Last checked at 30 Sep 2020 09:15
30 September 2020
Bezant Resources Plc
("Bezant", the "Company" or, together with its subsidiaries, the "Group")
Final Results for the Year Ended 31 December 2019, Publication of Annual Report and
Update on Timing of Notification of Interim Results for the Six Months Ended 30 June 2020
Bezant (AIM: BZT), the copper-gold exploration and development company, announces its audited final results for the year ended 31 December 2019.
Highlights:
Financial:
· £1.1m loss after tax - £1.1m loss from continuing operations and £nil from discontinued operations (2018: £1.2m - £0.8m loss from continuing operations and £0.4m from discontinued operations).
· Impairment charge of £211,000 (2018: £199,000) relating to the Company's Mankayan Copper-Gold Project, Philippines.
· Approximately £0.3m cash at bank at the period end (2018: £0.5m).
Operational:
As explained in the Chairman's statement below the main focus during the Company remained focused on seeking to develop its existing projects through strategic alliances / joint ventures / sales and the identification and acquisition of copper-gold resources moving towards development of projects which pass the relevant criteria for investment.
Mankayan Project Philippines: During the period the Company sold 80% of its interest in the Mankayan copper-gold porphyry project in the Philippines to MMIH of Singapore who intend a reverse takeover or listing on the Singapore or other suitable exchange. For a variety of reasons interruptions have occurred to that process, but some achievements have been made in extending deadlines and work commitments for licence maintenance. MMIH are still focussed on the listing and, we understand, COVID-019 notwithstanding anticipate a favourable outcome.
Eureka Project Argentina: The Eureka Project in Argentina has been kept in good standing with most of our work being desktop, defining drilling programmes, which will test various geophysical and geochemical anomalies and , when complete, should define, the nature of the gold distribution and overall potential of the project. We have received expressions of interest to either joint venture or sell the project and are still considering the best route to take for the project.
Corporate:
On 24 May 2019, a resolution was passed at the Company's Annual General Meeting to approve the reorganisation of the Company's share capital in order to reduce the nominal value of the Company's ordinary shares such that the Company is able to issue new ordinary shares at a price below £0.02 per ordinary share in the event that the Directors seek to raise additional equity finance at such a price to provide, inter alia, additional working capital for the group. Pursuant to this resolution, every existing ordinary share in the capital of the Company in issue of £0.002 each ("Existing Ordinary Shares") on 24 May 2019 was re-designated and sub-divided into 1 (one) new ordinary share of £0.00002 each ("New Ordinary Shares") and 1 (one) deferred share of £0.00198 each ("Deferred Shares"). The New Ordinary Shares have been admitted for trading on AIM in place of the Existing Ordinary Shares. The New Ordinary Shares continue to carry the same rights as attached to the Existing Ordinary Shares (save for the reduction in their nominal value). The Deferred Shares have very limited rights and are effectively valueless as they have no voting rights and have no rights as to dividends and only very limited rights on a return of capital. The Deferred Shares are not admitted to trading or listed on any stock exchange and are not freely transferable.
On 5 December 2019, certain professional fees amounting to £29,375 owed to Novum Securities Ltd was settled by the issue of 20,982,143 new Ordinary Shares (the "Fee Shares"). The Fee Shares were issued at a price of 0.14 pence per share, being the price at which the Company completed its fundraise announced on 5 December 2019 which represented a discount of approximately 30 per cent. to the Company's closing mid-market share price of 0.2 pence on 4 December 2019.
On 29 June 2019 Laurence Read has, with the agreement of the Board, resigned to enable him to pursue his other interests
Post Period End:
1. Decision not to exercise option in relation to Buffalo Project in Zambia
As announced on 3 January 2020, the Company was granted an extension to the initial expenditure phase in respect of its conditional option to acquire a 50 per cent. interest in small scale copper mining licence number 15164-HQ-SML in The Republic of Zambia (the "Licence"), as announced on 23 April 2019, which contains the Buffalo exploration project (the "Buffalo Project") (the "Buffalo Option"). Under the original terms of the Buffalo Option and as consideration for a 50 per cent. interest in the Buffalo Project, Bezant was required to complete an initial assessment of the Licence area at a cost of up to US$200,000 by 1 February 2020 (the "Initial Expenditure Phase"). The Initial Expenditure Phase was extended to 30 April 2020, to enable the Company to progress its ongoing assessment of the Buffalo Project.
As announced on 27 April 2020 the Company will be focusing its resources on progressing the larger scale Kalengwa Exploration Project announced on the same date, and the Bezant Board decided that the Company will not be exercising its pre-existing option over the Buffalo Project in Zambia which therefore lapsed on its scheduled expiry date of 30 April 2020.
2. Acquisition of 30% interest in Kalengwa Project in Zambia
As announced on 27 April 2020, the Company entered into a binding joint venture agreement dated 24 April 2020 with KPZ International Limited ("KPZ Int") (the "JV Agreement") in relation to the acquisition of a 30 per cent. interest in the approximate 974 km2 large scale exploration licence numbered 24401-HQ-LEL in the Kalengwa greater exploration area in The Republic of Zambia (the "Licence") by acquiring a 30 per cent. shareholding in KPZ Int. The Licence is held by Kalengwa Processing Zone Ltd ("KPZ"), a 100 per cent. (less one share) Zambian subsidiary of KPZ Int, and is for the exploration of copper, cobalt, silver, gold and certain other specified minerals. The Licence was granted on 2 April 2019 and is valid for an initial period up to 1 April 2023.
3. Sale of 80% of interest in Mankayan Project in Philippines
On 15 June 2020, the Company announced an update on its transaction with Mining and Minerals Industries Holding Pte. Ltd. ("MMIH"), a private company incorporated in Singapore, with respect to the disposal of 80 per cent. of the Company's interest in the Mankayan copper-gold project in the Philippines (the "Mankayan Project") (the "Transaction"). MMIH updated Bezant regarding its preparations in respect of the proposed listing of MMJV, its wholly-owned subsidiary which holds its 80 per cent. interest in the Mankayan project as follows:
1. MMIH, via China Hongxing Sports Limited ("CHX"), made a formal application to the Singapore Exchange Securities Trading Limited (the "Singapore Stock Exchange" or "SGX") to extend the time period in which to complete its proposed reverse takeover of CHX (the "RTO Transaction"). Such application was initially refused, but an appeal has subsequently been lodged on the grounds that the RTO Transaction has been hampered by the COVID-19 pandemic. MMIH is simultaneously pursuing alternative opportunities to achieve a potential listing and fundraising on certain other recognised global stock exchanges in the event that the targeted RTO Transaction or similar initial public offering on the SGX is unviable or cannot be achieved by the 31 December 2020 deadline prescribed in the Transaction Agreement.
