Kibo Energy Regulatory News (KIBO)

Kibo Energy PLC (Incorporated in Ireland)

(Registration Number: 451931)

(External registration number: 2011/007371/10)

Share code on the JSE Limited: KBO

Share code on the AIM: KIBO

ISIN: IE00B97C0C31

("Kibo" or "the Company")

Dated: 24 June 2019

Kibo Energy PLC ('Kibo' or the 'Company')

Results for the Year Ended 31 December 2018

Kibo Energy PLC ("Kibo" or the "Company"), the multi-asset, Africa focused energy company, is pleased to release its consolidated annual financial results for the year ended 31 December 2018. The Company's Annual Report, which contains the full financial statements is in the process of being prepared for dispatch to shareholders. A copy of this Annual Report will also be available from the Company's website at www.kibo.energy. Details of the date and venue for this year's AGM will be announced on posting of the full Annual Financial Results.

Overview (2018 and 2019 YTD)

· Acquired majority interests in the Mabesekwa Coal Independent Power Project in Botswana, the Benga Power Plant Project in Mozambique, and a 60% equity interest in Mast Energy Developments Limited in the UK

· Country diversification to help insulate the Company from sovereign risk in addition to benefitting from sub-Saharan Africa's urgent and increasing demand for reliable, sustainable and affordable electricity

· Received confirmation from TANESCO that the Company can develop the Mbeya Coal to Power Project for the export market, subsequent to earlier notification from TANESCO that the MCPP did not qualify as one of the preferred applicants for the delivery of thermal coal power in Tanzania under a TANESCO tender round

· Feasibility study completed and submitted to the Ministry of Mineral Resources and Energy and Electricidade de Moçambique ahead of schedule for the Benga Project in Mozambique

· Mining Scoping Study completed for the Mabesekwa Project in Botswana with a feasibility study underway

· In line with the Company's strategy of becoming a dedicated energy development company, Kibo successfully completed the sale of the Haneti Nickel Project to Katoro Gold PLC

Chairman's Statement

2018 was transformational for the Company as we reoriented our business and implemented our strategy to be a global energy developer with multiple power projects focused primarily on Africa. This strategy has helped us to spread country and project risk and should present us with many opportunities within the strongly growing African energy sector.

The new energy projects in which we acquired majority interests during 2018 include the Mabesekwa Coal Independent Power Project ("MCIPP" or "Mabesekwa Project") in Botswana, the Benga Power Plant Project ("BPPP" or "Benga Project") in Mozambique, and a 60% equity interest in Mast Energy Developments Limited ("MED") in the UK. The latter acquisition is expected to provide us with an opportunity for revenue streams in the short term, whilst also creating an ability to leverage MED's experience in electricity generation to develop new energy projects in Africa through introducing and developing the UK Reserve Power business model alongside our existing coal-to-power projects on the continent.

The country diversification offered by our current African project portfolio is strategically positioned to help insulate the Company from sovereign risk whilst also granting us the opportunity to participate in the opportunity arising from sub-Saharan Africa's urgent and increasing demand for reliable, sustainable and affordable electricity.

Our board and management teams have spent many years operating in the international mining and energy sectors. Currently, the energy sector is in a state of flux across the African continent: only some 700 million of its 1.3 billion population have access to an electricity supply. In Mozambique and Tanzania, this access is limited to 24.2% and 32.8% of the population respectively, while Botswana will need to add up to 500MW of committed, dispatchable electricity generating capacity by 2040, in order to keep pace with demand. Even the UK power landscape is undergoing transformational change, driven primarily by the decarbonisation, decentralisation and digitisation of the power market, which could create a £6 billion flexibility market by 2030.

Kibo's projects are positioned to address these concerns. To this end, we remain focused on navigating the intricate agreements needed to bring them to commercialisation and maintaining good relationships with the various governments and international organisations that are vital to their continued progress. Through our experience on the project development path for the Mbeya Coal to Power Project ("MCPP") in Tanzania, we have established and strengthened key relationships and collaboration agreements with international energy development, engineering and financial firms such as SEPCOIII, General Electric and ABSA. In 2018, we continued to develop and strengthen these relationships. We signed a Strategic Development Agreement ("SDA") with SEPCOIII in July which would place the resources of one of the world's largest energy project developers behind Kibo in enhancing its business strategy and the development of its African energy assets. This SDA was backed with a commitment for a two-stage equity investment in Kibo and while a final decision regarding the SDA has not been made, given all conditions have not been met, discussions are ongoing. The Company also expanded its existing Collaboration Agreement with General Electric in August 2018 confirming it as the preferred technology partner and supplier to Kibo across all its current and future energy projects in Africa.

