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: KBO

Share code on the AIM: KIBO

ISIN: IE00B97C0C31

("Kibo" or "the Group" or "the Company")

Unaudited Interim results for the six months ended 30 June 2020

Dated 22 October 2020

Kibo Energy PLC, the multi-asset, Africa focused, Energy Company, is pleased to announce its unaudited interim results for the 6 month period ended 30 June 2020.

Highlights

· Momentum behind Benga and MED projects maintained despite impact of COVID 19 on field operations:

Benga

o Renewal of MoU with EDM demonstrates Mozambique Government support for Benga

o Terms for negotiation of 200 MW PPA with Baobab Resources signed

o Feasibility of increasing planned generating capacity of Benga up to 400 MW to meeting existing and anticipated demand for off-take agreements (PPAs) in process

MED

o Bordersley commissioning now scheduled for Quarter 1 2021

o Listing and IPO preparation for MED well advanced and scheduled for completion before end year.

o Heads of Terms for acquisition of 9 MW reserve power site signed

· Successful placing raising £1.45 m provides working capital to meet project development goals over the next 6 months.

Chairman's Statement

I am pleased to present our half-year accounts for the 6-month period ending 30 June 2020 and provide a review of our Company's activities during the period.

As you are aware, the global economy continues to be severely impacted by the COVID-19 pandemic. The Company's primary focus during the period was keeping momentum behind the development of our energy projects while putting measures in place to mitigate risk to the health and welfare of our staff and contractors. These were accomplished within the scope of our business continuity programme designed in response to the pandemic and commencing from the end March 2020. This programme, which is continuing, has ensured that all our critical business processes and obligations as a publicly listed company continue to be met during 2020, project development work continues and risks to the health and welfare of our management, staff and service providers from the pandemic is reduced.

Unavoidably, COVID 19 has had an impact on field operations and we are experiencing some delays in meeting our previously announced project development target dates but are working closely with our partners and service providers to manage these delays.

Operations

General

During the first half of 2020, the Company focused mainly on advancing our Benga and Mast Energy projects where we believe visibility to early production and revenue generation is most clearly demonstrated. These two projects, located in Mozambique and UK respectively, though different in scale, are ideally positioned to help address the differing energy challenges in both countries. Mozambique, a developing country, has a requirement to ramp up and diversify its electricity production to enable its socio-economic objectives and our Benga Power Plant Project (Benga Project) is being well received and supported by Government as an important part of this plan. Mast, on the other hand, is exploiting the opportunity created by the UK's rapid transition to renewable energy by providing back-up flexible reserve generation capacity to renewable power, particularly wind. There are several revenue generating opportunities arising on a reserve power installation which extends beyond the base power tariff; standby charges, revenues from participation in the UK capacity market and increased charges in times of high demand to name a few. The Company is also in an ideal position through its management experience and networks to introduce and develop the reserve power market model in Africa; this is a longer term objective of the Company which can sit alongside its power plant development plans and create additional revenue generating opportunities.

I give a brief summary of the Company's activities below.

Benga Power Plant Project ("Benga")

We signed an updated Memorandum of Understanding ('MoU') with Mozambican state-owned electric utility Electricidade de Mocambique ('EDM') in March; this demonstrated the continuing support of the Mozambique Government to Benga in recognition of the project's importance to its energy strategy. The revised MoU was in recognition of the progress we have shown so far on the project and to facilitate and support the remaining works streams to take it from its current development status to completion. Equally encouraging was the binding term sheet with Baobab Resources we announced in May 2020 to exclusively negotiate a 200 MW power purchase agreement. This shows the growing electricity demand to support large scale industrial projects in the coal rich Tete Province where the Company operates. The power purchase agreement when concluded will provide 100% of the electricity requirement for Baobab's Tete steel and vanadium project one of the key industrial and infrastructural development projects currently underway in Mozambique. I am pleased to say that the growing demand for power off-take opportunities from Benga has encouraged the Company to investigate the feasibility of increasing its generating capacity from originally planned 100 -150 MW (DFS completed) to 300 -350 MW and with contingent planning to increase to 400 MW if required. The Company is currently undertaking studies to assess if this can be done through the construction of two separate power stations or one large integrated facility. The conclusion of a PPA with Baobab which had an original target date of the end of Q3 2020 will now be completed in Q4 2020 and is being done in the context of this increased generating capacity being considered.

