3.2��������� Basis of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. This is evidenced with RHA Tungsten (Private) Limited which the Group owns 49% of but is consolidated into the Group (note 4.7).
Subsidiaries are consolidated, using the acquisition method, from the date that control is gained and non-controlling interests are apportioned on a proportional basis.
When necessary amounts reported by subsidiaries have been adjusted to conform to the Group's accounting policies.
3.3 �������� Business combinations and goodwill
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
3.4��������� Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
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3.5��������� Non-controlling interests ("NCI")
Non-controlling interests are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of acquisition.
Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
�
3.6��������� Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
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3.7��������� Foreign currency
�
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into dollars at the exchange rates at the dates of the transactions.
Foreign currency differences are recognised in Other Comprehensive Income ("OCI") and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI.
Where the functional currency of a company is in a hyperinflationary economy IAS 29 Financial Reporting in Hyperinflationary Economies is applied. Under this standard the results are restated to reflect the current cost of the various elements of the financial statements. For the Statement of comprehensive income the cost of sales and depreciation are recorded at current costs at the time of consumption; sales and other expenses are recorded at their money amounts when they occurred. Therefore all amounts need to be restated into the measuring unit current at the end of the reporting period by applying a general price index.
Monetary items stated in the Statement of financial position that are stated at current cost are not restated because they are already expressed in terms of the measuring unit current at the end of the reporting period. All non-monetary items in the statement of financial position are restated by applying an index at the time of their acquisition to the reporting date. Any resulting gain or loss on the net monetary position is included in profit or loss reserve.
In accordance with IAS29, corresponding figures for the previous reporting period, whether they were based on a historical cost approach or a current cost approach, are restated by applying a general price index so that the comparative financial statements are presented in terms of the measuring unit current at the end of the reporting period. Information that is disclosed in respect of earlier periods is also expressed in terms of the measuring unit current at the end of the reporting period.
�
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
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3.8��������� Discontinued operation
A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:
���� represents a separate major line of business or geographic area of operations;
���� is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or
���� is a subsidiary acquired exclusively with a view to re-sale.
�
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative year.
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3.9��������� Revenue
Performance obligations and service recognition policies
Revenue is measured based on the consideration specified in a contract with a customer in line with IFRS 15. The Group recognises revenue when it transfers control over of goods or services to a customer.
The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms, and the related revenue recognition policies.
�
| Type of product/ service | Nature and timing of satisfaction of performance obligations, including significant payment terms | Revenue recognition under IFRS 15 |
| Revenue | � | � |
| Wolframite sales | Customers obtain control of the wolframite ore when the ore has been delivered to and have been accepted at their premises or the agreed point of delivery. Invoices are generated at that point in time based on the agreed upon weight of the ore. Invoices are generally payable within 30 days. No discounts are provided for. The sale of the ore is not subject to a return policy. | Revenue is recognised when the goods are delivered and have been accepted by the customers at their premises or the agreed point of delivery. |
| Scrap sales | Customers obtain control of the scrap when the scrap has been delivered to and have been accepted at their premises or the agreed point of delivery. Invoices are generated at that point in time based upon the agreed upon weight of the scrap. Invoices are generally payable within 30 days. No discounts are provided for. The sale of the scrap is not subject to a return policy. | Revenue is recognised when the goods are delivered and have been accepted by the customers at their premises or the agreed point of delivery. |
| Reserve Bank of Zimbabwe Export Incentive | The Export Incentive is provided on an individual basis and has to be applied for. It is based on the export sales of the company. As such the revenue from the RBZ is not guaranteed. | The Group gains control over the export incentive when it is received in the Group's bank accounts. |
| Other Income | � | � |
| Government Grants | The Group has no control over the timing of the grants nor any payment terms. | The Group gains control over the Government grant� when it is received in the Group's bank accounts. |
| Prescription of debts | Management periodically reviews all outstanding payables and identifies any potential debts that may have prescribed. | Debts are considered prescribed if the creditor has not claimed payment for a period in excess of the relevant prescription period. |
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3.10������� Employee benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
| Share-based payment arrangements |
The Group operates an equity-settled share option plan and issues warrants from time to time either with direct subscriptions in equity or as finance related packages. The fair value of the service received in exchange for the grant of options or issue of warrants is recognised as an expense or recognised as a deduction from equity or an addition to intangible assets depending on the nature of the services received.
Share-based payments are measured at fair value at the date of grant.� The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.
Fair value is measured by use of the Black Scholes model.� The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
The warrants issued as part of the loan note agreements contain certain re-set provisions as to exercise price and/or number of warrants issued depending on certain conditions. Any share subscriptions priced at a price lesser than the warrant exercise price will trigger a re-set of the exercise price to the lower share subscription price. The warrants exercise price was re-set for all remaining Darwin warrants issued under the loan notes to a new exercise price of 0.375p being the lowest subscription price on 16 December 2016. There were no re-set events during 2018 nor 2019.
Any adjustments are recognised through the profit and loss. The fair value is reassessed annually.
�
3.11������� Finance income and finance costs
The Group's finance income and finance costs include:
������ interest income;
������ Interest expense;
������ dividend income;
Interest income and expense is recognised using the effective interest method. Dividend income is recognised in profit or loss on the date on which the Group's right to receive payment is established.
The "effective interest rate" is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
������ the gross carrying amount of the financial asset; or
������ the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset, if the asset is no-longer credit-impaired, then the calculation of interest income reverts to the gross basis.
�
3.12������� Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI.
3.12.1���� Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
3.12.2���� Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
���� temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
���� temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and -- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
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3.13������� Intangible assets and goodwill
All costs of Exploration and Evaluation ("E&E") are initially capitalised as intangible assets, such as payments to acquire the legal right to explore, costs of technical services and studies, seismic acquisition, exploratory drilling and testing. The costs include directly attributable overheads together with the cost of other materials consumed during the exploration and evaluation phases.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to profit or loss as they are incurred.
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E&E assets are not amortised.
Intangible assets related to each exploration licence or pool of licences are carried forward, until the existence (or otherwise) of commercial reserves has been determined. Once the technical feasibility and commercial viability of extracting a mineral resource is demonstrable, the related E&E assets are assessed for impairment on an individual licence or cost pool basis, as appropriate, as set out below and any impairment loss is recognised in profit or loss.
The Group considers each licence, or where appropriate, a pool of licences, separately, for the purposes of determining whether impairment of E&E assets has occurred.
Intangible assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 Exploration for and Evaluation of Mineral Resources and include the point at which a determination is made as to whether or not commercial reserves exist.
When impairment indicators exist, the aggregate carrying value is compared against the expected recoverable amount, generally by reference to the present value of the future net cash flows expected to be derived from production of commercial reserves.
When a licence or pool of licences is abandoned or there is no planned future work, the costs associated with the respective licences are written off in full and recognised in profit or loss.
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Any impairment loss is recognised in profit or loss and separately disclosed.
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3.14������� Impairment
3.14.1���� Non-derivative financial assets
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is "credit-impaired" when one or more events that have a detrimental impact on the estimated future cash flows of the financial assets have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
������ significant financial difficulty of the borrower or issuer;
������ a breach of contract such as a default or being more than 90 days past due;
������ the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
������ it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
������ the disappearance of an active market for a security because of financial difficulties.
A 12 months approach is followed in determining the Expected Credit Loss ("ECL").
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures of recovery of the amounts due.
3.14.2���� Financial assets measured at amortised cost
The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.
In assessing collective impairment, the Group uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
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3.14.3���� Available for sale financial asset
Impairment losses on available-for-sale financial assets are recognised, only when fair value is less than carrying value and this is significant over a prolonged period, by reclassifying the losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss previously recognised in profit or loss.
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3.14.4���� Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Goodwill is tested annually for impairment.
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For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
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The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less cost of disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
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Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
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3.15 ������ Cash and cash equivalents
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The Cash and cash equivalent comprises of bank accounts and bank overdraft. Cash and cash equivalent are measured at amortised cost.
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3.16������� Inventory
Inventory is measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in, first-out principle. The cost of inventories includes the cost of consumables and cost of production. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Inventory consists of mining consumables.
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3.17������� Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.
Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:
������ Land - indefinite useful life
������ Buildings - 10 years
������ Plant & equipment - 4/6 years
������ Mine development - depreciated over the life of the mine currently assessed at 10 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
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3.18 ������ Financial instruments
The Group classifies non-derivative financial assets into the following categories: loans and receivables and FVTPL and FVTOCI financial assets.
The Group classifies non-derivative financial liabilities into the following category: other financial liabilities.
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3.18.1���� Non-derivative financial assets and financial liabilities - Recognition and derecognition
The Group initially recognises loans and receivables on the date when they are originated. All other financial assets and financial liabilities are initially recognised on the trade date when the entity becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. Gains or losses on derecognition of financial liabilities are recognised in profit or loss as a finance charge.
Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
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3.18.2���� Loans and receivables- Measurement
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These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method.
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3.18.3���� Assets at FVOCI - Measurement
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These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, are recognised in OCI and accumulated in the revaluation reserve.
When these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
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3.18.4���� Non-derivative financial liabilities - Measurement
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Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
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3.18.5���� Convertible loan notes and derivative financial instruments
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The presentation and measurement of loan notes for accounting purposes is governed by IAS 32 and IAS 39. These standards require the loan notes to be separated into two components:
������ A derivative liability, and
������ A debt host liability.
This is because the loan notes are convertible into an unknown number of shares, therefore failing the 'fixed-for-fixed' criterion under IAS 32. This requires the 'underlying option component' of the loan note to be valued first (as an embedded derivative), with the residual of the face value being allocated to the debt host liability (refer financial liabilities policy above).
Compound financial instruments issued by the Group comprise convertible notes denominated in dollars that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.
The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.
Interest related to the financial liability is recognised in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognised.
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3.19������� Provisions - Rehabilitation
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
An obligation to incur environmental restoration, rehabilitation and decommissioning costs arises when disturbance is caused by the development or on-going production of a mining property. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are recognised in profit or loss over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and recognised in profit or loss as extraction progresses.
Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work (that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate) are added to or deducted from the cost of the related asset in the current period. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in profit or loss. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy above.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost in profit or loss.
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3.20������� Equity
Equity comprises the following:
����Share capital - ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
����Share-options and warrant reserve - represents equity-settled share-based payments.
����Accumulated loss represent retained profits less retained losses.
����Revaluation reserve represents the difference between the nominal value of shares issued by the Company to the shareholders of ZimDiv Holdings Limited ("Zimdiv") and the nominal value of the ZimDiv shares taken in exchange.
���Non-controlling interests represents the share of retained profits less retained losses of the non-controlling interests.�
���Foreign currency translation reserve represents the other comprehensive income gains or losses arising on the conversion of the functional currencies of the subsidiaries to the holding company's functional currency of USD.
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3.21������� Leases
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether the arrangement is or contains a lease.
At inception or on reassessment of an arrangement that contains a lease, the Group separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Group's incremental borrowing rate.
Prior to 1 January 2019, leases in which a significant proportion of the risks and rewards are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statement of comprehensive income on a straight line basis over the period of the lease. Finance leases are recognised as assets of the Group at the fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The related liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between interest expense and capital redemption of the liability. Interest is recognised immediately in the statement of comprehensive income unless attributable to qualifying assets, in which case they are capitalised to the cost of those assets.
Since 1 January 2019, assets held under leases are recognised as assets of the Group at the fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between interest expense and capital redemption of the liability. Interest is recognised immediately in the statement of comprehensive income unless attributable to qualifying assets, in which case they are capitalised to the cost of those assets.
Exemptions are applied for short life leases and low value assets made under operating leases charged to the statement of comprehensive income on a straight line basis over the period of the lease.