Our diversification strategy proved particularly prescient in February 2019 with the disappointing news that our MCPP did not qualify as one of the preferred applicants for the delivery of thermal coal power in Tanzania under a TANESCO tender round, delaying the construction of the project. While we strongly anticipated that the MCPP would be the first of our projects to be constructed, it is now on hold as we explore alternative options for it. I would like to remind shareholders that the failed tender bid only represented one opportunity to commercialise the MCPP and that alternative options such as power export to neighbouring countries, competing in any future coal to power tenders from TANESCO and negotiating power off-take agreements with local private enterprise are all potential revenue streams. We also continue to explore non-power related options to exploit the coal resource, including export, coal to gas production or coal sales to local off-takers.

We believe that the recent award of the pre-qualification tenders appears to reflect a political decision to keep closer national control of coal to power generation and does not denigrate the high quality of Kibo's tender bid, which we still believe offers the best and most advanced option for the fast-track development of a thermal coal plant in Tanzania. We are awaiting clarification from TANESCO as to why our bid failed despite repeated assurances that the MCPP was an integral part of Tanzania's plans for increased power capacity in the country, including a signed MOU in place for the negotiation of a Power Purchase Agreement ("PPA") between TANESCO and Kibo. There is still much uncertainty on what solutions will emerge to address Tanzania's electricity shortages, but the situation is dynamic and Kibo is well placed to be part of the mix at the appropriate time. What is certain, however, is the urgent demand for electricity and particularly substantial base load power generation in the country in the short term.

However, the Company has received confirmation from TANESCO that it can develop the MCPP for the export market. TANESCO has advised the Company that it is currently implementing interconnectors through Zambia, Tanzania and Kenya enabling power trade within the Eastern African Power Pool and Southern African Power Pool member countries. TANESCO has recommended that the Company engage these Power Pools to ensure participation in the high demand export market. Furthermore, the Company also remains engaged with TANESCO, regarding potential energy supply opportunities to the domestic market.

Although we are still committed to continue working closely with Government and all other local stakeholders on our project in Tanzania to our mutual benefit, the non-qualification of the MCPP's in the tender process means that we can, for the moment, focus more on our other projects in Africa and in the UK Reserve Power market where we have already achieved much progress.

The Benga Project in Mozambique (65% interest with an option to increase to 85%) is our first pure energy project, and we are very encouraged by its rapid progress. With Government support and a feasibility study completed and submitted to the Ministry of Mineral Resources and Energy ('MIREME') and Electricidade de Moçambique ('EDM') ahead of schedule, our focus is now on finalising the coal supply agreement ("CSA") and PPA with private off-takers.

The Mabesekwa Project in Botswana (85% interest) also presents an exciting opportunity for the Company and its shareholders. With a Mining Scoping Study complete, we are now progressing a feasibility study and waiting for a Mining Licence for the Mabesekwa Coal Mine.

Our final acquisition of the year was MED in the UK (60% interest), which is looking to support the UK energy mix with much needed flexible energy projects, a growing segment of the UK energy market. Most recently, MED executed a Sale and Purchase Agreement ("SPA") to acquire Bordersley Power Limited, a key milestone as it advances on its strategy to become a key player in the UK flexible power generation market. This transaction is expected to reach completion shortly.

On the corporate front, we completed the sale of our Haneti Nickel Project during 2018 to Katoro Gold PLC. This sale represented the divestment of the Company's last non-energy projects in line with our strategy of growing Kibo as a dedicated energy development company. Currently, Kibo holds a 57.57% majority interest in Katoro which, as well as Haneti, holds gold projects in northern Tanzania.

Kibo undertook three broker sponsored placings during 2018 and raised £2.75 million. It also completed full settlement of funds drawn down under its forward payment facility with Sanderson Capital Partners Limited signed in 2016. I would like to welcome First Equity Limited and SVS Securities Limited who we appointed as our new AIM joint brokers during 2018. I also note the internal re-assignment of roles on our Board and our appointment of Pieter Krugel as CFO of the Company during 2018, both of which have facilitated the seamless transition of the Company to a focused energy development company.

The result for the year amounted to a loss of £4,036,713 for the year ended 31 December 2018 (31 December 2017: £4,519,813) as detailed further in the Statement of Profit or Loss and Other Comprehensive Income.

Outlook

We remain focused on delivering our objective to build a leading multi-asset energy company and realising value from our four projects, which we anticipate will play major roles in the provision of energy to a variety of power-constricted markets. With our long-established international relationships, including the project financing agreement announced post period end with Wimmer Financial, we are well positioned to rapidly move onto the construction phases once we have, amongst other things, completed our already advanced PPA discussions. Our strength lies in our diversity. Each of our four projects represent a vast opportunity; I look forward with confidence to the time that our first project crosses the line.

Finally, I would once again like to thank our Board and especially our management under the stewardship of our CEO Louis Coetzee who continue to provide the drive and commitment to making Kibo a significant player in the African energy market.

