Last checked at 19 Dec 2016 07:00
19 December 2016
Kennedy Ventures plc
Preliminary Results for the Year Ended 30 June 2016
Kennedy Ventures plc ("Kennedy Ventures" or the "Company"), the AIM quoted investment company, who through its stake in African Tantalum (Pty) Limited ("Aftan", together the "Group") has an interest in the Tantalite Valley Mine ("TVM") in Namibia, is pleased to announce its audited preliminary results for the full year ended 30 June 2016 ("the Period").
Highlights
Operational
· Long term Offtake agreement signed by Aftan with a major leading manufacturer of electronic components, for the full production of tantalite from the TVM.
· Aftan obtained full explosives magazine licence to enable it to take delivery of, and store, explosives at the TVM.
· Recommissioned the TVM processing plant within budget, processing 10,500 tonnes per month and delivering its first shipment to its offtake partner.
Financial
At 30 June 2016:
· The group's loss for the year amounted to £788,000.
· Cash at bank amounted to £60,000 and, with the investment in TVM, development costs and property plant & equipment amounted to £674,000 and £466,000 respectively.
· Overall Net Assets at 30 June 2016 amounted to £1,405,000, up from the 30 June 2015 balance of £646,000.
Post Period
· Kennedy Ventures successfully raised £2 million gross (July 2016) through a placing with the net proceeds being invested in Aftan, to go towards upgrading and expanding the TVM plant, in addition to opening up the lepidolite orebody, which has exciting lithium potential.
· Post upgrade, Aftan resumed production, with full production capacity expected to be reached in Q2 2017. The upgrade of plant equipment and reorganisation of modules at the Homestead deposit of the TVM has been completed, which will result in a higher recovery rate of fine tantalite.
· Final stage of Aftan's upgrade programme reached, with a milling circuit forecast to be installed in December 2016.
· In November 2016, first shipment post upgrade containing 1.6 tonnes of tantalite concentrate was delivered to Aftan's long-term offtake partner. Deliveries are scheduled to occur twice per month following the installation of the final items of capital equipment that are currently being commissioned. TVM's lithium potential continues to be explored with both geological and metallurgical test studies being conducted, with entrance into the lithium market a strong possibility in the medium term.
· TVM's increased mining face availability has allowed for flexibility in ore sourcing and consistent grade selection for higher grade feed to the plant.
· Aftan's upgraded plant is expected to consistently deliver improved recoveries and allows for re-processing of all tailings and micaceous ores.
Outlook
· We expect throughput rate at the TVM of 15,000 tonnes per month in Q2 2017.
· Aftan is expected to be cash flow positive for 2017, generating a healthy margin from Q2 2017 upon reaching full production.
· JORC compliant resource report for the lepidolite deposit is expected in the first half of next year.
· Opportunity for Aftan to enter lithium market through processing of lithium bearing micaceous ore.
Caroline McLeod, Director and Country Representative for Kennedy and Aftan, said:
"With Kennedy's investment Aftan has successfully recommissioned TVM and as a result gained a better understanding of the ore body and the plant's processing capabilities. The result was the fast tracking of the plant expansion and upgrade to enable the efficient and material extraction of fine tantalite from the ore. Post Period, Aftan has delivered the upgrade on budget and schedule and it is now on the cusp of being cash flow positive, producing at significantly higher production levels.
With stable production at the higher rate anticipated from Q2 next year and with guaranteed payment of goods through our offtake partner, we can now look to the exciting lepidolite deposit where lithium potential exists. Aftan anticipates producing a JORC resource report during the first half of next year on this deposit and anticipates being able to process these lithium bearing ores during next year, producing lithium-rich concentrate.
Kennedy Ventures, through its investment in Aftan, has taken large steps forward during the Period and Aftan will very soon represent a cash generative business. We see exciting upside potential both near TVM and regionally where we see significant opportunities for further investments. We look forward to further crystallising and growing the value of our investments."
Posting of accounts and notice of AGM
The Report and Accounts for the period ended 30 June 2016 will shortly be available on the Company's website and will be sent to registered shareholders by post shortly together with notice of the Group's AGM.