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Payments made under non-capitalised leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
3.22������� Operating segments
Segmental information is provided for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Group considers that the role of chief operating decision-maker is performed by the Group's board of directors.�
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4.����������� Significant accounting judgements, estimates and assumptions
In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
4.1. ������� Judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the consolidated financial statements is included in the following notes:
-���� Note 4.7 - consolidation: whether the Group has de facto control over an investee; and
-���� Note 14 - leases: whether an arrangement contains a lease.
4.2.�������� Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the year ended 31 December 2019 is included in the following notes:
���� Note 25 - recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used;
���� Note 4.4 - Recoverability of exploration and evaluation assets: key assumptions underlying recoverable amounts;
���� Note 4.5 - Recoverability of RHA Cash-Generating Unit "CGU": key assumptions underlying recoverable amounts
���Note 15 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources.
���Note 19 - share based payments assumptions regarding the various inputs into the Black Scholes model used to determine the option value.
4.3. ������� Measurement of fair values
A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
���� Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
���� Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
���� Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change occurred.
�Further information about the assumptions made in measuring fair values is included in the following notes:
���� Note 19 - share-based payment arrangements;
���� Note 29 - financial instruments.
4.4��������� Recoverability of exploration and evaluation assets
Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including by reference to specific impairment indicators prescribed in IFRS 6 Exploration for and Evaluation of Mineral Resources.� If there is any indication of potential impairment, an impairment test is required based on value in use of the asset or fair value less cost to sell.
The carrying amount of exploration and evaluation assets at 31 December 2019 amounted to�nil�(2018: $nil). Refer to note 8 for the assumptions used.
4.5��������� Recoverability of RHA Cash-Generating Unit "CGU"
Determining whether a CGU is impaired requires an assessment of whether there are any indicators of impairment, including by reference to specific impairment indicators prescribed in IAS36 Impairment of Assets. If there is any indication of potential impairment, an impairment test is required based on the greater of fair value less cost of disposal, and, value in use of the asset. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value.
During 2017 the operating losses at RHA were higher than predicted due to operations in the open pit and underground failing to deliver both the ore volumes and the anticipated grade.� The operating losses are an indicator of potential impairment. In December 2017, due to the lower ore delivery, anticipated grade and operating losses, the Board of Directors decided to place the RHA Tungsten mine under care and maintenance.
As a result, management completed an impairment review.
The impairment review concluded that four months further capex will be required in order to open the existing underground mining of 6 000 tons per month run of mine ore. Concurrently additional plant upgrades and a connection to the national grid would result in a 40 000 ton per month run of mine ore operation. A further option to construct a new decline vehicle access was not considered during this review.
Key assumptions used in calculating the initial impairment included:
���� 7 265 mtu concentrate production per month; 10 year mine plan; APT price of $275 per metric ton unit ('mtu');
���� 20% discount rate; and a zero growth rate in operating cash flow after the plant is fully operational, forecast to be for the full year 2019. Other key factors include attainment of forecast grade as set out in our resource statement and plant operating parameters being achieved.
���� The XRT sorter installation is a significant element in increasing confidence in RHA in that 70% of the anticipated run of mine feed target of 40 000 ton per month is passed through the sorter, which is able to recover approximately 90% of the mineralisation in a mass pull of some 5%.
���� The model assumes annual revenues of $13.1m from 2020.� Revenue generation is dependent on a number of inter-linked assumptions and a combination of negative changes in those assumptions would result in further impairment charges.�
As the mine is not operating, these assumptions were not revisited and the mine remains fully impaired.
Sensitivity analysis was conducted on the volume, grade, concentrate production per month and APT price assumptions in the model.
The management of RHA concluded its negotiations with NIEEF during the year, however at the date of this report the full amount of the agreed upon funding has yet to be received. Accordingly, management felt that it was prudent to maintain the impairment until such time as the counterparty has fulfilled its contractual obligations.
The company has not funded any of the activities at RHA since 1 July 2019 and is awaiting the fulfilment of NIEEF's obligations to fund the operations.
4.6��������� Estimation of useful life for mine assets
Mine assets are depreciated /amortised on a straight-line basis over the life of the mine concerned. �Judgement is applied in assessing the mine's useful life and in the case of RHA, the Group's only operating concern, is based on the initial Preliminary Economic Assessment ('PEA') first published in August 2013 that initially modelled an 8 year life of mine. The life of mine reassessed annually based on levels of production.
4.7��������� Basis of consolidation
RHA Tungsten (Private) Limited
During 2013, Premier concluded a shareholders' agreement with NIEEF whereby NIEEF acquired 51% of the shares of RHA. The principal terms of the agreement are as follows:
���� ZimDiv Holdings Limited ('ZimDiv'), a wholly owned subsidiary, is appointed as the Manager of the project for an initial 5 year term.
���� ZimDiv has marketing rights to the product.
���� Each shareholder can appoint up to two directors each, with a 5th director who is rotated between each shareholder. The 5th director will not have a vote.
����Although the local Zimbabwean company is responsible for financing and repayment of such. Premier has secured the funding to advance RHA to production.
����There has been no operational change since the agreements were signed and Premier continues to fund RHA until it becomes cash generative.���
At the financial year-end, one director of RHA was from the Premier Group and one director from NIEEF. There is no majority vote at board level and Premier still retains operational and management control through its shareholders' agreement. Following the assessment, the Directors concluded that Premier, through its wholly owned subsidiary ZimDiv, retained control and should continue to consolidate 100% of RHA and recognise non-controlling interests of 51% in the consolidated financial statements.
4.8��������� Valuations
���� Investments�- Premier's investment in Circum Minerals Limited ('Circum') is classified as an FVOCI as such is required to be measured at fair value at the reporting date. As Circum is unlisted there are no quoted market prices. In previous years the fair value of the Circum shares was derived using the most recent placing price.� The Fair value of the Circum shares as at 31 December 2019 was derived using the most recent placing price in April 2019.
���� Investments�- Premier's investment in MN Holdings ('MNH') is classified as an FVOCI as such is required to be measured at fair value at the reporting date. As MNH is unlisted there are no quoted market prices. The Fair value of the MNH shares as at 31 December 2019 was derived using the purchase price in July 2019.
����Valuation of warrants, share options and ordinary shares issued as consideration - judgement is applied in determining appropriate assumptions to be used in calculating the fair value of the warrants, shares and share options issued. Refer accounting policy note and note 20.
���Provision for Rehabilitation - A provision is recognised for site rehabilitation and decommissioning of current mining activities based on current environmental and regulatory requirements. The net present value of the provision is calculated at a discount rate of 10% over an 8 year life of mine.
����The life of mine has subsequently been reassessed to a total of 10 years. The corresponding rehabilitation assets was capitalised to property, plant and equipment and is depreciated over the life of the mine.
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5.����������� Going Concern
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These consolidated financial statements are prepared on the going concern basis. The going concern basis assumes that the Group will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities and commitments in the normal course of business.
The Group has incurred operating losses from continuing operations amounting to $1.871 million (2018: $2.845 million) and negative cash flows from operations amounting to $0.404 million for the year ended 31 December 2019 (2018: $1.558 million) as the Group continued to maintain RHA in care and maintenance, attempted to advance Zulu through the proposed EPO and external partners joint venture processes described above in this report and explored new opportunities to diversify and mitigate general risks associated with its Zimbabwe based projects.
As at 31 December 2019, current liabilities exceeded current assets by $2.096 million (2018: $3.423 million). The Group raised $1.984 million (2018: $1.715 million) in net funding through share subscriptions to fund holding costs at RHA inclusive of substantial additional debt incurred through RHA operations during the latter part of 2017, general group maintenance and preservation of assets and to investigate and assess potential diversification, through potential investments in cash generating assets, as discussed above.�
The Directors have prepared cash flow forecasts for the period ending 31 December 2021, on the basis of the following considerations.
RHA
������ The Company has not funded any of the activities at RHA since 1 July 2019.
������ RHA concluded an agreement with NIEEF on 30 April 2019 in terms of which NIEEF undertook to provide $6 million funding to offset local costs and to bring RHA back into production. The amount received was RTGS $6 million, which, on conversion, amounted to less than the agreed upon amount.
������ RHA has not been included in the cash flow forecasts for the above reasons.
Zulu
������ The Company will seek to secure the EPO for Zulu and thereafter fund development of Zulu on the basis of a "farm-in" or joint venture agreement with prospective partners.
������ The Company will only maintain the tenements and will not provide any further funding.
MNH
������ The Group is anticipating deriving a return on its current investment in MNH in the latter portion of 2020 and into 2021.
The Group
������ The cash flow is dependent on additional capital being raised and any cash flows derived from its investment in the trading company. There remains an active and liquid market for the Company's shares and the Company has historically been able to raise funding through equity placements and the Board believes that it will continue to be able secure the funds required for ongoing working capital needs going forward.
������ The Company will seek to diversify its operations and risk profile and limit the funds that need to be raised through equity placements to provide necessary funding for the Company's significantly reduced fixed overhead.
������ Subsequent to the year end, as disclosed in note 32, the Company purchased an investment in Lithium Consolidated Limited ("Li3") and is anticipating deriving revenues from that investment during 2021.
In the event that the Company is unable to obtain additional equity finance for the Group's working capital, a material uncertainty exists which may cast significant doubt on the ability of the Group to continue as a going concern and therefore be unable to realise its assets and settle its liabilities in the normal course of business.
The CEO has agreed to defer any repayment of his loan account until such time as the company has the cash to repay that loan. Additionally, he has agreed to provide temporary working capital funding should it be required.
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6.����������� Operating segments
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The group has the following three reportable segments that are managed separately due to the different jurisdictions.
Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
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| Reportable segments | Operations |
| RHA and RHA Mauritius | Development and mining of Wolframite |
| Zulu and Zulu Mauritius | Development of Lithium and Tantalite |
| Head office | General administration and control |
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| By operating segment | Unallocated Corporate | RHA Tungsten Mine Zimbabwe and RHA Mauritius* | Exploration Zulu Lithium Zimbabwe and Zulu Mauritius | Total continued operations |
| 2019 | $ 000 | $ 000 | $ 000 | $ 000 |
| � | � | � | � | � |
| Result | � | � | � | � |
| Revenue | - | - | - | - |
| Operating loss / (income) | 1 293 | 526 | 52 | 1 871 |
| Other income | (612) | (673) | - | (1 285) |
| Fair value movement on investment | - | - | - | - |
| Impairment of RHA | - | 483 | - | 483 |
| Finance charges | 34 | 106 | - | 140 |
| Impairment of Zulu | - | - | - | - |
| Loss before taxation | 715 | 442 | 52 | 1 209 |
| Assets | � | � | � | � |
| Exploration and evaluation assets | - | - | - | - |
| Investments | 7 444 | - | - | 7 444 |
| Inventories | - | 2 | - | 2 |
| Trade and other receivables | 16 | 2 | - | 18 |
| Cash | 19 | 20 | 1 | 40 |
| Total assets | 7 479 | 24 | 1 | 7 504 |
| Liabilities | � | � | � | � |
| Other financial liabilities | - | (35) | - | (35) |
| Borrowings | (715) | - | - | (715) |
| Bank overdraft | - | - | - | - |
| Trade and other payables | (1 085) | (318) | (3) | (1 406) |
| Provisions | - | (388) | - | (388) |
| Total liabilities | (1 800) | (741) | (3) | (2 544) |
| Net assets | 5 679 | (717) | (2) | 4 960 |
| � | � | � | � | � |
| Other information | � | � | � | � |
| Depreciation and amortisation | - | - | - | - |
| Property plant and equipment additions | - | 483 | - | 483 |
| Costs capitalised to intangible assets | - | - | 272 | 272 |
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| By operating segment | Unallocated Corporate | RHA Tungsten Mine Zimbabwe and RHA Mauritius* | Exploration Zulu Lithium Zimbabwe and Zulu Mauritius | Total continued operations |
| 2018 | $ 000 | $ 000 | $ 000 | $ 000 |
| � | � | � | � | � |
| Result | � | � | � | � |
| Revenue | - | (168) | - | (168) |
| Operating loss | 1 791 | 1 053 | - | 2 844 |
| Other income | ��������������������� - | ��������������������� - | ��������������������� - | ��������������������� - |
| Fair value movement on investment | (47) | - | - | (47) |
| Impairment of RHA | ��������������������� - | 244 | - | 244 |
| Finance charges | 7 | 146 | - | 153 |
| Impairment of Zulu | - | - | 4 563 | 4 563 |
| Loss before taxation | 1 751 | 1 443 | 4 563 | 7 757 |
| Assets | � | � | � | � |
| Exploration and evaluation assets | - | - | - | - |
| Investments | 6 263 | - | - | 6 263 |
| Inventories | - | 26 | - | 26 |
| Trade and other receivables | 15 | 38 | - | 53 |
| Cash | 2 | 11 | 2 | 16 |
| Total assets | 6 280 | 75 | 2 | 6 358 |
| Liabilities | � | � | � | � |
| Other financial liabilities | - | (94) | - | (94) |
| Borrowings | (213) | - | - | (213) |
| Bank overdraft | - | (288) | - | (288) |
| Trade and other payables | (1 313) | (1 645) | - | (2 957) |
| Provisions | - | (983) | - | (983) |
| Total liabilities | (1 526) | (3 009) | - | (4 535) |
| Net assets | 4 754 | (2 934) | 2 | 1 823 |
| � | � | � | � | � |
| Other information | � | � | � | � |
| Depreciation and amortisation | - | - | - | - |
| Property plant and equipment additions | - | 196 | - | 196 |
| Costs capitalised to intangible assets | - | - | 272 | 272 |
�
*Represents 100% of the results and financial position of RHA Tungsten (Private) Limited ("RHA") whereas the Group owns 49%. Non-controlling interests are disclosed in note 20.