_____________________________

Christian Schaffalitzky

Chairman

21 June 2019

Review of Activities

Introduction

During 2018 Kibo Energy PLC ("Kibo" or the "Company") focused primarily on advancing its African energy projects in Tanzania, Botswana and Mozambique. It also made significant progress under the management of MED in evaluating project sites to install small scale gas fired generators to serve the UK Reserve Power Market, where the Company anticipates opportunities to avail off revenue streams in the short term.

Mozambique - Benga Power Plant Project ("BPPP" or "Benga Project")

Kibo operates in Mozambique through a local joint venture company Benga Power Plant Limited ("BPPL") in which Kibo has 65% interest. BBPL holds the Benga Project in which Kibo's 65% beneficial interest is to be maintained by expenditure of up to £1 million towards the completion of a definitive feasibility study for the construction of a 250-300 MW coal fired thermal power plant in the north-western Tete province. During 2018, the Company finalised the BPPP acquisition with Termoeléctrica de Benga S.A. ("Termoeléctrica"), which holds the remaining 35% interest in the joint venture and mobilised resources to advance the Definitive Feasibility Study on the project. The Company has benefited from significant work already completed on the project by Termoeléctrica and its strong relationships with government agencies and other local stakeholders in the project. The following agreements, approvals and studies are already in place:

· authorisation from the Ministry of Mineral Resources and Energy to proceed with final feasibility study;

· a Memorandum of Understanding with Electricidade de Moçambique ("EDM"), the state-owned electricity generation and transmission company acknowledging and providing their support for its collaboration on the project;

· confirmation from the Zambesi River water authority (ARA Zambezi) that sufficient water will be available for the proposed coal-fuelled power plant;

· preliminary 5-year lease title over 59 hectares of land close to the two producing coal mines in the Tete Province which is expected to be extended to 50 years as a pre-requisite to power plant construction; and

· formal letters of comfort received from various power supply off-takers for up to 150 MW and positive response from nearby coal mines to discuss terms for the supply of coal to the proposed power station.

Since acquiring its 65% interest and taking control of managing the project, Kibo has commenced a Definitive Feasibility Study ("Benga DFS"), which will take the project through completion of a pre-feasibility study, an environmental impact study, detailed engineering and design, and a comprehensive financial model (the Benga DFS was completed in March 2019 with a final review currently in progress). The Benga DFS was given significant impetus towards the end of 2018 when BPPL re-negotiated and expanded its MOU with EDM. The expanded MOU, which already provided for collaboration on the Benga DFS, set out both parties intention to negotiate a PPA for EDM to be anchor off-taker for the power, assist in finalising project financing and in negotiating related commercial contracts. The DFS was aggressively advanced following the appointment of STEAG, a German energy consultancy, to execute the studies, and EPC specifications and PNO Consultants from South Africa, to conduct a grid integration study. Other work in progress includes the commencement of Phase 2 of the Environmental Impact Study and completion of a topographic survey (LIDAR survey) at the proposed power station site. In tandem with the engineering studies, negotiations on Coal Purchase Agreements with local mines and PPA negotiations with EDM and private power off-takers are also progressing well.

Botswana - Mabesekwa Project ("MCIPP" or "Mabesekwa Project")

Kibo established a strategic position in the Botswanan energy market with its acquisition of an 85% beneficial interest in the Mabesekwa Coal Independent Power Project in April 2018. The MCIPP is held in Botswanan registered company Kibo Energy Botswana (Pty) Limited in which Kibo and its joint venture partner, Sechaba Natural Resources Limited ("Sechaba"), from which it acquired its interest in the project, hold beneficial interests of 85% and 15% respectively. Kibo acquired its interest in the MCIPP from Sechaba by issuing it 153,710,030 of new Kibo shares, thereby making it a 27.13% shareholder in Kibo at the date of the transaction (currently at 18.43%). As part of the transaction Sechaba also retained some small royalties of US$0.5 and US$0.0225 per metric tonne of coal sold and kilowatts per hour of power produced respectively, payable from the assets of the project (coal mine & power plant). Additionally, for a period of 72 months from closure of the transaction, Kibo will have the right of first refusal to participate in any electricity generating projects within SADC countries that may be offered to Sechaba and on similar terms. Conversely, Sechaba will have the right of first refusal to participate in any coal export projects within SADC countries that may be offered to Kibo.

As per the announcement dated 21 June 2018, the assets of the MCIPP, in which Kibo holds its 85% attributable interest, include a 303 Mt Coal Resource and a concept study to construct a co-located coal fed thermal power plant with capacity of up to 600 MW located 64 km south-west of Botswana's second city, Francistown. The Company confirms that there has been no material change to the Mabesekwa Coal Resource since the Coal Resource estimate was first published as part of the announcement dated 21 June 2018. A pre-feasibility study on the coal mining element together with a scoping study for the construction of the power plant has already been completed by Sechaba Water and land use permits and environmental certification are also already in place at the site.