For further information on the Company, visit: www.kvplc.com:
Kennedy Ventures plc | |
Peter Hibberd (CEO), c/o Camarco | Tel: +44 (0)203 757 4983 |
Grant Thornton UK LLP (Nominated Adviser) Colin Aaronson Richard Tonthat Daniel Bush | Tel: +44 (0)20 7383 5100
|
Shore Capital (Broker) Mark Percy / Toby Gibbs (Corporate Finance) Jerry Keen (Corporate Broking) | Tel: +44 (0) 207 408 4090 |
Camarco (PR) Gordon Poole / Billy Clegg | Tel: +44 (0) 203 757 4980 |
CHAIRMAN'S STATEMENT
YEAR TO 30 June 2016
The last twelve months have seen our African investment make significant progress, achieving commercial production levels of tantalum, a rare and valuable metal used in the production of electronic components and alloys, whilst unearthing an opportunity to diversify into the lucrative lithium market.
Since Kennedy Ventures' investment in Afrcan Tantalum (Pty) Limited ("Aftan") in 2015, our main aim has been to facilitate the re-opening of the Tantalite Valley Mine ("TVM") and recommission the processing plant in order to extract the inherent and significant value from the TVM and surrounding ore bodies. The Company is delighted to say that Aftan's development programme has remained within budget, on schedule, and has now reached its final stage, with the installation of a milling circuit forecast to complete in December 2016.
Upon its completion, the TVM is expected to be cash flow positive and have an increased recovery rate of fine tantalite. In November 2016 and on schedule, Aftan delivered its first shipment containing 1.6 tons of tantalite concentrate under an agreement with its long-term offtake partner, a leading manufacturer of electronic components. This agreement ensures Aftan receives security of payment and a sustainable source of income going forward.
In July 2016, we successfully raised £2.0 million through the issue of 66,666,665 new ordinary shares at 3p per share, with the proceeds invested in Aftan to allow it to upgrade and expand its current plant at the TVM, in addition to opening up the lepidolite orebody, which through its association with tantalite, has exciting lithium potential.
Aftan is in the process of assessing the potential value of the lepidolite lithium deposit by conducting both geological and metallurgical test studies, which are advancing in line with expectations. Its plant upgrade programme is scheduled to complete in Q1 2017 with the installation of an additional flotation circuit. This final step will allow for the removal of mica to create a lithium-rich concentrate, which may enable the Group to become the first and only AIM quoted company with investments in lithium producing operations.
The strong progress of Aftan's plant upgrade programme has enabled the production of Tantalum to resume. We forecast that production will ramp up to full capacity in Q2 2017 and achieve the targeted throughput rate of 15,000 tonnes per month and 15 tonnes of tantalite concentrate per month with improved ore sourcing and grades.
Tantalite is predominantly used in tantalum capacitors, a key component required by a wide range of electronic equipment and mobile devices, resulting in high, sustained levels of demand for the mineral. Additionally, Tantalum's chemical inertness and high resistance to corrosion allows it to be used as a minor component in alloys.
We remain fully aware that tantalum is a conflict mineral and we are dedicated to ensuring that all tantalum produced by Aftan is conflict-free. TVM, located in Southern Namibia near Warmbad in the Karas District, represents a fully traceable source of tantalum. Aftan has established good relationships with the local community which provides many of the workforce. It has also provided educational assistance and will seek to build up an appropriate CSR programme. Caroline McLeod plays a key role in this.
Financials
The Company recorded a loss before tax of £788,000, compared to £219,000 in 2015, and had cash balances of £60,000 at the end of the period. The Group continues to maintain operations on a low cash cost basis and administrative expenses for the year of £788,000 included a share based payment charge of £197,000. The Company does not plan to pay a dividend for the twelve months to 30 June 2016.
Board and management team
The Group has continued to strengthen its management team through the addition of Renier Swieger as General Manager of Operations for Aftan. Renier is an experienced engineer and project manager with a history of successfully delivering mining projects on time and in budget. In addition to his sector experience, Renier, a Namibian citizen, has vast regional expertise having worked across Africa in managerial roles for MDM Engineering, Anglo Gold Ashanti Ltd and Manhattan Corporation.
