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AfriTin Mining Ltd - Half-year Report

RNS Number : 3699A
AfriTin Mining Ltd
29 September 2020
 

AfriTin Mining Limited

 

("AfriTin" or the "Company" and with its subsidiaries the "Group")

 

Unaudited Interim Results

 

for the six months ended 31 August 2020

 

AfriTin Mining Limited (AIM: ATM), an African tin mining company with its flagship asset, the Uis tin mine ("Uis") in Namibia, is pleased to release its unaudited interim results for the six months ended 31 August 2020.

Highlights

·      Revenue increased to £1,083,996 for the six-month period ended 31 August 2020;

·      Phase 1 pilot plant continues to ramp up and achieved a production record of 37.5 tonnes of tin concentrate in August 2020;

·      Publication of an internal operational and financial and forecast review to accompany the mineral resource estimate (JORC 2012) conducted by CSA Global, indicated robust economics for current plant expansion;

·      The Company expects to complete the ramp-up to steady-state production of 60 tonnes of tin concentrate per month by the end of 2020;

·      Continued shipments of tin concentrate to Thaisarco, with the agreement renewed for a further 12 months which is anticipated to increase revenues further as production continues to ramp up; and,

·      Renewed and increased working capital and VAT facilities with Nedbank Namibia during the period.

 

Chief Executive Officer's Statement

Introduction

Despite the continued global uncertainty around the COVID-19 pandemic and associated lockdown, AfriTin has steadily increased production at the Uis tin mine in Namibia, resulting in a marked increase in the revenue of the Company during the period. During this period, the operations of the Phase 1 pilot plant achieved a production record of 37.5 tonnes of tin concentrate in August 2020 despite ongoing planned shutdowns for plant improvements. This equates to 63% of expected Phase 1 steady-state production and with continued improvements we anticipate this increasing to steady-state production targets by the end of 2020. The off-take agreement with Thaisarco has been renewed for a further 12 months and the Company looks forward to building on this robust relationship as the shipments increase over the coming months. The global tin market has been one of the better performers on the London Metals Exchange during this uncertain period confirming our belief in the market fundamentals of tin.

COVID-19 pandemic

In March 2020, Namibia implemented a lockdown across the country in response to the global COVID-19 pandemic. However, under the government legislation, mining operations were categorised as critical economic services and minimal operational activity was permitted to continue, including critical maintenance work. To comply with this directive, AfriTin had to suspend open-pit mining at the Uis tin mine, but we were able to continue feeding the processing plant from the run-of-mine stockpile. At the time of the lockdown, more than two months' worth of ore feed had been stockpiled, enabling the Company to maintain the ramp-up, albeit at a slower pace than originally planned.

As a result of the COVID-19 pandemic, AfriTin implemented new health measures across the Company to protect our employees from the virus. The health and safety of our employees and communities remains a key priority, and the Company is following all World Health Organisation and Namibian National Health guidelines and recommendations to ensure their wellbeing. AfriTin can report that there have been no confirmed cases of COVID-19 at the Uis tin mine. A COVID-19 community support programme was established to support the residents of Uis. This includes providing the local clinic with medical supplies and contracting a local Uis resident to make facemasks which were distributed at the clinic and the local school.

Review of the business & operations

In June 2020, AfriTin performed an internal financial and operational review to accompany the mineral resource estimate (JORC 2012) conducted by CSA Global, declared on 16 September 2019. This review outlined the development strategy for the Uis tin project, dovetailed with AfriTin's corporate strategy of a fast-tracked but risk-mitigated pathway to growing company value through the establishment of free cash flows, while developing a schedule towards expanded operations.

This translates into the following objectives:

·      Confirming the historical mineral resources followed by exploration of proximal mineralised pegmatites;

·      Establishing a mining and processing operation of sufficient scale and efficiency to be commercially viable and provide free cash flows as expeditiously as possible;

·      Expanding the revenue stream from tin concentrate to include other viable by-products, with particular emphasis on tantalum and lithium; and

·      Using the pilot facility as a platform to develop a large-scale operation.

Initiatives to solve identified key bottlenecks in the processing plant are ongoing. As a result of higher-than-anticipated fines material in the run-of-mine feed, improvements were required to rebalance material flows and expand capacity related to the dewatering of grits (45 to 500 micron particles) and slimes (smaller than 45 micron particles). The bottlenecks in the fines dewatering circuit of the Uis processing plant have now been addressed. As a result, the Company looks forward to completing the ramp-up to steady-state production of 60 tonnes of tin concentrate per month by the end of 2020.

Financing

In May 2020, AfriTin secured a £2.05 million loan note facility. This facility enabled the Company to continue executing its growth strategy for the ramp-up phase of the Phase 1 pilot plant. In addition, the facility provided additional protection against any potential effects from the COVID-19 pandemic. At 31 August 2020, the Company had drawn down £1.8 million of this facility.

On 31 July 2020, the Company renewed and increased its working capital and VAT facilities with Nedbank Namibia for a further 12-month period. This support from a local bank in Namibia shows confidence in our Company, asset and commodity. In August 2020, AfriTin raised additional equity financing by way of a placing and subscription of £3.05 million at a price of 2.1 pence per ordinary share through existing shareholders and - importantly - this also attracted prominent new institutional investors to the share register. Their participation demonstrates on-going confidence in our team's ability to deliver our stated strategy and growth plans.

Outlook

2020 is proving to be an unprecedented time for both the mining sector and the world as a whole. However, the Company has adapted to the confines of the COVID-19 pandemic. I'd like to thank the entire team for all their dedication during these difficult times as well as acknowledge the ongoing support from the Namibian Government, our loyal shareholders and board of directors.

AfriTin is well set for the second half of the financial year as we continue our journey to become the tin champion of Africa and I look forward to providing further updates in the second half of the financial year.

Anthony Viljoen

CEO

 

For further information, please visit www.afritinmining.com or contact:

AfriTin Mining Limited


Anthony Viljoen, CEO

+27 (11) 268 6555

Nominated Adviser


WH Ireland Limited

Katy Mitchell

James Sinclair-Ford

+44 (0) 207 220 1666 

Corporate Advisor and Joint Broker


Hannam & Partners

Andrew Chubb

Jay Ashfield

Nilesh Patel

+44 (0) 20 7907 8500

Joint Broker


Turner Pope Investments

Andy Thacker

+44 (0) 203 657 0050

Financial PR (United Kingdom)


Tavistock

+44 (0) 207 920 3150

Jos Simson

Barney Hayward


 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014

About AfriTin Mining Limited

Notes to Editors

AfriTin Mining Limited is the first pure tin company listed in London and its vision is to create a portfolio of globally significant, conflict-free, tin-producing assets. The Company's flagship asset is the Uis Tin Mine in Namibia, formerly the world's largest hard-rock opencast tin mine.

AfriTin is managed by an experienced board of directors and management team with a current two-fold strategy: fast-track Uis tin mine in Namibia to commercial production as Phase 1, ramping up to 5 000 tonnes of tin concentrate in a Phase 2 expansion. The Company strives to capitalise on the solid market fundamentals of tin by developing a critical mass of tin resource inventory, achieving production in the near term and further scaling production by consolidating tin assets in Africa.



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 6 months ended 31 August 2020


Notes

6 months ended

31 August 2020 (unaudited)

£

6 months

ended

31 August

2019

(unaudited)

£

12 months

ended

29 February

2020

(audited)

£

Continuing operations







 

Revenue

5

       1 083 996


-


 69 032

 

Cost of Sales


(1 070 239)


-


 (47 336)

 

Gross Profit


   13 757


-


 21 696

 

Administrative expenses

6

(946 182)


(615 516)


(1 815 227)

 

Operating loss


(932 425)


(615 516)


(1 793 531)

 

Finance income


                  14


3 749


 3 793

 

Finance cost

7

(109 410)


(15 346)


(40 719)

 

Loss before tax


(1 041 821)


(627 113)


(1 830 457)

 

Income tax expense

8

               -  


-


 -

 

Loss for the period


(1 041 821)


(627 113)


(1 830 457)

 

Other comprehensive loss







 

Items that will or may be reclassified to profit or loss:







 

Exchange differences on translation of share-based payment reserve


(4 342)


222


(1 039)

 

Exchange differences on translation of foreign operations


(1 293 490)


(31 697)


(1 113 281)

 

Exchange differences on non-controlling interest


     6 213


 (21)


 4 167

 








 

Total comprehensive loss for the period


(2 333 440)


(658 609)


(2 940 610)

 








 

Loss for the period attributable to:







 

Owners of the parent


(999 434)


(624 551)


(1 781 962)

 

Non-controlling interests


(42 387)


(2 562)


(48 495)

 



(1 041 821)


(627 113)


(1 830 457)

 








 

Total comprehensive loss for the period attributable to:







 

Owners of the parent


(2 297 266)


(656 027)


(2 896 282)

 

Non-controlling interests


(36 174)


(2 582)


(44 328)

 



(2 333 440)


(658 609)


(2 940 610)

 








 

Loss per ordinary share







 








 

Basic and diluted loss per share (in pence)    

9

(0.15)


(0.10)


(0.29)

 



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 August 2020

Company number: 63974


Notes

31 August

2020

(unaudited)

£

31 August

2019

(unaudited)

£

 

29 February

2020

(audited)

£

Assets







Non-current assets







Intangible assets

 10

  7 247 261


  7 596 732


 7 441 018

Property, plant and equipment

 11

       12 961 697


  9 333 036


 12 467 868

Total non-current assets


     20 163 958


       16 929 768


 19 908 886








Current assets







Inventories

12

     610 171


       26 441


 246 910

Trade and other receivables

13

     362 756


     992 390


 648 722

Cash and cash equivalents


  2 578 612


     130 635


 574 600

Total current assets


  3 551 539


  1 149 466


 1 470 232








Total assets


       23 715 497


    18 079 234


 21 379 118








Equity and liabilities







Equity







Share capital

18

     23 604 665


      20 223 173


 20 487 239

Convertible loan note reserve


  3 770 645


    -  


 3 770 645

Accumulated deficit


(5 364 934)


(3 210 518)


(4 365 500)

Warrant reserve

19

     215 956


       78 651


 78 651

Share-based payment reserve


     729 808


     264 671


 559 534

Foreign currency translation reserve


(2 828 598)


(453 523)


(1 535 108)

Equity attributable to the owners of the parent


      20 127 542


      16 902 454


 18 995 461

Non-controlling interests


(87 986)


(10 067)


(51 812)

Total equity


      20 039 556


       16 892 387


 18 943 649








Non-current liabilities







Environmental rehabilitation liability

16

80 968     


     75 600


 86 005

Lease liability

17

       140 527


     262 475


 181 544

Total non-current liabilities


     221 495


     338 075


 267 549








Current liabilities







Trade and other payables

15

     894 008


     763 307


 894 830

Borrowings

14

     2 517 536


       85 465


 1 230 961

Lease liability

17

       42 902


-


 42 129

Total current liabilities


  3 454 446


     848 772


 2 167 920








Total equity and liabilities


      23 715 497


       18 079 234


 21 379 118

 

The notes that follow in this report form part of these financial statements.