On acquiring the project in early 2018, Kibo commissioned an Independent Competent Person's Report ("CPR") from Gemecs (Pty) Ltd, South Africa, on the coal deposit that will form the feed stock to the planned thermal power plant. The CPR reported on washability tests carried out on the coal, which indicated potential to lower the ash content, increase the calorific value and lower the total sulphur content in order to maximise the coal yields for use in a thermal power plant. Additional testing of bulk samples from drill holes across the coal deposit yielded results which indicated that favourable coal quality for power generation can be achieved through industry standard beneficiation processes.

In November 2018, Kibo applied for a mining right over the Coal Resource and this is currently being processed by the Botswanan Department of Mines.

The Mabesekwa Project is ideally located to supply power to the South African market where there is an urgent demand for additional baseload power generation. The South African Government has provided for 3,750 MW to be supplied from independent cross-border coal to power projects in its Cross-Border Project procurement plan announced in 2016. The Mabesekwa Project is also well located to incorporate a solar energy component at the proposed thermal power plant and the Company will look to explore this further as part of the DFS.

Tanzania - Mbeya Project ("MCPP" or "Mbeya Project")

Kibo now has 100% interest in the Mbeya Project in southwest Tanzania, on which it has completed an Integrated Bankable Feasibility Study for the construction of a co-located coal mine and coal fired power station. During the first half of 2018, the Company continued to engage closely with TANESCO on finalising a PPA as a follow-on from the MOU on the terms for negotiating a PPA signed between the parties in February 2018. During this period, Kibo also continued to advance all other aspects of the MCPP in anticipation of concluding a PPA with TANESCO including the completion of the second phase of its school building & upgrade programme in villages close to the MCPP development site in southern Tanzania.

The announcement in September 2018 by TANESCO that it was issuing an open tender for companies to apply for pre-qualification to be considered as independent coal and gas power producers, and that companies with which it had already MOUs or was otherwise in negotiation with should also submit tenders, was unexpected. Following a subsequent cancellation and reinstatement of the tender process by TANESCO, Kibo re-submitted comprehensive and detailed documentation including its Integrated Bankable Feasibility Study for the MCPP in support of a tender application in December 2018. Regrettably, TANESCO informed Kibo by letter received on the 14th February 2019 that it had not pre-qualified from the tender process to be considered further as an independent coal to power producer. The Company is currently seeking full clarification from TANESCO on this decision and assessing alternative commercialisation options for the MCPP.

Despite the non-qualification of the MCPP in the recent tender round by TANESCO for coal generated power, the Company continues to hold the Mbeya (formerly Rukwa) Coal Resource. In September 2018, it received notification that the Mining Commission of Tanzania had recommended grant of a Special Mining Licence over the Resource. With Kibo's anticipated anchor off-taker for the power, TANESCO being not currently in the picture, the Company continues to investigate and develop alternative or co-existing outlets for both power and coal comprising, inter alia, export of power, power supply to local off takers, coal to local and export markets, and coal to gas conversion. The Company has received confirmation from TANESCO that it can develop the MCPP for the export market. TANESCO has advised the Company that it is currently implementing interconnectors through Zambia, Tanzania and Kenya enabling power trade within the Eastern African Power Pool and Southern African Power Pool member countries. TANESCO has recommended that the Company engage these Power Pools to ensure participation in the high demand export market. Furthermore, the Company also remains engaged with TANESCO, regarding potential energy supply opportunities to the domestic market. Kibo confirms that there has been no material change to the Mbeya Coal Resource since the Coal Resource estimate was first published as part of the RNS dated 11 April 2016, and the Company's attributable interest in the Resource is still 100%.

United Kingdom - Mast Energy Developments Limited ("MED")

The Company took its first steps into the UK Reserve Power generation market in 2018 with the acquisition of a 60% interest in UK company MED. MED is targeting the acquisition of appropriate sites upon which it plans to develop and operate gas fired generators and ancillary structures, to supply power to the UK Reserve Power generation market. The Reserve Power generation market is a growing segment of the UK energy market primarily due to the increasing percentage of renewable resources, particularly wind, contributing to the total power output, which has caused periods of under capacity on the UK electricity grid.

The acquisition was completed in October 2018 through the issue of 5.7 million new Kibo shares to the sellers for a deemed consideration of £300,000, and an agreement that the sellers would also receive 5% of Kibo's share of gross projects' revenues (royalties) under terms which require them to invest the royalties by subscribing for Kibo shares on a monthly basis up to a subscription value of £2.2 million. Other material terms of the acquisition include terms for Kibo to buy out the royalties at a 6% discount to their present value at discrete time points related to the cumulative operating capacity reached within the asset portfolios, and reciprocal options to buy out each other's remaining interest in MED once the total generating capacity in the projects reaches 150 MW.