Outlook
Aftan is close to achieving full production levels at the TVM, has already secured a long-term offtake partner, and operates in a stable mining friendly country and commodity market. This provides the Group with confidence that Aftan can become a leading tantalum producer with significant potential to enter the lithium market.
As previously stated, the Group is very excited by the TVM's significant lithium potential, and has already committed the resources to enable further exploration. It is viewed as a viable opportunity to achieve near-term production of lithium concentrate, which would enhance Aftan's growth prospects substantially, particularly when considering the rising demand and value of lithium. Aftan is currently working towards producing a JORC compliant resource report for the lepidolite deposit, expected in the first half of next year.
Moving forward, we will assist Aftan to continue to identify ways to improve its current operations, whilst actively seeking to identify and evaluate prospective complementary investment opportunities that will enhance shareholder value.
Giles Clarke
Chairman
18 December 2016
GROUP INCOME STATEMENT
Year to 30 June 2016
2016 £'000 | 2015 £'000 | |||
Administrative expenses | ||||
Administrative expenses | (788) | (219) | ||
Operating loss and loss before tax | (788) | (219) | ||
Taxation | - | - | ||
Loss for the year and total comprehensive loss | (788) | (219) | ||
Loss attributable to owners of the Company | (676) | (199) | ||
Loss attributable to non-controlling interests | (112) | (20) | ||
(788) | (219) | |||
Earnings per share attributable to owners of the Company | ||||
From continuing operations: | ||||
Basic and diluted(pence) | (0.6)p | (0.3)p | ||
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year to 30 June 2016
2016 £'000 | 2015 £'000 | ||
Loss for the year attributable to owners of the Company | (676) | (199) | |
Other comprehensive income: | |||
Items that may be subsequently reclassified to profit and loss: | |||
Exchange differences on translation of foreign operations | 21 | (4) | |
Other comprehensive income/(expense) for the period | 21 | (4) | |
Total comprehensive loss for the year attributable to equity holders of the parent | (655) | (203) | |
GROUP STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
GROUP | |||
Notes | 2016 £'000 | 2015 £'000 | |
Non-Current assets | |||
Goodwill | 11 | 571 | 442 |
Other intangible assets | 12 | 674 | 10 |
Property, plant and equipment | 13 | 466 | 395 |
Investment in subsidiaries | 14 | - | - |
1,711 | 847 | ||
Current assets | |||
Trade and other receivables | 16 | 70 | 13 |
Cash and cash equivalents | 17 | 60 | 26 |
130 | 39 | ||
Current liabilities | |||
Trade and other payables | 18 | 286 | 98 |
Short term borrowings | 19 | 150 | 142 |
436 | 240 | ||
Net assets | 1,405 | 646 | |
Equity | |||
Share capital | 20 | 1,084 | 763 |
Share premium account | 20 | 9,125 | 7,849 |
Capital redemption reserve | 2,077 | 2,077 | |
Currency translation reserve | 17 | (4) | |
Retained earnings | (10,773) | (10,182) | |
Equity attributable to owners of the Company | 1,530 | 503 | |
Non-controlling interests | (125) | 143 | |
Total equity | 1,405 | 646 | |
These financial statements were approved by the Board of Directors on 18 December 2016.