We also continued to work collaboratively with partner ESS Tech Inc in planning for the co-location and integration of renewable power and innovative battery storage solutions at the Benga project. We maintain a strong commitment to designing our planned coal to power stations to incorporate the latest emission mitigation technologies and plan for the gradual transition of our coal fired projects to renewable generating source.

Mast Energy Development Projects ("MED")

The Company has made solid progress during the period in moving its initial UK reserve power generation site, Bordersley, towards production while simultaneously planning for the acquisition and funding of additional reserve power sites. Our target is to assemble a portfolio of well-located flexible power sites in the UK for development to meet our near-term objective of 100 MW of flexible power generating capacity. This process is managed by our 60% owned subsidiary MED. Prior to Covid, we anticipated first flexible power generation from Bordersley in the first quarter of 2020; regrettably the impact of the pandemic on the operations of our Milan based EPC contractor, AB Implantii during early part of 2020 and general related travel restriction in Europe has pushed out the new target date for commissioning of the plant to the first quarter of 2021. The Company continues to work closely with all its contactors and partners which, as well as AB Impantii, includes Clarke Energy, Encora Energy Limited, Satkraft Markets GmbH and the relevant UK utility authorities. We thank all concerned for their cooperation and flexibility in accommodating this scheduling delay and look forward to having Bordersley up and running as early as possible next year.

The delay with field work on Bordersley has afforded management more time to pursue additional business development opportunities in the UK reserve power market. The recent signing (September 2020) of terms for the acquisition of a 9 MW power plant at an advanced stage of development is the first outcome from this acquisition trail and we are confident that we can rapidly build on this through further acquisitions over the next twelve months. In this regard, we continue to work closely with Balance Power projects through our existing agreement and with other partners in sourcing and evaluating flexible power sites in accordance with strict economic criteria. I am also pleased to report that we have carefully considered the optimum funding structure to enable completion of Bordersley and the acquisition and development of additional sites. We explored several options with various potential energy investment institutions and concluded that our business development targets could be best met through an IPO and listing of MED (or holding company thereof) on the standard market of the London Stock Exchange which we announced in June. We have now completed the corporate structuring and agreements to facilitate this and are at an advanced stage with IPO preparations. We anticipate listing MED on in London before the end of this year.

Other Projects

Understandably the on-going Covid situation and the related global economic knock on effects has impacted our ability to progress our MCPP (Tanzania) and MCIPP (Botswana) projects significantly during 2020 but these projects remain in good standing and we are carefully considering how we can now best extract value from them.

Corporate

During the period, we continued exploring funding options for the Company which concluded with us securing a £1 million credit facility in the form of a convertible loan note. This facility announced in June, was supported by some of our larger shareholders and we availed of the first drawdown tranche of £300,000 in August. Subsequently, we have implemented a broker sponsored placing with ETX Capital Limited in September for total proceeds of £1,450,000 and cancelled the convertible loan note by mutual consent with the lenders. The placing proceeds should provide sufficient working capital to allow us reach key development milestones, particularly for the Benga and MED projects over the next twelve months.

During 2020 to date, we have issued an additional 897,500,444 shares at share prices ranging from £0.002 to £0.0525 in placing shares, settlement shares with contractors & service providers, conversion & fee shares associated with the convertible loan note and costs and vendor shares associated with acquisition of the Bordersley reserve power project.