In December 2018, Kibo announced that MED had acquired an exclusive option to evaluate and negotiate on the acquisition of three peaking power sites with total output capacity of 31.3MW. MED has since completed due diligence on two of these sites with an aggregate capacity of 25.2MW and has signed a Sale and Purchase Agreement ("SPA") on one of them, Bordersley Power Limited ("Bordersley"), a 5 MW gas-fuelled power generation plant. This transaction is expected to reach completion shortly. In tandem with this, MED is evaluating potential Engineering, Construction & Procurement ("EPC") providers for Bordersley and conditional offers of debt financing from two financial institutions. Both sites are planned to be operational in the last quarter of 2019 and the first quarter of 2020 respectively (subject to completion of the second acquisition).

Corporate

During 2018, the Company continued its strategy to divest its non-energy assets with the sale of its remaining exploration project, the Haneti Nickel project, to Katoro Gold PLC for a consideration of 15,384,615 newly issued shares in Katoro at a price per share of 1.3p valuing the project at £200,000. This follows the divestment of its gold assets, the Imweru & Lubando projects to Katoro during 2017.

Kibo undertook three broker sponsored placings during 2018 and raised £2.75 million through the issue of 55.742 million shares at prices of 4.25p and 5.25p per share. The Company also issued an additional 29.61 million shares in full settlement of funds drawn down under its forward payment facility with Sanderson Capital Partners Limited in the amounts of $568,712 and £1,115,067. On completion of the MCIPP and MED acquisitions, the Company issued a total of 159,424,316 consideration shares. Total new shares issued during 2018 came to 244,776,705 issued or deemed issued at price per share from 4.25p to 6.1p. During March 2019, Kibo has issued an additional 126,436,782 shares to Sanderson Capital Partners Limited ("Sanderson") to acquire the residual 2.5% equity interest that Sanderson held in the MCPP at a deemed price of 1.3p.

The Company undertook a Board re-structuring during 2018, which included the appointment of Pieter Krugel as Chief Financial Officer. The Company believes that this re-structuring will better align the core skill sets of management with Kibo's new positioning as a focused international energy project developer.

The Company also appointed First Equity Limited and SVS Securities Limited as its new joint corporate broker during 2018 to replace Beaufort Securities Limited. The Company changed its name at its AGM at the end of July from Kibo Mining plc to Kibo Energy PLC to reflect is new sole focus on energy project development and appointed Crowe U.K. LLP as its new statutory auditors.

_______________________________

Louis Coetzee

Chief Executive Officer

21 June 2019

Consolidated Statement of Profit or Loss and Other Comprehensive Income

The financial statements were approved and authorised for issue by the Board of Directors 21 June 2019 and signed on its behalf by:

On behalf of the Board

__________________ ________________________

Christian Schaffalitzky Noel O'Keeffe

Consolidated Statement of Financial Position

The financial statements were approved and authorised for issue by the Board of Directors on 21 June 2019 and signed on its behalf by:

On behalf of the Board

_____________________ ________________________

Christian Schaffalitzky Noel O'Keeffe

Company Statement of Financial Position

The financial statements were approved and authorised for issue by the Board of Directors on 21 June 2019 and signed on its behalf by:

On behalf of the Board_______________________ ________________________

Christian Schaffalitzky Noel O'Keeffe

Consolidated Statement of Changes in Equity

The financial statements were approved by the Board of Directors and authorised for issue on 21 June 2019 and signed on its behalf by

On behalf of the Board

________________________________ ________________________

Christian Schaffalitzky Noel O'Keeffe

Company Statement of Changes in Equity

The financial statements were approved by the Board of Directors and authorised for issue on 21 June 2019 and signed on its behalf by

On behalf of the Board_______________________ ________________________

Christian Schaffalitzky Noel O'Keeffe

Consolidated Statement of Cash Flows

Company Statement of Cash Flow

Notes to the Annual Financial Statements

1. Segment analysis

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the Chief Operating decision maker. The Chief Executive Officer is the Chief Operating decision maker of the Group. Management currently identifies two divisions as operating segments - mining and corporate. These operating segments are monitored and strategic decisions are made based upon them together with other non-financial data collated from exploration activities. Principal activities for these operating segments are as follows:

Geographical segments

The Group operates in six principal geographical areas - Corporate (Ireland, Cyprus, South Africa, Canada & United Kingdom) and Mining (Tanzania).

2. Investment and other Income

3. Loss on ordinary activities before taxation

4. Staff costs (including Directors)

The average monthly number of employees (including Executive Directors) during the period was as follows:

5. Directors' emoluments

The emoluments of the Chairman were £15,963 (2017 £13,135).

The emoluments of the highest paid director were £198,552 (2017: £260,210).

Directors received shares to the value of £ NIL during the year (2017: £195 000).