Signed on behalf of the Board by:
Nick Harrison Director | Giles Clarke Director |
Company number: 005697574
GROUP STATEMENT OF CHANGES IN EQUITY
Year to 30 June 2016
Share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Currency translation reserve £'000 | Retained earnings £'000 | Equity shareholders' funds £'000 | Non-controlling interests £'000 | Total £'000 | |
Balance at 1 July 2014 | 711 | 7,673 | 2,077 | - | (9,983) | 478 | - | 478 |
Comprehensive income Loss for the year | - | - | - | - | (199) | (199) | (20) | (219) |
Other comprehensive income | - | - | - | (4) | - | (4) | - | (4) |
Total comprehensive income | - | - | - | (4) | (199) | (203) | (20) | (223) |
Issue of share capital | 52 | 176 | - | - | - | 228 | - | 228 |
Acquisition of subsidiary undertakings | - | - | - | - | - | - | 163 | 163 |
|
| |||||||
Balance at 30 June 2015 | 763 | 7,849 | 2,077 | (4) | (10,182) | 503 | 143 | 646 |
Comprehensive income Loss for the year | - | - | - | - | (676) | (676) | (112) | (788) |
Other comprehensive income | - | - | - | 21 | - | 21 | - | 21 |
Total comprehensive income | - | 21 | (676) | (655) | (112) | (767) | ||
Issue of share capital | 321 | 1,276 | - | - | - | 1,597 | - | 1,597 |
Acquisition of non-controlling interests | - | - | - | - | - | - | (156) | (156) |
Share based payment expense | - | - | - | - | 85 | 85 | - | 85 |
Balance at 30 June 2016 | 1,084 | 9,125 | 2,077 | 17 | (10,773) | 1,530 | (125) | 1,405 |
GROUP STATEMENT OF CASH FLOWS
Year to 30 June 2016
GROUP | |||
2016 | 2015 | ||
£'000 | £'000 | ||
OPERATING ACTIVITIES | |||
Net cash used in operating activities | (423) | (186) | |
INVESTING ACTIVITIES | |||
Purchases of property, plant and equipment | (88) | - | |
Development costs | (664) | - | |
Advances to subsidiary undertakings | - | - | |
Acquisition of non-controlling interests | (336) | - | |
Acquisition of subsidiary undertakings | - | (464) | |
Net cash used in investing activities | (1,088) | (464) | |
FINANCING ACTIVITIES | |||
Net proceeds from share issues | 1,365 | 7 | |
Loans from associates | 108 | 142 | |
Net cash from financing activities | 1,473 | 149 | |
Net (decrease)/increase in cash and cash equivalents | (38) | (501) | |
Exchange rate translation adjustment | 72 | (4) | |
Cash and cash equivalents at beginning of year | 26 | 531 | |
Cash and cash equivalents at end of year | 60 | 26 | |
NOTES TO THE ANNOUNCEMENT
Year to 30 June 2016
1 | BASIS OF PREPARATION |
The summary accounts do not constitute statutory accounts as defined in section 435 of the Companies Act 2006, but has been extracted from the statutory accounts for the period ended 30 June 2016 on which an unqualified audit report has been issued. The statutory financial statements for the period ended 30 June 2016 were approved by Directors on 18 December 2016, but have not yet been delivered to the Registrar of Companies.
The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting Standards ("IFRS") including standards and interpretations issued by both the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretation Committee ("IFRIC") as adopted and endorsed by the European Union ("EU"), further to IAS Regulation (EC 1606/2002).
The consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of financial instruments. Cost is based on the fair values of the consideration given in exchange for assets.
The Group's consolidated financial statements incorporate the financial statements of Kennedy Ventures Plc (the "Company") and entities controlled by the Company (its subsidiaries). Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
In the application of IFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgments made by management in the application of IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustment in the next year are disclosed, where applicable, in the relevant notes to the financial statements. | |
2 | POSTING OF ACCOUNTS |
The Report and Accounts for the period ended 30 June 2016 will shortly be available on the Company's website and will be sent to shareholders by post in due course. | |
3 | RELATED PARTY TRANSACTION |
On 1 June 2015 the Company entered into an agreement with Westleigh Investments Holdings Limited ("WIHL") under which it agreed to pay WIHL for the recharge expenditure in respect of accounting, administration and office accommodation services provided to the Company. Recharges are based on an apportionment of costs and the level of services provided. During the year, WIHL received £48,000 (2015: £12,500) under this agreement.
WIHL is a company in which Giles Clarke and Nick Harrison, both of whom are directors of Kennedy Ventures, hold beneficial interests of 73.28% and 26.72% respectively, and as such this agreement is classified as a related party transaction pursuant to Rule 13 of the AIM Rules for Companies.
The independent directors consider, having consulted with the Company's nominated adviser, that the terms of this transaction are fair and reasonable insofar as its shareholders are concerned. |