RHA Revenue is generated from sales to Noble Minerals, in line with RHA's off-take agreement.
7.����������� Hyper-inflationary accounting
In terms of IAS29, Hyperinflation is indicated by characteristics of the economic environment of a country which include, but are not limited to, the following:
a)���the general population prefers to keep its wealth in nonmonetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power;
b)���the general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency;
c)����sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short;
d)��� interest rates, wages and prices are linked to a price index; and
e)��� the cumulative inflation rate over three years is approaching, or exceeds, 100%.
�
As stated in the 2018 annual financial statements, with effect of the 21st of February 2019 Zimbabwe implemented the Real Time Gross Settlement of US Dollars ("RTGS") at an official exchange rate of 1:1. At that time the official inflation rate was 0%. At the year end the official exchange rate has moved to
RTGS 17 2322 : US$1 whilst the official inflation rate has moved to 521.2% on a year on year basis. The table below details the exchange rates and inflation rates, as published by https://tradingeconomics.com/zimbabwe/inflation-cpi, on a monthly basis for the year ended 31 December 2019.
�
| Month ending | Inflation rate | Exchange Rate RTGS : US$ |
| January 2019 | 0.00% | 1.0000 |
| February 2019 | 0.00% | 1.0000 |
| March 2019 | 0.00% | 3.0120 |
| April 2019 | 75.86% | 3.2614 |
| May 2019 | 97.85% | 5.2635 |
| June 2019 | 175.66% | 6.6220 |
| July 2019 | 230.54% | 9.1856 |
| August 2019 | 288.50% | 10.7139 |
| September 2019 | 353.00% | 15.1979 |
| October 2019 | 440.10% | 16.1152 |
| November 2019 | 480.70% | 16.7012 |
| December 2019 | 521.20% | 17.2322 |
�
Two of the group's� subsidiaries, namely RHA Tungsten and Zulu Lithium, operate in Zimbabwe.
In accordance with IAS29 the group has implemented the Historical Cost approach in restating the subsidiary accounts as at the 31 December 2019. Due to the timing of the implementation of RTGS, no restatement of the 2018 financial statements is required.
The financial statements reflect the reduction in the purchasing power of RTGS which have been remeasured, in terms of IAS 29, as at 31 December 2019.
8.����������� Intangible assets and goodwill
| � | � | 2019 | 2018 |
| � | � | $ 000 | $ 000 |
| Exploration and evaluations assets | � | -� | -� |
| Total intangible assets | � | -� | -� |
| � | � | � | � |
| � | � | Exploration & Evaluation assets | �Total |
| � | � | $ 000 | $ 000 |
| � | � | � | � |
| Opening carrying value� 2018 | � | 4 291 | 4 291 |
| Expenditure on Exploration and evaluation | � | 272 | 272 |
| Impairment of Exploration and evaluation assets | � | (4 563) | (4 563) |
| Closing carrying value 2018 | � | -� | -� |
| Expenditure on Exploration and evaluation | � | -� | -� |
| Impairment of Exploration and evaluation assets | � | -� | -� |
| Closing carrying value 2019 | � | -� | -� |
�
The impairment loss amounted to $nil (2018 $4.563 million) Exploration and evaluation assets at 31 December 2019 comprise of Zulu located in Zimbabwe. In the prior year the exploration and evaluation assets comprised the Zulu and the limestone licence in Mozambique.
Zulu Lithium and Tantalite Project
During the year nil (2018: $0.272 million) exploration costs were incurred and capitalised to Zulu. Exploration work conducted during the year indicated that both lithium and tantalum recovery may be a viable option. The Group views this project as strategic and exploration work will be continued in the future, cash flow permitting.
The drop in the price of Spodumene to $400/t coupled with the political uncertainty and resulting country risk included in the discount rate applied to Zimbabwe has resulted in the directors deciding to impair Zulu in full for the year ended 31 December 2018. The impairment amounted to $nil million (2018 - $4.291 million).
Key assumptions applied in calculating the discounted cash flow analysis included:
������ Targeted annual production of spodumene concentrate������������������������������������������� 84�000 tonnes
������ Targeted annual production of petalite concentrate��������������������������������������������������� 32�500 tonnes
������ Price of spodumene concentrate������������������������������������������������������������������������������������ $800/t
������ Price of petalite concentrate� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �$400/t
������ Discount rate ����������������������������������������������������������������������������������������������������������������������10%
������ Operating costs per combined tonnage of concentrate��������������������������������������������� $486/t
������ Estimated 15 year life of mine
������ Average strip ratio of ���������������������������������������������������������������������������������������������������������5.5:1
The EPO as discussed above as at the reporting date has not been granted, accordingly the above assumptions did not warrant reassessment.
9.����������� Investments
| � | Circum | Manganese | Arc Minerals * | Total |
| � | Minerals | Namibian | Mining | � |
| � | � | Holdings | � | � |
| � | $ 000 | $ 000 | $ 000 | $ 000 |
| Opening carrying value 2018 | 6 263 | - | 196 | 6 459 |
| Shares acquired | - | - | - | - |
| Fair value adjustment | - | - | 47 | 47 |
| Shares disposed� (9)(10)(11)(12)(13) | - | - | (243) | (243) |
| Closing carrying value 2018 | 6 263 | - | - | 6 263 |
| Shares acquired | - | 1 181 | - | 1 181 |
| Fair value adjustment | - | - | - | - |
| Closing carrying value 2019 | 6 263 | 1 181 | - | 7 444 |
| � | � | � | � | � |
| � | � | � | � | � |
| Reconciliation of movements in investments | � | � | � | |
| Investment in Circum Minerals Limited� - 15 May 2014 (1) | 1 400 | - | - | 1 400 |
| Fair value adjustment - February 2015(2) | 1 100 | - | - | 1 100 |
| Fair value adjustment - June 2015(3) | 1 500 | - | - | 1 500 |
| Investment in Casa Mining Limited(4) | - | - | 250 | 250 |
| Acquisition at fair value (5) | - | - | 50 | 50 |
| Acquisition at fair value 2017(6) | 2 936 | - | - | 2 936 |
| Issue of Premier shares (6) | 1 216 | - | - | 1 216 |
| Fair value adjustment - 31 December 2017(7)(8) | (1 889) | - | (104) | (1 993) |
| Opening carrying value 2018 | 6 263 | - | 196 | 6 459 |
| Fair value adjustment - 31 December 2018(8) | - | - | 47 | 47 |
| Sale of shares (9)(10)(11)(12)(13) | - | - | (243) | (243) |
| Opening carrying value 2019 | 6 263 | - | - | 6 263 |
| Acquisition at fair value 2019(14) | - | 1 181 | - | 1 181 |
| � | 6 263 | 1 181 | ������������������������� -�� | 7 444 |
�
Arc Minerals (formerly known as Ortac Resources Limited) was designated on 1 January 2018 as FVTPL.
Circum Minerals was designated on 1 January 2018 as FVOCI.
�
(1) Represents 2 million shares in unlisted entity Circum Minerals Limited ('Circum').
(2) As Circum is unlisted there are no quoted market prices. Fair value of the shares was therefore estimated using the price at which warrants in Circum shares were exercised by a third party in February 2015 at $1.25 per share.
(3) Fair value of the shares was adjusted to the most recent placing price of $2 per share during August 2015.
(4) Represents a 4.5% interest in Casa acquired in October 2016.
(5) Represents a 0.5% interest in Casa acquired in 2017.
(6) Represents a further 3�010�333 shares in Circum Minerals Limited settled by the issue of Premier's shares at $1,50 per share being a premium to the prevailing market price to compensate for potential market fluctuations in the price of the company's shares.
(7) As Circum is unlisted there are no quoted market prices. Fair value of the shares was therefore estimated using the latest price at which the Company acquired shares during 2017 (at $1.25 per share).
(8) The fair value of the Casa Mining Limited shares were derived from the swop values of shares acquired
(9)� Sale of Arc Minerals Shares 2�500�000 @ 0.0315 GBP
(10) Sale of Arc Minerals Shares 500�000 @ 0.03225 GBP
(11) Sale of Arc Minerals Shares 651�456 @ 0.0285 GBP
(12) Sale of Arc Minerals Shares 2�200�000 @ 0.03025 GBP
(13) Sale of Arc Minerals Shares 277�366 @ 0.0301 GBP
(14) Represents a purchase of 11% interest in MNH.
The shares are considered to be level 3 financial assets under the IFRS 13 categorisation of fair value measurements.��
Premier continues to hold 5�010�333 shares in Circum currently valued in total at $6.263 million. Circum has published a general update to shareholders in June 2019 and the major shareholders and directors are now fully coordinated in their intention to generate a liquidity event for shareholders.
The fair value of these� investments at 31 December 2019 amounted to $7.444 million (2018: $6.263 million).
Premier's investment in Circum is classified as FVOCI and as such is required to be measured at fair value at each reporting date. As Circum is unlisted there are no quoted market prices. The fair value of the Circum shares was derived using the previous issue price and validating it against the most recent placing price on 30 April 2019.
�
Premier's investment in MNH is classified as FVOCI and as such is required to be measured at fair value at each reporting date. As MNH is unlisted there are no quoted market prices. The fair value of the MNH shares was based on the latest transactions and supported by an external evaluation conducted by Bara Consulting.