Key management personnel consist only of the Directors. Details of share options and interests in the Company's shares of each director are shown in the Directors' report. The following table summarises the remuneration applicable to each of the individuals who held office as a director during the reporting period:

£195,000 convertible loan notes were issued to Directors of the Company who are also members of its Executive committee on 27 September 2017. The loan notes issued were in lieu of bonus shares due as part of an interim award approved by the Kibo board on 24 April 2017. On 28 September 2017, these directors elected to convert their loan notes into Kibo shares. These resultant number of shares issued amount to 3,900,000 ordinary shares at an issue price of £0.05 per share, calculated in accordance with the Note Term Sheet.

6. Taxation

Current tax

The difference between the total current tax shown above and the amount calculated by applying the standard rate of Irish corporation tax of 12.5% to the loss before tax is as follows:

The effective tax rate used for the December 2018 and December 2017 reconciliations above is the corporate rate of 12.5% payable by corporate entities in Ireland on taxable profits under tax law in that jurisdiction.

No provision has been made for the 2018 deferred taxation as no taxable income has been received to date, and the probability of future taxable income is indicative of current market conditions which remain uncertain. At the Statement of Financial Position date, the Directors estimate that the Group has unused tax losses of £25,000,200 (2017: £21,876,379) available for potential offset against future profits which equates to an estimated potential deferred tax asset of £3,125,024 (2017: £2,734,547). No deferred tax asset has been recognised due to the unpredictability of the future profit streams. Losses may be carried forward indefinitely in accordance with the applicable taxation regulations ruling within each of the above jurisdictions.

7. Loss of parent Company

As permitted by Section 293 of the Companies Act 2014, the Statement of Profit or Loss of the parent Company has not been separately disclosed in these financial statements. The parent Company's loss for the financial period was £2,356,473 (2017: £3,269,920).

8. Loss per share

Basic loss per share

The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following:

As there are no instruments in issue which have a dilutive impact, the dilutive loss per share is equal to the basic loss per share, and thus not disclosed separately.

9. Property, plant and equipment

10. Intangible assets

Intangible assets consist solely of separately identifiable prospecting and exploration assets acquired either through business combinations or through separate asset acquisitions. These intangible assets are recognised at the respective fair values of the underlying asset acquired, or where the fair value of the underlying asset acquired is not readily available, the fair value of the consideration.

The following reconciliation serves to summarise the composition of intangible prospecting assets as at period end:

Intangible assets are not amortised, due to the indefinite useful life which is attached to the underlying prospecting rights and/or intellectual property acquired, until such time that active mining operations commence, which will result in the intangible asset being amortised over the useful life of the relevant mining licences.

Intangible assets with an indefinite useful life are assessed for impairment on an annual basis, against the prospective fair value of the intangible asset. The valuation of intangible assets with an indefinite useful life is reassessed on an annual basis through valuation techniques applicable to the nature of the intangible assets.

One or more of the following facts or circumstances indicate that an entity should test exploration and evaluation assets for impairment:

· the period for which the entity has the right to explore the asset has expired during the period or will expire in the foreseeable future;

· substantial expenditure on the asset in future is neither planned nor budgeted;

· exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and

· sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

In assessing whether a write-down is required in the carrying value of a potentially impaired intangible asset, the asset's carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. The valuation techniques applicable to the valuation of the abovementioned intangible assets comprise a combination of fair market values, discounted cash flow projections and historic transaction prices.

The following key assumptions influence the measurement of the intangible assets' recoverable amounts, based on the value in use calculations performed:

• currency fluctuations and exchange movements applicable to model;

• commodity prices related to ore reserve and forward looking statements;

• expected growth rates in respect of production capacity;

• cost of capital related to funding requirements;

• applicable discounts rates, inflation and taxation implications;

• future operating expenditure for extraction and mining of measured mineral resources; and

• co-operation of key project partners going forward.

Through review of the project specific financial, operational, market and economic indicators applicable to the above intangible assets, as well as consideration of the various elements which contribute toward the indication of impairment of exploration and evaluation assets, a partial impairment of the Lake Victoria Gold intangible asset was identified, as detailed in the latter part of this note. A summary of the assessment performed for each of the intangible assets are detailed below.

Mbeya Coal to Power Project

The Group's flagship exploration/prospecting asset remains its Mbeya Coal to Power Project situated in the Mbeya region of Tanzania, which comprises the Mbeya Coal Mine, a potential 1.5Mt p/a mining operation, and the Mbeya Power Plant, a planned 300MW mine-mouth thermal power station. The Mbeya Coal Mine has a defined 120.8 Mt NI 43-101 thermal coal resource.

A Definitive Feasibility Study has been conducted on the project which underpinned its value and confirmed an initial rate of return of 69.2%. The 300MW mouth-of-mine thermal power station has long term scalability with the potential to become a 1000MW plant. The completed full Power Feasibility Study highlighted an annual power output target of 1.8GW based on annual average coal consumption of 1.5Mt.