2. The Philippines has only recently started to ease its COVID-19 lockdown restrictions which have severely restricted movement and required all non-essential offices to be closed, such that there has been no exploration activity at the Mankayan Project site since the local COVID-19 lockdown commenced in mid March 2020.
3. Singapore has similarly been under a two month COVID-19 lockdown period and is also now slowly beginning to ease its restrictions.
4. Accordingly, MMIH has advised Bezant that it has to date not been able to fulfil its expenditure commitments pursuant to the terms of the Transaction Agreement due to the abovementioned delays in their proposed RTO Transaction and, more recently, due to COVID-19 restrictions in the Philippines. MMIH has communicated to Bezant that, to date, CMDC, the MPSA holder, has undertaken the following activities on the Mankayan Project:
· Successfully applied to the requisite Philippine Government Mining Agency for an extension to the exploration period to the MPSA's scheduled expiry date of 11 November 2021 and certain revisions to the associated work programme commitments under the MPSA
· engaged an independent expert to update the JORC 2004 resource information to JORC 2012; and
· completed the technical and social audits for 2018 as required under the requisite Philippines Government Mining Agency rules and regulations.
4. Fundraising
On 19 June 2020, the Company announced a £350,000 (before expenses) fundraising. The fundraising comprised a placing of 406,250,000 new Ordinary Shares (the "Placing Shares") for £325,000 at a price of 0.08 pence per Ordinary Share (the "Placing Price") (the "Placing") and a subscription by Colin Bird, Bezant's Executive Chairman, who has invested £25,000 to subscribe for 31,250,000 new Ordinary Shares at the Placing Price (the "Subscription Shares") (the "Subscription"), representing 7.14 per cent. of the total Fundraising amount. Each of the participants in the Fundraising will also receive a warrant exercisable at a 100% premium to the Placing Price for each Fundraising Share which they have subscribed valid for 2 years from Admission. The Company is also issuing a warrant to Novum to subscribe for 21,875,000 new Ordinary Shares exercisable at the Placing Price for a period of 2 years from Admission.
As announced on 28 August 2020, the Company raised £625,000 before expenses from a fundraising comprising 750,000,000 new Ordinary Shares ("Placing Shares") for £600,000 at a price of 0.08 pence per Ordinary Share (the "Placing Price") (the "Placing") and a subscription by Colin Bird, Bezant's Executive Chairman, who has invested £25,000 to subscribe for 31,250,000 new Ordinary Shares at the Placing Price (the "Subscription Shares") (the "Subscription"), representing 4.17 per cent. of the total Fundraising amount. Each of the participants in the Fundraising will also receive half a warrant exercisable at 0.16 pence for each Fundraising Share which they have subscribed valid for two years from Admission. The Company is also issuing a warrant to Novum to subscribe for 37,500,000 new Ordinary Shares exercisable at the Placing Price for a period of two years from Admission.
5. Acquisition of interest in Hope Copper Gold Project in Namibia
The Company has entered into an exclusive and legally binding Heads of Agreement dated 18 June 2020 to acquire 100% of Virgo Resources Ltd, incorporated in Australia (ACN 626 148 347) ("Virgo") (the "Acquisition"). Virgo through its 100% owned Australian subsidiary Hepburn Resources Pty Ltd (ACN 624 189 162) owns i) 70% of Hope and Gorab Mining Pty Ltd incorporated in Namibia which owns EPL5796, ii) 80% of Hope Namibia Mineral Exploration Pty Ltd Incorporated in Namibia which owns EPL6605 and iii) has the option to acquire a 80% interest in EPL7170 (under application). The share and cash consideration payable by Bezant at completion of the Acquisition ("Completion") is i) the issue of 422,062,525 new ordinary shares of 0.002 pence each in the capital of the Company ("Bezant Shares") at a deemed issue price of 0.2 pence per Bezant Share ("Ordinary Shares Consideration"), ii) £135,000 to be settled by the issue of new Bezant Shares based on the share price on the day of settlement ("Asset Sellers Consideration"); and iii) cash of £85,600 (the "Consideration"). The Acquisition is subject to various Conditions Precedent detailed below including a 30 day due diligence period and Bezant and Virgo obtaining all necessary regulatory approvals or waivers and shareholder approvals pursuant to the AIM Rules or any other laws or statute.
On 15 July 2020 further to its announcement of 19 June 2020 in relation to the proposed acquisition of 100 per cent. of Virgo Resources Ltd and its interest in the hope gold copper project in Namibia, the Company announced that its due diligence progressed as anticipated. As part of the Due Diligence Review and based on historical drilling information it has come to light the Hope Copper-Gold Project (EPL5796) and adjacent tenures (EPL6605 and EPL7170) cover over 1,200 km2 of the highly prospective Matchless Copper Belt, hosts multiple high-grade copper-gold VMS-style sulphide deposits, such as historically mined Otjihase Copper Mine (>16Mt @ 2.2% Cu & 1.2g/t Au). The project area contains a combined Mineral Resource of 10.2Mt @ 1.9% Cu and 0.3g/t Au at a 0.7% Cu cut-off, reported in accordance with the JORC Code (2012). Approximately 30% of the mineral resource in the 'Indicated' Mineral Resource category and the balance in the 'Inferred' Mineral Resource category. Also, due to the fact that many of the historic drill holes were not assayed for gold, the overall gold grade in the current mineral resources (0.3g/t Au) is interpreted to be a significant underestimate.