�
Sensitivity analysis
The investments are subject to changes in market prices. A 10% reduction in market prices would result in a $0.744 million (2018: $0.625 million) charge to Other Comprehensive Income, and nil (2018: $nil) in profit and loss.�
�
10.��������� Property, plant and equipment
�
| � | Mine Development | Plant and Equipment | Land and Buildings | Total |
| � | $ 000 | $ 000 | $ 000 | $ 000 |
| Cost | � | � | � | � |
| At 1 January 2018 | 8 408 | 4 115 | 852 | 13 375 |
| Additions | 1 | 195 | -� | 196 |
| Disposals | - | - | - | - |
| At 31 December 2018 | 8 409 | 4 310 | 852 | 13 571 |
| Exchange differences (1) | (4 986) | (967) | (547) | (6 500) |
| Transfer from Capital Work in Progress | 62 | (62) | -� | -� |
| Additions | 31 | 452 | -� | 483 |
| Disposals | - | - | - | - |
| At 31 December 2019 | 3 516 | 3 733 | 305 | 7 554 |
| � | � | � | � | � |
| Accumulated Depreciation and Impairment Losses | � | � | � | |
| At 1 January 2018 | 8 408 | 4 115 | 852 | 13 375 |
| Impairment of RHA | 1 | 195 | -� | 196 |
| At 31 December 2018 | 8 409 | 4 310 | 852 | 13 571 |
| Exchange differences (1) | (4 986) | (967) | (547) | (6 500) |
| Charge for the year | -� | -� | -� | -� |
| Impairment of RHA | 93 | 390 | -� | 483 |
| � | 3 516 | 3 733 | 305 | 7 554 |
| � | � | � | � | � |
| Net Book Value | � | � | � | � |
| At 31 December 2018 | - | - | - | - |
| At 31 December 2019 | - | - | - | - |
�
Refer to note 7 Hyperinflationary Accounting.
�
The impairment assessment is detailed in note 4.5, Significant accounting judgements, estimates and assumptions.
Refer note 14, Other financial liabilities for capitalised lease assets.
�
11.��������� Inventories
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| Mine consumables | 2 | 26 |
| � | 2 | 26 |
�
12.��������� Trade and other receivables
| � | � | 2019 | 2018 |
| � | � | $ 000 | $ 000 |
| � | � | � | � |
| Indirect tax receivable | � | 2 | 21 |
| Other receivables | � | - | 7 |
| Prepayments | � | 16 | 25 |
| � | � | 18 | 53 |
| � | � | � | � |
| Current | � | 18 | 53 |
| Non-current | � | - | - |
| � | � | 18 | 53 |
�
The receivables are considered to be held within a held-to-collect business model consistent with the Group's continuing recognition of the receivables.
As at 31 December 2019 the Group does not have any contract assets nor any contract liabilities arising out of contracts with customers relating to the Group's right to receive consideration for work completed but not billed.
Credit and market risks, and impairment losses
The Group did not impair any of its trade receivables as at 31 December 2019, as all trade receivables generated during the financial year were settled in full prior to the year-end.
Information about the Group's exposure to credit and market risks and impairment losses for trade receivables is included in Note 29.
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
�
13.��������� Cash and cash equivalents
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| Bank balances | 40 | 16 |
| Bank overdrafts | -� | (288) |
| Cash and cash equivalents per the statement of cash flows | 40 | (272) |
�
The bank overdraft facility of RHA amounting to $nil (2018: $0.300 million) held with Nedbank Zimbabwe was not renewed in the 2019 year.
�
14.��������� Finance lease liabilities
Finance lease
During 2015, the Group entered into a finance lease with Board Market Trading 258 (Pty) Ltd for the purchase of two generators with a net book value of $0.124 million to be used at RHA. The finance lease is for a term of 48 months with interest charged at 19.5% per annum with monthly repayments of $0.006 million beginning from 1 August 2016. Depreciation of leased assets amounted to nil (2018: $nil) due to the assets being fully impaired in a prior period.
The agreement is classified as a finance lease as the rental period equal the estimated useful life of the assets concerned and the Group has the right to purchase the assets outright at the end of the minimum lease term by paying a nominal amount.
In terms of IFRS 16 Leases, short term lease agreements which are less than one month or with total present value of lease payments not exceeding $0.005 million are excluded from capitalisation.
Future lease payments are due as follows:
| � | Minimum lease payments | Interest | Present value of minimum lease payments |
| 2019 | $ 000 | $ 000 | $ 000 |
| Not later than one year | 36 | 1 | 35 |
| Between one year and five years | -� | -� | -� |
| � | 36 | 1 | 35 |
| � | � | � | � |
| � | Minimum lease payments | Interest | Present value of minimum lease payments |
| 2018 | $ 000 | $ 000 | $ 000 |
| Not later than one year | 72 | 12 | 60 |
| Between one year and five years | 36 | 2 | 34 |
| � | 108 | 14 | 94 |
�
| Reconciliation | � | � | � |
| � | Minimum lease payments | Interest | Present value of minimum lease payments |
| � | � | � | � |
| Balance as at 31 December 2017 | 185 | 30 | 155 |
| Payments made during the year | 77 | 16 | 61 |
| Balance as at 31 December 2018 | 108 | 14 | 94 |
| Payments made during the year | 72 | 13 | 59 |
| Balance as at 31 December 2019 | 36 | 1 | 35 |
�
�
| � | � | 2019 | 2018 |
| � | � | $ 000 | $ 000 |
| Finance lease liability | � | 35 | 94 |
| � | � | 35 | 94 |
| � | � | � | � |
| Other financial liabilities | � | � | � |
| Current | � | 35 | 60 |
| Non-current | � | -� | 34 |
| � | � | 35 | 94 |
| � | � | � | � |
| Non-Capitalised lease payments during the year | � | � | � |
| Short term non-capitalised lease payments | � | 94 | 94 |
�
�
15.��������� Provisions - rehabilitation
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| As at 1 January | 983 | 917 |
| Foreign Exchange variation on translation | (684) | -� |
| Unwinding of discount | 89 | 66 |
| As at 31 December | 388 | 983 |
A provision is recognised for site rehabilitation and decommissioning of current mining activities based on current environmental and regulatory requirements. The gross provision was based upon an environmental impact assessment ("EIA") conducted and calculated in 2014 and discounted to a net present value using a discount rate of 10% over a life of mine of 8 years.� The corresponding rehabilitation assets was capitalised to property, plant and equipment and is depreciated over the life of the mine. The initial provision for rehabilitation was performed in the then functional currency of USD. With the implementation of RTGS this provision was restated in terms of note 7 on Hyperinflationary accounting. With RHA currently under care and maintenance� the directors reassessed the final provision based upon actual volumes extracted versus projected volumes. This reassessment will be done annually taking into consideration the remaining volume of ore to be extracted, the current level of mining that has already been conducted and the estimated costs involved in rehabilitating the land.
�
16.��������� Trade and other payables
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| Trade payables * | 1 065 | 1 188 |
| Accrued expenses | 303 | 1 211 |
| Payroll liabilities | 38 | 558 |
| � | 1 406 | 2 957 |
�
All trade and other payables at 31 December 2019 are due within one year, non-interest bearing, and comprise amounts outstanding for mine purchases and on-going costs, except as described further below. The Directors consider that the carrying amount of trade and other payables approximates their fair value.
�
* On 11 March 2019,� amounts owing to JRG Consulting amounted to $0.190 million and ZAR 0.245 million (exchange rate of 0.0694 amounts to $0.017 million). Interest is charged at 12% per annum, compounded monthly.� Repayments are agreed at $0.055 million per month. At year-end $nil (2018: $0.207) was outstanding in terms of the Memorandum of Agreement.
* In April 2018 Brendan Roach loaned the company GBP 0.084 million. In the current year this loan was converted to an interest bearing loan.
* At 31 December 2019 there was an amount outstanding of $0.398 relating to consulting fees. In August 2020 most of these fees were settled through shares.
�
17.��������� Borrowings
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| Loan G. Roach - see related party transactions | 219 | 213 |
| Loan B. Roach - see related party transactions | 128 | -� |
| Loan Regent Mercantile | 368 | -� |
| � | 715 | 213 |
| � | � | � |
| Reconciliation of movement in borrowings | � | � |
| As at 1 January | 213 | 216 |
| Loans received (3) (4) | 468 | 300 |
| Loans repaid through conversion to equity (1) (2) | -� | (300) |
| Repayment | -� | (25) |
| Implementation fee | -� | 15 |
| Accrued interest | 34 | 7 |
| As at 31 December | 715 | 213 |
| � | � | � |
| Current | 715 | 213 |
| Non-current | -� | -� |
| � | 715 | 213 |
Borrowings comprise loans from a related party and a non-related party. Loans from a related party are further disclosed in Note 31, Related Party Transactions.
�
(1)� On 15 September 2015, George Roach provided a $0.300 million loan direct to Premier for the use at RHA. The loan is unsecured and accrues interest at a rate of 3% per annum. As at 28 March 2017, the loan and accrued interest totalled $ 0.309 million. On 28 March 2017 the Company announced that it had amended the terms of the existing Loan Agreement ("Loan") with George Roach through the grant of conversion rights. The Board granted conversion rights in respect of the Loan, which can now be converted into new ordinary shares at a price of 0.5p per new ordinary share. On 15 December 2017 the company announced that George Roach had elected to convert $0.100 million of the $0.300 million he provided to the Company. The outstanding loan balance of $0.219 million continues to accrue interest at 3% (2018: $0.213 million).
�
(2)�On 5 June 2018 the Company entered into a loan with a company owned by a Trust of which George Roach is a beneficiary, for a gross value of $0.300 million to assist with its cash flow requirements. The Loan carries an implementation fee of US$0.015 million (5%) and a redemption fee of US$0.015 million (5%). On 9 November 2018, the Company converted the George Roach loan by issuing� 142�045 455 shares at an issue price of 0.16p per share for a total value of $0.300 million.
�
(3)� On 21 June 2019 the company reported that it has issued a convertible loan note for US$0.350 million with Regent Mercantile Holdings Limited. The annual interest rate payable on the outstanding loan will be 10% per annum. The principal amount of US$0.350 million will be made available to the Company in one advance with no deductions. No warrants have been issued to Regent under the Convertible loan note.
The principal amount (plus any accrued interest) under the Loan Agreement is repayable in two equal payments on 1 August 2019 and 1 September 2019. Failing direct repayment of the loan by Premier, Regent at its sole discretion may convert any percentage of a repayment within applicable share authorities into new Premier shares at a conversion price equal to 90 per cent of the daily volume weighted average price ("VWAP") during the five days trading days immediately prior to the relevant repayment date.
The Loan Agreement is subject to normal events of default and the Company has provided a number of standard warranties and undertakings to Regent in respect of the Group. The Loan Agreement is secured over 350 000 shares of Circum Minerals Limited held by Premier.
(4)� During 2018 Brendan Roach converted his current accounts payable liability to a loan. The value of the loan converted amounted to GBP 0.084 million (USD $0.118 million). The loan accrues interest from the 1st of January 2019 at 8% and is repayable on demand. The outstanding loan balance of $0.128 million continues to accrue interest.
�
18.��������� Share capital
�
Authorised share capital
11.26 billion (2018: 9 billion) ordinary shares of no par value.