An Integrated Bankable Feasibility Study report for the entire project indicated total potential revenues of US$ 7.5-8.5 billion over an initial 25-year mine life, post-tax equity IRR between 21-22%, debt pay-back period of 11-12 years and a construction period of 36 months.

During the 2018 financial period, the Group continued to pursue various avenues in order to securing a formal binding Power-Purchase Agreement with the Tanzania Electricity Supply Company ("TANESCO"). Subsequent to the completion of a compulsory tender process through TANESCO on the development of the Mbeya Coal to Power Project, the Group was informed that its bid to secure a Power-Purchase Agreement was unsuccessful.

Further engagement with TANESCO has subsequently culminated in the receipt of a formal notice from TANESCO inviting the Group it to develop the Mbeya Coal to Power Project for the export market and thereby enabling the Company to engage with the African Power Pools regarding potential off-take agreements.

As at year end, taking into account the various aspects listed above, the Group concluded that none of the impairment indicators had been met in relation to the Mbeya Coal assets.

Lake Victoria Project

During the year, the Group (through a 55.5% shareholding (as at 31 December 2018) owned in AIM-listed subsidiary Katoro Gold plc) completed all technical aspects of the pre-feasibility study ("PFS"). However, due to changes in the Tanzanian mining legislation and associated mining regulations the Group suspended completion of the other elements of the PFS to conduct further assessments to determine the extent to which the new legislation and regulations could impact the viability of the project.

Having completed this assessment, the Group concluded that there was still an upside in exploration and development potential for the further development of the project, however the immediate benefit to the Group would be through development of more advanced projects.

As at year end, taking into consideration the decision to suspend temporarily the further exploration of the Lake Victoria Project, the Group re-assessed the fair value of intangible assets with an indefinite useful life utilising an open market valuation based on offers received on the specific resource, concluding that there exists a potential impairment as the fair value of these intangible assets does not exceed the carrying value.

Thus, as at year end, an impairment amounting to £912,892 was recognised, in relation to the Lake Victoria Project.

Mabesekwa Coal Independent Power Project

On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project, located in Botswana. The project comprises early stage development of a coal resource with the aim of developing a coal mine and associated thermal power plant. This acquisition was in line with the Group's strategy of positioning itself as a strategic regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania.

As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited ("Sechaba"). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project and were granted the right to have its managing director (holding the role at the date of acquisition) gain a seat on Kibo's board of directors (no Sechaba representative currently sits on the Kibo board with Mr Mashale Phumaphi's resignation). The intangible asset was recognised at the fair value of the consideration paid, which emanates from the fair value of the equity instruments issued as at transaction date, being £9,376,312.

The Mabesekwa Coal Independent Power Project is located approximately 40km east of the village of Tonata and approximately 50km southwest of Francistown, Botswana's second largest city. Certain aspects of the Project have been advanced previously by Sechaba Natural Resources Limited ("Sechaba"), including water and land use permits and environmental certification. Mabesekwa consists of a 300Mt subset of a coal deposit which contained an insitu resource of approximately 777Mt at the time of the Kibo acquisition (the balance of which the MCIPP holding company does not have any interest in).

A pre-feasibility study on a coal mine and a scoping study on a coal fired thermal power plant has been completed. Kibo is in possession of a Competent Persons Report on the project, which includes a SAMREC-compliant Maiden Resource Statement on the excised 300 Mt portion of the Mabesekwa coal deposit.

Kibo has furthermore, submitted a formal full mining right application to the Botswana's Department of Mines.

As at year end, taking into account the progress made in relation to the Mabesekwa Coal Independent Power Project since acquisition, the Group concluded that none of the impairment indicators had been met in relation to the Mabesekwa Coal assets.

11. Acquisition and Disposal of interests in other entities

Mabesekwa Coal Independent Power Project

On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project, located in Botswana. This acquisition was in line with the Group's strategy of positioning itself as a strategic regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania.

As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited ("Sechaba"). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project and were granted the right to have its managing director (holding the role at the date of acquisition) gain a seat on Kibo's board of directors (no Sechaba representative currently sits on the Kibo board with Mr Mashale Phumaphi's resignation). The intangible asset was recognised at the fair value of the consideration paid, which emanates from the fair value of the equity instruments issued as at transaction date, being £9,376,312.

MAST Energy Development Limited

The Group acquired a 60% equity interest in MAST Energy Development Limited for £300,000, settled through the issue of 5,714,286 ordinary shares in Kibo effective on 19 October 2018. The acquisition of MAST Energy Development Limited falls within the ambit of IFRS 3: Business Combinations. The net assets acquired were valued at Nil, with the resultant purchase price being allocated to Goodwill on date of acquisition.