I would also like to mention our investment in Katoro Gold PLC (AIM: KAT/www.katorogold.com) where Kibo's holding currently stands at 29.63%. Katoro is pursuing battery metal (Tanzania) and gold development (South Africa) opportunities and is currently very active in the field on both projects. These exploration/mine development projects, by their nature carry risk but also considerable upside should they prove successful. We are very pleased with Katoro's results and progress to date on both projects and look forward to developments over the next 6 months.

Conclusion 

Following the disappointment in Tanzania with not being able to advance the MCPP development as quickly as we planned, I believe we have now steadied the ship and are well positioned to benefit from our current flag ship projects, Benga and MED in particular in the short term. I look forward to progress on the exciting plans for these projects over the next year

In conclusion I wish to thank our CEO, Louis Coetzee, and his management team for their continued hard work in steering Kibo through this difficult period of a global pandemic while keeping momentum behind our projects.

Christian Schaffalitzky

Chairman

Unaudited Interim Results for the six months ended 30 June 2020

Unaudited Condensed Consolidated Interim Statement of Comprehensive Income

For the six months ended 30 June 2020

 Unaudited Condensed Consolidated Interim Statement of Financial Position

As at 30 June 2020

Unaudited Condensed Interim Consolidated Statement of Changes in Equity

Unaudited Condensed Consolidated Interim Statement of Cash Flow

For the six months ended 30 June 2020

Notes to the unaudited condensed consolidated interim financial statements

For the six months ended 30 June 2020

1. General information

Kibo Energy PLC is a public company incorporated in Ireland. The condensed consolidated interim financial results consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Company's shares are listed on the AIM Market ("AIM") of the London Stock Exchange and the Alternative Exchange ("AltX") of the Johannesburg Stock Exchange ("JSE") Limited. The principal activities of the Company and its subsidiaries are related to the development of energy projects in Mozambique, Botswana, Tanzania and the United Kingdom.

2. Statement of Compliance and Basis of Preparation

The unaudited condensed consolidated interim financial results are for the six months ended 30 June 2020, and have been prepared using the same accounting policies as those applied by the Group in its December 2019 consolidated annual financial statements, which are in accordance with the framework concepts and the recognition and measurement criteria of the International Financial Reporting Standards and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU ("IFRS"), including the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited, the AIM rules of the London Stock Exchange and the Irish Companies Act 2015.

These condensed consolidated interim financial statements do not include all the notes presented in a complete set of consolidated annual financial statements, as only selected explanatory notes are included to explain key events and transactions that are significant to obtaining an understanding of the changes throughout the financial period, accordingly the report must be read in conjunction with the annual report for the year ended 31 December 2019.

The comparative amounts in the consolidated financial results include extracts from the consolidated annual financial statements for the period ended 31 December 2019.

These extracts do not constitute statutory accounts in accordance with the Irish Companies Acts 2015. All monetary information is presented in the presentation currency of the Company being Pound Sterling. The Group's principal accounting policies and assumptions have been applied consistently over the current and prior comparative financial period.

3. Use of estimates and judgements

Preparing the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2019.

4. Loss per share

Basic, dilutive and headline loss per share for the six months ended 30 June 2020 are as follows:

Headline earnings per share (HEPS) is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as required by Circular 1/2019 issued by the South African Institute of Chartered Accountants (SAICA).

5. Called up share capital and share premium

Authorised ordinary share capital of the company is 2,000,000,000 ordinary shares of €0.001 each.

Deferred shares of the company is 1,000,000,000 of €0.014 and 3,000,000,000 of €0.009 respectively.

Detail of issued capital is as follows:

The company issued the following ordinary shares during the period, with regard to key transactions:

- 6,996,110 new ordinary shares were issued on 30 March 2020 at £0.0045 per share. The shares were issued in payment of various service invoices to certain providers of professional and technical consulting services;

- 8,000,000 new ordinary shares were issued on 30 March 2020 at £0.0525 per share to St'Anderton on Vaal Limited ('St'Anderton') In light of the progress to the agreement for Kibo to consolidate full ownership of Bordersley by acquiring all St' Anderton direct and indirect interests in Bordersley; and

- 22,218,000 new ordinary shares were issued on 18 June 2020 at £0.002 per share. The shares were issued in payment of various service invoices to certain providers of professional and technical consulting services.

6. 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:

7. Intangible assets

Intangible assets are not amortised, due to the indefinite useful life which is attached to the underlying prospecting rights, 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.

As at reporting period end, taking into account the various applicable aspects, the Group concluded that none of the impairment indicators had been met in relation to the Mbeya Coal to Power Project or the Bordersley Power Project.

8. Investment in associate

The value of the equity interest in Kibo Energy Botswana (Pty) Ltd was determined based on the fair value of the proportionate equity interest retained in the in the enlarged resource following the restructuring in the prior period.

As at reporting period end, taking into account the various applicable aspects, the Group concluded that none of the impairment indicators had been met in relation to the Mabesekwa Coal Independent Power Plant project.

9. Other financial assets

Terms associated with the receivable from Lake Victoria Gold Limited

· US$100,000 upon the satisfaction of the conditions precedent

· US$100,000 upon registration of the Sale Shares in the name of LVG

· US$100,000 on the date 4 months from the date of the Agreement

· US$200,000 on the date 9 months from the date of the Agreement

· US$500,000 upon the earlier of the commissioning of the first producing mine of LVG in the United Republic of Tanzania or the date 24 months from the date of the Agreement.

Terms associated with the receivable from Blyvoor Joint Venture:

· Katoro was required to provide a loan facility in aggregate of £790,000 to the joint venture to fund ongoing development work;

· the loan facility will bear interest at the 12-month London Inter Bank Offered Rate, or its successor;

· the loan facility will be repayable within 12 months after the last third-party creditor participating in the project financing shall have been paid or any earlier date on which the parties may agree.

10. Borrowings

The borrowings relate to the unsecured interest free loan facility from Sanderson Capital Partners Limited which was repayable either through the issue of cash or ordinary shares in the Company.

11. Corporate transactions

Lake Victoria

During the interim period, the Group concluded a final agreement with Lake Victoria Gold Limited ("LVG") covering the disposal of 100% of the equity interest held by subsidiary Katoro Gold Plc in its wholly owned subsidiary, Reef Miners Limited ("Reef"), in the amount of US$1.0 million.

Following the last conditions precedent having been met on 12 June 2020, resulted in the conclusion of the disposal agreement, at which point the assets and corresponding liabilities previously classified as held for sale was derecognised by the Group as part of the loss of control of the subsidiary, with a corresponding increase recognised related to the amount receivable for the disposal.

The major classes of assets and liabilities disposed of are as follows:

12. Financial instruments

The Board of Directors considers that the fair values of financial assets and liabilities approximate their carrying values at each reporting date due to the short term nature thereof, and market related interest rate applied.

13. Unaudited results

These condensed consolidated interim financial results have not been audited or reviewed by the Group's auditors.

14. Dividends

No dividends were declared during the interim period.

15. Board of Directors

There were no changes to the board of directors during the interim period, or any other committee's composition.

16. Subsequent events

Sloane acquires 100% interest in Mast Energy

Sloane has acquired from St Anderton on Vaal Limited ('St Anderton') the remaining 40% interest in Mast Energy Developments Ltd ('Mast Energy') in exchange for 36,917,076 new Ordinary Shares in Sloane. Accordingly, Sloane will at completion of the share exchange transaction own a 100% interest in Mast Energy alongside its 100% interest in Bordersley Power Ltd as it seeks to develop a portfolio of flexible power plants in the UK. St Anderton will at completion hold 26.11% of Sloane, with Kibo holding the remaining 73.89%. Completion shall take place upon the satisfaction or waiver of the following conditions precedent:

- any required approvals or other consents being obtained from the UK Listing Authority and Financial Conduct Authority with regard to the listing of Sloane/MED on the Main Market of the LSE, Standard segment; and

- any approvals or other consents required by law or any regulatory authority.

Kibo's UK Energy Subsidiary to Seek Admission to the Standard List of the London Stock Exchange

In July 2020, the Group announced that it was seeking admission for its 100% owned UK subsidiary Sloane Developments Ltd ('Sloane'), which will be renamed Mast Energy Developments PLC ('MED'), to the Standard List of the London Stock Exchange plc ("London Stock Exchange" or "LSE") ('Admission').

The admission will be accompanied by an IPO which will seek to raise sufficient funds to develop a portfolio of flexible power plants in the UK to become a multi-asset operator in the rapidly growing Reserve Power market.

MED will hold prior to Admission a 100% interest in both Mast Energy Developments Ltd, which will be renamed Mast Energy Limited ('Mast Energy'), and Bordersley Power Limited, which holds the Bordersley project. Following the initial fundraise and Admission, it is intended that Kibo will hold at least 51% of MED.

River Group has been appointed as advisor to manage the Admission and the associated IPO. A prospectus for the Admission and IPO will be published once it has been approved by the Financial Conduct Authority (the 'FCA'). An experienced board and management for MED comprising directors from Kibo, Mast Energy and new appointments will be announced in conjunction with publication of the prospectus.

Extraordinary General Meeting to Approve Increase in Company's Share Capital

As noted on 25 June 2020, the Company has a requirement to increase its authorised share capital in order to meet its fee and warrant issue obligations pursuant to the Facility and to fully avail of the Facility. The EGM was held solely for the purpose of seeking shareholder approval to increase the authorised share capital sufficiently to ensure the Company has enough Ordinary Share headroom to meet these obligations and to provide the ability to consider, and if appropriate, implement additional further funding options in the medium term.

On the 24 August 2020 the Company held an Extraordinary General Meeting, where all resolutions were carried by approximately 95% of proxy votes cast.

Issue of Fee Shares in respect of Convertible Loan Note

The Group has drawn down the first tranche of funding of £300,000 in respect of the funding facility for up to £1 million announced on the 25 June 2020 ("the Facility"). The terms of the Facility require the payment of a drawdown fee of £45,000 and legal due diligence fee of £18,000 (total of £63,000) to be paid to the lenders. Kibo has elected to pay this in Kibo shares in the amount of 28,636,364 new ordinary shares ("Fee Shares") at a nominal share price of £0.0022 (0.22p) which is the calculated 5-day Volume Weighted Average Price from the date on which the Company submitted its draw down request on the 17 July 2020.

Issue of Facility Arrangement Fee and Conversion Shares

Following shareholder approval for the increase in the Company's authorised share capital at its EGM today, it has issued 25,925,925 shares (the "Arrangement Fee Shares") in settlement of the Arrangement Fee of £70,000 as per the terms of the funding facility for up to £1 million announced on the 25 June 2020 (the "Facility").

The Company has also issued an additional 43,750,000 shares (the "Conversion Shares") to certain lenders who have elected to convert funds advanced as part of the first tranche of funding of £300,000 ("Facility Drawdown") in respect of the Facility which Kibo announced it had drawn down on (see RNS of 5 August 2020). The Conversion Shares were issued at a price of £0.0024 each being the 5-day VWAP less 10% at 24 August 2020 representing re-payment by the Company of £105,000 of the £300,000 first tranche Facility Drawdown.