�
Issued share capital
| � | Number of Shares | Value |
| � | �'000 | $ 000 |
| As at 1 January 2018 | 6 574 967 | 46 960 |
| � | � | � |
| Shares issued on warrant exercise (1) | 250 000 | 563 |
| Shares issued under subscription agreement (2) | 416 667 | 975 |
| Shares issued on conversion of loan (3) | 142 045 | 300 |
| � | � | � |
| As at 31 December 2018 | 7 383 679 | 48 798 |
| � | � | � |
| Shares issued under subscription agreement (4) | 444 444 | 525 |
| Shares issued on conversion for fees (5) | 161 986 | 185 |
| Shares issued on conversion of loan (6) | 1 009 890 | 569 |
| Shares issued on conversion of loan (7) | 753 779 | 306 |
| Shares issued under subscription agreement (8) | 1 250 000 | 310 |
| Shares issued under subscription agreement (9) | 262 293 | 342 |
| � | � | � |
| As at 31 December 2019 | 11 266 071 | 51 035 |
| � | � | � |
| Less cumulative share costs | � | (2�993) |
| � | � | � |
| Net share capital as at 31 December 2019 | � | 48 042 |
�
�
| (1) | On 16 March 2018, the Company issued 250�000 000 shares to Darwin Strategic Limited on conversion of warrants at an issue price of 0.16p per share. |
| (2) | On 14 August 2018, the Company issued 416�666 667 shares under a subscription agreement at a price of 0.18p per share. |
| (3) | On 09 November 2018, the Company issued 142�045 455 shares at an issue price of 0.16p per share for a total value of $0.300 million to George Roach for conversion of his loan. |
| (4) | On the 07 March 2019, the Company issued 444�444 444 shares under a subscription agreement at a price of 0.9p per share. |
| (5) | On the 29 May 2019, the company issued 161�985 963 shares for a total value of $ 0.185 million for conversion of fees. |
| (6) | On 07 July 2019, the Company issued 1�009�889 850 shares at an issue price of 0.45p per share for a total value of $0.569 million for conversion of loan. |
| (7) | On 28 August 2019, the Company issued 753�778 580 shares at an issue price of 0.45p per share for a total value of $0.306 million for conversion of loan. |
| (8) | On the 03 October 2019, the Company issued 1�250�000 000 shares under a subscription agreement for a total value of $0.310 million |
| (9) | On the 19 December 2019, the Company issued 262�293 000 shares under a subscription agreement� at a price of 0,01p for a total value of $0.343 million |
�
Reconciliation to balance as stated in the consolidated statement of financial position
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| As at 1 January | 45 873 | 44 158 |
| Shares issued under subscription agreements - cash flow | 1 177 | 975 |
| Shares issued to settle trade payables | 185 | -� |
| Shares issued on conversion of loans and loan notes (note 17) - non-cash | -� | 300 |
| Shares issued on exercise of warrants - cash flow | -� | 563 |
| Shares issued to purchase Investment in MNH | 875 | - |
| Share issue costs - cash flow | (68) | (123) |
| As at 31 December | 48 042 | 45 873 |
�
19.��������� Share based payment and warrant reserve
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| Share options and warrants reserve beginning of year | 2 366 | 2 393 |
| Warrants granted | -� | -� |
| Share options | -� | 177 |
| Warrants cancelled | -� | (204) |
| Share options and warrants reserve end of year | 2 366 | 2 366 |
Share options and warrant arrangements are set out below.
Equity-settled Share base payment arrangement
The Company adopted an incentive share option plan (the 'Plan') during 2012. The essential elements of the Plan provide that the aggregate number of common shares of the Company's capital stock issuable pursuant to options granted under the Plan may not exceed 15% of the issued and outstanding Ordinary Shares at the time of any grant of options. Options granted under the Plan will have a maximum term of 10 years. All options granted to Directors and management are subject to vesting provisions of one to two years.
All options are to be settled by the physical delivery of shares.
The fair value of all the share options has been measured using the Black-Scholes Model.
Expected volatility has been based on an evaluation of the historical volatility of the Company's share price, particularly over the historical period commensurate with the expected term. The expected term of the instruments has been based on historical experience and general option holder behaviour
The Company has granted the following share options during the years up to 31 December 2019:
| Issued to | Date Granted | Vesting Term | Number of Options Granted '000 | Exercise Price | Expiry Date | Estimated Fair Value � |
| Employees and consultants | 10/02/2011 | 1 year | 2 250 | 1.135p | 09/02/2014 | 0.87p |
| Directors | 04/12/2012 | See 1 below | 20 386 | Nil | 03/12/2022 | 1.11p |
| Directors | 04/12/2012 | See 2 below | 20 386 | 2p | 03/12/2022 | 1.85p |
| Employees and associates | � 04/12/2012 | � See 3 below | � 5 536 | � Nil | � 03/12/2022 | � 1.85p |
| Directors | 29/07/2014 | See 4 below | 6 000 | 1.15p | 28/07/2024 | 1.15p |
| Directors | 29/07/2014 | See 5 below | 6 000 | 1.50p | 28/07/2024 | 1.15p |
| Management | 29/07/2014 | See 4 below | 6 500 | 1.15p | 28/07/2024 | 1.15p |
| Management | 29/07/2014 | See 5 below | 6 500 | 1.50p | 28/07/2024 | 1.15p |
| Directors | 13/03/2015 | See 4 below | 2 000 | 0.9p | 12/03/2025 | 0.67p |
| Directors | 13/03/2015 | See 5 below | 2 000 | 1.17p | 12/03/2025 | 0.64p |
| Management | 13/03/2015 | See 4 below | 3 250 | 0.9p | 12/03/2025 | 0.67p |
| Management | 13/03/2015 | See 5 below | 3 250 | 1.17p | 12/03/2025 | 0.64p |
| Directors | 19/01/2017 | See 5 below | 30 500 | 0.28p | 18/01/2027 | 0.278p |
| Consultants | 19/01/2017 | See 5 below | 50 439 | 0.28p | 18/01/2027 | 0.278p |
| Directors | 19/01/2017 | See 5 below | 30 500 | 0.40p | 18/01/2027 | 0.28p |
| Consultants | 19/01/2017 | See 5 below | 50 439 | 0.40p | 18/01/2027 | 0. 28p |
| Totals options issued | 245 936 | � | � | � | ||
| � Issued to: | � | � | � | � | � | � |
| -������ Directors | 111 772 | � | � | � | ||
| -�������� Employees and consultants | 114�664 | � | � | � | ||
| -�������� Management | 19 500 | � | � | � | ||
| Total options issued | 245 936 | � | � | � | ||
| � | � | � | � | � | � | � |
| Less: -������ Options exercised in prior years | � 27�257 | � | � | � | ||
| -������ Options cancelled in prior years | 18�330 | � | � | � | ||
| Total options in issue at 31 December 2019 | 200 349 | � | � | � | ||
1.����These share options vest on the two-year anniversary of the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
2.���� These share options vest in equal instalments annually on the anniversary of the grant date over a two year period. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
3.���� These share options vested on the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
4.����These share options vest on the one-year anniversary of the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
5.����These share options vest on the two-year anniversary of the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
�
No share options were granted during the year ended 31 December 2019 (2018 - none issued).
�
The fair value of the options granted during the year ended 31 December 2019 was $nil (2018: $nil). The assessed fair value of options granted to directors and management was determined using the Black-Scholes Model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free rate interest rate for the term of the option.
�
| � | In issue prior | Exercised | Cancelled / | Granted | In issue as at |
| � | to 1 January | during the | lapsed during | during the | 31 December |
| � | 2019 | year | the year | year | 2019 |
| Directors: | � | � | � | � | � |
| �- G. Roach | 21 517 | -� | -� | -� | 21 517 |
| �- G. Manhambara | -� | -� | -� | -� | -� |
| �- N. Herbert | 4 000 | -� | -� | -� | 4 000 |
| �- W. Hampel | 8 000 | -� | -� | -� | 8 000 |
| �- M. Foster (resigned) | 18 000 | -� | -� | -� | 18 000 |
| �- Resigned directors | 40 941 | -� | -� | -� | 40 941 |
| Other option holders | 107 891 | -� | -� | -� | 107 891 |
| � | 200 349 | -� | -� | -� | 200 349 |
�
The Group has the following share options outstanding:
| Grant Date | Expiry Date | Exercise Price | Number of options outstanding '000 | Number of options vested and exercisable '000 |
| 04/12/2012 | 03/12/2022 | Nil | 2 013 | 2 013 |
| 04/12/2012 | 03/12/2022 | 2p | 12 458 | 12 458 |
| 29/07/2014 | 28/07/2024 | 1.15p | 3 000 | 3 000 |
| 29/07/2014 | 28/07/2024 | 1.50p | 10 500 | 10 500 |
| 13/03/2015 | 12/03/2025 | 0.9p | 5 250 | 5 250 |
| 13/03/2015 | 12/03/2025 | 1.17p | 5 250 | 5 250 |
| 19/01/2017 | 18/01/2027 | 0.28p | 80 939 | 80 939 |
| 19/01/2017 | 18/01/2027 | 0.40p | 80 939 | 80 939 |
| � | � | � | 200 349 | 200 349 |
�
The following table lists the inputs into the valuation model.
�
| � | 19 Jan | 19 Jan | 13 Mar | 13 Mar | 29 Jul | 29 Jul | 4 Dec |
| � | 2017 | 2017 | 2015 | 2015 | 2014 | 2014 | 2012 |
| � | Issue | Issue | Issue | Issue | Issue | Issue | Issue |
| Dividend yield (%) | - | - | - | - | - | - | - |
| Expected volatility (%) | 236.0 | 236.0 | 100.0 | 100.0 | 148.0 | 148.0 | 75.0 |
| Risk-free interest rate (%) | 1.43 | 1.43 | 1.71 | 1.71 | 1.71 | 1.71 | 1.81 |
| Share price at grant date | 0.28p | 0.28p | 0.9p | 0.9p | 1.15p | 1.15p | 1.85p |
| Exercise price | 0.28p | 0.40p | 0.9p | 1.17p | 1.15p | 1.5p | 2p and nil |
�
The shares that the options are based on are quoted in GBP and so the option agreement is stated in GBP. As such they are presented in GBP despite the presentational currency of the Group being USD.
�
The number and weighted-average exercise prices of share options under the share option programmes and replacement awards were as follows:
�
| � | 2019 | � | 2018 | ||
| � | � Shares '000 | Weighted Average Exercise Price | � | � Shares '000 | Weighted Average Exercise Price |
| Options outstanding, beginning of year | 200 349 | 0.55p | � | 200 349 | 0.55p |
| Granted | - | - | � | - | - |
| Options outstanding, end of year | 200 349 | 0.55p | � | 200 349 | 0.55p |
�
The weighted-average life of the options in issue as at 31 December 2019 is 5 years and 27 days (2018 - 6 years and 27 days.)
Warrants
The Company did not grant warrant options during the year (2018: nil)
A summary of the status of the Company's share warrants as of 31 December 2019 and changes during the year are as follows:
| � | 2019 '000 | 2018 '000 |
| Warrants outstanding, beginning of year | 23 000 | 234 704 |
| Granted | - | - |
| Expired | (23�000) | - |
| Exercised | - | (6�350) |
| Cancelled * | - | (205�354) |
| Warrants outstanding, end of year | - | 23 000 |
�
During the year ending 31 December 2019 23�million warrants granted to an advisor expired. A payment of $0.204 million was made during 2018 for the cancellation of the warrants above.
There are no warrants outstand in favour of the Directors.
�
Premier's share price opened at 0.1060p in January 2019, traded at an average of 0.1030p, with a high of 0.1970 and low of 0.0220p during the year and closed at 0.0850p on 31 December 2019.
�
20.��������� Non-controlling interest
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| At 1 January | (12 704) | (11 755) |
| Effect of change in the functional currency of subsidiaries | 11 971 | - |
| Non-controlling interest in share of profit / (losses) for the year - RHA | 18 | (949) |
| Non-controlling interest in share of other comprehensive income for the period | (10 793) | - |
| At 31 December | (11 508) | (12 704) |
�
The following table summarises the information relating to each of the Group's subsidiaries that has material Non-controlling interest, before any intra-group eliminations.
�
| � | 2019 | 2018 |
| � | RHA | RHA |
| Non-controlling Interest percentage | 51% | 51% |
| Non-current assets | - | - |
| Current assets | 24 | 75 |
| Non-current liabilities | (18 346) | (19 791) |
| Current liabilities | (4 241) | (5 094) |
| Net assets | (22 563) | (24 810) |
| Net assets attributed to Non-controlling Interest | � | � |
| (11 508) | (12 704) | |
| � | � | � |
| Revenue | - | 168 |
| Profit / (Loss) | 36 | (1 860) |
| Other Comprehensive Income /(Loss) | (21 126) | - |
| Total comprehensive income | (21�126) | (1 860) |
| Loss allocated to NCI | (10 775) | (949) |
The share of losses in the year represents the losses attributable to non-controlling interests in RHA for the year (2018 - RHA for the year).