Benga Power Project

Kibo entered into a Joint Venture Agreement with Mozambique energy company Termoeléctrica de Benga S.A. to participate in the further assessment and potential development of the Benga Independent Power Project ('BIPP'). The assets associated with the acquisition were transferred into a newly incorporated entity in which Kibo and Termoeléctrica hold initial participation interests of 65% and 35% respectively, which Kibo obtained for no consideration on commencement. As disclosed in the significant judgement section of the financial results, Kibo is not able to exercise control over the operations of the newly incorporated entity, therefore the investment is recognised as a Joint Venture for financial reporting purposes, which requires the recognition of the participants interest in the net revenue of the Joint Venture's operations.

In order to maintain its initial participation interest Kibo is required to ensure funding of a maximum amount of £1 million towards the completion of a Definitive Feasibility Study.

Kibo Nickel Limited

The Group disposed of its entire interest in Kibo Nickel Ltd and its wholly owned subsidiary, Eagle Exploration Ltd (hereinafter referred to as "Kibo Nickel Group"), to Katoro Gold Plc for the purchase consideration of £200,000, settled through the issue of 15,384,615 ordinary shares in Katoro Gold Plc, effective from 3 December 2018.

The Group retained an indirect controlling equity interest (55.53%) in the Kibo Nickel Group, through its directly held subsidiary, Katoro Gold PLC. As the change in Kibo's equity interest in the Kibo Nickel Group did not result in a loss of control, the transaction was recognised as a transaction with owners in their capacity as owners.

12. Trade and other receivables

The nature of amounts owed by Group undertakings is such that the expected recovery thereof is in excess of one year, and is thus classified as amounts falling due after one year.

The carrying value of current trade and other receivables approximates their fair value.

Amounts owed by Group undertakings represent inter-company loans between the Company and its subsidiaries. They have no fixed repayment terms, bear no interest and are unsecured, resulting in the recognition of the receivable as a non-current asset due to settlement being extended beyond 12 months.

During the period the Board resolved to capitalise inter-company loans and convert the respective loans owed by subsidiaries into share capital in order to adhere to international transfer pricing regulation and this resulted in a corresponding decrease in amounts owed by group undertakings.

Trade and other receivables pledged as security

None of the above stated trade and other receivables were pledged as security at period end. Credit quality of trade and other receivables that are neither past due nor impaired can be assessed by reference to historical repayment trends of the individual debtors.

13. Cash

Cash has not been ceded, or placed as encumbrance toward any liabilities as at year end.

14. Share capital - Group and Company

All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right to transfer ownership of their shares.

The Deferred Shares will not entitle holders to receive notice of, or attend or vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return on capital on a winding up other than the nominal amount paid following a substantial distribution to the holders of the Ordinary Shares in the Company. Accordingly, for all practical purposes the

Deferred Shares will be valueless, and it is the board's intention at the appropriate time, to purchase the Deferred Shares at an aggregate consideration of €1.

15. Control reserve

The transaction with Opera Investments PLC in 2017 represented a disposal without loss of control. Under IFRS this constitutes a transaction with equity holders and as such is recognised through equity as opposed to recognising goodwill. The control reserve represents the difference between the purchase consideration and the book value of the net assets and liabilities acquired in the transaction with Opera Investments.

16. Share based payments

Share based payment reserve

The following reconciliation serves to summarise the composition of the share based payment reserve as at period end:

Share options and warrants in the current year relate to 1,208,333 ordinary shares in Katoro Gold PLC Group, issued to directors of Katoro Gold Plc. The fair value of the warrants issued have been determined using the Black-Scholes option pricing model. The fair value at the date of the grant per warrant was £0.06.

Expenses settled through the issue of shares

The Group recognised the following expense related to equity settled share based payment transactions:

* The Group issued 779,878 (2017: 277,768) ordinary shares of €0.010 (2017: €0.015) par value each in the capital of the Company to exploration service providers in settlement of invoices for a total amount of £22,616 (2017: £13,194). The shares issued were in respect of invoices for geological and investor relations services by Katoro Gold PLC (2017: Kibo Energy PLC).

The Company recognised the following expense related to equity settled share based payment transactions:

At 31 December 2018 the Company had Nil options and Nil warrants outstanding. The previously issued Options and Warrants, as listed below, had all expired, with the corresponding share based payment charge being reclassified through equity in the Group & Company Statement of Changes in Equity.

Reconciliation of the quantity of share options in issue:

Reconciliation of the quantity of warrants in issue:

17. Translation reserves

The foreign exchange reserve relates to the foreign exchange effect of the retranslation of the Group's overseas subsidiaries on consolidation into the Group's financial statements, taking into account the financing provided to subsidiary operations is seen as part of the Group's net investment in subsidiaries.

18. Non-controlling interest

The non-controlling interest carried forward relates to the 2.5% interest held by Sanderson Capital Partners Limited in the Mbeya Coal Development Limited and its subsidiaries and 44.47% equity in Katoro Gold PLC and its subsidiaries.

The summarised financial information for significant subsidiaries in which the non-controlling interest has an influence, namely the Katoro Gold Group as at ended 31 December 2018, is presented below: