Last checked at 29 Sep 2023 07:00
29 September 2023
Bezant Resources Plc
("Bezant" or the "Company")
Interim Results for the Six Months Ended 30 June 2023
Bezant (AIM: BZT), the copper-gold exploration and development company, announces its unaudited interim results for the six months ended 30 June 2023.
Chairman's Statement
Dear Shareholder,
The focus of the first half of 2023 continues to be Southern Africa.
Financial highlights:
£463K loss after tax (2022: £348K)
Approximately £365K cash at bank at the period end (31 December 2022: £57K).
Operational and corporate events in six months to 30 June 2023:
In Namibia at our Hope & Gorob project we await the issue of a mining licence and in the meantime have been working on technical and other studies targeting a 8,000, tonnes contained copper p.a. open pit copper / gold mining operation in 2024, obtaining non-equity financing for the mining operation and the finalization of an updated mineral resource estimate.
In Botswana at our Kanye project we have focused on metallurgical work to test that manganese can be extracted from the deposit to produce leach solutions with high manganese concentrate via standard leaching processing technologies.
Eureka Project Argentina: We maintain our Eureka Project in good standing and during the period we had an updated Environmental Impact Assessment approved which provides for environmental monitoring and a drill program encompassing 9 drill holes of 200-300 metres each. The Company will engage an environmental consultant to conduct the environmental monitoring in 2H 2023 and we are seeking a joint venture partner for the exploration of the Eureka Project. In 2021 and into 2022 this was hampered by COVID restrictions in Argentina, but we have in the period received expressions of interest in the project and our focus remains to joint venture or monetise this unique red bed copper occurrence.
Investment in Mankayan Project in Philippines: On 27 March 2023 the Company announced the completion of its share swap sale of its investment in IDM Mankayan Pty Ltd for shares in IDM International Ltd. Our investment in IDM International Ltd (see note 7.1) is held at fair value of £2.2m. At the time of writing we hold a 24.2% investment in IDM International Limited. We are looking for this investment to be monetised either by direct trade sale or flotation on an individual or combined project basis. IDM International Limited and Crescent Mining Development Corporation the licence holder are actively progressing the project, whilst pursuing the various avenues to secure and advance what is a very large project in a copper hungry world.
Funding: On 15 June 2023, the Company announced, that it had agreed with Sanderson Capital Partners Limited ("Sanderson") a long-term shareholder in the Company to extend the repayment date for the £700,000 drawn down under the unsecured convertible loan funding facility entered into with Sanderson on 22 November 2021 until 23 December 2024 which is now convertible by Sanderson at the fixed price of 0.08 pence per share.
Issue of Equity: During the period we announced, on the dates indicated below, the following issues of new ordinary shares ("Shares") to raise funds and settle accrued fees to conserve the Company's working capital:
a) On 9 January 2023 the issue of 7,926,024 new Shares to settle £6,000 of consultancy fees;
b) On 12 April 2023 a fundraising of £750,000 from existing shareholders and investors for 1,875,000,000 Shares which included £40,000 from directors, the issue of 218,700,942 Shares to Directors and a PDMR at a premium to the share price and the fundraising price to settle £174,961 of accrued fees for the period March 2022 to March 2023 and the issue of 246,808,068 Shares to settle £101,250 of consultancy fees at the fundraising price to conserve the Company's working capital:
c) On 5 May 2023 the issue of 104,875,000 Shares to settle professional fees of £41,950; and
d) On 15 June 2023, the issue of 87,500,000 Shares to settle fees of £70,000 due in relation to the extension of the Sanderson unsecured convertible loan funding facility equivalent to 6.67% per year at a premium to the share price and the issue of 437,500,000 warrants over Shares exercisable at 0.12 pence per Share exercisable for two years.
Operational and corporate post period end events:
On 24 July 2023 and 6 September 2023 we announced the results of the metallurgical test work at the Kanye project which in essence verify that manganese can be extracted from the deposit to produce leach solutions with high manganese concentrate via standard leaching processing technologies with extremely high recoveries.
A revised mineral resource statement in relation to the Hope & Gorob project is being finalised by Addison Mining Services which will incorporate recent metallurgical test work and the Company expects to announce this in October 2023.
Outlook: During the period the copper price has continued to be volatile, but the consensus remains that there is an impending shortage of copper supplies. We believe we have an above average copper project portfolio, and we continue to have several discussions regarding finance and resource collaboration for their advancement. At the time of writing, we are still in discussions and negotiations regarding portfolio advancement.
I would like to thank my fellow directors and management for their untiring efforts to maintain and advance our projects to a point where our portfolio is well understood by the trade and therefore financeable going forward.
Colin Bird
Executive Chairman
29 September 2023
For further information, please contact:
Bezant Resources Plc Colin Bird Executive Chairman |
| |
Beaumont Cornish (Nominated Adviser) Roland Cornish / Asia Szusciak | +44 (0) 20 7628 3396 | |
Novum Securities Limited (Joint Broker) Jon Belliss |
+44 (0) 20 7399 9400 | |
Shard Capital Partners LLP (Joint Broker) Damon Heath |
+44 (0) 20 7186 9952 |
or visit http://www.bezantresources.com
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law pursuant to the Market Abuse (Amendment) (EU Exit) regulations (SI 2019/310).
Group Statement of Profit and Loss
For the six months ended 30 June 2023
| Notes | Unaudited Six months ended 30 June 2023 £'000 | Unaudited Six months ended 30 June 2022 £'000 |
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CONTINUING OPERATIONS |
| ||
| |||
Group revenue | - | - | |
Cost of sales | - | - | |
| |||
Gross profit | - | - | |
| |||
Operating expenses | (463) | (319) | |
Share based payments | 4 | - | (29) |
Group operating loss | (463) | (348) | |
|
| ||
Interest income | - | - | |
|
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Loss before taxation | (463) | (348) | |
Taxation | - | - | |
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Loss for the period | (463) | (348) |
Loss per share (pence) |
|
| |
Basic and diluted from continuing operations | 4 | (0.01) | (0.01) |
Group Statement of Other Comprehensive Income
For the six months ended 30 June 2023
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| Unaudited Six months ended 30 June 2023 £'000 | Unaudited Six months ended 30 June 2022 £'000 |
Other comprehensive income: |
|
| |
Loss for the period |
| (463) | (348) |
Items that may be reclassified to profit or loss: |
|
| |
Foreign currency reserve movement |
| (179) | 9 |
Total comprehensive loss for the period |
| (642) | (339) |
Group Statement of Changes in Equity
For the six months ended 30 June 2023
Share Capital £'000 | Share Premium £'000 | Other Reserves1 £'000 | Retained Losses £'000 | Non-Controlling interest | Total Equity £'000 | |
Unaudited - six months ended 30 June 2023 |
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|
|
|
|
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Balance at 1 January 2023 | 2,079 | 39,507 | 3,672 | (35,551) | - | 9,707 |
Current period loss | - | - | - | (463) | - | (463) |
Foreign currency reserve | - | - | (179) | - | - | (179) |
Total comprehensive loss for the period | - | - | (179) | (463) |
- | (642) |
Proceeds from shares issued | 37 | 713 | - | - | - | 750 |
Share issue costs | - | (81) | 21 | - | - | (60) |
Shares issued - in lieu of fees | 14 | 422 | - | - | - | 436 |
Equity component of borrowings | - | - | 272 | - | - | 272 |
Balance at 30 June 2023 | 2,130 | 40,561 | 3,786 | (36,014) |
- | 10,463 |
Share Capital £'000 | Share Premium £'000 | Other Reserves1 £'000 | Retained Losses £'000 | Non-Controlling interest | Total Equity £'000 | |
Unaudited - six months ended 30 June 2022 |
|
|
|
|
|
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Balance at 1 January 2022 | 2,076 | 39,303 | 3,781 | (36,952) | (12) | 8,196 |
Current period loss | - | - | - | (348) | - | (348) |
Foreign currency reserve | - | - | 9 | - | - | 9 |
Total comprehensive loss for the period | - | - | - | (348) |
- | (339) |
Proceeds from shares issued | - | - | - | - | - | - |
Shares issued - in lieu of fees | 2 | 147 | - | - | - | 149 |
Warrants exercised | - | 18 | - | 44 | - | 62 |
Share options granted | - | - | - | - | - | |
Balance at 30 June 2022 | 2,078 | 39,468 | 3,790 | (37,256) |
(12) | 8,068 |
1 Other reserves is made up of the share-based payment and foreign exchange reserve.
Group Balance Sheet
As at 30 June 2023
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| Unaudited | Audited |
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| 30 June 2023 | 31 December 2022 |
| Notes | £'000 | £'000 |
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ASSETS
|
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Non-current assets |
| ||
Plant and equipment | 6 | 2 | 2 |
Investments | 7 | 2,260 | 2,260 |
Exploration and evaluation assets | 8 | 8,435 | 8,398 |
Total non-current assets | 10,697 | 10,660 | |
|
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Current assets |
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Trade and other receivables | 56 | 76 | |
Cash and cash equivalents | 365 | 57 | |
Total current assets | 421 | 133 | |
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TOTAL ASSETS | 11,118 | 10,793 | |
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LIABILITIES |
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|
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Current liabilities |
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Trade and other payables | 220 | 463 | |
Borrowings | 9 | 435 | 623 |
Total current liabilities | 655 | 1,086 | |
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NET ASSETS | 10,463 | 9,707 | |
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EQUITY |
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Share capital | 10 | 2,130 | 2,079 |
Share premium | 10 | 40,561 | 39,507 |
Share-based payment reserve | 1,201 | 1,181 | |
Foreign exchange reserve | 328 | 506 | |
Merger reserve | 1,831 | 1,831 | |
Other reserves | 426 | 154 | |
Retained losses | (36,014) | (35,551) | |
TOTAL EQUITY | 10,463 | 9,707 |
Group Statement of Cash Flows
For the six months ended 30 June 2023
|
| Unaudited | Unaudited |
|
| Six months ended 30 June 2023 | Six months ended 30 June 2022 |
| Notes | £'000 | £'000 |
|
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Net cash outflow from operating activities | 11 | (246) | (238) |
|
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Cash flows from/(used) in investing activities |
| ||
Deferred exploration expenditure | (149) | (474) | |
|
| (149) | (474) |
Cash flows from financing activities |
|
| |
Proceeds from issuance of ordinary shares |
| 703 | 19 |
Borrowings |
| - | 250 |
|
| 703 | 269 |
Increase/(decrease) in cash |
| 308 | (443) |
|
|
| |
Cash and cash equivalents at beginning of period |
| 57 | 728 |
Foreign exchange movement |
| - | 4 |
|
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Cash and cash equivalents at end of period |
| 365 | 289 |
Notes to the interim financial information
For the six months ended 30 June 2023
1. | Basis of preparation The unaudited interim 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.
These interim results for the six months ended 30 June 2023 are unaudited and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial statements for the year ended 31 December 2022 have been delivered to the Registrar of Companies and the auditors' report on those financial statements was unqualified and contained a material uncertainty pertaining to going concern.
Going concern basis of accounting The Group made a loss from all operations for the six months ended 30 June 2023 after tax of £0.5 million (2022: £0.4 million), had negative cash flows from operations and is currently not generating revenues. Cash and cash equivalents were £365,000 as at 30 June 2023.
On 12 April 2023 the Company announced a £750,000 fundraising from directors, existing shareholders and investors to advance the Hope Copper-Gold Project in Namibia whilst the Company awaits the award of a mining licence ahead of facilitating copper gold mining operations, for the metallurgical test work on the Kanye manganese project in Botswana and for the Company's other projects as well as working capital. The Company also issued shares to Directors and PDMR at a premium to the share price to settle £174,961 of accrued fees ("Conversion Shares") and the settling of £101,250 of consultancy fees by the issue of shares to consultants ("Consultant Shares") to conserve the Company's working capital.
On 15 June 2023, the Company announced, that it had agreed with Sanderson Capital Partners Limited ("Sanderson") a long-term shareholder in the Company to extend the repayment date for the £700,000 drawn down under the unsecured convertible loan funding facility entered into with Sanderson on 22 November 2021 until 23 December 2024 which is now convertible by Sanderson at the fixed price of 0.08 pence per share.
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.
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 realize 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.
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2 | Significant accounting judgments, estimates and assumptions |
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting year are: |
Share-based payment transactions: | |
The Group measures the cost of equity-settled transactions with directors, consultants and employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black and Scholes model which takes into account expected share volatility, strike price, term of the option and the dividend policy. |
| Impairment of investments, options and deferred exploration expenditure: | |
The Group determines whether investments (including those acquired during the period), options and deferred exploration expenditure are impaired when indicators, based on facts and circumstances, suggest that the carrying amount may exceed its recoverable amount. Such indicators include the point at which a determination is made as to whether or not commercial mining reserves exist in the subsidiary or associate in which the investment is held or whether exploration expenditure capitalised is recoverable by way of future exploitation or sale, obviously pending completion of the exploration activities associated with any specific project in each segment.
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Fair value of assets and liabilities acquired on acquisition of subsidiaries |
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The Group determines the fair value of assets and liabilities acquired on acquisition of subsidiaries by reference to the carrying value at the date of acquisition and by reference to exploration activities undertaken and/or information that the Directors become aware of post acquisition (note 8).
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Investments at fair value through profit and loss ('Equity investments') |
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Equity investments are initially measured at cost, including transaction costs. At each reporting date, the fair value is assessed and any resultant gains and losses are included directly in the Consolidated Statement of Profit and Loss under IFRS 9.
Valuation of Equity Instruments Convertible Loan (Borrowings) Convertible instruments can be complex, containing a number of features which can have a significant impact on the accounting under IFRS 9 Financial Instruments and IAS 32 Presentation of Financial Instruments. The Company determined that the £700,000 convertible note whose terms was modified during the period (note 9) was substantially different as the discounted present value of the cash flows under the new terms including any fees paid net of any fees received discounted using the original effective interest rate was more than 10% different from the discounted present value of the remaining cash flows of the original financial liability. Therefore, the original £700,000 convertible note ("Original 2022 Convertible Loan") was treated as being repaid on 14 June 2023 and a new £700,000 convertible note loan taken out on 14 June 2023 under the new the modified terms ("Modified 2023 Convertible Loan"). The Company determined that the Modified 2023 Convertible Loan was an equity instrument as the conversion feature results in the conversion of a fixed amount of stated principal into a fixed number of shares, it satisfies the 'fixed for fixed' criterion and, therefore, it is classified as an equity instrument which requires the valuation of the liability component and the equity conversion component. The fair value of the liability component, included in current borrowings, at inception was calculated using a market interest rate for an equivalent instrument without conversion option. The discount rate applied was 25%. |
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3. | Segment reporting For the purposes of segmental information, the operations of the Group are focused in geographical segments, namely the UK, Argentina, Namibia, and Botswana, and comprise one class of business: the exploration, evaluation and development of mineral resources. The UK is used for the administration of the Group and includes equity investments in non-group companies.
The Group's loss before tax arose from its operations in the UK, Argentina Namibia and Botswana. | |
For the six months ended 30 June 2023 - unaudited | ||||||
|
| UK | Argentina | Namibia | Botswana | Total |
£'000 | £'000 | £'000 | ||||
Consolidated loss before tax | (418) | (45) |
- |
- | (463) | |
Included in the consolidated loss before tax are the following income/(expense) items: | ||||||
Foreign currency gain | - | - | - | - | - | |
Total Assets | 2,663 | 4,867 | 2,536 | 1,052 | 11,118 | |
Total Liabilities | (601) | (54) | - | - | (655) |
For the six months ended 30 June 2022 - unaudited | ||||||
|
| UK | Argentina | Namibia | Botswana | Total |
£'000 | £'000 | £'000 | ||||
Consolidated loss before tax | (288) | (59) |
(1) |
- | (348) | |
Included in the consolidated loss before tax are the following income/(expense) items: | ||||||
Foreign currency gain | - | - | - | - | ||
Total Assets | 361 | 5,338 | 2,418 | 885 | 9,002 | |
Total Liabilities | (892) | (42) | - | - | (934) |
4. | Share based payments |
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| 6 months ended 30 June 2023 | 6 months ended 30 June 2022 |
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| £'000 | £'000 |
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| Share option expense - Directors | - | 18 |
| Share option expense - Management | - | 11 |
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| - | 29 |
5. | 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 six months ended 30 June 2023 of £463,000 (2022: £348,000). The basic loss per share was calculated using a weighted average number of shares in issue of 6,139,789,530 (2022: 5,025,497,800).
The weighted average number of shares in issue and to be issued if calculating the diluted loss per share would amount to 7,200,975,826 (2022: 6,355,967,563).
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. |
6. | Plant and equipment |
| |
Unaudited | Audited | ||
30 June 2023 | 31 December 2022 | ||
£'000 | £'000 | ||
6.1 | Cost |
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Balance at beginning of period | 67 | 67 | |
| Exchange differences | - | - |
| At end of period | 67 | 67 |
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|
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6.2 | Depreciation |
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| Balance at beginning of period | 65 | 65 |
| Charge for the period | - | - |
| At end of period | 65 | 65 |
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Net book value at end of period | 2 | 2 |
7. | Investments | ||
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| Unaudited | Audited |
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| 30 June 2023 | 31 December 2022 |
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| £'000 | £'000 |
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| Investments under fair value through profit and loss (note 7.1) | 2,182 | 2,182 |
| Debt instruments under fair value through profit and loss (note 7.2) | 78 | 78 |
|
| 2,260 | 2,260 |
7.1 | Investments
|
| On 13 September 2021 the Company, entered into a conditional agreement with IDM Mankayan Pty Ltd ("IDM Mankayan"), a company incorporated in Australia, to take the Mankayan Project in the Philippines forward (the "IDM Mankayan Agreement"). The IDM Mankayan Agreement completed on 20 October 2021 and the Company paid A$90,000 (GBP49K)_to IDM Mankayan and owns 44 IDM Mankayan shares (the "IDM Mankayan Investment") of the 160 shares issued by IDM Mankayan but has no management control over or right to appoint directors of IDM Mankayan which is why the IDM Mankayan Investment is held as an equity investment under IFRS 9. The Mankayan project's MPSA was originally issued for a standard 25 year period, which expired on 11 November 2021, and as announced by the Company on 18 March 2022 has been renewed for a second 25 year term with effect from 12 November 2021.
On 26 October 2022 the Company entered into a conditional share purchase agreement with IDM International Ltd ("IDM International") the parent company of IDM Mankayan to sell the IDM Mankayan Investment for 19,381,054 fully paid ordinary shares of IDM International (the "IDM International SPA"). The IDM International SPA was conditional on approval of the IDM International SPA by the shareholders of IDM International and completed during the period on 27 March 2023.
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7.2 | On 26 October 2022 the Company entered into a convertible loan note agreement with IDM International to invest A$137,500 (GBP 78K) in IDM International to acquire 137,500 notes (the "IDM International Convertible Loan Note Investment"). The Company has the right to convert the whole but not part of the face value of each Note into IDM International Shares at A$0.20 at any time (and as many times) prior to the Maturity Date which is 11 November 2026. As at 30 June 2023, the fair value of the debt instrument was £78k and no unrealised gain/loss was recognised.
1 19,381,054 shares valued at AUD$0.20 (£0.112) being the share subscription price at which at which third parties subscribed for shares in IDM International on 4 April 2023.
Investments are initially valued at cost. At each reporting date these investments are measured at fair value with any gains or losses recognised through the Consolidated Statement of Profit and Loss. In 2023, the Group and Company had unrealised gains of £2,133,000.
This along with other valuations are estimates based on the Directors' assessment of the performance of the underlying investment and reliable information such as recent fundraising. There is however inherent uncertainty when valuing private companies such as these in the natural resources sector. |
8. | Exploration and evaluation assets |
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Unaudited | Audited | ||
30 June 2023 | 31 December 2022 | ||
£'000 | £'000 | ||
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Balance at beginning of period | 8,398 | 7,692 | |
Acquisitions during period |
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Exploration expenditure | 37 | 934 | |
Write back of liability in relation to joint venture expenditure (note 8.1) | - | (228) | |
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Carried forward at end of period | 8,435 | 8,398 |
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9. | Borrowings
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| Borrowings Original 2022 Convertible Loan - Note (i) | |||
Consolidated | ||||
Unaudited | Audited | |||
30 June 2023 | 31 December 2022 | |||
£'000 | £'000 | |||
| ||||
Balance at beginning of year | 623 | - | ||
Convertible loan receipts | - | 700 | ||
Equity allocation | - | (154) | ||
Finance charge accrued | 77 | 77 | ||
Refinanced by Modified 2023 Convertible Loan | (700) |
| ||
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| - | 623 | |
| Borrowings Modified 2023 Convertible Loan - Note (ii) | |||
Consolidated | ||||
Unaudited | Audited | |||
30 June 2023 | 31 December 2022 | |||
£'000 | £'000 | |||
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Balance at beginning of year | - | - | ||
Original 2022 Convertible loan refinanced | 700 | - | ||
Equity allocation | (272) | - | ||
Finance charge accrued | 7 | - | ||
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| 435 | - | |
Note (i) As announced on 30 June 2022 the Company further to its announcement of 23 November 2021 confirmed that it had issued two drawdown notices of £350,000 each ("Tranche 1" and "Tranche 2") for a total amount of £700,000 (the "Original 2022 Convertible Loan") under its £1,000,000 interest free unsecured convertible loan funding facility with Sanderson Capital Partners Ltd (the "Lender"), a long-term shareholder in the Company (the "Facility"). The amount drawdown was interest free and repayable in 12 months or can be converted at any time at the Lender's option into Bezant shares at fixed prices for Tranche 1 of £350,000, at 0.19 pence per share and for Tranche 2 of £350,000 at 0.225 pence per share. As the conversion feature results in the conversion of a fixed amount of stated principal into a fixed number of shares, it satisfies the 'fixed for fixed' criterion and, therefore, it is classified as an equity instrument. The value of the liability component of £546,000 and the equity conversion component of £154,000 were determined at the date of the drawdowns. The fair value of the liability component, included in current borrowings, at inception was calculated using a market interest rate for an equivalent instrument without conversion option. The discount rate applied was 25%.
Under the terms of the Facility the Lender is due;
a) a drawdown fee of £14,000 being 2% of the amount drawdown which was settled by the issue of 12,522,361 new ordinary shares of £0.00002 each ("Shares") credited as fully paid at 0.1118 pence per share being the five-day VWAP on 28 June 2022 (the "Drawdown Fee Shares"); and
b) £350,000 of three year warrants over Shares (the "Warrants"). The exercise price for the Warrants are as follows:
· £175,000 at 0.25 pence per share for the drawdown of Tranche 1; and
· £175,000 at 0.30 pence per share for the drawdown of Tranche 2.
Note (ii) On 15 June 2023 the Company announced that it had agreed with the Lender to extend the repayment date for the £700,000 under the Original 2022 Convertible Loan so the £700,000 drawdown is now repayable by 23 December 2024 and convertible by the Lender at the fixed price of 0.08 pence per share (the "New Conversion Price") and to the loan extension fees detailed below (the "Modified 2023 Convertible Loan"). No further amounts can be drawn down under the Facility.
As the conversion feature of the Modified 2023 Convertible Loan results in the conversion of a fixed amount of stated principal into a fixed number of shares, it satisfies the 'fixed for fixed' criterion and, therefore, it is classified as an equity instrument. The value of the liability component of £427,674 and the equity conversion component of £272,326 were determined at the date of the Modified Terms. The fair value of the liability component, included in current borrowings, at the date of the Modified 2023 Convertible Loan was calculated using a market interest rate for an equivalent instrument without conversion option. The discount rate applied was 25%.
Under IFRS 9, the terms of a modified financial liability at amortised cost are substantially different if the discounted present value of the cash flows under the new terms including any fees paid net of any fees received discounted using the original effective interest rate is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. Therefore the Original 2022 Convertible Loan is treated as repaid on 14 June 2023 and the Modified 2023 Convertible Loan as a new loan taken out on 14 June 2023.
The Company as a loan extension fee in relation to the Modified 2023 Convertible Loan i) paid the Lender a £70,000 facility extension and documentation fee equivalent to 6.67% per year which was settled by the issue of 87,500,000 new ordinary shares of 0.002p each ("Shares") at the New Conversion Price ("Facility Extension Fee Shares"); and ii) issued the Lender 437,500,000 warrants over Shares exercisable at 0.12 pence per Share (the "Warrant Exercise Price") exercisable for two years from 14 June 2023 (the "Facility Extension Fees"). The Company has an option to convert all or part of the £700,000 drawdown if the Company's share price exceeds 0.14 pence for 10 or more business days.
The New Conversion Price was at a 113% premium to the closing price of 0.0375 pence per share on 14 June 2023 and a 100% premium to the placing price in relation to the Company's £750,000 fundraising announced on 12 April 2023. The Warrant Exercise Price is at a 220% premium to the closing price on 14 June 2023.
10. | Share capital |
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Unaudited | Audited | ||
30 June 2023 | 31 December 2022 | ||
£'000 | £'000 | ||
| Number |
| |
Authorised |
| ||
6,000,000,000 ordinary shares of 0.002p each (1) | 120 | 100 | |
5,000,000,000 deferred shares of 0.198p each (2) | 9,900 | 9,900 | |
10,000 | 10,000 | ||
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| Allotted ordinary shares, called up and fully paid |
| |
| As at beginning of the year | 101 | 98 |
| Share subscription | 37 | - |
| Shares issued in lieu of directors and management fees | 4 | 1 |
| Shares issued on exercise of warrants | - | 1 |
| Shares issued to settle third party fees | 10 | 1 |
| Total ordinary shares at end of year | 152 | 101 |
|
| ||
| Allotted deferred shares, called up and fully paid (2) |
| |
| As at beginning of the period | 1,978 | 1,978 |
| Total deferred shares at end of period | 1,978 | 1,978 |
|
Ordinary and deferred as at end of period | 2,130 | 2,079 |
| Number of shares 30 June 2023 | Number of shares 31 December 2022 | |
| Ordinary share capital is summarised below: |
| |
| As at beginning of the period | 5,081,399,113 | 4,913,028,538 |
| Share subscription | 1,875,000,000 | - |
| Shares issued in lieu of directors and management fees | 218,700,942 | 100,000,000 |
| Shares issued on exercise of warrants | - | 41,562,500 |
| Shares issued to settle third party fees | 462,872,981 | 26,808,075 |
|
As at end of period | 7,637,973,036 | 5,081,399,113 |
|
|
| |
| Deferred share capital is summarised below: |
| |
| As at beginning of the year (1) | 998,773,038 | 998,773,038 |
|
As at end of period | 998,773,038 | 998,773,038 |
|
|
| |
| (1) This is the number of ordinary shares which the directors were authorised to issue at the AGM on 23 August 2022. This authority was increased to 7,500,000,000 shares at the AGM on 28 July 2023. (2) 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.
| ||
|
| Unaudited | Audited |
|
| 30 June 2023 | 31 December 2022 |
|
| £'000 | £'000 |
| The share premium was as follows: |
| |
| As at beginning of year | 39,507 | 39,303 |
| Share subscription | 713 | - |
| Shares issued to settle third party fees | 251 | 34 |
| Shares issued in lieu of directors and management fees | 171 | 128 |
| Share issue costs | (81) | - |
| Warrants exercised | - | 42 |
|
As at end of year | 40,561 | 39,507 |
| Each fully paid ordinary share carries the right to one vote at a meeting of the Company. Holders of ordinary 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. |
11. | Reconciliation of operating loss to net cash outflow from operating activities |
| |
|
| Unaudited | Unaudited |
|
| Six months ended 30 June 2023 | Six months ended 30 June 2022 |
|
| £'000 | £'000 |
|
|
| |
| Operating loss from all operations | (463) | (348) |
|
|
| |
| Share option expense | - | 29 |
| Shares issued - Directors fees | 43 |
|
| Share issued - Consultants | 19 |
|
| Shares issued - Legal/finance fees | 70 | - |
| (Increase)/decrease in receivables | 20 | (52) |
| Increase/(decrease) in payables | 65 | 133 |
|
Net cash outflow from operating activities | (246) | (238) |
12. | Subsequent events
|
No significant events have occurred subsequent to the reporting date that would have a material impact on the consolidated financial statements. |
13. | Availability of Interim Report |
A copy of these interim results will be available from the Company's registered office during normal business hours on any weekday at Floor 6, Quadrant House, 4 Thomas More Square, London E1W 1YW and can also be downloaded from the Company's website at www.bezantresources.com. Bezant Resources Plc is registered in England and Wales with company number 02918391. |