�
21.��������� Revenue
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| Major product/service lines | � | � |
| Sale of Wolframite | -� | 155 |
| Sale of scrap | -� | 1 |
| Reserve Bank of Zimbabwe Export Incentive | -� | 12 |
| Total revenue | -� | 168 |
| NIEEF refund of expenses | 404 | -� |
| Prescription of debts | 881 | -� |
| Total other income | 1 285 | -� |
| � | � | � |
| Gross revenue | 1 285 | 336 |
| � | � | � |
| Primary Geographical Markets | � | � |
| Africa | 1 285 | 336 |
| � | 1 285 | 336 |
�
22.��������� Cost of sales excluding depreciation and amortisation
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| Mining contractor | - | 24 |
| Staff costs | - | 66 |
| Consumables | - | 17 |
| Equipment hire and maintenance | - | 57 |
| Mining services | - | 3 |
| Plant services | - | 2 |
| Selling costs | - | 2 |
| Net realisable value adjustment of cost of inventory sold | - | 8 |
| Inventory write-down / (write-up) | - | - |
| � | - | 179 |
RHA mine is under care and maintenance and accordingly there are no cost of sales.
�
23.��������� Administrative expenses
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| Staff costs� | 94 | 222 |
| Consulting and advisory fees | 1 061 | 1 107 |
| Directors' fees | 61 | 97 |
| Audit, accounting and legal fees | 274 | 303 |
| Marketing and public relations | 7 | 64 |
| Travel | 174 | 268 |
| Costs incurred to cease operations | - | 174 |
| Security costs | 10 | 24 |
| Vehicle operating costs | (4) | 64 |
| Insurance | 38 | 43 |
| Office and administration | 61 | 200 |
| Short term non-capitalised lease payments (note 14) | 94 | 94 |
| Foreign exchange losses | 1 | (3) |
| Share based payment (note 20) | - | 177 |
| � | 1 871 | 2 834 |
�
24.��������� Finance charges
�
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| Interest charged by suppliers | - | 6 |
| Interest on borrowings | 39 | 52 |
| Derivative financial liability transaction costs | - | - |
| Unwinding of discount on provisions | 89 | 88 |
| Loss on extinguishment of debt | - | - |
| Interest on finance lease | 12 | 7 |
| � | 140 | 153 |
�
25.��������� Taxation
�
| Deferred tax | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| As at 1 January | - | - |
| As at 31 December | - | - |
| Income Tax | � | � |
| Taxation charge for the year | - | - |
�
There is no taxation charge for the year ended 31 December 2019 (2018: Nil) because the Group is registered in the British Virgin Islands where no corporate taxes or capital gains tax are charged. However, the Group may be liable for taxes in the jurisdictions of the underlying operations.
The Group has incurred tax losses in West Africa and Zimbabwe; however a deferred tax asset has not been recognised in the accounts due to the unpredictability of future profit streams.� The accumulative tax losses not recognised at RHA amount to $16.126 million (2018: $15.684 million).
�
| Reconciliation of effective tax rate | 2019 | 2019 | 2018 | 2018 |
| � | � | $ 000 | � | $ 000 |
| � | � | � | � | � |
| Loss before tax from continuing operations | (1 209) | - | (7 758) | - |
| Tax using the Zimbabwean company tax rate | 25% | 302 | 25% | 1 940 |
| Tax effect of: | � | � | � | � |
| Effects of tax rates in foreign jurisdictions | (25%) | (302) | (25%) | (1 940) |
| � | 0% | - | 0% | - |
Contingent liability
The Group operates across different geographical regions and is required to comply with tax legislation in various jurisdictions. The determination of the Group's tax is based on interpretations applied in terms of the respective tax legislations and may be subject to periodic challenges by tax authorities which may give rise to tax exposures.
26.��������� Loss per share
The calculation of loss per share is based on the loss after taxation attributable to shareholders, divided by the weighted average number of shares in issue during the year:
�
| � | 2019 | 2018 |
| � | � | � |
| Net loss attributable to owners of the company ($ 000) | (1 227) | (6 809) |
| � | � | � |
| Weighted average number of Ordinary Shares in calculating basic earnings per share ('000) | 8 902 140 | 6 954 725 |
| � | � | � |
| Basic loss per share (US cents) | (0.01) | (0.1) |
| Diluted loss per share (US cents) | (0.01) | (0.1) |
| � | � | � |
| Weighted average number of ordinary shares | � | � |
| Issued ordinary shares at 1 January ('000) | 7 383 679 | 6 574 967 |
| Weighted average of shares issued during the year ('000) | 1 518 461 | 379 758 |
| Weighted average number of ordinary shares at 31 December ('000) | 8 902 140 | 6 954 725 |
�
As the Group incurred a loss for the year, there is no dilutive effect from share options and warrants in issue or the shares issued after the reporting date.
�
| � | 2019 | 2018 |
| Potential dilutive effect on earnings per share | $ 000 | $ 000 |
| � | � | � |
| Options issued | 200 349 | 200 349 |
| Warrants issued | ���������������������� -�� | 23 000 |
| Convertible loan notes | 587 000 | ���������������������� -�� |
| Total potentially dilutive shares | 787 349 | 223 349 |
�
Refer to note 32 Post balance sheet events for additional potentially dilutive transactions.
�
27.�����Directors' remuneration
�
| � | Directors' fees | Consultancy Fees | Share Options | Total |
| 2019 | $ 000 | $ 000 | $ 000 | $ 000 |
| � | � | � | � | � |
| Executive Directors | � | � | � | � |
| George Roach | - | 230 | - | 230 |
| � | � | � | � | � |
| Non-Executive Directors | � | � | � | � |
| Michael Foster (*) | 22 | - | - | 22 |
| Godfrey Manhambara | 25 | - | - | 25 |
| Wolfgang Hampel | - | 33 | - | 33 |
| Neil Herbert (*) | - | 10 | - | 10 |
| � | 47 | 273 | - | 320 |
| � | � | � | � | � |
| 2018 | � | � | � | � |
| � | � | � | � | � |
| Executive Directors | � | � | � | � |
| George Roach | - | 240 | - | 240 |
| � | � | � | � | � |
| Non-Executive Directors | � | � | � | � |
| John (Ian) Stalker (*) | 11 | - | - | 11 |
| Michael Foster | 33 | - | - | 33 |
| Russel Swarts (*) | 12 | - | - | 12 |
| � | 56 | 240 | - | 297 |
(*)� These directors were not employed during the full financial year.
The Directors' fees disclosed in note 23 include $0.013 million (2018: $0.015 million) being the fees paid to Directors of RHA, who are not directors of the parent company.
The 2019 Directors fees noted above remain unpaid at the financial year-end. No pension benefits are provided for any Directors or other employee benefits.
28.��������������������������������������������������� Notes to the statement of cash flows
Cash and cash equivalents comprise cash at bank, bank overdrafts and short term bank deposits with an original maturity of three months or less. The carrying value of these assets is approximately equal to their fair value.
�
| Loss before tax | � | (1 209) | (7 758) |
| Adjustments for: | � | � | � |
| Finance charges | � | 140 | 153 |
| Foreign exchange variations | � | 2 269 | - |
| Loan implementation fee | � | - | 15 |
| Impairment of PPE - RHA | � | 483 | 196 |
| Impairment of current assets - RHA | � | - | 48 |
| Impairment of intangible assets - Zulu | � | - | 4 563 |
| Fair value movement of investments | � | - | (47) |
| Share based payments and warrant liabilities | � | - | 177 |
| Operating cash flows before movements in working capital | � | 1 683 | (2 653) |
| (Increase)/decrease in inventories | � | 24 | (26) |
| (Increase)/decrease in receivables | � | 35 | 138 |
| Increase/(decrease) in provisions from mine de-establishment | � | (595) | (23) |
| Increase/(decrease) in payables | � | (1 551) | 1 006 |
| Net cash (outflow) from operating activities | � | (404) | (1 558) |
�
29.��������� Financial Instruments - Fair values and risk management
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
Trade and other receivables and trade and other payables classified as held-for-sale are not included in the table below. As at 31 December 2019 the Group did not have any trade and other receivables nor any trade and other payables that were classified as held-for-sale.
The Group has not disclosed the fair values of financial instruments such as short-term trade receivables and payables, because their carrying amounts are a reasonable approximation of their fair value.
�
| � | � | Carrying value | � | � | � | � | Fair value | � | � | |
| 31 December 2019 | � | FVOCI - equity instruments | Financial assets at amortised cost | Other financial liabilities | Total | � | Level 1 | Level 2 | Level 3 | Total |
| � | Note | $ 000 | $ 000 | $ 000 | $ 000 | � | $ 000 | $ 000 | $ 000 | $ 000 |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial assets measured at fair value | � | � | � | � | � | � | � | � | � | |
| FVOCI | � | 7 444 | -� | -� | 7 444 | � | -� | -� | 7 444 | 7 444 |
| � | � | 7 444 | -� | -� | 7 444 | � | � | � | � | � |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial assets not measured at fair value | � | � | � | � | � | |||||
| Trade and other receivables | � | -� | 18 | -� | 18 | � | � | � | � | � |
| Cash and cash equivalents | � | -� | -� | -� | -� | � | � | � | � | � |
| � | � | -� | 18 | -� | 18 | � | � | � | � | � |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial liabilities measured at fair value | � | � | � | � | � | � | � | � | � | |
| � | � | -� | -� | -� | -� | � | � | � | � | � |
| � | � | -� | -� | -� | -� | � | � | � | � | � |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial liabilities not measured at fair value | � | � | � | � | � | |||||
| Bank overdrafts | � | -� | -� | -� | -� | � | � | � | � | � |
| Unsecured loans from shareholders | -� | -� | (347) | (347) | � | � | � | � | � | |
| Secured loan | � | -� | -� | (368) | (368) | � | � | � | � | � |
| Trade and other payables | � | -� | -� | (1 406) | (1 406) | � | � | � | � | � |
| � | � | -� | -� | (2 121) | (2 121) | � | � | � | � | � |
�
�
�
| � | � | Carrying value | � | � | � | � | Fair value | � | � | |
| 31 December 2018 | � | FVOCI - equity instruments | Financial assets at amortised cost | Other financial liabilities | Total | � | Level 1 | Level 2 | Level 3 | Total |
| � | Note | $ 000 | $ 000 | $ 000 | $ 000 | � | $ 000 | $ 000 | $ 000 | $ 000 |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial assets measured at fair value | � | � | � | � | � | � | � | � | � | |
| Available-for-sale | � | 6 263 | -� | -� | 6 263 | � | -� | -� | 6 263 | 6 263 |
| � | � | 6 263 | -� | -� | 6 263 | � | � | � | � | � |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial assets not measured at fair value | � | � | � | � | � | |||||
| Trade and other receivables | � | -� | 53 | -� | 53 | � | � | � | � | � |
| Cash and cash equivalents | � | -� | 16 | -� | 16 | � | � | � | � | � |
| � | � | -� | 69 | -� | 69 | � | � | � | � | � |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial liabilities measured at fair value | � | � | � | � | � | � | � | � | � | |
| � | � | -� | -� | -� | -� | � | � | � | � | � |
| � | � | -� | -� | -� | -� | � | � | � | � | � |
| � | � | � | � | � | � | � | � | � | � | � |
| Financial liabilities not measured at fair value | � | � | � | � | � | |||||
| Bank overdrafts | � | -� | -� | (288) | (288) | � | � | � | � | � |
| Unsecured loans from shareholders | -� | -� | (213) | (213) | � | � | � | � | � | |
| Trade and other payables | � | -� | -� | (2 957) | (2 957) | � | � | � | � | � |
| � | � | -� | -� | (3 458) | (3 458) | � | � | � | � | � |
�
Financial instruments - Fair values and risk management
B.������������ Measurement of fair values
i.������������� Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 3 fair values for financial instruments measured at fair value in the statement of financial position, as well as the significant unobservable inputs used. Related valuation processes are described in Note 4.8.
Financial instruments measured at fair value
| Type | Valuation technique | Significant unobservable inputs | Inter-relationship between significant unobservable inputs and fair value measurement |
| Unlisted Equity investments | Current market value technique: The valuation model is based upon the latest price at which the unlisted entity raised capital. | None | None |
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ii.������������ Transfers between Levels 1 and 2
There were no transfers between Levels 1 and 2 in either the current financial year or in the prior financial year.
C.������������ Financial Risk Management
The Group has exposure to the following risks arising from financial instruments:
- credit risk;
- liquidity risk; and
- market risk.
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Risk management framework
The Company's board of directors has overall responsibility for the establishment and oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk�� management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
The Group's audit committee oversees how management monitors compliance with the Group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group's audit committee undertake ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investments in debt securities.
The carrying amounts of financial assets represent the maximum credit exposure.
In the current year there was no impairment loss (2018 - $0.048 million comprising of $0.041 million for unrecoverable accrued VAT and $0.007 million) for unrecoverable sundry debtors.
Trade receivables
The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which its customers operate. Details of concentration of revenue are included in Note 21.
The Group has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group's standard payment terms and conditions are offered. The Group's review includes external ratings, if they are available, financial statements, credit agency information, industry information and in some cases bank references. Sales limits are established for each customer and are reviewed regularly.
The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period of one month.
The Group is monitoring the economic environment in Zimbabwe, where its exploration and mining operations are based.
The Group does not require collateral in respect of trade and other receivables. The Group does not have trade receivables for which a no allowance is recognised because of collateral.
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| � | � | 2019 | 2018 |
| � | � | $ 000 | $ 000 |
| At 31 December 2019 the exposure to credit risk for | � | � | � |
| trade receivables by geographic region was as follows: | � | � | � |
| � | � | � | � |
| Zimbabwe | � | 18 | 53 |
| Other | � | - | - |
| � | � | 18 | 53 |
| At 31 December 2019 the exposure to credit risk for | � | � | � |
| trade receivables by counterparty was as follows: | � | � | � |
| � | � | � | � |
| Zimbabwe Revenue Authority | � | 2 | 21 |
| Other | � | - | 7 |
| � | � | 2 | 28 |
| At 31 December 2019 the exposure to credit risk for | � | � | � |
| trade receivables by credit rating was as follows: | � | � | � |
| � | � | � | � |
| External credit ratings | � | - | - |
| Other | � | 18 | 53 |
| � | � | 18 | 53 |
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Expected credit loss assessment for corporate customers as at 1 January 2019 and 31 December 2019
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss (including but not limited to external ratings, audited financial statements, management accounts and cash flow projections and available press information about customers) and applying experienced credit judgement. Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default.
The company had no exposure to credit risk for the year ended 31 December 2019 (2018 - nil)
Movements in the allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade receivables during the year amounted to nil (2018 - nil).
Cash and cash equivalents
As at 31 December 2019, the Group held $0.040 million in cash and cash equivalents (2018: $0.016 million) and had a nil bank overdraft (2018: $0.288 million). The cash and cash equivalents are held with bank and financial institution counterparties which are rated BB to BAA (according to Standard and Poor's).
Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures. The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties. On the implementation of IFRS 9 the Group did not impair any of its cash and cash equivalents.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
Exposure to liquidity risk
The following table presents the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of netting agreements.
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| � | � | � | � | Contractual cash flows | � | ||
| 31 December 2019 | Carrying value | Total | 2 Months or less | 2 to 12 Months | 1 to 2 Years | 2 to 5 Years | More than 5 years |
| � | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 |
| Non- derivative financial | � | � | � | � | � | � | |
| liabilities | � | � | � | � | � | � | � |
| � | � | � | � | � | � | � | � |
| Bank overdrafts | -� | -� | -� | -� | -� | -� | -� |
| Unsecured shareholder's | � | � | � | � | � | � | |
| loan | 219 | (219) | (219) | -� | -� | -� | -� |
| Unsecured loans | 128 | (347) | (347) | -� | -� | -� | -� |
| Secured loans | 368 | (368) | (368) | -� | -� | -� | -� |
| Trade payables | 1 406 | (1 406) | (1 406) | -� | -� | -� | -� |
| � | 2 121 | (2 340) | (2 340) | -� | -� | -� | -� |
| � | � | � | � | � | � | � | � |
| Derivative financial | -� | -� | -� | -� | -� | -� | -� |
| liabilities | -� | -� | -� | -� | -� | -� | -� |
| � | -� | -� | -� | -� | -� | -� | -� |
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| � | � | � | � | Contractual cash flows | � | � | |
| 31 December 2018 | Carrying value | Total | 2 Months or less | 2 to 12 Months | 1 to 2 Years | 2 to 5 Years | More than 5 years |
| � | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 | $ 000 |
| Non- derivative financial | � | � | � | � | � | � | |
| liabilities | � | � | � | � | � | � | � |
| � | � | � | � | � | � | � | � |
| Bank overdrafts | 288 | (288) | (288) | -� | -� | -� | -� |
| Unsecured shareholder's | � | � | � | � | � | � | |
| loan | 213 | (213) | -� | (213) | -� | -� | -� |
| Trade payables | 2 957 | (2 957) | -� | (2 957) | -� | -� | -� |
| � | 3 458 | (3 458) | (288) | (3 170) | -� | -� | -� |
| � | � | � | � | � | � | � | � |
| Derivative financial | -� | -� | -� | -� | -� | -� | -� |
| liabilities | -� | -� | -� | -� | -� | -� | -� |
| � | -� | -� | -� | -� | -� | -� | -� |
The interest payments on the financial liabilities represent the fixed interest rates as per the respective contracts.
The Group aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities other than trade payables. The Group also monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables.
Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies are primarily Pound Sterling and the US Dollar. The Zimbabwean trading companies functional currency is RTGS. The currencies in which these transactions are primarily denominated are Euro, US Dollar, South African Rand, RTGS and Pound Sterling.
The Company conducts its business in Zimbabwe with a significant portion of expenditures in that country historically denominated in USD and now also in RTGS. The introduction of the RTGS$ during the financial year has resulted in the devaluation of the RTGS$ against the US Dollar. This devaluation has also resulted in the Zimbabwean economy going into hyperinflationary status. To a large extent this is beneficial to Premier as its Zimbabwean assets are fully impaired. The remaining liabilities are inflation adjusted at each reporting period yielding foreign exchange gains on conversion to USD.
All transactions are subject to spot rates and with no hedging transactions taking place.
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Exposure to currency risk
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| � | 31 December 2019 | � | 31 December 2018 | ||||||
| � | EUR | GBP | USD | ZAR | RTGS | EUR | GBP | USD | ZAR |
| � | � '000 | � '000 | � '000 | � '000 | � '000 | � '000 | � '000 | � '000 | � '000 |
| � | � | � | � | � | � | � | � | � | � |
| Trade receivables | -� | -� | 18 | -� | -� | -� | -� | 53 | -� |
| Unsecured loans | -� | -� | (715) | -� | -� | -� | -� | (213) | -� |
| Trade payables | (77) | (352) | (781) | (1 282) | (72 502) | (43) | (325) | (2 395) | (733) |
| Net statement of financial position exposure | (77) | (352) | (1 478) | (1 282) | (72 502) | (43) | (325) | (2 555) | (733) |
| � | � | � | � | � | � | � | � | � | � |
| Next 6 months forecast sales | -� | -� | -� | -� | -� | -� | -� | -� | -� |
| Next 6 months forecast purchases | -� | -� | (1 245) | (1 205) | (15 262) | -� | -� | (1 245) | (1 205) |
| Net forecast transaction exposure | -� | -� | (1 245) | (1 205) | (15 262) | -� | -� | (1 245) | (1 205) |
| � | � | � | � | � | � | � | � | � | � |
| Net exposure | (77) | (352) | (2 723) | (2 487) | (87 764) | (43) | (325) | (3 800) | (1 938) |
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The summary quantitative data about the Group's exposure to currency risk as reported to the management of the Group is as follows:
The following significant exchange rates in relation to the reporting currency are applicable:
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| � | � | Average rate for the year | Year end spot rate | ||
| � | � | 2019 | 2018 | 2019 | 2018 |
| Euro | � | ���������� 1.1201 | ���������� 1.1804 | ���������� 1.1220 | ���������� 1.2769 |
| GBP | � | ���������� 1.2769 | ���������� 1.3368 | ���������� 1.3263 | ���������� 1.2747 |
| ZAR | � | ���������� 0.0693 | ���������� 0.0755 | ���������� 0.0714 | ���������� 0.0694 |
| RTGS | � | ���������� 8.1792 | ���������� 1.0000 | �������� 17.2322 | ���������� 1.0000 |
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
| � | ���� Liabilities | ������������� Assets��� | ||
| � | 2019 | 2018 | 2019 | 2018 |
| �'000 | ' 000 | '000 | '000 | |
| � | � | � | � | � |
| Sterling (�) | 352 | 325 | - | - |
| Euro (�) | 77 | 43 | - | - |
| South African Rand (ZAR) | 1 282 | 733 | - | - |
| Real Time Gross Settlement of USD (RTGS) | � 79 197 | � - | � 25 | � - |
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The presentation currency of the Group is US dollars.
The Group is exposed primarily to movements in USD for trade, RTGS for the Zimbabwean companies and GBP for all fund raising activities.�
Sensitivity analysis
Financial instruments affected by foreign currency risk include financial investments (see note 9) cash and cash equivalents, other receivables, trade and other payables and convertible loan notes. The following analysis, required by IFRS 7 Financial Instruments: Disclosures, is intended to illustrate the sensitivity of the Group's financial instruments (at year end) to changes in market variables, being exchange rates.
The following assumptions were made in calculating the sensitivity analysis:
All income statement sensitivities also impact equity
Translation of foreign subsidiaries and operations into the Group's presentation currency have been excluded from this sensitivity as they have no monetary effect on the results.
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Income Statement / Equity
| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| Exchange rates: | � | � |
| +10% $ Sterling (GBP) | (35) | (42) |
| -10% $ Sterling (GBP) | 35 | 42 |
| +10% $ RTGS | (87 764) | - |
| -10% $ RTGS | 87 764 | - |
| � | � | � |
The above sensitivities are calculated with reference to a single moment in time and will change due to a number of factors including:
������ Fluctuating other receivable and trade payable balances
������ Fluctuating cash balances
������ Changes in currency mix
Interest rate risk
The Group has entered into fixed rate agreements for its finance leases and shareholders loans. The Group does not hedge its interest rate exposure by entering into variable interest rate swaps.
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Exposure to interest rate risk
The interest rate profile of the Group's interest-bearing financial instruments as reported to the management of the Group is as per the table below.
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| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| Fixed rate instruments | � | � |
| Financial assets | -� | -� |
| Financial liabilities | 750 | 310 |
| � | 750 | 310 |
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Fair value sensitivity analysis for fixed-rate instruments
The Group does not account for any fixed-rate financial assets of financial liabilities at FVTPL. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
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Other market price risk
The Group is exposed to equity price risk, which arises from equity securities at FVOCI are held as a long-term investment.
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The Group's investments in equity securities comprise small shareholdings in unlisted companies. The shares are not readily tradable and any monetisation of the shares is dependent on finding a willing buyer.
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Valuation techniques and assumptions applied for the purposes of measuring fair value
Due to the short term nature, the fair value of cash and receivables and liabilities approximates the carrying values disclosed in the financial statements.