Issue of Conversion Shares

The company issued 19,173,412 shares (the "Conversion Shares") to a lender who has elected to convert funds advanced as part of the first tranche of funding of £300,000 ("Facility Drawdown") as permitted per the terms of the funding facility for up to £1 million announced on the 25 June 2020 (the "Facility"). The Facility Drawdown was announced by the Company on 5 August 2020. The Conversion Shares were issued at a price of £0.002347 each being the 5-day VWAP less 10% at 2 September 2020 representing re-payment by the Company of a further £45,000 of the Facility Drawdown. Together with the conversion shares issued on 24 August 2020, the Company has now converted £150,000 of the Facility Drawdown to Kibo shares.

UK Subsidiary Acquires Production-Ready 9 MW flexible power project

The Company's announced that its 100% UK subsidiary, Sloane Developments Ltd. ('Sloane'), has agreed the Heads of Terms ("HOT") for a Share Purchase Agreement to acquire a 9MW flexible gas power project (the 'Acquisition').

The Acquisition is in line with the Company's strategy to acquire and develop a portfolio of small-scale flexible power generation assets that will help balance out the UK's national grid at critical times.

Settlement and Termination of Convertible Loan Note and Placing

The company has settled all outstanding amounts due under the Convertible Loan Note ("CLN"), announced on 25 June 2020 and that it has reached agreement with the holders of the CLN to terminate the CLN with immediate effect. The Company is further pleased to announce that it has undertaken a successful placing to raise GBP1,450,000 before costs (the "Placing") through the Company's broker ETX Capital, at a placing price of 0.2p per placing share (the "Placing Price"), with 1 warrant attached for every two placing shares, exercisable at 0.4p each over 36 months.

17. Going concern

The Group currently generates no revenue and had net assets of £28,068,612 as at 30 June 2020 (31 December 2019: net assets of £28,297,147). The Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this review and the below, they are confident that the company and the Group will have adequate financial resources to continue in operational existence for the foreseeable future.

Following the proposed capital reorganisation, the company has or has access to sufficient funds to continue the development activities for its various projects. In the event that the company is not able to raise further funding, and before any mitigating actions are taken, the company has sufficient funds for its present working capital requirements for the foreseeable future. The directors though continue to review the Group's options to secure additional funding for its general working capital requirements, alongside its ongoing review of potential acquisition targets and corporate development needs. The directors are confident in this light that such funding will be available, although there is no guarantee as to the terms of such funding or that such funding will be available. In addition, any equity funding may be subject to shareholder approvals in line with legal and regulatory requirements as appropriate. As a result, the directors continue to monitor and manage the company's cash and overheads carefully in the best interests of its shareholders.

Whilst the directors continue to consider it appropriate to prepare the financial statements on a going concern basis, the above constitutes a material uncertainty that the shareholders should be aware of.

18. Commitments and contingencies

There are no material commitments, contingent assets or contingent liabilities as at 30 June 2020.

19. Seasonality of operations

The company's operations are not considered to be seasonal or cyclical. These interim results were therefore not impacted by seasonality or cyclicality.

22 October 2020

**ENDS**

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014 ("MAR").

For further information please visit www.kibo.energy or contact:

Notes

Kibo Energy PLC is a multi-asset, Africa and UK focused, energy company positioned to address the acute power deficit, which is one of the primary impediments to economic development in Sub-Saharan Africa. To this end, it is the Company's objective to become a leading independent power producer in the region.

Kibo is simultaneously developing three similar coal-fuelled power projects: the Mbeya Coal to Power Project ('MCPP') in Tanzania; the Mabesekwa Coal Independent Power Project ('MCIPP') in Botswana; and the Benga Independent Power Project ('BIPP') in Mozambique. By developing these projects in parallel, the Company intends to leverage considerable economies of scale and timing in respect of strategic partnerships, procurement, equipment, human capital, execution capability / capacity and project finance.

Additionally, the Company has a 60% interest in MAST Energy Developments Limited ('MED'), a private UK registered company targeting the development and operation of flexible power plants to service the UK Reserve Power generation market.

Johannesburg

22 October 2020

Corporate and Designated Adviser

River Group