As announced on 17 August 2020, the Company completed its acquisition of 100% of Virgo Resources Ltd and its interests in the Hope Copper-Gold Project in Namibia. The share and cash consideration paid by Bezant at completion of the Acquisition ("Completion") is i) the issue of 422,062,525 new Ordinary Shares of the Company ("Bezant Shares") at a deemed issue price of 0.2 pence ("Ordinary Shares Consideration"), ii) £135,000 to be settled by the issue of 113,333,333 Bezant Shares based on the share price on 14 August 2020 ("Asset Sellers Share Consideration") of which 79,333,333 Bezant Shares are to be issued now ("Initial Asset Sellers Shares") and 34,000,000 Bezant Shares on 15 February 2021 ("Balance of Assets Sellers Shares"); and iii) cash of AUD157,021 (approx. £86,600) (the "Consideration").
Update on Timing of Notification of Interim Results for the Six Months Ended 30 June 2020
Pursuant to the guidance published by the London Stock Exchange in respect of the temporary measures for the publication of half-yearly reports for AIM companies pursuant to AIM Rule 18 of the AIM Rules for Companies, the Company intends to utilise the additional one month period to prepare and notify shareholders of the Company's interim results for the six months ended 30 June 2020. As such, the Company will release its interim results no later than 30 October 2020.
Colin Bird, Executive Chairman of Bezant, today commented:
" We are releasing our 2019 results later this year due to extended filing deadlines brought about by COVID-19 which means that we are already 9 months into 2020. During the current year we have increased the Company's copper projects in Souther Africa by acquire a 30% interest in the Kalengwa copper silver project in Zambia and a >70% interest in the Hope Copper Gold project in Namibia which means the Company is well positioned in the gold-copper space when the demand for copper is expected to double by 2030."
The Company's Annual Report and Financial Statements for the year ended 31 December 2019 has been published ed today and is available on the Company's website at: https://www.bezantresources.com/financial-reports
The audited financial information contained in this announcement does not constitute the Company's full financial statements for the year ended 31 December 2019, but is derived from those financial statements, approved by the board of directors. The auditors' report on the 2019 financial statements was unqualified and did not contain any statement under section 498(2) or (3) of the Companies Act 2006 but did contain an 'material uncertainty' paragraph relating to going concern. The full audited financial statements for the year ended 31 December 2019 will be delivered to the Registrar of Companies and filed at Companies House.
For further information, please contact:
Bezant Resources plc Colin Bird Executive Chairman
Beaumont Cornish (Nominated Adviser) Roland Cornish
Novum Securities Limited (Broker) Jon Belliss
or visit http://www.bezantresources.com
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+27 726 118 724
+44 (0) 20 7628 3396
Tel: +44 (0) 20 7399 9400
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The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.
Chairman's Statement
During the year under review, the Company remained focused on seeking to develop its existing projects through strategic alliances / joint ventures / sales and the identification and acquisition of copper-gold resources moving towards development of projects which pass the relevant criteria for investment.
Mankayan Project Philippines: During the period the Company sold 80% of its interest in the Mankayan copper-gold porphyry project in the Philippines to MMIH of Singapore who intend a reverse takeover or listing on the Singapore or other suitable exchange. For a variety of reasons interruptions have occurred to that process, but some achievements have been made in extending deadlines and work commitments for licence maintenance. MMIH are still focussed on the listing and, we understand, COVID-019 notwithstanding anticipate a favourable outcome.
Eureka Project Argentina: The Eureka Project in Argentina has been kept in good standing with most of our work being desktop, defining drilling programmes, which will test various geophysical and geochemical anomalies and , when complete, should define, the nature of the gold distribution and overall potential of the project. We have received expressions of interest to either joint venture or sell the project and are still considering the best route to take for the project.
The Board feel that a move of emphasis to Southern Africa is the right direction for the Company and during the period we acquired an option in relation to the Buffalo Project in Zambia which led us post year end to acquire an interest in the Kalengwa copper silver project in Zambia and the Hope Copper Gold project in Namibia.
This year's annual report is being sent to shareholders in September, so later than usual, and we have all had to learn to adapt to this new "COVID-19 World" pending the discovery of a vaccine, so in the circumstances I think it appropriate to write about the Company's acquisitions in 2020 and the Company's outlook going forward.
Kalengwa Project: Our 30% interest in the Kalengwa copper silver project in Zambia, where Bezant acts as operator, was acquired in April 2020 and comprises a large exploration licence surrounding one of the richest open pits ever worked in Zambia. During its working life, the Kalengwa mine, produced 1.9 million tonnes of ore at an average grade of 9.4% copper with over 25% of the ore mined exceeding 20% copper. The exploration licence has numerous indications of similar geology, along with poorly tested geochemical and geophysical anomalies, which could lead to discovery of further typical Copper Belt mineralisation. The key areas of interest include sparsely drilled copper mineralisation just 4km northeast of the main pit and a 13km strike zone of coincident geochemical and structural anomalism, which has not been drill tested. We are planning for a reconnaissance drilling program at Kalengwa.
Hope Copper Gold Project: We completed the acquisition of 100% of Virgo Resources +70% interest in the Hope and Gorob licences in Namibia, which already have a combined Mineral Resource of 10.2Mt @1.9% Cu and 0.3g/t Au at a 0.7% Cu cut-off, reported in accordance with the JORC Code (2012). The concession has a further untested potential mineralised area of over 150km as well as additional targets for drill testing adjacent to the Hope and Gorob deposits.
Post-acquisition, archive search, showed that the values of gold at Hope were on many occasions higher than the average in the mineral resource statement, including some values over 1g per tonne. Samples from the Gorob deposit were not assayed for gold by previous owners, thus giving the impression that no gold existed. The Company intends to commence a reconnaissance drilling programme to test the Gorob prospect for gold and to increase the resource base in the area surrounding the Hope property.
Market Outlook: We at Bezant are excited for the prospects of the Company in the immediate and mid-term. The gold price is always difficult to predict, but in our projects where gold occurs the potential for significant revenue addition also exist. We are particularly confident for the prospects of copper, the demand of which is expected to double by 2030. These forecasts have been made after review of global demand particularly in in emerging countries. The supply fundamentals have deteriorated over the last 3 years, mainly due to do the weak financing conditions for explorers and social challenges in places such as Chile and the DRC. It is our view, that the copper industry will return to its structure of the 1990s, where small high grade mines existed, medium sized open pit and underground mines existed and of course, the large open pits which were the key contributors.
Copper Mining Sector: Recent years, have seen the small copper mining sector eradicated and mid-tier companies with single copper projects, absorbed by the majors. Our belief for the coppers supply targets to be met, is for all types of copper contribution to resurface. Over the last 15 years the average grade of copper ore being mined has dropped from 1.1% to 0.62% and is still falling. When the copper grade falls to such lows, the annual production rate has to be huge to achieve the necessary unit working cost to provide a surplus of income over expenditure and achieve the necessary returns on capital. The aforementioned scenario results in the capital cost of new mines with low grades being in the billions of dollars, thus making the copper arena for low grade projects confined to just a few companies.
COVID-19 and Brexit: A combination of the COVID-19 pandemic and worsening geo-political tension has led to a very uncertain world. The paradox against this uncertainty is sharply rising base metal prices and bullish forecast for commodities for the coming years. We believe that for the coming year uncertainties will be increased, but that the underlying strong trend in commodities will be maintained. As everyone has to be monitoring the impact of COVID-19, at the corporate level this has meant us getting used to working from home and this is working well. Notwithstanding COVID-19 we have completed two acquisitions and two fundraisings both of which I have participated in. Notwithstanding local COVID-19 requirements we are finalising drilling agreements and anticipate commencing our planned reconnaissance drilling in Namibia and Zambia during October 2020. On a lighter note with no projects in Europe Brexit has a minimal effect on the Company.
I would like to thank my fellow directors of Bezant and management, who have seen many changes during the year and have been resilient during the transition phase.
I look forward to reporting positive developments in our projects, with the Company well positioned in the gold-copper space.
Mr Colin Bird
Executive Chairman
29 September 2020
Consolidated Statement of Profit and Loss
For the year ended 31 December 2019
Notes | Year ended 31 December 2019 £'000 | Year ended 31 December 2018 £'000 | ||||
CONTINUING OPERATIONS | ||||||
Group revenue | - | - | ||||
Cost of sales | - | - | ||||
Gross profit/(loss) | - | - | ||||
Operating expenses | (917) | (656) | ||||
Group operating loss | (917) | (656) | ||||
Interest received | 1 | - | ||||
Other income | - | 9 | ||||
Impairment of assets | 2 | (211) | (199) | |||
Loss before taxation | (1,127) | (846) | ||||
Taxation | - | - | ||||
Loss for the financial year from continuing operations | (1,127) | (846) | ||||
DISCONTINUED OPERATIONS | ||||||
Loss for the financial year from discontinued operations | - | (341) | ||||
Loss for the financial year | (1,127) | (1,187) | ||||
Attributable to: Owners of the Company | (1,127) | (1,242) | ||||
- Continuing operations | (1,127) | (846) | ||||
- Discontinued operations | - | (396) | ||||
Non-controlling interest - discontinued operations | - | 55 | ||||
| (1,127) | (1,187) | ||||
Loss per share (pence) | ||||||
Basic and diluted from continuing operations | 3 | (0.11) | (0.10) | |||
Basic and diluted from discontinued operations | 3 | - | (0.05) | |||
Basic and diluted from all operations | 3 | (0.11) | (0.15) |
Consolidated Statement of Other Comprehensive Income
For the year ended 31 December 2019
Year ended 31 December 2019 £'000 | Year ended 31 December 2018 £'000 | |||||
Other comprehensive income: | ||||||
Loss for the financial year | (1,127) | (1,187) | ||||
Items that may be reclassified to profit or loss: | ||||||
Foreign currency reserve movement | (17) | (102) | ||||
Total comprehensive loss for the financial year | (1,144) | (1,289) | ||||
Attributable to: Owners of the Company | (1,144) | (1,343) | ||||
- Continuing operations | (1,144) | (863) | ||||
- Discontinued operations | - | (480) | ||||
Non-controlling interest - discontinued operations | - | 54 | ||||
| (1,144) | (1,289) |
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Share Capital £'000 | Share Premium £'000 | Other Reserves £'000 | Retained Losses £'000 | Non-Controlling interest £'000 | Total Equity £'000 | |
Year ended 31 December 2019 | ||||||
Balance at 1 January 2019 | 1,998 | 36,074 | 840 | (33,362) | - | 5,550 |
Current year loss | - | - | - | (1,127) | - | (1,127) |
Foreign currency reserve | - | - | (17) | - | - | (17) |
Total comprehensive loss for the year | - | - | (17) | (1,127) | - | (1,144) |
Proceeds from shares issued | 5 | 366 | - | - | - | 371 |
Warrants issued | - | (38) | 38 | - | - | - |
Lapsed warrants | - | 27 | (27) | - | - | - |
Share options granted | - | - | 6 | - | - | 6 |
Balance at 31 December 2019 | 2,003 | 36,429 | 840 | (34,489) | - | 4,783 |
Share Capital £'000 | Share Premium £'000 | Other Reserves £'000 | Retained Losses £'000 | Non-Controlling interest £'000 | Total Equity £'000 | |
Year ended 31 December 2018 | ||||||
Balance at 1 January 2018 | 1,225 | 35,433 | 802 | (32,124) | (50) | 5,286 |
Current year loss | - | - | - | (1,242) | 55 | (1,187) |
Foreign currency reserve | - | - | (101) | - | (1) | (102) |
Total comprehensive loss for the year | - | - | (101) | (1,242) | 54 | (1,289) |
Proceeds from shares issued | 773 | 659 | - | - | - | 1,432 |
Warrants issued | - | (27) | 27 | - | - | - |
Lapsed warrants | - | 9 | (9) | - | - | - |
Share options granted | - | - | 121 | - | - | 121 |
Disposal of operations | - | - | - | 4 | (4) | - |
Balance at 31 December 2018 | 1,998 | 36,074 | 840 | (33,362) | - | 5,550 |
Consolidated Balance Sheet
As at 31 December 2019
2019 | 2018 | |||
Notes | £'000 | £'000 | ||
ASSETS | ||||
Non-current assets | ||||
Plant and equipment | 4 | 4 | 6 | |
Investments | 5 | - | 279 | |
Exploration and evaluation assets | 6 | 4,778 | 4,781 | |
Total non-current assets | 4,782 | 5,066 | ||
Current assets | ||||
Trade and other receivables | 65 | 65 | ||
Cash and cash equivalents | 330 | 492 | ||
Total current assets | 395 | 557 | ||
TOTAL ASSETS | 5,177 | 5,623 | ||
LIABILITIES | ||||
Current liabilities | ||||
Trade and other payables | 394 | 73 | ||
Total current liabilities | 394 | 73 | ||
NET ASSETS | 4,783 | 5,550 | ||
EQUITY | ||||
Share capital | 7 | 2,003 | 1,998 | |
Share premium | 7 | 36,429 | 36,074 | |
Share-based payment reserve | 174 | 157 | ||
Foreign exchange reserve | 666 | 683 | ||
Retained losses | (34,489) | (33,362) | ||
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT | 4,783 | 5,550 | ||
TOTAL EQUITY | 4,783 | 5,550 |
In accordance with the provisions of Section 408 of the Companies Act 2006, the Parent Company has not presented a separate income statement. A loss for the year ended 31 December 2019 of £1,216,000 (2018: £728,000) has been included in the consolidated income statement.
Consolidated Statement of Cash Flows
For the year ended 31 December 2019
Year ended 31 December 2019 | Year ended 31 December 2018 | ||
Notes | £'000 | £'000 | |
Net cash outflow from operating activities | 8 | (437) | (1,105) |
Cash flows from investing activities | |||
Interest received | 1 | - | |
Other income | 43 | 63 | |
Option payments | (27) | - | |
Proceeds from Disposal Group, net of cash disposed | 9 | - | 281 |
Loans to associates | (58) | (265) | |
(41) | 79 | ||
Cash flows from financing activities | |||
Proceeds from issuance of ordinary shares | 329 | 1,302 | |
Increase in cash | (149) | 276 | |
Cash and cash equivalents at beginning of year | 492 | 251 | |
Foreign exchange movement | (13) | (35) | |
Cash and cash equivalents at end of year | 330 | 492 | |
Notes to the financial information
For the year ended 31 December 2019
1. | Basis of Preparation The audited financial information set out above, which incorporates the financial information of the Company and its subsidiary undertakings (the "Group"), has been prepared using the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") including IFRS 6 'Exploration for and Evaluation of Mineral Resources', as adopted by the European Union ("EU") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The audited financial information contained in this announcement does not constitute the Company's full financial statements for the year ended 31 December 2019, but is derived from those financial statements, approved by the board of directors. The auditors' report on the 2019 financial statements was unqualified and did not contain any statement under section 498(2) or (3) of the Companies Act 2006 but did contain an 'material uncertainty' paragraph relating to going concern. The full audited financial statements for the year ended 31 December 2019 will be delivered to the Registrar of Companies and filed at Companies House.
Going concern basis of accounting The Group made a loss from all operations for the year ended 31 December 2019 after tax of £1.1 million (2018: £1.2 million), had negative cash flows from operations and is currently not generating revenues. Cash and cash equivalents were £330,000 as at 31 December 2019. Post year end, the Company raised £350,000 on 19 June 2020 and £625,000 on 28 August 2020. An operating loss is expected in the year subsequent to the date of these accounts and as a result the Company will need to raise funding to provide additional working capital to finance its ongoing activities. Management has successfully raised money in the past, but there is no guarantee that adequate funds will be available when needed in the future. Subsequent to the year end, the COVID-19 pandemic announced by the World Health Organisation is having a markedly negative impact on global stock markets, currencies and general business activity. The Company has developed a policy and is evolving procedures to address the health and wellbeing of its directors, consultants and contractors, and their families, in the face of the COVID-19 outbreak. The timing and extent of the impact and recovery from COVID-19 is unknown but it may have an impact on activities and potentially a post balance sheet date impact. Furthermore, the COVID-19 pandemic may adversely impact the ability of the Group to raise the necessary funding.
Based on the Board's assessment that the Company will be able to raise additional funds, as and when required, to meet its working capital and capital expenditure requirements, the Board have concluded that they have a reasonable expectation that the Group can continue in operational existence for the foreseeable future. For these reasons the Group continues to adopt the going concern basis in preparing the annual report and financial statements.
There is a material uncertainty related to the conditions above that may cast significant doubt on the Group's ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.
The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the entity not continue as a going concern. |
2. | Impairment | ||
Year ended 31 December 2019 | Year ended 31 December 2018 | ||
£'000 | £'000 | ||
Impairment loss on loan to associate | 211 | 199 | |
| 211 | 199 | |
The Mankayan project owned by Crescent Mining and Development Corporation is part of the continuing operations and was fully impaired in 2016 (see note 12) due to then significant lingering uncertainty concerning the political and tax environment in the Philippines. Although the political and tax environment has subsequently improved it was not considered prudent in the 2018 accounts to write back any of the provision made in 2016 and the provision made in 2017 and the first half of 2018 in relation to additional funds lent in 2017 and H1 2018. The funds advanced in the second half of 2018 were not impaired given that the Exploration Period under the MPSA was in April 2018 extended for 2 years and based on the improved economics in the recent Mining Plus study announced on 12 February 2019. In 2019 , as per note 12.1, the Group has sold 80% of its interest in the Mankayan copper-cold project and derecognised its investment in its subsidiary, Asean Copper Investments Limited and the loan balances outstanding have been fully impaired. | |||
3. | Loss per share |
The basic and diluted loss per share have been calculated using the loss attributable to equity holders of the Company for the year ended 31 December 2019 of £1,127,000 (2018: £1,242,000) of which £1,127,000 (2018: £846,000) was from Continuing Operations and £nil (2018: £396,000) was from Discontinued Operations. The basic loss per share was calculated using a weighted average number of shares in issue of 1,018,075,876 (2018: 871,214,591).
The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued of 1,018,075,876 (2018: 871,214,591).
The diluted loss per share and the basic loss per share are recorded as the same amount, as conversion of share options decreases the basic loss per share, thus being anti-dilutive. |
4. | Plant and equipment | ||
2019 | 2018 | ||
£'000 | £'000 | ||
Plant and equipment | |||
Cost | |||
At beginning of year | 73 | 84 | |
Exchange differences | (5) | (11) | |
At end of year | 68 | 73 | |
Depreciation | |||
At beginning of year | 67 | 74 | |
Charge for the year | 1 | 1 | |
Exchange differences | (4) | (8) | |
At end of year | 64 | 67 | |
Net book value at end of year | 4 | 6 |
5. | Investments | ||
2019 | 2018 | ||
£'000 | £'000 | ||
Loan to associate | 211 | 478 | |
Impairment provision (note 2) | (211) | (199) | |
| - | 279 |
6. | Exploration and evaluation assets | ||
2019 | 2018 | ||
£'000 | £'000 | ||
Balance at beginning of year | 4,781 | 4,790 | |
Exchange differences | (3) | (9) | |
Carried forward at end of year | 4,778 | 4,781 | |
The amount of capitalised exploration and evaluation expenditure relates to 12 licences comprising the Eureka Project and are located in north-west Jujuy near to the Argentine border with Bolivia and are formally known as Mina Eureka, Mina Eureka II, Mina Gino I, Mina Gino II, Mina Mason I, Mina Mason II, Mina Julio I, Mina Julio II, Mina Paul I, Mina Paul II, Mina Sur Eureke and Mina Cabereria Sur, covering, in aggregate, an area in excess of approximately 5,500 hectares and accessible via a series of gravel roads. All licences remain valid and in May 2019 the Company obtained a two year renewal of its Environmental Impact Assessment (EIA) approvals in respect of its Mina Eureka, Mina Gino I, Mina Gino II, Mina Mason I, Mina Mason II, Mina Julio I, Mina Julio II, Mina Paul I, Mina Paul II, being the 9 northern most licences which are the intended focus of a future exploration programme. | |||
Notwithstanding the absence of new exploration activities on-site during the period the directors have assessed the value of the intangible asset having considered any indicators of impairment, and in their opinion, based on a review of the expiry dates of licences, future expected availability of funds to develop the Eureka Project and the intention to continue exploration and evaluation, no impairment is necessary. | |||
7. | Share capital | ||
2019 | 2018 | ||
Number | £'000 | £'000 | |
Authorised | |||
5,000,000,000 ordinary shares of 0.2p each | - | 10,000 | |
5,000,000,000 ordinary shares of 0.002p each | 100 | - | |
5,000,000,000 deferred shares of 0.198p each | 9,900 | - | |
10,000 |
10,000 | ||
Allotted ordinary shares, called up and fully paid | |||
As at beginning of the year | 1,998 | 1,225 | |
Share subscription | 5 | 711 | |
Shares issued to directors and management | - | 37 | |
Shares issued to settle third party fees | - | 25 | |
Sub-divided to deferred shares (1) | (1,978) | - | |
Total ordinary shares at end of year r | 25 | 1,998 | |
Allotted deferred shares, called up and fully paid | |||
As at beginning of the period | - | - | |
Sub-divided from ordinary shares (1) | 1,978 | - | |
Total deferred shares at end of period | 1,978 | - | |
Ordinary and deferred as at end of year | 2,003 | 1,998 | |
Number of shares 2019 | Number of shares 2018 | ||
Ordinary share capital is summarised below: | |||
As at beginning of the year | 998,773,038 | 612,273,038 | |
Share subscription | 250,000,000 | 355,555,555 | |
Shares issued to directors and management | - | 18,544,445(3) | |
Shares issued to settle third party fees | 20,982,143(2) | 12,400,000(4) | |
As at end of year | 1,269,755,181 | 998,773,038 | |
Deferred share capital is summarised below: | |||
As at beginning of the year | - | - | |
Issued due to sub-division (1) | 998,773,038 | - | |
As at end of year | 998,773,038 | - | |
(1) On 24 May 2019, a resolution was passed at the Company's Annual General Meeting to approve the reorganisation of the Company's share capital in order to reduce the nominal value of the Company's ordinary shares such that the Company is able to issue new ordinary shares at a price below £0.02 per ordinary share in the event that the Directors seek to raise additional equity finance at such a price to provide, inter alia, additional working capital for the group. Pursuant to this resolution, every existing ordinary share in the capital of the Company in issue of £0.002 each ("Existing Ordinary Shares") on 24 May 2019 was re-designated and sub-divided into 1 (one) new ordinary share of £0.00002 each ("New Ordinary Shares") and 1 (one) deferred share of £0.00198 each ("Deferred Shares"). The New Ordinary Shares have been admitted for trading on AIM in place of the Existing Ordinary Shares. The New Ordinary Shares continue to carry the same rights as attached to the Existing Ordinary Shares (save for the reduction in their nominal value). The Deferred Shares have very limited rights and are effectively valueless as they have no voting rights and have no rights as to dividends and only very limited rights on a return of capital. The Deferred Shares are not admitted to trading or listed on any stock exchange and are not freely transferable.
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(2) On 5 December 2019, certain professional fees amounting to £29,375 owed to Novum Securities Ltd was settled by the issue of 20,982,143 new Ordinary Shares (the "Fee Shares"). The Fee Shares were issued at a price of 0.14 pence per share, being the price at which the Company completed its fundraise announced on 5 December 2019 which represented a discount of approximately 30 per cent. to the Company's closing mid-market share price of 0.2 pence on 4 December 2019. | |
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(3) Certain of the Company's directors agreed to convert outstanding fees of £31,233, due in respect of the period from 1 July 2017 to 31 December 2018, into 6,940,667 new Ordinary Shares and the Company's management agreed to convert outstanding fees and salaries of £22,217, due in respect of the same period, into 4,937,111 new Ordinary Shares. In addition, £30,000 of fees due to Dr. Bernard Olivier, the Company's former CEO who resigned as a director on 15 January 2018, were converted into 6,666,667 new Ordinary Shares. The Director Shares, Management Shares and Fee Conversion Shares were all issued on 22 March 2018 at a price of 0.45 pence per share, being the price at which the Company had completed its then most recent fundraise announced on 5 February 2018 which represented a premium of approximately 7.14 per cent. to the Company's closing mid-market share price of 0.42 pence on 21 March 2018. | |
(4) Certain fees and expenses amounting to £55,800 owed by the Company to Verona Investment Group Inc. ("Verona") were settled by the issue of 12,400,000 new Ordinary Shares at a price of 0.45 pence per share on 22 March 2018. |
2019 | 2018 | ||
£'000 | £'000 | ||
The share premium was as follows: | |||
As at beginning of year | 36,074 | 35,433 | |
Share subscription | 345 | 689 | |
Shares issued to directors and management | - | 41 | |
Shares issued to settle third party fees | 42 | 27 | |
Share issue costs | (21) | (98) | |
Warrants lapsed | 27 | 9 | |
Warrants issued | (38) | (27) | |
As at end of year | 36,429 | 36,074 |
Each fully paid ordinary share carries the right to one vote at a meeting of the Company. Holders of shares also have the right to receive dividends and to participate in the proceeds from sale of all surplus assets in proportion to the total shares issued in the event of the Company winding up. |
8. | Reconciliation of operating loss to net cash outflow from operating activities | ||
Year ended 31 December 2019 | Year ended 31 December 2018 | ||
£'000 | £'000 | ||
Operating loss from all operations | (917) | (1,191) | |
Depreciation and amortisation | 1 | 1 | |
VAT refunds received | (43) | (63) | |
Share options | 6 | 121 | |
Shares converted at a discount | 13 | ||
Foreign exchange gain | 154 | (293) | |
Decrease in receivables | 29 | 141 | |
Increase in payables | 320 | 179 | |
Net cash outflow from operating activities | (437) | (1,105) | |
9. | Proceeds from Disposal Group, net of cash disposed | ||
Year ended 31 December 2019 | Year ended 31 December 2018 | ||
£'000 | £'000 | ||
Proceeds from sale* | - | 329 | |
Cash of disposal group | - | (48) | |
| - | 281 | |
* The gross consideration was US$500,000 of which US$450,000 was received by the Company in the year and US$50,000 was paid to the Company's lawyers in escrow and was released to the Company on 14 January 2019. | |||
10. | Availability of Annual Report and Financial Statements |
Copies of the Company's full Annual Report and Financial Statements are being posted today to those shareholders who have elected to receive hardcopy shareholder communications from the Company and are also available to download from the Company's website at www.bezantresources.com.
The Annual Report and Financial Statements will also be made available for inspection at the Company's registered office during normal business hours on any weekday. Bezant Resources Plc is registered in England and Wales with registered number 02918391. The registered office is at Floor 6, Quadrant House, 4 Thomas More Square, London E1W 1YW. |
11. | Subsequent events |
1. Decision not to exercise option in relation to Buffalo Project in Zambia As announced on 3 January 2020, the Company was granted an extension to the initial expenditure phase in respect of its conditional option to acquire a 50 per cent. interest in small scale copper mining licence number 15164-HQ-SML in The Republic of Zambia (the "Licence"), as announced on 23 April 2019, which contains the Buffalo exploration project (the "Buffalo Project") (the "Buffalo Option"). Under the original terms of the Buffalo Option and as consideration for a 50 per cent. interest in the Buffalo Project, Bezant was required to complete an initial assessment of the Licence area at a cost of up to US$200,000 by 1 February 2020 (the "Initial Expenditure Phase"). The Initial Expenditure Phase was extended to 30 April 2020, to enable the Company to progress its ongoing assessment of the Buffalo Project.
As announced on 27 April 2020 the Company will be focusing its resources on progressing the larger scale Kalengwa Exploration Project announced on the same date, and the Bezant Board decided that the Company will not be exercising its pre-existing option over the Buffalo Project in Zambia which therefore lapsed on its scheduled expiry date of 30 April 2020. | |
2. Acquisition of 30% interest in Kalengwa Project in Zambia As announced on 27 April 2020, the Company entered into a binding joint venture agreement dated 24 April 2020 with KPZ International Limited ("KPZ Int") (the "JV Agreement") in relation to the acquisition of a 30 per cent. interest in the approximate 974 km2 large scale exploration licence numbered 24401-HQ-LEL in the Kalengwa greater exploration area in The Republic of Zambia (the "Licence") by acquiring a 30 per cent. shareholding in KPZ Int. The Licence is held by Kalengwa Processing Zone Ltd ("KPZ"), a 100 per cent. (less one share) Zambian subsidiary of KPZ Int, and is for the exploration of copper, cobalt, silver, gold and certain other specified minerals. The Licence was granted on 2 April 2019 and is valid for an initial period up to 1 April 2023. | |
3. Sale of 80% of interest in Mankayan Project in Philippines On 15 June 2020, the Company announced an update on its transaction with Mining and Minerals Industries Holding Pte. Ltd. ("MMIH"), a private company incorporated in Singapore, with respect to the disposal of 80 per cent. of the Company's interest in the Mankayan copper-gold project in the Philippines (the "Mankayan Project") (the "Transaction"). MMIH updated Bezant regarding its preparations in respect of the proposed listing of MMJV, its wholly-owned subsidiary which holds its 80 per cent. interest in the Mankayan project as follows: 5. MMIH, via China Hongxing Sports Limited ("CHX"), made a formal application to the Singapore Exchange Securities Trading Limited (the "Singapore Stock Exchange" or "SGX") to extend the time period in which to complete its proposed reverse takeover of CHX (the "RTO Transaction"). Such application was initially refused, but an appeal has subsequently been lodged on the grounds that the RTO Transaction has been hampered by the COVID-19 pandemic. MMIH is simultaneously pursuing alternative opportunities to achieve a potential listing and fundraising on certain other recognised global stock exchanges in the event that the targeted RTO Transaction or similar initial public offering on the SGX is unviable or cannot be achieved by the 31 December 2020 deadline prescribed in the Transaction Agreement. 6. The Philippines has only recently started to ease its COVID-19 lockdown restrictions which have severely restricted movement and required all non-essential offices to be closed, such that there has been no exploration activity at the Mankayan Project site since the local COVID-19 lockdown commenced in mid March 2020. 7. Singapore has similarly been under a two month COVID-19 lockdown period and is also now slowly beginning to ease its restrictions. 8. Accordingly, MMIH has advised Bezant that it has to date not been able to fulfil its expenditure commitments pursuant to the terms of the Transaction Agreement due to the abovementioned delays in their proposed RTO Transaction and, more recently, due to COVID-19 restrictions in the Philippines. MMIH has communicated to Bezant that, to date, CMDC, the MPSA holder, has undertaken the following activities on the Mankayan Project: · Successfully applied to the requisite Philippine Government Mining Agency for an extension to the exploration period to the MPSA's scheduled expiry date of 11 November 2021 and certain revisions to the associated work programme commitments under the MPSA · engaged an independent expert to update the JORC 2004 resource information to JORC 2012; and · completed the technical and social audits for 2018 as required under the requisite Philippines Government Mining Agency rules and regulations. | |
4. Fundraising On 19 June 2020, the Company announced a £350,000 (before expenses) fundraising. The fundraising comprised a placing of 406,250,000 new Ordinary Shares (the "Placing Shares") for £325,000 at a price of 0.08 pence per Ordinary Share (the "Placing Price") (the "Placing") and a subscription by Colin Bird, Bezant's Executive Chairman, who has invested £25,000 to subscribe for 31,250,000 new Ordinary Shares at the Placing Price (the "Subscription Shares") (the "Subscription"), representing 7.14 per cent. of the total Fundraising amount. Each of the participants in the Fundraising will also receive a warrant exercisable at a 100% premium to the Placing Price for each Fundraising Share which they have subscribed valid for 2 years from Admission. The Company is also issuing a warrant to Novum to subscribe for 21,875,000 new Ordinary Shares exercisable at the Placing Price for a period of 2 years from Admission.
As announced on 28 August 2020, the Company raised £625,000 before expenses from a fundraising comprising 750,000,000 new Ordinary Shares ("Placing Shares") for £600,000 at a price of 0.08 pence per Ordinary Share (the "Placing Price") (the "Placing") and a subscription by Colin Bird, Bezant's Executive Chairman, who has invested £25,000 to subscribe for 31,250,000 new Ordinary Shares at the Placing Price (the "Subscription Shares") (the "Subscription"), representing 4.17 per cent. of the total Fundraising amount. Each of the participants in the Fundraising will also receive half a warrant exercisable at 0.16 pence for each Fundraising Share which they have subscribed valid for two years from Admission. The Company is also issuing a warrant to Novum to subscribe for 37,500,000 new Ordinary Shares exercisable at the Placing Price for a period of two years from Admission.
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5. Acquisition of interest in Hope Copper Gold Project in Namibia | |
The Company has entered into an exclusive and legally binding Heads of Agreement dated 18 June 2020 to acquire 100% of Virgo Resources Ltd, incorporated in Australia (ACN 626 148 347) ("Virgo") (the "Acquisition"). Virgo through its 100% owned Australian subsidiary Hepburn Resources Pty Ltd (ACN 624 189 162) owns i) 70% of Hope and Gorab Mining Pty Ltd incorporated in Namibia which owns EPL5796, ii) 80% of Hope Namibia Mineral Exploration Pty Ltd Incorporated in Namibia which owns EPL6605 and iii) has the option to acquire a 80% interest in EPL7170 (under application). The share and cash consideration payable by Bezant at completion of the Acquisition ("Completion") is i) the issue of 422,062,525 new ordinary shares of 0.002 pence each in the capital of the Company ("Bezant Shares") at a deemed issue price of 0.2 pence per Bezant Share ("Ordinary Shares Consideration"), ii) £135,000 to be settled by the issue of new Bezant Shares based on the share price on the day of settlement ("Asset Sellers Consideration"); and iii) cash of £85,600 (the "Consideration"). The Acquisition is subject to various Conditions Precedent detailed below including a 30 day due diligence period and Bezant and Virgo obtaining all necessary regulatory approvals or waivers and shareholder approvals pursuant to the AIM Rules or any other laws or statute. | |
On 15 July 2020 further to its announcement of 19 June 2020 in relation to the proposed acquisition of 100 per cent. of Virgo Resources Ltd and its interest in the hope gold copper project in Namibia, the Company announced that its due diligence progressed as anticipated. As part of the Due Diligence Review and based on historical drilling information it has come to light the Hope Copper-Gold Project (EPL5796) and adjacent tenures (EPL6605 and EPL7170) cover over 1,200 km2 of the highly prospective Matchless Copper Belt, hosts multiple high-grade copper-gold VMS-style sulphide deposits, such as historically mined Otjihase Copper Mine (>16Mt @ 2.2% Cu & 1.2g/t Au). The project area contains a combined Mineral Resource of 10.2Mt @ 1.9% Cu and 0.3g/t Au at a 0.7% Cu cut-off, reported in accordance with the JORC Code (2012). Approximately 30% of the mineral resource in the 'Indicated' Mineral Resource category and the balance in the 'Inferred' Mineral Resource category. Also, due to the fact that many of the historic drill holes were not assayed for gold, the overall gold grade in the current mineral resources (0.3g/t Au) is interpreted to be a significant underestimate. | |
As announced on 17 August 2020, the Company completed its acquisition of 100% of Virgo Resources Ltd and its interests in the Hope Copper-Gold Project in Namibia. The share and cash consideration paid by Bezant at completion of the Acquisition ("Completion") is i) the issue of 422,062,525 new Ordinary Shares of the Company ("Bezant Shares") at a deemed issue price of 0.2 pence ("Ordinary Shares Consideration"), ii) £135,000 to be settled by the issue of 113,333,333 Bezant Shares based on the share price on 14 August 2020 ("Asset Sellers Share Consideration") of which 79,333,333 Bezant Shares are to be issued now ("Initial Asset Sellers Shares") and 34,000,000 Bezant Shares on 15 February 2021 ("Balance of Assets Sellers Shares"); and iii) cash of AUD157,021 (approx. £86,600) (the "Consideration"). | |
The COVID-19 pandemic announced by the World Health Organisation post year end is having a markedly negative impact on global stock markets, currencies and general business activity. The Company has developed a policy and is evolving procedures to address the health and wellbeing of its directors, consultants and contractors, and their families, in the face of the COVID-19 outbreak. The timing and extent of the impact and recovery from COVID-19 is unknown but it may have an impact on activities and potentially a post balance sheet date impact.
Other than these matters, no significant events have occurred subsequent to the reporting date that would have a material impact on the consolidated financial statements. |