The fair value of financial assets is estimated by using other readily available information. As the Circum and MNH shares are in privately held exploration companies, the fair values were estimated using observable placing prices where available.
Circum and MNH are unlisted and there are no quoted market prices. The fair value of the Circum shares was derived using the previous issue price and validating it against the most recent placing price on 30 April 2019. The fair value of MNH shares was derived from the latest placing and supported by an external valuation conducted by Bara Consulting.
Capital management
The Group manages its capital resources to ensure that entities in the Group will be able to continue as a going concern, while maximising shareholder return.
The capital structure of the Group consists of equity attributable to shareholders, comprising issued share capital and reserves. The availability of new capital will depend on many factors including a positive mineral exploration environment, positive stock market conditions, the Group's track record, and the experience of management. There are no externally imposed capital requirements.� The Directors are confident that adequate cash resources exist or will be made available to finance operations but controls over expenditure are carefully managed.�
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30.����Subsidiaries
Premier had investments in the following subsidiary undertakings as at 31 December 2019, which principally affected the losses and net assets of the Group:
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| � Name | Country of incorporation and operation | Proportion of voting interest % � | � � Activity | |
| � | � | 2019��������� 2018����������� | � | |
| ZimDiv Holdings Limited RRCC Ltd Regent Resources Capital Corporation SAU | Mauritius BVI Togo | 100 100 100 | 100 100 100 | Holding Company Holding Company Exploration |
| G and B African Resources Benin SARL | Benin | 100 | 100 | Exploration |
| Zulu Lithium Mauritius Holdings Limited RHA Tungsten Mauritius Limited | Mauritius Mauritius | 100 100 | 100 100 | Holding Company Holding Company |
| Kavira Minerals Holdings Limited Tinde Fluorspar Holdings Limited Lubimbi Minerals Holdings Limited Gwaaii River Minerals Holdings Limited | Mauritius Mauritius Mauritius Mauritius | 100 100 100 100 | 100 100 100 100 | Holding Company Holding Company Holding Company Holding Company |
| Zulu Lithium (Private) Limited RHA Tungsten (Private) Limited | Zimbabwe Zimbabwe | 100 49* | 100 ��� 49* | Exploration Production |
| Katete Mining (Private) Limited | Zimbabwe | 100 | 100 | Exploration |
| Tinde Fluorspar (Private) Limited LM Minerals (Private) Limited BM Mining & Exploration (Private) Limited | Zimbabwe Zimbabwe Zimbabwe | 100 100 100 | 100 100 100 | Exploration Exploration Exploration |
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* Accounted as a controlled subsidiary, refer note 4-� Significant accounting policies, estimates and assumptions and note 4.7 -� Basis of consolidation.
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31.��������� Related party transactions
Ultimate controlling party
There is no single ultimate controlling party.
Transactions with key management personnel
Loans from directors
On 15 September 2015, George Roach provided a $0.300 million loan direct to Premier for the use at RHA. The loan is unsecured and accrues interest at a rate of 3% per annum. As at 28 March 2017, the loan and accrued interest totalled $0.309 million. On 28 March 2017 the Company announced that it had amended the terms of the existing loan agreement with George Roach through the grant of conversion rights. The Board granted conversion rights in respect of the Loan, which can now be converted into new ordinary shares at a price of 0.5p per new ordinary share. On 15 December 2017 the company announced that George Roach had elected to convert $0.100 million of the $0.300 million ("Loan") he provided to the Company. The outstanding loan balance of $0.219 million continues to accrue interest at 3% (2018: $0.213 million).
Supplies and Services����
During 2019, administration fees of $0.114 (2018: $0.114 million) were paid by Premier to a trading business in which George Roach, Director, is the beneficial owner. Administration fees comprised allocated rental costs and administrative support services.� At the financial year-end the amount outstanding is $115 575 (2018: $nil).
The amount outstanding at 31 December 2019 for Brendan Roach for directors fees of RHA Tungsten is $62�542 (2018 - $nil).
The amount outstanding at 31 December 2019 for Godfrey Manhambara for directors fees of is $29�544 (2018 - $9�673).
The amount outstanding at 31 December 2019 for Wolfgang Hampel for directors fees of is $80�000 (2018 - $15�000).
The amount outstanding at 31 December 2019 for Neil Herbert for directors fees of is $9�631 (2018 - $ni).
Borrowings
In April 2018 Brendan Roach loaned the company GBP 0.084 million. The outstanding loan balance as at 31 December 2019 is $0.128 million.
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Remuneration of key management personnel
The remuneration of the Directors and other key management personnel of the Group are set out below for each of the categories specified in IAS 24 Related Party Disclosures.
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| � | 2019 | 2018 |
| � | $ 000 | $ 000 |
| � | � | � |
| Consulting Fees | 230 | 240 |
| Staff costs | 129 | 126 |
| Directors' fees (Note 27) | 47 | 56 |
| � | 406 | 422 |
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32.��������� Events after the reporting date
32.1������� RHA Tungsten (Pvt) Ltd
In February 2020 the Honourable Minister of the Ministry of Industry and Commerce on behalf of the National Indigenisation and Economic Empowerment Fund ("NIEEF"), undertook a site visit to evaluate the progress to re-commence the reprocessing of the tailings at RHA.
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In May 2020 the Ministry of Commerce and Industry in Zimbabwe indicated that whilst they cannot conclude the negotiation in regard to RHA under the Covid-19 lock down, and provided RTGS $2.5 million (equivalent to US$108�806 at the official bank exchange rate), as interim funds to cover holding and security costs at RHA for an extended period.
32.2������� Corporate matters
Premier reached an agreement Regent Mercantile Holdings Limited ("Regent") in January 2020 to extend the repayment terms of the convertible loan note for US$350�000 from 31 January 2020 until the 31 March 2020. In April 2020, the Company reached a further verbal agreement with Regent for a further extension to the repayment terms of the convertible loan note for US$350�000.
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Premier concluded a loan instrument of US$200�000 in April 2020 with a company owned by a Trust of which George Roach is a beneficiary, for a gross value of US$200�000. The proceeds of the New were used to support ongoing development and provide additional general working capital for the Company. The annual interest rate payable on the outstanding amounts under the New Loan is 10% per annum.
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In May 2020, Premier concluded an investment agreement of US$290�000 before costs with D-Beta One EQ ("D-Beta"), Ltd, YA II PN ("YA"), Ltd and Riverfort Global Opportunities PCC Limited ("Riverfort"). The annual interest rate payable on the outstanding investment amount is 10%. The principal amount (plus any accrued interest) under the Investment Agreement is repayable six months from the date of this announcement. The proceeds of the Investment Agreement were used to reduce existing liabilities and general working capital for the Company.
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In June 2020, Premier entered into a conditional sale and purchase agreement to acquire a portfolio of hard-rock lithium assets located in Zimbabwe and Mozambique from Lithium Consolidated Ltd ("Li3") following Li3's strategic shift of focus to their Australian based projects. Premier conditionally agreed to purchase the Li3 African projects for a gross consideration of AUD$150�000, (approximately US$104�000) that was to be satisfied through issuance of new ordinary shares in Premier. Premier completed the purchase in July 2020 by the issuance of 124�512�702 new ordinary shares in favour of Li3.
On the 22nd June 2020 Premier was granted an extension of three months for the reporting and filing of its financial results for the year ended 31 December 2019.
On the 25th June 2020 Premier confirmed the appointment of Neil Herbert (an existing Non-Executive Director) as Non-Executive Chairman of the Company.
In June 2020, Premier entered into a conditional sale and purchase agreement to acquire a portfolio of hard-rock lithium assets located in Zimbabwe and Mozambique from Lithium Consolidated Ltd ("Li3") following Li3's strategic shift of focus to their Australian based projects. Premier conditionally agreed to purchase the Li3 African projects for a gross consideration of AUD$ 150�000, (approximately US$104�000) that was to be satisfied through issuance of new ordinary in Premier. Premier completed the purchase in July 2020 by the issuance of 124�512�702 in favour of Li3.
On 24 July 2020, the Company received a notice of exercise by Regent to convert their loan plus accrued interest in the amount of US$390�040.92 (�305�836.77) in accordance with the terms of the loan agreement as announced on the 21 June 2019 into new ordinary shares in the Company. The Company therefor has issued 431�241�920 new ordinary shares to Regent at an issue price of 0.07092p per share.
On 27 July 2020, the Company received a notice of exercise by D-Beta One EQ, Ltd, YA II PN, Ltd and Riverfort Global Opportunities PCC Limited, collectively referred to as the ("Investors") to convert US$50�000 of the investment plus accrued interest of US$6�276.71, amounting to US$56�276.71 (�44�115.31) in accordance with the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company. The Company therefor has issued 70�426�740 new ordinary shares to the Investors an issue price of 0.062640p per share.
On 30 July 2020, the Company received a notice of exercise by the company owned by a trust of which George Roach is a beneficiary to convert the loan, plus accrued interest, amounting to US$206�027 (�159�131.07) in accordance with the terms of the loan agreement as announced on the 9 April 2020 into new ordinary shares in the Company. The Company therefor has issued 232�647�763 new ordinary shares to the company an issue price of 0.0684 per share.
On 11 August 2020, the Company received a notice of exercise by the Investors to convert a further US$50�000 of the investment plus accrued interest of US$1�183.56, amounting to US$51�183.56 (�39�165.66) in accordance with the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company. The Company therefor has issued 64�470�222 new ordinary shares to the Investors an issue price of 0.06075p per share.
On 11 August 2020, the Company issued new ordinary shares to Directors, employees, and other creditors in settlement of accrued but unpaid contractual amounts due, amounting in aggregate to �337�428. The Company issued 374 920�533 new shares in settlement of accrued but unpaid fees at an issue price of 0.09p per share.
On 18 August 2020, the Company received a notice of exercise by the Investors to convert a further US$50�000 of the investment plus accrued interest of US$312.33, amounting to US$50 312.33 (�38�388.31) in accordance with the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company. The Company therefor has issued 62�450�479 new ordinary shares to the Investors an issue price of 0.06147p per share.
On 21 August 2020, the Company received a notice of exercise by the Investors to convert a further US$75�000 of the investment plus accrued interest of US$1�189.04, amounting to US$76�189.04 (�58�810.32) in accordance with the terms of the loan agreement as announced on the 7 May 2020 into new ordinary shares in the Company. The Company therefor has issued 125�905�202 new ordinary shares to the Investors an issue price of 0.04671p per share.
32.3 Circum Minerals Limited investment
On the 15th of June 2020 the Board of Premier African Minerals Limited provided an update from the Board of Circum that a combination of factors in the later part of 2019 and the effects of Covid-19, has led the Circum Board to decide to execute a new set of strategic objectives to develop its potash asset, set to ultimately ensure that all investors who financially supported Circum so far, are given a better chance to earn the expected returns through a future liquidity event, in the shortest possible time.
32.4������� MN Holdings Limited
In February 2020, Premier acquired a further 2% in MNH for US$200�000 that was satisfied through the issue of 171�074�444 new ordinary shares at an agreed issue price of 0.09p per share for an aggregate consideration of �153�967 payable in new on. Premier's interest in MNH has increase to 12%.
In May 2020, Premier acquired a further 7% in MNH, the purchase consideration of US$700�000 was payable in Premier shares but was subject to shareholder approval at special general meeting held in June 2020. Following the approval of the Agreement by shareholders at the Company's General Meeting, Premier satisfied the purchase consideration of US$700�000 in the form of 498�229�730 new ordinary Premier shares issued at an issue price of 0.0111p , being Premier's quoted closing share price on the 4th of June 2020. On completion, Premier's interest in MNH will increase to 19%.
32.5����� Ultimate Controlling Company
There is no single ultimate controlling company for Premier African Minerals Limited.
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