 

The financial statements were authorised and approved for issue by the Board of Directors and authorised for issue on 28 September 2020

ANTHONY VILJOEN

Chief Executive Officer

28 SEPTEMBER 2020


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 August 2020


Share capital

Convertible loan note reserve

Accumulated deficit

Warrant reserve

Share-based payment reserve

Foreign currency translation reserve

Total

Non-controlling interests

Total equity


£

£

£

£

£

£

£

£

£

Total equity at 28 February 2019

17 337 718

-

(2 585 967)

78 651

220 729

(421 827)

14 629 304

(7 484)

14 621 820

Loss for the period

-

-

(624 551)

-

-

-

(624 551)

(2 562)

(627 113)

Other comprehensive income/loss

-

-

-

-

222

(31 697)

(31 475)

(21)

(31 496)

Transactions with owners:










Share-based payments

-

-

-

-

43 720

-

43 720

-

43 720

Issue of shares

2 988 392

-

-

-

-

-

2 988 392

-

2 988 392

Share issue costs

(102 937)

-

-

-

-

-

(102 937)

-

(102 937)

Total equity at 31 August 2019

20 223 173

-

(3 210 518)

78 651

264 671

(453 524)

16 902 454

(10 067)

16 892 387

Loss for the period

-

-

(1 154 982)

-



(1 154 982)

(45 933)

(1 200 915)

Other comprehensive income/loss

-

-

-

-

(1 261)

(1 081 584)

(1 082 845)

4 188

(1 078 657)

Transactions with owners:










Share-based payments

-

-

-

-

359 842

-

359 842

-

359 842

Issue of shares

272 816

3 800 000

-

-

(63 718)

-

4 009 098

-

4 009 098

Share issue costs

(8 750)

(29 355)

-

-


-

(38 105)

-

(38 105)

Total equity at 29 February 2020

20 487 239

   3 770 645

(4 365 500)

        78 651

      559 534

(1 535 108)

18 995 461

(51 812)

18 943 649

Loss for the period

  -  

  -  

(999 434)

  -  

  -  

  -  

(999 434)

(42 387)

(1 041 821)

Other comprehensive income/loss

  -  

  -  

  -  

-    

(4 342)

(1 293 490)

(1 297 832)

          6 213

(1 291 619)

Transactions with owners:










Issue of shares

   3 370 743

  -  

  -  

  -  

  -  

  -  

   3 370 743

  -  

   3 370 743

Share issue costs

(253 317)

  -  

  -  

  -  

  -  

  -  

(253 317)

  -  

(253 317)

Share-based payments

  -  

  -  

  -  

  -  

      174 616

  -  

      174 616

  -  

      174 616

Warrants granted

  -  

  -  

  -  

      137 305

  -  

  -  

      137 305

  -  

      137 305

Total equity at 31 August 2020

23 604 665

   3 770 645

(5 364 934)

      215 956

      729 808

(2 828 598)

20 127 542

(87 986)

20 039 556


CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended 31 August 2020

 


Notes

Period ended 31 August 2020 (unaudited)

£

 

Period ended 31 August 2019 (unaudited)

£

Year ended

29 February

2020

(audited)

£

Cash flows from operating activities







Loss before taxation


(1 041 821)


(627 112)


(1 830 457)

Adjustments for:







Depreciation of property, plant and equipment

11

          181 520


           61 126


 128 130

Share-based payments


114 385             


           43 720


184 888

Equity-settled transactions

18

          320 743


                    -  


 109 190

Finance income


(14)


(3 749)


(3 793)

Finance costs

7

          109 410


                    -  


 40 719

Changes in working capital:







Decrease/(Increase) in receivables

13

          232 192


(519 580)


(220 634)

Increase/(decrease) in payables

15

          81 600


      384 405


(241 546)

(Increase)/decrease in inventory

12

(397 485)


(1 087)


 578 828

Net cash used in operating activities


(399 470)


(662 278)


(1 254 675)








Cash flows from investing activities







Finance income


     14


             3 749


 3 793

Purchase of intangible assets

10

(72 828)


(578 252)


(596 291)

Purchase of property, plant and equipment

11

(1 751 822)


(3 346 592)


(7 159 313)

Net cash used in investing activities


(1 824 636)


(3 921 095)


(7 751 811)








Cash flows from financing activities







Finance costs

7

(1 881)


                    -  


(562)

Lease payments

17

(30 700)


                    -  


(68 015)

Net proceeds from issue of shares

18

       2 796 683


      2 885 455


 3 770 645

Proceeds from borrowings

14

3 834 387


           85 465


4 840 989

Repayment of borrowings

14

      (2 501 805)  


-


(3 610 028)

Net cash generated from financing activities


       4 096 684


      2 970 920


 7 809 734








Net decrease in cash and cash equivalents


       1 872 578


(1 612 453)


(1 196 752)

Cash and cash equivalents at the beginning of the period


          574 600


      1 781 335


 1 781 335

Exchange differences


          131 434


(38 247)


 (9 983)

Cash and cash equivalents at the end of the period


       2 578 612


         130 635


574 600



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 August 2020

 

1.     Corporate information and principal activities

 

AfriTin Mining Limited ("AfriTin") was incorporated and domiciled in Guernsey on 1 September 2017 and admitted to the AIM market in London on 9 November 2017. The company's registered office is currently 18-20 Le Pollet, St Peter Port, Guernsey, GY1 1WH. Effective 1 October 2020, the registered address will become PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH. The company operates from Illovo Edge Office Park, 2nd Floor, Building 3, Corner Harries and Fricker Road, Illovo, Johannesburg, 2116, South Africa.

 

These financial statements are for the period ended 31 August 2020 and the comparative figures for the 6-month period ended 31 August 2019 and for the year ended 29 February 2020 are shown.

 

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

 

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

 

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

 

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

 

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

 

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

 

The minority shareholder in Jaxson is Lerama Resources Pty Limited who owns a 50% interest in Jaxson.

 

Pamish 71 owns a 74% interest in Zaaiplaats Mining Pty Limited ("Zaaiplaats").

 

The minority shareholder in Zaaiplaats is Tamiforce Pty Limited who owns 26%.

 

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

 

At 31 August 2020, the AfriTin Group comprised:

 

Company

Equity holding and voting rights

Country of incorporation

Nature of activities

AfriTin Mining Limited

N/A

Guernsey

Ultimate holding company

Greenhills Resources Limited1

100%

Guernsey

Holding company

AfriTin Mining Pty Limited1

100%

South Africa

Group support services

Tantalum Investment Pty Limited1

100%

Namibia

Tin & tantalum exploration

AfriTin Mining (Namibia) Pty Limited2

100%

Namibia

Tin & tantalum operations

Uis Tin Mining Company Pty Limited3

85%

Namibia

Tin & tantalum operations

Mokopane Tin Company Pty Limited2

100%

South Africa

Holding company

Renetype Pty Limited4

74%

South Africa

Tin & tantalum exploration

Jaxson 641 Pty Limited4

50%

South Africa

Tin & tantalum exploration

Pamish Investments 71 Pty Limited2

100%

South Africa

Holding company

Zaaiplaats Mining Pty Limited5

74%

South Africa

Property owning

 

1 Held directly by AfriTin Mining Limited

2 Held by Greenhills Resources Limited

3 Held by AfriTin Mining (Namibia) Pty Limited

4 Held by Mokopane Tin Company Pty Limited

5 Held by Pamish Investments 71 Pty Limited

 

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

2.     Significant accounting policies

 

Basis of accounting

 

The interim financial statements have been prepared using measurement and recognition criteria based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted for use in the EU. The interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial statements for the year ended 28 February 2021 and which were applied in the Group's statutory financial statements for the year ended 29 February 2020.

 

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

 

The interim financial information for the six months to 31 August 2020 is unaudited and does not constitute statutory financial information. The statutory accounts for the year ended 29 February 2020 are available on the Company's website. The auditors' report on those accounts was unqualified and included a material uncertainty in respect of going concern but did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006..

 

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

 

Going concern

 

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

 

At 31 August 2020, the Company had cash in the bank of £2.6m and had drawn down £764k of the available £1.9m Nedbank working capital and VAT facility.

 

The £2.05m loan note issued in May 2020 (of which only £1.8m has been drawn down) as well as the £3.8m convertible loan note raised in November 2019 mature in May 2021.

 

The Nedbank facility of N$43m (approx. £1.9m) as well as the N$4.2m (approx. £188k) Nedbank guarantee to Namibia Power Corporation Pty Limited in relation to a deposit for the supply of electrical power continue to be in place. The Nedbank facility falls due for renewal in July 2021.

 

The Company is commissioning and ramping up the Phase 1 pilot plant at Uis with the purpose of proving up the feasibility of a much larger, profitable Phase 2 plant to go into full commercial production. Whilst the ramp up was adversely impacted by supply chain disruption associated with COVID-19, the ramp up is now continuing with minimal disruption following easing of government restrictions and measures implemented by the mine. 

 

Management have prepared a detailed cashflow forecast for the period to 30 September 2021 and performed stress tests of those forecasts. The base case forecast demonstrates that the Group will have sufficient funds to meet its liabilities as they fall due and includes the following key assumptions:

 

·                      The £3.8m convertible loan notes issued in November 2019 and the £2.05m loan notes issued in May 2020 (of which only £1.8m have been drawn down) are assumed to be settled in equity. Per the agreements, the £3.8m convertible loan notes can be settled in equity at the discretion of the Company. However, settlement of the £2.05m loan notes (of which only £1.8m has been drawn down) in cash or shares is subject to agreement by both parties and therefore equity settlement cannot be guaranteed and is dependent on the loan note holders being in agreement.

·      The working capital facility with Nedbank Namibia is anticipated to be renewed in July 2021 under the annual review.           

·    Prices have been set at $18 000 which is the current spot price per tonne of tin and $150 000 per tonne of tantalum.

·    The forecasts assume a continued ramp up in production to steady state for Phase 1 of the operation by the end of 2020.

 

Whilst the Board anticipate that the £2.05m loan note (of which only £1.8m has been drawn down) will be settled in equity, there can be no guarantee that this event will occur and if it is not forthcoming the Group will likely need to raise additional funds.

 

Whilst the Board fully anticipate renewal of the working capital facility in July 2021, noting the recent renewal of the facility, there can be no guarantee that this will occur.

 

Additionally, the Group's forecasts are based on anticipated growth in production which is considered achievable by the Board. However, the Board have considered the risks and uncertainties associated with COVID-19 on the Group's operations including the potential impact on areas including risks to supply chain and access to site by consultants, additional government restrictions and potential volatility in commodity prices. In the event of further disruption to the production ramp up or operational cash flow as a result of COVID-19 or other related operational issues, the Group may require additional funding.

 

These matters indicate a material uncertainty exists which may cast significant doubt on the Group's ability to continue as a going concern. No adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

 

Critical accounting estimates and judgements

 

In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial period are addressed below.

 

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

 

i)      Going concern and liquidity

 

Significant estimates were required in forecasting cash flows used in the assessment of going concern including tin and tantalum prices, the level of production and the rate at which production ramp up is achieved, operating costs and capital expenditure requirements. Additionally, judgment has been applied in assessing the likely form of settlement of one of the loan notes, renewal of the working capital facility and the risks associated with COVID-19, together with mitigating steps available to the Group if required.

 

ii)     Decommissioning and rehabilitation obligations

 

Estimating the future costs of environmental and rehabilitation obligations is complex and requires management to make estimates and judgements as most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. The resulting provisions (see Note 16) are further influenced by changing technologies, political, environmental, safety, business and statutory considerations.

 

The Group's rehabilitation provision is based on the net present value of management's best estimates of future rehabilitation costs. Judgement is required in establishing the disturbance and associated rehabilitation costs at period end, timing of costs, discount rates and inflation. In forming estimates of the cost of rehabilitation which are risk adjusted, the Group assessed the Environmental Management Plan and reports provided by internal and external experts. Actual costs incurred in future periods could differ materially from the estimates and changes to environmental laws and regulations, life of mine estimates, inflation rates and discount rates could affect the carrying amount of the provision. The carrying amount of the rehabilitation obligations for the Group at 31 August 2020 was £80 968 (August 2019: £75 600 and February 2020: £86 005).

 

iii)    Impairment indicator assessment for exploration & evaluation assets

 

Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including specific impairment indicators prescribed in IFRS 6: Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future tin prices, future capital expenditures and environmental, regulatory restrictions and the successful renewal of licenses. The directors have concluded that there are no indications of impairment in respect of the carrying value of intangible assets at 31 August 2020 based on planned future development of the projects and current and forecast tin prices. Exploration and evaluation assets are disclosed fully in Note 10.

 

iv)   Impairment assessment for property, plant and equipment

 

Management performed an impairment indicator assessment at 31 August 2020 and identified a potential impairment indicator based on the Group's market capitalisation and the decrease in tin prices and performed an impairment test accordingly. The impairment test was performed on a fair value less cost to sell basis and included assessments of different scenarios associated with capital development and expansion opportunities. The forecasts required estimates regarding forecast tin and tantalum prices, ore resources and production, together with operating and capital costs. The impairment test was performed at a post-tax nominal discount rate of 11.7%.

 

3.     Adoption of new and revised standards

 

New accounting standards adopted

 

Standards, amendments and interpretations to existing standards that are effective and have been adopted by the Group:

 

IFRS 3

Amendments to IFRS 3 "Business Combinations": Definition of "business"

1 January 2020

IAS 1 and IAS 8

Amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors": Definition of "material"

1 January 2020

Conceptual Framework

Amendments to References to the Conceptual Framework in IFRS Standards

1 January 2020

 

The adoption of these standards has made no material impact on the financial statements of the Group.

 

Accounting standards and interpretations not applied

 

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

 

IFRS 17

IFRS 17 "Insurance Contracts"

1 January 2021

 

The Directors anticipate that the adoption of this standard in future periods will have no material impact on the financial statements of the Group based on current operations.

 

4.     Segmental reporting

 

The reporting segments are identified by the management steering committee (who are considered to be the chief operating decision-makers) by the way that the Group's operations are organised. As at 31 August 2020, the Group operated within two operating segments, tin exploration and operational activities in Namibia and tin exploration activities in South Africa.

 

Segment results

 

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

 


South Africa


Namibia


Total


£


£


£

Period ended 31 August 2020






Results






Revenue

 13 757


1 070 239


 1 083 996

Associated costs

(2 715)


(1 385 083)


(1 387 798)

Segmental profit/(loss)

11 042


(314 844)


(303 802)







Period ended 31 August 2019






Results






Revenue

-


 -


-

Associated costs

(6 755)


(61 145)


(67 900)

Segmental loss

(6 755)


(61 145)


(67 900)







Year ended 29 February 2020






Results






Revenue

21 696


47 336


69 032

Associated costs

(14 006)


(436 922)


(450 928)

Segmental profit/(loss)

7 690


(389 586)


(381 896)

 

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

 


Period ended

31 August 2020

£

Period ended

31 August 2019

£

Year ended

29 February 2020

£

Segmental loss

(303 802)


(67 900)


(381 896)

Unallocated costs

(628 623)


(547 616)


(1 411 635)

Finance income

14


 3 749


 3 793

Finance costs


(15 346)


(40 719)

Loss before tax

(1 041 821)


(627 113)


(1 830 457)

 

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

 

Other segmental information


South Africa


Namibia


Total


£


£


£

As at 31 August 2020






Intangible assets

        2 994 786


    4 252 475


7 247 261

Other reportable segmental assets

       61 314


  13 570 933


  13 632 247

Other reportable segmental liabilities

 (58 909)


     (820 345)


(879 254)

Unallocated net asset

             -  


                 -  


39 302

Total consolidated net assets

        2 997 191


  17 003 063  


  20 039 556







As at 31 August 2019






Intangible assets

 3 232 101


 4 364 631


7 596 732

Other reportable segmental assets

      50 268


 9 915 995


9 966 263

Other reportable segmental liabilities

(70 419)


(565 563)


(635 982)

Unallocated net liabilities

               -  


               -  


(34 627)

Total consolidated net assets

3 211 950


  13 715 063


   16 892 387







As at 29 February 2020






Intangible assets

 3 108 713


 4 332 305


 7 441 018

Other reportable segmental assets

 60 323


 13 041 793


13 102 116

Other reportable segmental liabilities

(64 997)


(774 676)


(839 673)

Unallocated net liabilities

 -


 -


(759 812)

Total consolidated net assets

 3 104 039


 16 599 422


 18 943 649

 

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

5.     Revenue


Period ended

31 August 2020

£

 

Period ended

31 August 2019

£

Year ended

29 February 2020

£

Revenue from the sale of tin

1 070 239


-


47 336

Revenue from the sale of sand

13 757


-


 21 696


1 083 996


-


 69 032

 

6.     Administrative expenses

 

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

 


Period ended

31 August 2020

£

 

Period ended

31 August 2019

£

Year ended

29 February 2020

£

Staff costs

381 625


248 572


 793 687

Depreciation of property, plant & equipment

57 671


61 126


128 130

Professional fees

67 044


145 412


 88 550

Travelling expenses

9 128


63 778


 98 988

Other costs

429 214


96 628


652 999

Auditor's remuneration

1 500


-


 52 873


946 182


615 516


 1 815 227

 

7.     Finance cost


Period ended

31 August 2020

£

 

Period ended

31 August 2019

£

Year ended

29 February 2020

£

Interest on lease liability

12 528


15 346


 33 128

Interest on environmental rehabilitation liability

3 704


-


7 029

Interest on loan notes

52 096


-


-

Warrant charges linked to loan note issue

39 202


-


-

Other interest

1 880


-


562


109 410


15 346


40 719

 

8.     Taxation

 

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

 


Period ended

31 August 2020

£

 

Period ended

31 August 2019

£

Year ended

29 February 2020

£

Factors affecting tax for the period:






The tax assessed for the period at the Guernsey corporation

tax charge rate of 0%, as explained below:






Loss before taxation

(1 041 821)


(627 113)


(1 830 457)







Loss before taxation multiplied by the Guernsey

Corporation tax charge rate of 0%

-


-


-

Effects of:






Differences in tax rates (overseas jurisdictions)

(188 301)


(111 850)


(327 821)

Tax losses carried forward

188 301


111 850


327 821

Tax for the period

-


-


-

 

Accumulated losses in the subsidiary undertakings for which there is an unrecognised deferred tax asset are £2 180 918 (August 2019: £1 271 578 and February 2020: £1 797 379).

 

9.     Loss per share from continuing operations

 

The calculation of a basic loss per share of 0.15 pence (August 2019: loss per share of 0.10 pence and February 2020: loss per share of 0.29 pence), is calculated using the total loss for the period attributable to the owners of the Company of £999 434 (August 2019: £624 551 and February 2020: £1 781 962) and the weighted average number of shares in issue during the period of 677 705 520 (August 2019: 599 566 233 and February 2020: 623 591 330).

 

Due to the loss for the period, the diluted loss per share is the same as the basic loss per share. The number of potentially dilutive ordinary shares, in respect of share options, warrants and shares to be issued as at 31 August 2020 is 89 723 725 (August 2019: 50 536 891 and February 2020: 69 080 819). These potentially dilutive ordinary shares may have a dilutive effect on future earnings per share.

 

10.  Intangible assets


Exploration and evaluation assets


Computer software


Total


£


£


£

As at 31 August 2019

7 525 269


71 463


7 596 732

Additions for the period

28 236


55 595


83 831

Exchange differences

(229 011)


(10 534)


(239 545)

As at 29 February 2020

7 324 494


116 524


7 441 018

Additions for the period

78 664


3 534


82 198

Exchange differences

(264 148)


(11 807)


(275 955)

As at 31 August 2020

7 139 010


108 251


7 247 261

 

The Company's subsidiary, Greenhills Resources Limited has the following:

i)      a 74% interest in Renetype Pty Limited ("Renetype") which holds an interest in Prospecting Right 2205.

ii)     an 85% interest in Uis Tin Mining Company Pty Limited ("UTMC") which holds an interest in mining rights, ML129, ML133 and ML134.

iii)    a 50% interest in Jaxson 641 Pty Limited ("Jaxson") which holds an interest in Prospecting Right 428.

iv)   a 74% interest in Zaaiplaats Mining Pty Limited ("Zaaiplaats") which holds an interest in Prospecting Right 183.

 

The Company has a 100% interest in Tantalum Investment Pty Limited ("Tantalum") which holds an interest in Exclusive Prospecting Licence 5445 and Exclusive Prospecting Licence 5670.

 

11.  Property, plant and equipment


Land

Mining asset under construction

Decommissioning asset

Right-of-use

Asset

Computer Equipment

Furniture

Vehicles

Total

Cost









As at 31 August 2019

13 514

8 777 273

75 600

289 922

99 396

88 880

85 982

9 430 567

Additions for the period

-

4 188 741

10 863

(11 909)

3 168

3 179

-

4 194 042

Exchange differences

(1 076)

(965 085)

(6 966)

(22 049)

(8 191)

(7 311)

(6 847)

(1 017 525)

As at 29 February 2020

12 438

12 000 929

79 497

255 964

94 373

84 748

79 135

12 607 084

Additions for the period

-

1 674 884

-

-

3 952

-

-

1 678 836

Exchange differences

(1 251)

(1 126 683)

(7 998)

(25 751)

(9 588)

(8 471)

(7 961)

(1 187 703)

As at 31 August 2020

11 187

12 549 130

71 499

230 213

88 737

76 277

71 174

13 098 217










Accumulated Depreciation









As at 31 August 2019

-

-

-

43 488

24 417

11 712

17 915

97 532

Charge for the period

-

-

-

15 304

19 603

8 546

10 835

54 288

Exchange differences

-

-

-

(4 905)

(3 681)

(1 648)

(2 370)

(12 604)

As at 29 February 2020

-

-

-

53 887

40 339

18 610

26 380

139 216

Charge for the period

-

-

-

24 819

16 155

7 586

9 111

57 671

Exchange differences

-

-

-

(6 007)

(4 476)

(2 015)

(2 869)

(15 367)

As at 31 August 2020

-

-

72 699

52 018

24 181

32 622

181 520










Net Book Value









As at 31 August 2020

11 187

12 549 1302

71 499

157 514

36 719

52 096

38 552

12 916 697

As at 29 February 2020

12 438

12 000 929

79 497

202 077

54 034

66 138

52 755

12 467 868

As at 31 August 2019

13 514

8 777 273

75 600

246 434

74 979

77 168

68 067

9 333 036

 

12.  Inventories


31 August 2020

£

 

31 August 2019

£

29 February 2020

£

Run-of-mine stockpile

261 424


-


-

Tin concentrate on hand

285 971


-


 185 338

Consumables

62 776


26 441


 61 572


610 171


26 441


246 910

 

13.  Trade and other receivables


31 August 2020

£

 

31 August 2019

£

29 February 2020

£

Trade receivables

164 573


32 440


 42 772

Other receivables

100 690


177 528


 111 614

VAT receivables

97 493


782 422


 494 336


362 756


992 390


 648 722

 

14.  Borrowings


31 August 2020

£

 

31 August 2019

£

29 February 2020

£

 

Working capital facility

763 543


85 465


1 230 961

Loan note facility

1 753 993


-


-


2 517 536


85 465


1 230 961

 

On 16 August 2019, a working capital facility of N$35m (approximately £1.6m) and a VAT facility for N$8m (approximately £358k) was entered into between the Company's subsidiary, AfriTin Mining (Namibia) Pty Limited and Nedbank Namibia.

 

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

 

The working capital facility and the VAT facility were reviewable on 31 July 2020 and were renewed for a further 12-month period. Interest accrues on these loans at the prime rate charged by Nedbank Namibia.

 

Both AfriTin, as the parent company of AfriTin Mining (Namibia) Pty Limited, and Bushveld Minerals Limited ("Bushveld"), a shareholder holding approximately 8% of the Company, provide collateral in the form of a joint suretyship.

 

In addition to the facility amount of N$35m (approx. £1.6m) , Nedbank Namibia have provided AfriTin Mining (Namibia) Pty Limited with a N$4.1m (approx. £184k) guarantee to Namibia Power Corporation Pty Limited in relation to a deposit for the supply of electrical power. As a result of the guarantee provided by Nedbank Namibia, no cash was paid over for the deposit.

 

On 5 May 2020, £2.05m financing was secured by way of a new loan note facility. The notes, which are issued in tranches of £50k, bear an interest rate of 10% per annum to be accrued and payable in full on redemption, either in cash or through the issue of shares by mutual agreement between the Company and the loan note holders and have a 12-month term. At 31 August 2020, the company had drawn down on £1.8 million of these notes. As part of the facility agreement, the loan note holders received 10 warrants for each £1 subscribed and paid for, each warrant giving the holder the right to subscribe for one share in AfriTin. The warrants can be exercised at any time from the date of issue and will lapse on 4 May 2023. The exercise price of the warrants is 1.95p.

 

15.  Trade and other payables


31 August 2020

£

 

31 August 2019

£

29 February 2020

£

Trade payables

676 674


616 505


 570 779

Other payables

109 690


109 335


 71 117

Accruals

107 644


37 467


 252 934


894 008


763 307


 894 830

 

16.  Environmental rehabilitation liability


£

Balance at 31 August 2019

75 600

Increase in provision

10 864

Interest expense

7 127

Foreign exchange differences

(7 585)

Balance at 29 February 2020

86 005

Increase in provision

-

Interest expense

3 705

Foreign exchange differences

(8 742)

Balance at 31 August 2020

80 968

 

Provision for future environmental rehabilitation and decommissioning costs are made on a progressive basis. Estimates are based on costs that are regularly reviewed and adjusted appropriately for new circumstances. The environmental rehabilitation liability is based on disturbances and the required rehabilitation as at 31 August 2020.

 

The rehabilitation provision represents the present value of decommissioning costs relating to the dismantling of mechanical equipment and steel structures related to the Phase 1 pilot plant, the demolishing of civil platforms and reshaping of earthworks. A provision for this requires estimates and assumptions to be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. In calculating the appropriate provision, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability. In determining the amount attributable to the rehabilitation liability, management used a discount rate of 9.35%, an inflation rate of 5.5% and an estimated mining period of 38 years. Actual rehabilitation and decommissioning costs will ultimately depend upon future market prices for the necessary rehabilitation works and timing of when the mine ceases operation.

 

17.  Lease liability

 

A lease liability is raised for the rental of an office building. The lease commenced on 1 December 2018 and has a term of 5 years.

 


£

Balance at 31 August 2019

262 475

Additions

-

Interest expense

16 232

Lease payments

(35 841)

Exchange differences

(19 193)

Balance at 29 February 2020

223 673

Additions

-

Interest expense

12 528

Lease payments

(30 700)

Exchange differences

(22 072)

Balance at 31 August 2020

183 429

 

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

 


31 August 2020

£

 

31 August 2019

£

29 February 2020

£

Non-current liability

140 527


262 475


 181 544

Current liability

42 902


-


 42 129


183 429


262 475


 223 673

 

18.  Share capital


Number of ordinary shares of no par value issued and fully paid

Share Capital

£

Balance at 31 August 2019

644 201 599

20 223 173

Shares issued to Hannam & Partners

327 868

10 000

Shares issued to directors/employees

8 616 906

262 816

Share issue costs

-

(8 750)

Balance at 29 February 2020

653 146 373

20 487 239

Capital Raise - 3 August 2020

145 238 089

3 050 000

Shares issued to suppliers

15 273 480

320 743

Share issue costs

(253 317)

Balance at 31 August 2020

813 657 942

23 604 665

 

Authorised: 966 302 399 ordinary shares of no par value

Allotted, issued and fully paid: 813 657 942 ordinary shares of no par value

 

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

 

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

 

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

 

19.  Warrant reserve

 

The following warrants were granted during the period ended 31 August 2020:

 

Date of grant

7 July 2020

31 May 2020

5 May 2020

Number granted

2 500 000

2 500 000

13 000 000

Contractual life

2.8 years

2.9 years

3 years

Estimated fair value per warrant (£)

0.0122

0.00679

0.00691

 

The following warrants were granted during the year ended 28 February 2019:

 

Date of grant

23 January 2019

Number granted

3 800 000

Contractual life

2 years

Estimated fair value per warrant (£)

0.01286

 

The following warrants were granted during the period ended 28 February 2018:

 

Date of grant

9 November 2017

Number granted

 1 871 939

Contractual life

3 years

Estimated fair value per warrant (£)

0.01591

 

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

 

Date of grant

7 July 2020

31 May 2020

5 May 2020

23 January 2019

9 November 2017

Share price at grant date (pence)

2.55

1.80

1.80

4.15

3.90

Exercise price (pence)

1.95

1.95

1.95

4.50

3.90

Expected life

2.8 years

2.9 years

3 years

2 years

3 years

Expected volatility

60%

60%

60%

60%

60%

Expected dividends

Nil

Nil

Nil

Nil

Nil

Risk-free interest rate

1.24%

1.24%

1.24%

1.24%

1.24%

 

The warrants in issue during the period are as follows:

 

Outstanding at 31 August 2019

 5 671 939

Exercisable at 31 August 2019

 5 671 939

Granted during the period

 -

Expired during the period

 -

Exercised during the period

 -

Outstanding at 29 February 2020

 5 671 939

Exercisable at 29 February 2020

 5 671 939

Granted during the period

18 000 000

Expired during the period

 -

Exercised during the period

 -

Outstanding at 31 August 2020

 23 671 939

Exercisable at 31 August 2020

 23 671 939

 

The warrants outstanding at period-end have an average exercise price of £0.0251, with a weighted average remaining contractual life of 2.11 years.

 

In the period ended 31 August 2020, a warrant charge of £137 305 was accounted for in relation to warrants issued as part of the May 2020 loan note facility.

 

20.  Events after balance sheet date

 

There are no events after balance sheet date to disclose.

 

21.  Related-party transactions

 

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

 

Bushveld Minerals Limited ("Bushveld") is a related party due to Anthony Viljoen, Chief Executive Officer, being a Non-Executive Director on the Bushveld Board. During the period, Bushveld charged the Group £39 556 (August 2019: £33 794 and February 2020: £85 596) for the use of office space. At period end, the Group owed Bushveld £95 391 (August 2019: £33 794 and February 2020: £71 762). Furthermore, Bushveld provide joint suretyship of N$30m (approx. £1.34m) as collateral for the Nedbank Namibia working capital facility.

 

 

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AfriTin Mining Ltd's (LON:ATM) Anthony Viljoen talks Proactive London through their latest six month report for the period to June 2020. Viljoen highlights the revenue generated - just over £1m during the six month period. He goes on to explain ramping up of production at its Uis mine in...

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