Kalahari Minerals plc / Ticker: KAH / Index: AIM / Sector: Mining &
Exploration
4 June 2010
Kalahari Minerals plc (`Kalahari' or `the Company')
Final Results
Kalahari Minerals plc, the AIM listed resource company, announces
its results for the year ended 31 December 2009.
Overview
- Increased interest in Extract Resources Limited (`Extract'), Kalahari's
primary value driver, which is developing the world-class Husab Uranium
Project (`Husab')
- Rössing South, part of Husab, defined as the highest grade granite-hosted
uranium deposit in Namibia and expected to be one of the top five global
uranium deposits by contained metal and a total resource in excess of 500Mlbs
U3O8
- Cost estimates demonstrate that Rössing South could support a profitable,
long life, low cost, low technical risk uranium mine producing 14.8M lbs U3O8
per year, making it one of the world's largest uranium mines
- Kalahari and Extract have solidified key relationships in Namibia and
assembled a team of high calibre experts in order to advance Rössing South
towards production
- Rationalised corporate structure to realise value of gold, copper and base
metal assets through a joint development agreement with North River Resources
Plc
- Strengthened shareholder register with new strategic investors including
ITOCHU Corporation, the major Japanese trading house with a strong
relationship with the Government of Japan, and APAC Resources Limited, a major
Hong-Kong based investment company
-
- Two capital raisings totalling £37.89 million completed demonstrating strong
investor appetite
Chairman's Statement
We made excellent progress crystallising the value of our interests
in our uranium, gold, copper and base metal assets in Namibia over the past
year, both through operational developments and through the implementation of
key corporate initiatives.
Our interest in Extract Resources Limited (`Extract') remains of
paramount importance to Kalahari as our primary value driver, and we remain
its key, highly active, shareholder with a 40.8%interest (as at 1 June 2010).
Extract has continued its rapid development programme on its flagship project,
Rössing South, which has a current JORC resource of 267Mlb of U3O8 at average
grades of 487ppm and has been defined as the highest grade granite-hosted
uranium deposit in Namibia. Importantly, both Zones 1 and 2 at Rössing South
remain open at depth and strike indicating that the total resource for the
project could exceed 500Mlb of U3O8, placing it amongst the largest Uranium
assets in the world. We remain wholly supportive of Extract's rapid
development schedule for its world-class uranium assets, and look forward to
the next phase of development which will include both a resource upgrade and
the publication of a Definitive Feasibility Study in the coming months.
In order to progress its world-class uranium project to its full
potential, Extract solidified its relationships in Namibia and continued to
build a team of high calibre experts to advance Rössing South towards
production. Kalahari was therefore instrumental in bringing to Extract's Board
two exceptional Namibian nationals, Steve Galloway as Chairman and Inge
Zaamwani-Kamwi as a Non-executive Director. In addition, in October 2009,
Norman Green was appointed as Chief Executive Officer of Swakop Uranium,
Extract's wholly-owned subsidiary. Norman has a huge amount of experience in
the resource sector in southern Africa, and importantly in Namibia, through
his commissioning of a number of mines, such as the Skorpion Zinc mine. In
addition to this, Norman will be based in Namibia on a fulltime basis, which
we see as vitally important in maintaining the strong relationships that we
have developed with the local authorities.
Post period end, Extract appointed Jonathan Leslie as its new Chief
Executive Officer. This appointment marked the culmination of a long process
intended to identify the best person, from an outstanding shortlist of
industry professionals, to drive Extract forward and transform it from a pure
exploration company to a tier one uranium producer. Jonathan has an
exceptional level of experience in the uranium sector, particularly in
marketing and management, stemming from his role as Managing Director of
Rössing Uranium, Rio Tinto's subsidiary, which operates the producing Rössing
Mine. This high profile position, which saw him responsible for overall
marketing of all uranium from the world's largest uranium mine, established
Jonathan as an international expert in the uranium industry and a
well-respected figure in Namibia, with outstanding relationships with the
Namibian government and mining agencies.
Kalahari also instigated key initiatives during the period to
maximise the value of its non-uranium assets. This has been achieved through
the relationship established with North River Resources Plc (`North River'),
aimed at fast tracking our gold, copper and other base metal projects towards
production through a joint development agreement, and in so doing, attributing
tangible value to these highly prospective assets. Under the terms of this
agreement, Kalahari has retained a 44.7% interest (as at 1 June 2010) in North
River and both myself and fellow Kalahari Director Professor Glyn Tonge have
joined the Board of North River to ensure an open dialogue between our two
companies in the future.
Since forming this relationship in November 2009, North River has
implemented an aggressive development programme focussed primarily on
developing the key copper projects and the Namib lead zinc project towards
production, where considerable work was previously carried out by Kalahari.
Corporate Review
The Company continues to focus on strengthening the relationship
between Kalahari and both Extract and North River, as well as our position in
Namibia, which necessitated changes to our Board to align the skills and
experiences of our Directors with our business model. This impetus led to a
number of new appointments at Board level.
Mr. Neil MacLachlan was appointed to the Board of Kalahari in March
2009, and his appointment was specifically designed to further strengthen the
relationship and dialogue between us and Extract, through his position as a
Non-executive Director for both companies. Mr. David de Jongh Weill also
joined as a Non-executive Director, replacing Stephen Galloway, who stepped
down to assume the position of Chairman of Extract. Post period end, Mr.
Richard Lockwood also joined as a Non-executive Director, bringing with him 50
years of experience in institutional investment and extensive experience in
the uranium sector.
In addition to a bolstered corporate team, we have welcomed new
strategic investors to our shareholder register, providing further support to
our already strong institutional backing. Since year end, recent additions to
our shareholder base have included ITOCHU Corporation (`ITOCHU'), a major
Japanese trading house with an established relationship with the Government of
Japan. ITOCHU has taken a circa 15% interest in the Company and appointed a
representative, Mr. Takashi Yasuda, to the Board to ensure the benefits of the
strategic relationship between the two companies is maximised. APAC Resources
Limited (`APAC'), a major Hong-Kong based investment company, has agreed to
acquire circa 7% of Kalahari's issued share capital (4.45% as at 1 June). In
addition to the support that these investments give to our shareholder
register, which also includes Rio Tinto holding a circa 12.5% interest (as at
1 June 2010), both ITOCHU and APAC's involvement with Kalahari gives us
exposure to invaluable relationships and contacts in the Asian resource
sector. We believe that access to this network will be highly beneficial, as
we work together with Extract in developing the world-class Rössing South
project towards production.
Kalahari has a serious and vested long-term interest in Namibia,
and in line with this, the Company listed on the Namibian Stock Exchange
(`NSX') in October 2009. This listing underpins our ongoing commitment to
Namibia and the development of its huge resource potential to the benefit of
all stakeholders.
Extract also listed on the NSX in October 2009, and we remain
highly supportive of Extract's corporate development, including the
Nambianisation of its board and corporate structure. In line with this,
representatives from both Kalahari and Extract, including Jonathan Leslie,
Stephen Galloway and myself, recently met with both the President and Prime
Minister of Namibia, in order to provide an update on Extract's activities in
the country. In particular, we emphasised our joint commitment to Namibia as a
whole and our intention to continue to provide employment and other ancillary
benefits to the Namibian people through Extract's development activities.
Financial Overview
- Annual increase of interest in associate Extract of 0.82% to
40.41% (as at 1 June 2010: 40.78%). The market value of this investment at
balance sheet date is £454.5 million, which has been achieved through
acquiring a shareholding at an average share price of £0.82 (balance sheet
date share value £4.64).
- Acquisition of 44.89% shareholding in the enlarged share capital
of North River as proceeds from the disposal of the entire share capital of
West Africa Gold Exploration (Namibia) (Pty) Limited and Craton Diamonds (Pty)
Limited. The market value of the investment at balance sheet date is £8.3
million.
- Two successful equity capital raisings undertaken during the year
giving rise to net proceeds of £36.17 million.
- On 7 September 2009, the Group raised a further £10 million in
convertible loan notes.
- Post year end, on 4 May 2010, the Group agreed to sell up to
16,000,000 ordinary shares in the Company, generating proceeds of £29,600,000.
Outlook
The corporate initiatives that we have implemented this year have
created a solid platform for future growth, maximising the full potential of
our significant uranium, gold, copper and other base metal interests in
Namibia. We believe we have assembled a strong, supportive and high quality
shareholder register, and I look forward to working with our key strategic
investors over the coming year, realising the considerable value of our
interests for the benefit of all stakeholders.
Development work at Husab and progress on the Rössing South
Definitive Feasibility Study continues at pace, with Kalahari's full support,
and we look forward to the resource upgrade and publication of the study,
which is scheduled for release in the coming months. We believe that these
developments will reiterate the global significance of Rössing South,
confirming its potential to host one of the world's largest uranium mines.
Mark Hohnen
Chairman
1 June 2010
OPERATIONS REPORT
Uranium
ASX 200 listed company Extract, in which Kalahari's subsidiary,
Kalahari Uranium Limited, holds a 40.78% interest (as at 1 June 2010), is
developing world-class uranium assets in Namibia, which Kalahari believes have
the potential to deliver a resource well in excess of 500Mlbs of U3O8. Its
main project, known as the Husab Uranium project (`Husab'), is located in a
prime uranium district flanked by the Rössing Mine (69% Rio Tinto) and the
Langer Heinrich Project (Paladin Resources Ltd). The key deposit within Husab
is Rössing South and this is where current activity is mainly concentrated.
Extract made rapid progress throughout the year, starting 2009 with
the announcement of a maiden resource for Rössing South Zone 2, which brought
the total Husab resource to 292Mlbs U3O8 at a grade of 487ppm. Following this,
Extract announced that preliminary cost estimates indicated that Rössing South
could support a profitable, long-life, low-cost, low technical risk uranium
mine producing 14.8Mlbs U3O8 per year, making it one of the world's largest
uranium mines. Given that Rössing South was only discovered in January 2008,
the Board of Kalahari believes that this expeditious growth is outstanding.
In order to accelerate development work at Rössing South, Extract
has now increased drill rigs on-site from one to nineteen, spending some A$8
million a quarter on drilling. In October 2009, Extract released a targeted
resource at Rössing South of 452-552Mlbs U3O8, and Kalahari believes that
Extract will achieve a figure close to the top end of this range by Q3 2010,
when Kalahari expects a resource upgrade to be achieved by Extract.
Importantly, resource growth is expected to come from various areas including
from the current infill drilling that it being conducted on Zone 1 and 2, in
addition to depth extensions in Zone 1 and 2, southern extensions to Zone 2,
the eastern limb of Zone 2, and at depth between Zone 1 and 2.
Progress on the Rössing South Definitive Feasibility Study
continues to progress well and is expected to confirm the project's potential
to be one of the world's largest uranium mines. The base case mine plan
remains low risk, bulk tonnage, open pit mining, with ore processed through a
conventional agitated tank leach plant. Publication of the Rössing South
Definitive Feasibility Study is expected by Q4 2010, a slightly later
timescale than originally anticipated, due to the fact that the resource
continues to grow in size, which increases the time required by Extract to
better define the ore body, and in particular to identify the high grade
resource. This approach by Extract will ensure that an optimum development
plan can be determined, to maximise the true potential of this outstanding
uranium project.
Gold, Copper and Base Metal
In November 2009, Kalahari entered into an agreement with North
River Resources plc whereby Kalahari's gold, copper and other base metal
interests would be jointly developed towards production in the medium term.
Kalahari retained a 44.7% stake (as at 1 June 2010) in North River and both
Professor Glyn Tonge and Mark Hohnen have joined its Board as Non-executive
Director and Non-executive Chairman respectively. We are looking forward to
pooling our expertise and fast-tracking these assets towards production, to
the benefit of both North River and Kalahari shareholders alike.
North River has subsequently implemented a development schedule,
focussed primarily on developing the key copper projects and the Namib
lead-zinc project towards production, where considerable work was previously
carried out by Kalahari. Various oxide processing options are being
investigated, including ammonia leaching and oxide flotation, with the aim of
identifying the most economic processing route ahead of scoping studies.
Mining studies are commencing to establish the viability of trucking sulphide
ore to nearby processing plants.
Rehabilitation work has also commenced at the historically
producing Namib lead-zinc underground mine, where the Company intends to
explore for additional polymetallic (lead, zinc, silver, indium) resources.
Work to date has focussed on site establishment and clean-up, after which the
underground workings will be made safe. Once safety equipment and systems are
in place, a full survey of the underground workings will be completed in order
to identify the most attractive route to take the project into production.
Importantly, North River is also in discussions with a metal refining company,
as potential joint venture partner, to enable the underground mine's rapid
exploration and development.
At Ubib, North River is actively negotiating farm access contracts,
following which it is intended to commence extensive field surveys aimed at
delineating drilling targets. Early surveying and historical data has
indicated the licence is prospective primarily for copper, gold and also
uranium. Indeed, the tenement extends to within 30km of Rössing and Rössing
South uranium assets. In view of this, North River has submitted an
application for an amendment to the existing licence to include nuclear fuels,
in order to encompass the uranium mineralisation.
For further information please visit www.kalahari-minerals.com or
contact:
Mark Hohnen Kalahari Minerals Plc Tel: +44 (0) 20 7292 9110
Simon Raggett Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Stuart Faulkner Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Richard Chase Ambrian Partners Ltd Tel: +44 (0) 20 7634 4700
Rory Scott Mirabaud Securities LLP Tel: +44 (0) 20 7878 3360
Hugo de Salis St Brides Media & Finance Tel: +44 (0) 20 7236 1177
Ltd
Susie Callear St Brides Media & Finance Tel: +44 (0) 20 7236 1177
Ltd
Consolidated Statement of Comprehensive Income
For the Year Ended 31 December 2009
2009 2008
Note £ £
restated
Revenue 2 - -
Share based payment charge 6 (1,277,112) (715,910)
Administrative expenses (1,921,948) (1,460,047)
Total administrative expenses (3,199,060) (2,175,957)
_________ _________
OPERATING LOSS (3,199,060) (2,175,957)
Finance Income 5 48,100 317,693
Finance expense 5 (315,068) -
Share of operating loss of associated undertakings 12 (3,124,834) (3,781,380)
Profit on deemed disposal of associated undertakings 12 10,872,218 61,302
_________ _________
PROFIT / (LOSS) BEFORE TAXTION 4,281,356 (5,578,342)
Tax expense 8 - -
_________ _________
PROFIT / (LOSS) FOR THE YEAR FROM CONTINUED OPERATIONS 4,281,356 (5,578,342)
PROFIT / (LOSS) FOR THE YEAR FROM DISCONTINUED OPERATIONS 3 4,707,948 (5,407,757)
_________ _________
PROFIT/ (LOSS) FOR THE YEAR 8,989,304 (10,986,099)
_________ _________
OTHER COMPREHENSIVE INCOME
Exchange gains arising on translation of foreign operations 3,259,732 1,216,487
Share of associates other comprehensive income (3,100,499) (178,932)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF
THE PARENT 9,148,537 9,948,544
_________ _________
EARNINGS PER SHARE
Earnings / (loss) per share attributable to equity holders of the parent 7
Basic pence per share 4.64p (7.29p)
Dilutive pence per share 4.25p -
Earnings / (loss) per share from continuing operations
Basic pence per share 2.37p (3.70p)
Dilutive pence per share 2.10p -
Earnings / (loss) per share from discontinued operations
Basic pence per share 2.43p (3.59p)
Dilutive pence per share 2.15p -
Consolidated Statement of Financial Position
As at 31 December 2009
2009 2008 2007
Note £ £ £
restated restated
NON-CURRENT ASSETS
Intangible assets 10 328 187,599 152,674
Property, plant and equipment 11 273,197 439,255 363,260
Investments in associated undertakings 12 86,396,788 26,818,796 20,636,837
_________ _________ _________
Total non-current assets 86,670,313 27,445,650 21,152,771
_________ _________ _________
CURRENT ASSETS
Other receivables 14 293,670 436,897 399,133
Cash and cash equivalents 15 3,441,948 6,093,505 2,834,224
_________ _________ _________
Total current assets 3,735,618 6,530,402 3,233,357
_________ _________ _________
TOTAL ASSETS 90,405,931 33,976,052 24,386,128
_________ _________ _________
NON-CURRENT LIABILITIES
Borrowings 16 (10,000,000) - -
_______ _________ _________
CURRENT LIABILITIES
Trade and other payables 17 (389,047) (555,004) (124,318)
_______ _________ _________
TOTAL LIABILITIES (10,389,047) (555,004) (124,318)
_________ _________ _________
NET ASSETS 80,016,884 33,421,048 24,261,810
_________ _________ _________
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital 18 2,091,812 1,789,123 1,107,291
Share premium 18 59,819,779 24,311,213 6,834,975
Share option and warrant reserve 3,536,495 1,900,451 950,739
Other reserves (2,854,677) 245,822 424,754
Foreign exchange reserve 5,035,066 1,775,334 558,847
Retained earnings 12,388,409 3,399,105 14,385,204
_________ _________ _________
TOTAL EQUITY 80,016,884 33,421,048 24,261,810
_________ _________ _________
Company Statement of Financial Position
As at 31 December 2009
Restated
2009 2008
Note £ £
NON-CURRENT ASSETS
Property, plant and equipment 11 2,282 23,280
Investments 13 261,677 1,093,837
Other receivables 14 63,281,092 9,487,272
_________ _________
Total non-current assets 63,545,051 10,604,389
_________ _________
CURRENT ASSETS
Other receivables 14 238,147 106,694
Cash and cash equivalents 15 3,416,588 5,769,892
_________ _________
Total current assets 3,654,735 5,876,586
_________ _________
TOTAL ASSETS 67,199,786 16,480,975
_________ _________
NON-CURRENT LIABILITIES
Borrowings 16 (10,000,000) -
_______ _________
CURRENT LIABILITIES
Trade and other payables 17 (386,975) (256,752)
_________ _________
TOTAL LIABILITIES (10,386,975) (256,752)
_________ _________
NET ASSETS 56,812,811 16,224,223
_________ _________
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital 18 2,091,812 1,789,123
Share premium 18 59,819,779 24,311,213
Share option and warrant reserve 3,536,495 1,900,451
Retained losses 18 (8,635,275) (11,776,564)
_________ _________
TOTAL EQUITY 56,812,811 16,224,223
_________ _________
Consolidated Statement of Changes in Equity
For the Year Ended 31 December 2009
Restated Foreign Share option
Share Share Retained exchange & warrant Other
capital premium earnings reserve reserve Reserves Total
£ £ £ £ £ £ £
restated restated restated restated restated
PERIOD FROM
1 JANUARY 2009
TO 31 DECEMBER 2009
As at 1 January 2009 1,789,123 24,311,213 3,399,105 1,775,334 1,900,451 245,822 33,421,048
Total comprehensive
income for the year - - 8,989,304 3,259,732 - (3,100,499) 9,148,537
Share based payment - (358,932) - - 1,636,044 - 1,277,112
Shares issued 302,689 37,787,880 - - - - 38,090,569
Share issue expenses - (1,920,382) - - - - (1,920,382)
As at
31 December 2009 2,091,812 59,819,779 12,388,409 5,035,066 3,536,495 (2,854,677) 80,016,884
PERIOD FROM
1 JANUARY 2008
TO 31 DECEMBER 2008
As at 1 January 2008 1,107,291 6,834,975 5,653,395 546,487 950,739 506,354 15,599,241
Prior year adjustment (note 9) - - 8,731,809 12,360 - (81,600) 8,662,569
As at 1 January
2008 as restated 1,107,291 6,834,975 14,385,204 558,847 950,739 424,754 24,261,810
Total comprehensive
loss for the year: - - (10,986,099) 1,216,487 - (178,932) (9,948,544)
Share based payment - - - - 949,712 - 949,712
Shares issued 681,832 18,447,350 - - - - 19,129,182
Share issued - expenses - (971,112) - - - - (971,112)
As at 31 December 2008
as restated 1,789,123 24,311,213 3,399,105 1,775,334 1,900,451 245,822 33,421,048
Company Statement of Changes in Equity
For the Year Ended 31 December 2009
Share
option
Share Share Retained & warrant
capital premium losses reserve Total
£ £ £ £ £
restated restated restated
PERIOD FROM 1 JANUARY 2009 TO 31 DECEMBER 2009
As at 1 January 2009 1,789,123 24,311,213 (11,776,564) 1,900,451 16,224,223
Total comprehensive income for the year - - 3,141,289 - 3,141,289
Share based payment - (358,932) - 1,636,044 1,277,112
Shares issued 302,689 37,787,880 - - 38,090,569
Share issue expenses - (1,920,382) - - (1,920,382)
As at
31 December 2009 2,091,812 59,819,779 (8,635,275) 3,536,495 56,812,811
PERIOD FROM 1 JANUARY 2008 TO 31 DECEMBER 2008
As at 1 January 2008 1,107,291 6,834,975 (4,958,039) 950,739 3,934,966
Total comprehensive loss for the year - - (6,818,525) - (6,818,525)
Share based payment - - - 949,712 949,712
Shares issued 681,832 18,447,350 - - 19,129,182
Share issue expenses - (971,112) - - (971,112)
As at
31 December 2008 1,789,123 24,311,213 (11,776,564) 1,900,451 16,224,223
Consolidated Statement of Cash Flows
For the Year Ended 31 December 2009
2009 2008
£ £
restated
Cash flows from operating activities
Profit/(loss) for the year 8,989,304 (10,986,099)
Adjustments:
Finance expense/ (income) 266,968 (317,693)
Depreciation charges 48,520 38,332
Amortisation charges 21,881 19,798
Share based payments 1,277,112 949,712
Share of associates losses 3,124,834 3,781,380
Profit on deemed disposal of associate undertaking (10,872,218) (61,302)
Profit from discontinued operations (5,700,088) -
Cashflows from operating activities before changes in working capital and
provisions (2,843,687) (6,575,872)
_________ _________
Movement in working capital
Increase in other receivables (355) (37,764)
(Decrease)/ increase in payables (183,305) 538,606
_________ _________
Cash utilised by working capital (183,660) 500,842
Net cash from operating activities (3,027,347) (6,075,030)
_________ _________
Cash flows from investing activities
Purchase of intangible asset (49,099) (54,723)
Sale/(purchase) of property, plant and equipment 6,425 (114,327)
Investment in associated undertakings (45,661,053) (9,092,280)
Cash disposed of with subsidiaries (138,770) -
Interest received 48,100 317,693
_________ _________
Net cash from investing activities (45,794,397) (8,943,637)
_________ _________
Cash flow from financing activities
Issue of ordinary share capital 38,090,569 19,129,182
Share issue expenses (1,920,382) (971,112)
Convertible loan note 10,000,000 -
_________ _________
Net cash from financing activities 46,170,187 18,158,070
(Decrease)/increase in cash and cash equivalents (2,651,557) 3,139,403
Cash and cash equivalents at beginning of the year 6,093,505 2,834,224
Foreign exchange on cash balance - 198,878
______ ______
Cash and cash equivalents at end of the year 3,441,948 6,093,505
_________ _________
Company Statement of Cash Flows
For the Year Ended 31 December 2009
2009 2008
£ £
Cash flows from operating activities
Operating profit/(loss) for the year 3,141,289 (6,818,525)
Adjustments:
Finance expense 315,067 -
Depreciation charges 112 6,254
Share based payments 1,277,112 949,713
Profit/(loss) on disposal of subsidiaries 832,161 (300,599)
_________ _________
Cash flows from operating activities before changes in working capital and
provisions 5,565,741 (6,163,157)
_________ _________
Movement in working capital
Increase in receivables (131,453) (75,927)
(Decrease)/increase in payables (184,845) 173,079
_________ _________
Cash utilised by operating activities (316,298) 97,152
Net cash from operating activities 5,249,443 (6,066,005)
_________ _________
Cash flows from investing activities
Purchase of property, plant and equipment (2,394) (11,054)
Sale of property, plant and equipment 23,280 -
Investment in associated undertaking - (284,851)
Interest received - 300,598
Loans to Group undertakings (53,793,820) (9,116,479)
_________ _________
Net cash flow from investing activities (53,772,934) (9,111,786)
_________ _________
Cash flow used in financing activities
Issue of ordinary share capital 38,090,569 19,129,182
Share issue expenses (1,920,382) (971,113)
Convertible loan note 10,000,000 -
_________ _________
Net cash from financing activities 46,170,187 18,158,069
_________ _________
(Decrease)/ increase in cash and cash equivalents (2,353,304) 2,980,278
Cash and cash equivalents at beginning of the year 5,769,892 2,789,614
_________ _________
Cash and cash equivalents at end of the year 3,416,588 5,769,892
_________ _________
Notes to the Financial Statements
For the Year Ended 31 December 2009
1. Significant Accounting Policies
General information
Kalahari Minerals plc is a public limited company which is quoted
as an AIM and NSX and domiciled in the UK. The address of the registered
office is Level 1B, 38 Jermyn Street, London SW1Y 6DN. The registered number
of the Company is 5294388.
Basis of preparation
The principal accounting policies adopted in the preparation of the
financial statements are set out below. The policies have been consistently
applied to all the years presented, unless otherwise stated. Both the Parent
Company financial statements and the Group financial statements have been
prepared and approved by the Directors in accordance with International
Financial Reporting Standards (`IFRSs') and IFRIC interpretations, issued by
the International Accounting Standards Board (IASB) as endorsed for use in the
EU (`Endorsed IFRSs') and those parts of the Companies Act 2006 that are
applicable to companies that prepare their financial statements under IFRS.
The Company has taken advantage of the exemption allowed under
section 408 of the Companies Act 2006 and has not presented its own statement
of comprehensive income in these financial statements. The Group profit for
the year includes a profit after tax of £3.1 million (2008: loss of £6.8
million) which is dealt with in the financial statements of the Company.
New IFRS issued by the IASB effective from 1 January 2009 and applied in these
financial statements are as follows:
Standard Date of adoption Impact on initial
application
Amendment to IAS1 1 January 2009 The Group have fully
`Presentation of adopted IAS 1, which has
Financial Statements' resulted in a revision to
the presentation of the
primary statements.
Amendment to IFRS 2 1 January 2009 The amendment did not have
`Share- based payments any impact on the current
vesting conditions and year, or prior year
cancellations' financial statements.
Future transactions will be
accounted for consistently
with this amendment.
Amendment to IFRS 7, 1 January 2009 The revisions to IFRS 7
`Improving Disclosure have been considered and
about Financial reflected in the financial
Instruments - instrument disclosure
Improvements to IFRSS within these financial
(2009)' statements.
IFRS 8, `Operating 1 January 2009 The revisions to IFRS 8
segments' have been considered and
reflected in the financial
instrument disclosure
within these financial
statements.
IAS 23 `Amendment, 1 January 2009 The amendment did not have
Borrowing costs' any impact on the current
year, or prior year
financial statements.
Future transactions will be
accounted for consistently
with this amendment.
IAS 27 Amendment - 1 July 2009 This amendment did not have
Consolidated and any impact on the current,
separate financial or prior year financial
statements statements. Future
transactions will be
accounted for consistently
with this amendment.
IFRS3 Revised - 1 July 2009 This amendment did not have
Business Combinations any impact on the current,
or prior year financial
statements. Future
transactions will be
accounted for consistently
with this amendment.
The following standards, interpretations and amendments issued by
the IASB are effective in 2009 but not relevant or have no impact on the
Group:
IAS 32 `Amendment, Financial Instruments: Presentation of financial statements;
Puttable financial instruments and obligations arising on liquidation.
IFRIC 11, IFRS2, `Group and Treasury Share Transactions' (effective 1 March
2007). This amendment provides guidance as to whether certain share-based
payment transactions should be classified as "equity settled" or "cash settled".
IFRIC 12, `Service Concession Arrangements' (effective 1 January 2008). This
amendment interprets 14 IFRSs that refer to a public sector entity that awards
the concession as the grantor and the private sector entity that provides the
services as the operator.
IFRIC 14, IAS19, `The Limit on Defined Benefit Asset Minimum Funding
Requirements and their Interaction' (effective 1 January 2008). This amendment
clarifies how any asset in a defined benefit pension scheme should be
determined, in particular where a minimum funding requirement exists.
IFRIC 13, `Customer Loyalty Programmes' (effective 1 July 2008). This interprets
accounting by entities that grant loyalty awards credits.
IAS 39 AND IFRS 7, `Reclassification of Financial Instruments' (effective 1 July
2008). This amendment provides guidance on reclassification of non-derivative
financial assets.
IFRIC 16, `Hedges of a Net Investment in a foreign operation' (effective 1
October 2008). This clarifies accounting treatment of changes in foreign
exchange rates in respect of hedged items.
No other IFRSs issued and adopted but not yet effective are
expected to have an impact on the Group's financial statements. Standards,
amendments and interpretations, which are effective for reporting periods
beginning after the date of these financial statements which have not been
adopted early:
IFRIC 9 and IAS 39 Amendments - Embedded 30 June 2009
derivatives
IAS 39 Amendment - Recognition 1 July 2009
and measurement:
Eligible hedged items
IFRIC 17 Distributions of 1 July 2009
non-cash assets to
owners
IFRIC 18 Transfers of assets 1 July 2009
from customers
IFRS 1* Additional exemptions 1 January 2010
for first-time adopters
IFRS 2* Amendment - Group 1 January 2010
Cash-settled
Share-based payment
transactions
IAS 32 Amendment - 1 February 2010
Classification of
Rights Issues
IFRIC 19* Extinguishing Financial 1 April 2010
Liabilities with Equity
Instruments
Improvements to IFRSs generally 1 January
(2009)* 2010
IAS 24* Revised - Related party 1 January 2011
disclosures
IFRIC 14* Amendment to IFRIC 1 January 2011
14-IAS 19 Limit on a
defined benefit asset,
Minimum funding
requirements and their
interaction
IFRS 9* Financial instruments 1 January 2013
* Not yet endorsed by European Union
The Group have not yet assessed the impact of IFRS 9. Except for
the introduction of IAS24 Revised the above new standards, amendments and
interpretations are not expected to materially affect the Group's reporting or
reported numbers.
The Directors do not anticipate that the adoption of the other
standards and interpretations listed above will have a material impact on the
Company's financial statements in the period of initial application.
Basis of consolidation
(a) Subsidiaries
Subsidiaries are entities that are directly or indirectly
controlled by the Group. Control exists where the Group has the power to
govern the financial and operating policies of the entity so as to obtain
benefits from its activities. In assessing control, potential voting rights
are taken into account. Subsidiaries are fully consolidated from the date on
which control is transferred until the date that the control ceases.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group. Inter-company transactions, balances
and unrealised gains on transactions between Group entities are eliminated.
The consolidated financial statements have been prepared in
accordance with IAS27 'Consolidated and Separate Financial Statements' and
IFRS 3 'Business Combinations'.
(b) Associates
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control
over those policies.
In considering the degree of control and contractual ability to
direct use of funding provided by the Group are taken into consideration.
Investments in associates are accounted for using the equity method
of accounting and are initially recognised at cost plus any goodwill arising.
Any premium paid for an associate above the fair value of the Group's share of
the identifiable assets, liabilities and contingent liabilities acquired is
capitalised and included in the carrying amount of the associate. The carrying
amount of investment in an associate is subject to impairment in the same way
as described below.
The Group's share of its associates' post-acquisition profits or
losses is recognised in the consolidated statement of comprehensive income,
and its share of post-acquisition movements in reserves is recognised in
reserves. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investment.
When the Group's share of losses in an associate equals or exceeds its
interest in the associate no further losses are recognised.
Where annual financial statements for an associate are available,
which have a concurrent year end to that of the Group the information
contained within the financial statements will be used to equity account for
the associate. Where an associate has a financial year end which is not
concurrent with that of the Group, or is more than three months different to
that of the Group but the associate prepares interim financial information
which is publicly available this information adjusted for any known
circumstances will be used to equity account for the associate.
Revenue recognition
Revenue is measured at the fair value of consideration received or
receivable from the sale of goods and services from the Group's ordinary
business activities. Revenue is stated net of discounts, sales and other
taxes. There was no revenue received in the year.
Interest income
Revenue from interest income is accrued on a timely basis using the
effective interest method, which exactly discounts estimated future cash flows
through the expected life of the financial asset, to which the interest income
derived, to its net carrying value. The only bank interest received in the
year was on cash held at bank. The impact of discounting was immaterial.
Expenses
Operating expenses are recognised in the statement of comprehensive
income upon utilisation of the service or at the date of their origin.
Interest income and expense are reported on an accrual basis.
Continued and discontinued operations
The results of operations during the year are included in the
consolidated statement of comprehensive income up to the date of disposal.
Discontinued operations are presented in the statement of
comprehensive income (including the comparative period) as a single line which
comprises the post tax loss of the discontinued operation. Operations are
classified as discontinued when the decision is made to dispose of the
operation by the directors and the operations are actively marketed.
Intangible assets - exploration and evaluation assets
The Group capitalises the fair value of the consideration paid for
exploration and prospecting rights. All other costs incurred are expensed as
they are incurred. The Group has taken into consideration the degree to which
expenditure can be associated with finding specific mineral resources. The
intangibles are amortised over the length of the mining licences and the
amortisation expense is included within the Administration expenses line in
the statement of comprehensive income.
Impairment of assets
Where appropriate, the Group reviews the carrying amounts of its
tangible assets, intangible assets and investments to determine whether there
is any indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss. Where it is not possible
to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
the current market assessments of the time value of money and the risks
specific to the asset. If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in the
statement of comprehensive income, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount
of the asset (cash-generating unit) is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (cash-generating unit) in prior years.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss. Depreciation is charged so as
to write off the costs of assets, over their estimated useful lives, using the
straight line method, on the following basis:
Land & buildings 50 years
Building improvements 4 years
Fixtures & fittings 4 years
Plant and machinery 4 years
Motor vehicles 4 years
Financial instruments
Financial assets and financial liabilities are recognised on the
statement of financial positions when the Company becomes a party to the
contractual provisions of the instrument.
Financial assets and liabilities are initially recognised and
subsequently measured based on their classification as "loans and receivables"
or "other" financial liabilities.
The Company classifies its financial assets in the following
category: loans and receivables. The classification depends on the purpose for
which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. They
are included in current assets. The Company's loans and receivables comprise
of `other receivables' and `cash and cash equivalents'. Other receivables are
recognised initially at fair value and subsequently measured at amortised cost
less provision for impairment.
Financial liabilities
The Group classifies its financial liabilities into categories
depending on the purpose for which the liability was acquired. The Group has
not classified any of its liabilities at fair value through profit and loss.
The Group's accounting policy for each category is as follows:
Held at amortised cost: Trade payables and other short-term
monetary liabilities are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method.
Compound financial instruments: The Group's convertible loan notes
are classified as compound financial instruments and a separate accounting
policy for convertible debt has been included below.
Convertible debt
In accordance with IAS 32 and IAS 39, the Company has classified
the convertible debt in issue as a compound financial instrument. Accordingly,
the Company presents as appropriate the liability and equity components
separately on the statement of financial position. The classification of the
liability and equity components is not reversed as a result of a change in the
likelihood that the conversion option will be exercised. No gain or loss
arises from initially recognising the components of the instrument separately.
Interest on the debt element of the loan is accredited over the term of the
loan. Costs associated with the raising of debt are set off against the gross
value of monies received.
Interest on borrowings is capitalised where the related proceeds
are clearly allocated to the development of a qualifying asset. Capitalisation
of interest is suspended once the qualifying asset is bought into production.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a financial
liability.
The Group's ordinary shares and unclassified ordinary shares are
classed as equity instruments.
Leases
Payments made under operating leases are recognised in the income
statement on a straight line basis over the term of the lease.
Provisions
Provisions are recognised when the Group has a present obligation
as a result of a past event and it is probable that the Group will be required
to settle the obligation. Provisions are measured at the Directors' best
estimate of the expenditure required to settle that obligation at the balance
sheet date and are discounted to present value where the effect is material.
Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using tax rates
enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is calculated on the comprehensive basis using the
balance sheet liability method, which requires provision for temporary
differences between the tax bases of assets and liabilities and their carrying
amounts on the statement of financial position. Tax rates enacted at the
statement of financial position date are used to determine the deferred tax
balances. Deferred tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the asset can be
utilised. Deferred tax is applied to share-based payments in accordance with
IAS 12 Income Taxes.
Foreign currencies
Assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of transaction. Exchange differences are taken
into account in arriving at the operating result. The Company translates its
foreign operations using the closing rate method.
One of the requirements of IAS 21 -- The Effects of Changes in
Foreign Exchange Rates is that on disposal of a foreign operation, the
cumulative amount of exchange differences previously recognised directly in
equity for that foreign operation are to be transferred to the statement of
comprehensive income as part of the profit or loss on disposal. The Company
has adopted the exemption allowing these cumulative translation differences to
be reset to zero at the transition date. If the Company had not taken this
exemption, a different amount of net foreign exchange gains and losses would
be transferred to the income statement on disposal of a foreign operation.
Monetary assets and liabilities for foreign operations are
translated at the year end exchange rate and non-monetary assets are recorded
at the exchange rate prevailing at the date of acquisition.
Exchange differences arising from the translation of the net assets
of foreign operations are taken to the foreign exchange reserve. Other
exchange differences are taken to the statement of comprehensive income.
Share-based payments
The Company has granted equity-settled options and warrants. The
fair value of the incentive granted is recognised as an expense with a
corresponding increase in equity. The fair value is measured at the grant date
and spread over the period during which the employees or third parties become
unconditionally entitled to the incentives. When identifiable, the fair value
is determined by the value of the services provided. When a fair value for the
services provided cannot be ascertained the fair value is measured by
reference to the fair value of the equity instrument granted.
Judgements made in applying accounting policies and key sources of
estimation uncertainty
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation were:
(a) Impairment of assets
In formulating accounting policies the Directors are required to
apply their judgement, and where necessary engage professional advisors, with
regard to the following significant areas:
- Expenditure capitalised as intangible non-current assets;
- Expenditure capitalised as property, plant and equipment; and
- The associated impairment review assumptions.
These assets of the Group are subject to periodic review by the
Directors.
On review, during the year, the Directors have noted no
circumstances which would suggest that at this time any impairment is
necessary given the preliminary results of surveys on the assets obtained to
date. The situation will be closely monitored and adjustments made in future
periods if there are indications that the assets held are not recoverable.
(b) Share-based payments
In determining the fair value of equity-settled share-based
payments and the related charge to the statement of comprehensive income, the
Group must make assumptions about future events and market conditions.
Judgement is made as to the likely number of shares that will vest, and the
fair value of each award granted.
Options are measured at fair value at the grant date using the
Black-Scholes model. The fair value is expensed on a straight line basis over
the vesting period, based on an estimate of the number of options that will
eventually vest.
Cash-settled share-based payment transactions result in the
recognition of a liability at its current fair value.
(c) Associates
The Directors believe, after careful consideration, that the Group
does, as a matter of fact, exercise significant influence over the activities
and operations of Extract Resources Limited and North River Resources Plc.
Therefore, the associates are accounted for on an equity basis.
2. Segmental Reporting
The Group operated in one principal operating segment, the
exploration for and production of Uranium in Namibia through in-direct
holdings. The Group's other segment is the exploration for base metals in
Namibia through in-direct holdings. The reporting on these investments to the
Chief Operating Decision maker focuses on market based criteria, such as share
price and market capitalisation. The impact of such criteria is discussed
further in the Chairman's Statement and the Operations Report on pages 2 to 4
and pages 6 to 8 of the annual report. Please refer to note 12 for details of
the impact of these segments on the financial statements of the Group.
The entity wide disclosures as required by IFRS 8 are considered to
be disclosed on the face of the primary statements are therefore not
replicated in this note.
Exploration, Exploration, Corporate Total
development development (unallocated)
of gold, of uranium
copper and
base metals
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2009 2009 2009 2009
£ £ £ £
Total revenues - - - -
Administrative expenses - - (3,199,060) (3,199,060)
Share of operating loss of (514,720) (2,610,114) - (3,124,834)
associate
Profit on deemed disposal of - 10,872,218 - 10,872,218
associate
Net finance expense - - (266,968) (266,968)
Profit from discontinued 4,707,948 - - 4,707,948
operations
Profit / (loss) before and 4,193,228 8,262,104 (3,466,028) 8,989,304
after taxation
Total non-current assets 5,284,330 81,112,785 273,198 86,670,313
Total non-current - - (10,000,000) (10,000,000)
liabilities
Total assets 5,284,330 81,112,785 4,080,816 90,405,931
Total liabilities - - (10,389,047) (10,389,047)
Exploration, Exploration, Corporate Total
development development (unallocated)
of gold, of uranium
copper and
base metals
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2008 2008 2008 2008
£ £ £ £
Total revenues - - - -
Administrative expenses - - (2,175,957) (2,175,957)
Share of operating loss of - (3,781,380) - (3,781,380)
associate
Profit on deemed disposal of - 61,302 - 61,302
associate
Net finance expense - - 317,693 317,693
Loss from discontinued (5,407,757) - - (5,407,757)
operations
Loss before and after (5,407,757) (3,720,078) (1,858,264) (10,986,099)
taxation
Total non-current assets 187,599 26,818,796 439,255 27,445,650
Total non-current - - - -
liabilities
Total assets 187,599 26,818,796 6,969,657 33,976,052
Total liabilities - - (555,004) (555,004)
3. Discounted Operations
On 20 November 2009, the Company sold its interest in West Africa
Gold Exploration (Namibia) (Pty) Ltd and Craton Diamonds (Pty) Ltd to North
River Resources Plc in exchange for 266,666,667 shares of that Company. The
income, expenses, assets and liabilities relating to this asset were
reclassified as discontinued in the year.
Profit/(loss) on discontinued operations for the period to the date of
disposal:
2009 2008
£ £
Loss on discontinued operations (992,140) (5,407,757)
_________ _________
Profit from selling discontinued operations after
tax
Sales proceeds, net of costs 5,878,645 -
Pre-disposal carrying value 178,557 -
_________ _________
Profit on disposal of discontinued operations 5,700,088 -
_________ _________
Total profit/ (loss) from discontinued operations 4,707,948 (5,407,757)
after tax
_________ _________
Financial information relating to the non-current assets held for sale
2009 2008
£ £
Cash disposed of: 138,770 -
_________ _________
Net assets disposed of:
Intangible assets 62,767 -
Property, plant and equipment 158,966 -
Trade and other receivables 143,582 -
Trade and other payables (325,528) -
_________ _________-
178,557 -
_________ _________
Discontinued cash flow movements
The statement of cash flows includes the following amounts relating
to discontinued operations:
2009 2008
£ £
Net cash from operating activities (810,194) (5,584,809)
Net cash from investing activities (138,770) (169,137)
4. Employees and Directors
Group Group Company Company
2009 2008 2009 2008
£ £ £ £
Average number of
employees are as
follows:
Administration and 50 66 1 9
operations
Directors 4 3 4 3
_________ _________ _________ _________
54 69 5 12
_________ _________ _________ _________
Group Group Company Company
2009 2008 2009 2008
£ £ £ £
Gross salaries
(including Directors) 570,868 825,501 - -
Fees (including 240,660 191,376 240,660 191,376
Directors)
Share based payments 1,636,044 949,712 1,636,044 949,712
_________ _________ _________ _________
2,447,572 1,966,589 1,876,704 1,141,088
_________ _________ _________ _________
Directors listed on page 12 are considered to be the key
management. Their remuneration is as follows:
Total Total
2009 2008
£ £
Mark Hohnen 150,000 622,467
Glyn Tonge 35,000 27,500
Steve Galloway 7,500 22,500
Neil MacLachlan 23,665 -
David Weill 24,495 -
Peter McIntyre (resigned 19 May 2009 ) - 523,909
_________ _________
240,660 1,196,376
_________ _________
All Directors' remuneration is paid in cash in accordance with
their contracts. In addition, all Directors have received options to purchase
ordinary shares of the Company at exercise prices that vary in accordance to
the year of grant (see Note 21). The highest paid Director was paid £150,000
(2008: £119,967) in the year.
The Company provides limited Directors and Officers Liability
Insurance, at a cost of approximately £14,095 (2008: £2,169). This cost is not
included in the table above.
Out of the share-based payment charge (see Note 21), £1,256,510
(2008: £699,087) relates to share-based payments to Directors and £20,602
(2008: £250,625) relates to share-based payments to employees. Gains made on
exercise of options during the year were £nil (2008: £1,005,000) by Directors
and £695,321 (2008: £1,256,250) by staff.
5. Finance Income and Expense
2009 2008
£ £
Finance income received on bank deposits 48,100 317,693
Finance expense (315,068) -
Net finance (expense)/ income (266,968) 317,693
6. Consolidated Profit/(Loss) Before
Taxation
The operating loss before tax is stated after charging:
2009 2008
£ £
Depreciation 48,520 38,332
Exploration licences amortisation 21,881 19,798
Fees payable to the Company's auditor for the
audit of the Company's annual accounts 28,000 16,500
Fees payable to the Company's auditor and its
associates for other services: - 8,700
Fees payable to Namibian subsidiary auditors (non
BDO) 18,800 11,800
Directors' emoluments 240,660 1,196,376
Share based payments 1,277,112 715,910
_________ _________
7. Earning Per Share
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations operations operations
2009 2009 2009 2008 2008 2008
£ £ £ £ £ £
Numerator
Profit / (loss) for the
year and earnings used
in basic EPS 4,281,356 4,707,948 8,989,304 (5,578,342) (5,407,757) (10,986,099)
Earnings used in basic
EPS 4,281,356 4,707,948 8,989,304 (5,578,342) (5,407,757) (10,986,099)
Add interest on
convertible debt 315,068 - 315,068 - - -
Earnings used in
diluted EPS 4,596,424 4,707,948 9,304,372 (5,578,342) (5,407,757) (10,986,099)
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations operations operations
2009 2009 2009 2008 2008 2008
£ £ £ £ £ £
Denominator
Weighted average number
of shares used in basic
EPS 193,542,014 193,542,014 193,542,014 150,750,226 - 150,750,226
Effects of:
ï'- Convertible debt 4,448,025 4,448,025 4,448,025 - - -
ï'- Employee share
options 21,108,849 21,108,849 21,108,849 5,904,521 - 5,904,521
Weighted average number
of shares used in
dilutive EPS 219,098,888 219,098,888 219,098,888 156,654,747 - 156,654,747
Nil (2008: 5,904,521) potential ordinary shares have been excluded
from the above diluted ordinary shares calculation as they are anti-dilutive.
Certain executive and employee options have not been included in
the calculation of diluted EPS because their exercise is contingent on the
satisfaction of certain criteria that had not been met at the end of the year.
In addition, certain employee options have also been excluded from the
calculation of dilutive EPS as their exercise price is greater than the
weighted average share price during the year (i.e. they are out-of-the-money)
and therefore it would not be advantageous for the holders to exercise those
options. The total number of options in issue is disclosed on Note 21.
For details of ordinary share transactions since the balance sheet
date please refer to Note 25.
8. Tax
Analysis of the tax charge
No liability to UK corporation tax arose on ordinary activities for
the year ended 31 December 2009 nor for the year ended 31 December 2008.
Factors affecting the tax charge
The tax assessed for the year is higher than the standard rate of
corporation tax in the UK. The difference is explained below:
2009 2008
£ £
Profit/(loss) on ordinary activities before tax 8,989,304 (10,986,099)
_________ _________
Loss on ordinary activities multiplied by the
standard rate
of corporation tax in the UK of 28 % (2008:
28.5%) 2,517,005 (3,131,038)
Effects of:
Non-deductible expenditure 2,341 11,014
Depreciation in excess of capital allowances 39,041 14,429
Salary amounts - 3,350
Amortisation - 208
Losses available to carry forward 836,628 1,924,431
Share based payments 458,092 144,115
Non-taxable (income)/expense (4,240,419) 1,033,491
Losses in relation to discontinued operations 387,312 -
_________ _________
Total tax - -
_________ _________
The Group has a potential deferred tax asset of £2,628,000 (2008:
£1,792,000) arises from the availability of tax losses but has not been
recognised as there is no certainty that sufficient profits will arise in
future accounting periods of which these losses could be offset against.
9. Prior Period Adjustments
The prior period comparatives have been adjusted to correct previously stated
balances as noted below.
The following line items with in the financial statements were affected;
1 January 1 January Movement for 31 December
2008 2008 the year 2008
As As
previously Prior year As previously Prior year
reported adjustment restated reported adjustment As restated
£ £ £ £ £ £
CONSOLIDATED STATEMENT OF INCOME:
- - -
Loss for the year (11,110,408) 124,309 (10,986,099)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION:
Investment in
associated undertakings 11,974,268 8,662,569 1 20,636,837 11,967,937 (5,785,978)4 26,818,796
CONSOLIDATED SHAREHOLDERS EQUITY:
Share premium 6,834,975 - 6,834,975 18,231,943 (755,705)2 24,311,213
Share option and
warrant reserve 950,739 - 950,739 505,679 444,0333 1,900,451
Foreign exchange
translation reserve 546,487 12,3601 558,847 1,252,568 (36,081)1 1,775,334
Retained earnings 5,653,395 8,731,8091 14,385,204 (11,110,408) 124,3091 3,399,105
Other reserve 506,354 (81,600)1 424,754 5,383,602 (5,562,534)1 245,822
TOTAL 14,491,950 (8,662,569) 23,154,519 14,263,384 (5,785,978) 31,631,925
1 Adjustments arose in respect of the correction of the equity
accounting for Extract Resources Limited.
2 Adjustment arose in respect of the correction of the reversal of
inter-Company interest on consolidation.
3 Adjustment arose in respect of the correction of the vesting
period over which the shared based payment expense vests.
4 Adjustment represents the net effect of the 2008 adjustments
noted above.
Except for the share option and warrant reserve adjustments and
corresponding impact on retained earnings of £444,033, there was no other
impact on the Company financial statements. There was no impact on earnings
per share as a result of the prior year adjustment.
10. Intangible Assets
Exploration
Group only Exploration & evaluation
licenses assets Total
£ £ £
COST
At 1 January 2008 48,954 119,725 168,679
Additions 54,724 - 54,724
_________ _________ _________
At 31 December 2008 103,678 119,725 223,403
Disposals (103,088) (119,725) (222,813)
_________ _________ _________
At 31 December 2009 590 - 590
_________ _________ _________
DEPRECIATION
At 1 January 2008 16,005 - 16,005
Charge for the year 19,798 - 19,798
_________ _________ _________
At 31 December 2008 35,803 - 35,803
Charge for the year 21,881 - 21,881
Disposals (57,422) - (57,422)
________ _________ ________
At 31 December 2009 262 - 262
_________ _________ _________
NET BOOK VALUE
At 31 December 2009 328 - 328
_________ _________ _________
At 31 December 2008 67,874 119,725 187,599
_________ _________ _________
At 31 December 2007 32,949 119,725 152,674
_________ _________ _________
11. Property, Plant and Equipment
Fixtures Motor
Land & Building Plant &
Group buildings improvements machinery & fittings vehicles Total
£ £ £ £ £ £
COST
At 1 January 2008 224,578 5,859 35,750 43,815 100,947 410,949
Additions - 51 16,235 39,585 58,543 114,414
Disposals (87) - - - - (87)
_________ _________ _________ _________ _________ _________
At 1 January 2009 224,491 5,910 51,985 83,400 159,490 525,276
Additions 50,294 - - 2,394 - 52,688
Disposals - (5,910) (51,985) (83,400) (154,490) (300,785)
_________ _________ _________ _________ _________ _________
At 31 December 2009 274,785 - - 2,394 - 277,179
_________ _________ _________ _________ _________ _________
DEPRECATION
At 1 January 2008 654 361 10,929 14,526 21,219 47,689
Charge for the year 1,556 1,468 9,175 15,911 10,222 38,332
_________ _________ _________ _________ _________ _________
At 1 January 2009 2,210 1,829 20,104 30,437 31,441 86,021
Charge for the year 1,660 1,307 15,064 13,103 17,416 48,520
Disposals - (3,136) (35,138) (43,428) (48,857) (134,148)
_________ _________ _________ ______ ______ ____
At 31 December 2009 3,870 - - 112 - 3,982
_________ _________ _________ _________ _________ _________
NET BOOK VALUE
At 31 December 2009 270,915 - - 2,282 - 273,197
_________ _________ _________ _________ _________ _________
At 31 December 2008 222,281 4,081 31,881 52,963 128,049 439,255
_________ _________ _________ _________ _________ _________
At 31 December 2007 223,924 5,498 24,821 29,289 79,728 363,260
_________ _________ _________ _________ _________ _________
Plant Furniture
& machinery
Company & fittings Total
£ £ £
COST
At 1 January 2008 21,621 8,462 30,083
Additions 2,701 8,353 11,054
_________ _________ _________
At 1 January 2009 24,322 16,815 41,137
Additions - 2,394 2,394
Disposals (24,322) (16,815) (41,137)
_________ _________ _________
At 31 December 2009 - 2,394 2,394
_________ _________ _________
DEPRECIATION
At 1 January 2008 7,558 4,045 11,603
Charge for the year 3,704 2,550 6,254
_________ _________ _________
At 1 January 2009 11,262 6,595 17,857
Charge for the year - 112 112
Disposals (11,262) (6,595) (17,857)
_________ _________ _________
At 31 December 2009 - 112 112
_________ _________ _________
NET BOOK VALUE
At 31 December 2009 - 2,282 2,282
_________ _________ _________
At 31 December 2008 13,060 10,220 23,280
_________ _________ _________
At 31 December 2007 14,063 4,417 18,480
_________ _________ _________
12. Investment in Associated Undertakings
The Group has the following significant investments in associated
companies which are accounted for using the equity method.
During the year the Group's investment in Extract Resources Limited
was increased from 39.59% to 40.41% (2008: from 36.22 % to 39.59%).
As at 20 November 2009, the Group divested its interest in its
previously held subsidiaries West Africa Gold Exploration (Namibia)
(Proprietary) Limited and Craton Diamonds (Proprietary) Limited to North River
Resources Plc for a 44.89% interest in North River. As at year end, the
Group's interest in North River was 44.89%. The North River transaction
referred to above are regarded as the principal non-cash transactions arising
in the reporting period.
2009 2008
£ £
Extract Resources Limited, Australia 81,112,785 26,818,796
North River Resources plc, United Kingdom 5,284,003 -
_________ _________
The associated undertakings at 31 December 2009 were:
Extract Resources Limited (`Extract')
Country of incorporation: Australia
Class of share: Ordinary
Proportion held of the ordinary shares: 40.41%
The market value of the interest of Extract at 31 December 2009 is
£454,486,209 (2008: £53,244,451) (Australian Stock Exchange and Namibian Stock
Exchange: ASX & NSX Code EXT). A limited number of the shares of Extract are
traded on the Toronto Stock Exchange (TSX Code EXT).
Restated
31 December 31 December
2009 2008
£ £
Balance at beginning of year 26,818,796 20,636,837
Investment in the period 45,661,053 9,092,280
Profit on deemed disposal of associate 10,872,218 61,302
Share of loss of associate (2,610,114) (3,781,380)
Share of other reserve movements of associate (3,020,578) (178,932)
Impact of movements in exchange rates 3,391,410 988,689
_________ _________
Total carrying value at the end of the year 81,112,785 26,818,796
_________ _________
Financial information of Extract
Extract prepared audited financial statements for the year ended 30
June 2009 and unaudited condensed interim financial information for the six
month period ended 31 December 2009.
Summary financial information of Extract prepared under IFRS is set
out below. Extract Resources Limited is accounted for using the equity method
of accounting:
Interim Year ended Interim Year ended
31 December 30 June 2009 31 December 30 June 2008
2009 2008
Unaudited Audited Unaudited Audited
£ £ £ £
Loss for the period (6,647,571) (5,435,512) (6,339,448) (6,323,085)
_________ _________ _________ _________
Non-current assets 48,527,661 49,274,299 49,022,257 49,868,533
Current assets 56,278,983 14,780,805 10,773,626 16,393,739
_________ _________ _________ _________
Total assets 104,806,644 64,055,104 59,795,883 66,262,272
_________ _________ _________ _________
Current liabilities (2,542,915) (1,751,280) (988,499) (889,667)
Non-current liabilities (8,343,034) (11,642,942) (17,983,448) (18,018,301)
_________ _________ _________ _________
Total liabilities (10,885,949) (13,294,222) (18,971,947) (18,907,968)
_________ _________ _________ _________
Total equity shareholders 93,920,696 50,660,882 40,823,936 47,354,304
funds
_________ _________ _________ _________
The accounting period is different due to the corporate governance
requirements of the shareholders of Extract.
North River Resources Plc (`North River')
Country of incorporation: United Kingdom
Class of share: Ordinary
Proportion held of the ordinary shares: 44.89%
The market value of the interest of North River Resources Plc at 31
December 2009 is £8,319,374 (AIM code NRRP).
2009
Acquired in the period (see note 3) 5,878,645
Share of loss of associate (514,720)
Share of other reserve movements of associate (79,922)
_________
Total carrying value at the end of the year 5,284,003
_________
Financial information of North River
Summary financial information of North River prepared under IFRS is
set out below. North River is accounted for using the equity method of
accounting:
2009
£
Loss for the six months ended 31 December 2009 (2,309,963)
_________
Non-current assets 8,231,358
Current assets 6,599,123
_________
Total assets 14,830,481
_________
Current liabilities (814,123)
_________
Total liabilities (814,123)
_________
Total equity shareholders funds 14,015,940
_________
The accounting year end is different due to the corporate governance
requirements of the shareholders of North River Resources Plc.
13. Investments
Company
Shares in
group
undertakings
COST £
At 1 January 2008 808,984
Additions 284,853
_________
At 1 January 2009 1,093,837
Disposals (832,160)
_________
At 31 December 2009 261,667
_________
NET BOOK VALUE
At 31 December 2007 808,984
_________
At 31 December 2008 1,093,837
_________
At 31 December 2009 261,677
_________
The Company's investments at the balance sheet date in the ordinary
share capital of companies are as below. All shareholding represent 100%
interests.
Aggregate Aggregate
Profit for capital & (Loss)/ capital &
the year reserves Profit for reserves
the year
2009 2009 2008 2008
£ £ £ £
Kalahari Diamonds Limited
Country of incorporation: 106,793 101,874 - -
Isle of Man
_________ _________ _________ ________
Nature of business:
Intermediary holding
company
Kalahari Gold Limited
Country of incorporation: 2,372,901 2,372,902 - -
Isle of Man
_________ _________ _________ _________
Nature of business:
Intermediary holding
company
Kalahari Uranium Limited
Country of incorporation: 1,246,120 4,059,691 1,275,905 2,813,571
Isle of Man
_________ _________ _________ _________
Nature of business:
Intermediary holding
company
Kalahari Energy (Pty)
Limited
Country of incorporation: (5,295) (14,292) (7,812) (7,805)
Namibia
_________ _________ _________ _________
Nature of business:
Minerals exploration and
development
TLP Investments 105 (Pty)
Limited
Country of incorporation: 1,436 1,444 - -
Namibia
_________ _________ _________ _________
Nature of business:
Property
West Africa Gold
Exploration (Namibia) (Pty)
Limited
Country of incorporation: N/A N/A (5,994,353) (6,895,515)
Namibia
_________ _________ _________ _________
Nature of business:
Minerals exploration and
development
Craton Diamonds (Pty)
Limited
Country of incorporation: N/A N/A (676,245) (580,521)
Namibia
_________ _________ _________ _________
Nature of business:
Minerals exploration and
development
The Group has taken advantage of the exemption in Companies Act
2006 s405(2) and has chosen not to consolidate Kalahari Copper Limited and
Kalahari Minerals Pty Limited on the basis that they are immaterial.
West Africa Gold Exploration (Namibia) (Pty) Limited and Craton
Diamonds (Pty) Limited were disposed to North River Resources Plc during the
year.
14. Other Receivables
Group Company
2009 2008 2009 2008
£ £ £ £
Current:
Other receivables 254,808 415,437 105,090 95,213
Prepayments 38,862 21,460 133,057 11,481
_________ _________ _________ _________
293,670 436,897 238,147 106,694
_________ _________ _________ _________
Non-current:
Amounts owed by 63,281,092 9,487,272
subsidiaries - -
_________ _________ _________ _________
293,670 436,897 63,519,239 9,593,966
_________ _________ _________ _________
Included within other receivables are £149,285 relating to VAT
(2008: £66,228). The Group's exposure to credit and currency risk related to
is disclosed in Note 20.
15. Cash and Cash Equivalents
Group Company
2009 2008 2009 2008
£ £ £ £
Cash in hand - 2,191 - -
Cash at bank 3,441,948 6,091,314 3,416,588 5,769,892
_________ _________ _________ _________
3,441,948 6,093,505 3,416,588 5,769,892
_________ _________ _________ _________
16. Borrowings
Convertible loan notes (Group and Company)
2009 2008
£
£
Loan drawn down 10,000,000 -
Balance carried forward 10,000,000 -
_________ _________
On 7 September 2009, the Group entered into a fixed-rate loan
agreement for £10,000,000 in convertible notes.
The loan notes incur an interest charge of 10% per annum for the
full two year loan period. Interest is payable bi-annually. The effective
interest rate is therefore 10%. The loan notes are secured against any
2,650,000 ordinary shares in Extract Resources Limited, of which the carrying
amount of the assets pledged at balance sheet date is £12,284,440. The
repayment date of the loan notes is the second anniversary of the date of the
instrument. The conversion rate of the loan note, should the holders choose
this option is 212.50p of loan note per share.
17. Trade and Other Payables
Group Company
2009 2008 2009 2008
£ £ £ £
Current:
Trade payables 47,479 358,067 45,407 194,429
Other payables 26,500 196,937 26,500 62,323
Accrued interest 315,068 - 315,068 -
_________ _________ _________ _________
389,047 555,004 386,975 256,752
_________ _________ _________ _________
The Group's trade and other payables are either due for repayment
upon demand or within 30 days.
The Group's exposure to risk related to trade and other payables is
disclosed in Note 20.
18. Ordinary Shares
Authorised:
2009 2008
£
£
Number Class Nominal
value
1,000,000,000 Ordinary £0.01 10,000,000 10,000,000
_________ _________
Allotted, issued and fully paid:
2009 2008
£
£
Number Class Nominal
value
209,181,128 Ordinary £0.01 2,091,812 1,789,123
(2008: 178,912,255) _________ _________
On 15 May 2009, the Company admitted to AIM a placement of
17,890,000 new ordinary £0.01 shares at £1.00 per ordinary new share. As part
of the placing, an agent in connection with the placing was granted 447,250
warrants at an exercise price of £1.00 per share.
On 18 May 2009, the Company issued 66,667 ordinary £0.01 shares at
a premium of £0.29 per share, due to the exercise of employee share options.
On 21 July 2009, the Company issued 175,000 ordinary £0.01 shares,
of which 50,000 ordinary shares were issued at a premium of £0.29 per share
and 125,000 ordinary shares were issued at a premium of £0.39 per share, due
to the exercise of employee share options.
On 28 July 2009, the Company issued 222,500 ordinary £0.01 shares
at a premium of £0.29 per share, due to the exercise of employee share
options.
On 4 September 2009 the Company admitted to AIM a placement of
11,764,706 new ordinary £0.01 shares at £1.70 per ordinary new share.
On 20 October 2009, the Company issued 25,000 ordinary £0.01 shares
at a premium of £0.29 per share, due to the exercise of employee share
options.
On 27 November 2009, the Company issued 125,000 ordinary £0.01
shares at a premium of £0.29 per share, due to the exercise of employee share
options.
Dilutive effects post balance sheet 31 December 2009
On 26 February 2010, the Company issued 118,000 ordinary £0.01
shares, of which 75,000 ordinary shares were issued at a premium of £0.29 per
share and 43,000 ordinary shares were issued at a premium of £0.39 per share,
due to the exercise of employee share options.
On 29 March 2010, the Company issued 343,667 ordinary £0.01 shares,
of which 81,667 ordinary shares were issued at a premium of £0.29 per share
and 262,000 ordinary shares were issued at a premium of £0.39 per share, due
to the exercise of employee share options.
On 15 April 2010, the Company issued 475,000 ordinary £0.01 shares
at a premium of £0.31 per share, due to the exercise of share warrants.
For details of the effect of the Coronet transaction please refer
to note 25.
19. Reserves
Share capital relates to the nominal value of the shares issued.
The share premium relates to the excess of consideration paid over the nominal
value of the shares after deducting related expenses.
The share option and warrant reserve -- holds the reserves element
of the share-based payment transactions adjusted for transfer on exercise
cancellation or expiry of options from the share option reserve.
The retained earnings reserve is the cumulative net gains and
losses recognised in the statement of comprehensive income adjusted for
transfer on exercise, cancellation or expiry of options from the share option
reserve.
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.
The other reserve is the Group's share of movements in other
comprehensive income in associates.
20. Financial Investments
The Group's activities expose it to a variety of financial risks:
in particular market risk (including currency risk, fair value interest rate
risk and price risk) and liquidity risk. The Group's overall risk management
programme focuses on the unpredictability of financial markets and seeks to
minimise the potential adverse effects on the Group's performance. The Board
on behalf of the members carries out risk management.
The financial instruments of the Group are:
Year ended Year ended
31 December 2009 31 December 2008
Loans and Financial Loans and Financial
receivables liabilities receivables liabilities
£ £ £ £
Financial assets
Other receivables 254,808 - 415,437 -
Cash and cash
equivalents 3,441,948 - 6,093,505 -
Financial liabilities
Trade payables and 10,389,047
convertible loan note - - 555,004
_________ _________ _________ _________
3,696,756 10,389,047 6,508,942 (555,004)
_________ _________ _________ _________
The financial instruments of the Company are:
Year ended Year ended
31 December 2009 31 December 2008
Loans and Financial Loans and Financial
receivables liabilities receivables liabilities
£ £ £ £
Financial assets
Amounts owed by
subsidiaries 63,281,092 - 9,487,272 -
Other receivables 105,090 - 95,213 -
Cash and cash
equivalents 3,416,588 - 5,769,892 -
Financial liabilities
Trade payables and 10,389,047
convertible loan note - 256,752
_________ _________ _________ _________
66,802,770 10,389,047 15,352,377 (256,752)
_________ _________ _________ _________
The fair value of the Group and the Company's financial assets and
financial liabilities is not considered to be materially different to the book
value disclosed above.
a) Capital risk management
The Group manages its capital to ensure that entities in the Group
will be able to continue as going concerns while optimising the debt and
equity balance. The capital structure of the Group consists of external
borrowings and equity comprising issued capital, reserves and retained losses.
The Group does not enter into derivative or hedging transactions
and it is the Group's policy that no trading in financial instruments will be
undertaken.
Where future investment in the interest in associates or other
Group projects is required the Board will assess the structure of whether it
can be funded from existing resources or financing arrangements as
appropriate.
b) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risks.
The Group has subsidiaries and associated undertakings based
overseas who are exposed to foreign currency translation risk. The Group's
operations incur expenditures in the local currencies of the United Kingdom,
Namibia and Australia. As a result of the use of these different currencies,
the Group is subject to foreign currency fluctuations which may materially
affect its financial position and operating results.
As at 31 December 2009, the Group was not materially exposed to
foreign exchange risk on its financial assets and liabilities.
(ii) Price risk
Prices ultimately received for minerals in relation to the Group's
investments will have significant impact on the profitability and viability of
all projects in which the Group has an interest. Increase in prices may have
significant and leveraged effect to the current and future values of projects
and shares held, the converse will apply where prices fall.
(iii) Interest rates on financial assets and liabilities
The Group and Company's financial assets consist of cash and cash
equivalents, loans, listed investments and other receivables.
The Group and Company's exposure to interest rate risk, which is
the risk that a financial instrument's value will fluctuate as a result of
changes in market interest rates and the effective weighted average interest
rate for each class of financial assets and financial liabilities comprises:
Fixed
interest
Floating maturing in
2009 interest more than 1 Non-interest
Group rate year bearing Total
£ £ £ £
Financial assets
British Sterling 3,696,756 - - 3,696,756
_________ _________ _________ _________
Weighted average
interest rate 0.05% - - -
Financial liabilities
British Sterling - 10,000,000 389,047 10,389,047
_________ _________ _________ _________
Weighted average
interest rate - 10% - -
Fixed
interest
Floating maturing in
2008 interest more than 1 Non-interest
Group rate year bearing Total
£ £ £ £
Financial assets
British Sterling 6,508,942 - - 6,508,942
_________ _________ _________ _________
Weighted average
interest rate 1% - - -
Financial liabilities
British Sterling - - 555,004 555,004
_________ _________ _________ _________
Fixed
interest
2009 Floating maturing Non-interest Total
Company interest rate more than 1 bearing
year loan
£ £ £ £
Financial
assets
British 3,466,588 - 63,281,092 66,747,680
Sterling
_________ _________ _________ _________
Weighted 0.05% - - -
average
interest rate
Financial
liabilities
British - - 386,975 10,386,975
Sterling
_________ _________ _________ _________Weighted - -
average
interest rate 10% 10%
Fixed
2008 interest
Company Floating maturing in Non-interest Total
interest rate 1 year or bearing loan
less
£ £ £ £
Financial
assets
British 5,798,877 - 9,487,272 15,286,149
Sterling
_________ _________ _________ _________
Weighted 1% - - -
average
interest rate
Financial
liabilities
British - - 256,752 256,752
Sterling
_________ _________ _________ _________
d) Credit risk
The carrying amount of the Group's financial assets represents its
maximum exposure to credit risk.
The Group is exposed to credit risk on cash deposits however it
does not consider that it has significant exposure because it banks with AAA
rated institutions.
e) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash. Management monitors rolling forecasts of the Group's and Company's
liquidity reserve. The review consists of considering the liquidity of local
markets, projecting cash flows and the level of liquid assets to meet these.
The management raises additional capital financing when the review indicates
this to be necessary.
The Group substantially finances its operations through equity.
During the current year, the Group has raised finance through a convertible
loan note. The interest rates for the loan are fixed in accordance with the
loan note agreement and therefore the Directors consider this mitigates the
effect of interest rate movements. No subsidiary Company of the Group is
permitted to enter into any borrowing facility or lease agreement without
prior consent of the Company.
The Group and Company are also exposed to cash flow interest rate
risk from its deposits of cash and cash equivalents with banks. The cash
balances maintained by the Group and Company are proactively managed in order
to ensure that the maximum level of interest is received for the available
funds but without affecting the working capital flexibility the Group and
Company require. The majority of the Group funds
are currently held in Sterling which attracts only a minimal
interest rate.
21. Share Based Payment Transactions
The Company has share-based payment arrangements, which are as
below:
(a) Options
On 31 October 2007, 3,500,000 share options over ordinary shares in
the Company were granted to Directors. The options allow the Directors to take
up ordinary shares at an exercise price of £0.30 each. The options are
exercisable on or before the 30 October 2012 and have terms and conditions
whereby they terminate upon cessation of employment or consulting
arrangements, and vesting dates over the first three years post issue. Upon
conversion, of the options to shares, the shares will rank equally with
existing shares. The options hold no voting or dividend rights and are not
transferrable. At reporting date, none of the options had been exercised but
500,000 had lapsed.
On 1 November 2007, 1,050,000 share options over ordinary shares in
the Company were granted to employees in Namibia as an incentive for
performance. The options allow the employees to take up ordinary shares at an
exercise price of £0.30 each. The options are exercisable on or before the 1
November 2010 and have terms and conditions whereby they terminate upon
cessation of employment or consulting arrangements, and vesting dates over the
first two years post issue. Upon conversion, of the options to shares, the
shares will rank equally with existing shares. The options hold no voting or
dividend rights and are not transferrable. At reporting date, 519,167 of the
options had been exercised and 162,500 had lapsed.
On 18 June 2008, 3,000,000 share options over ordinary shares in
the Company were granted to Directors. The options allow the Directors to take
up ordinary shares at an exercise price of £0.40 each. The options are
exercisable on or before the 18 June 2013 and have terms and conditions
whereby they terminate upon cessation of employment or consulting
arrangements, and vesting dates over the first three years post issue. Upon
conversion, of the options to shares, the shares will rank equally with
existing shares. The options hold no voting or dividend rights and are not
transferrable. At reporting date, none of the options had been exercised or
had lapsed.
On 18 June 2008, 650,000 share options over ordinary shares in the
Company were granted to employees in Namibia as an incentive for performance.
The options allow the employees to take up ordinary shares at an exercise
price of £0.40 each. The options are exercisable on or before the 18 June 2013
and have terms and conditions whereby they terminate upon cessation of
employment. Upon conversion, of the options to shares, the shares will rank
equally with existing shares. The options hold no voting or dividend rights
and are not transferrable. At reporting date, 95,000 of the options had been
exercised and none had lapsed.
On 2 July 2009, 3,900,000 share options over ordinary shares in the
Company were granted to Directors and executives. The options allow the
Directors to take up ordinary shares at an exercise price of £1.25 each. The
options are exercisable on or before the 2 July 2014 and have terms and
conditions whereby they terminate upon cessation of employment or consulting
arrangements, and vesting dates over the first three years post issue. Upon
conversion, of the options to shares, the shares will rank equally with
existing shares. The options hold no voting or dividend rights and are not
transferrable. At reporting date, none of the options had been exercised or
had lapsed.
(b) Warrants
On 20 January 2008, 475,000 share warrants over ordinary shares in
the Company were granted to an agent as part payment of brokerage fees in
relation to placements. The warrants allow the agent to take up ordinary
shares at an exercise price of £1.00 each and are exercisable on or before 20
June 2010. Upon conversion, of the warrants to shares, the shares will rank
equally with existing shares. The warrants hold no voting or dividend rights
and are not transferrable. At reporting date, none of the warrants had been
exercised or had lapsed.
On 15 May 2009, 894,500 share warrants over ordinary shares in
Kalahari Minerals Plc were granted to Mirabaud Securities LLP and Ambrian
Partners Limited as part payment of brokerage fees in relation to placements
that occurred in the 2009 financial year. The warrants allow the agents to
take up ordinary shares at an exercise price of £1.00 each and are exercisable
on or before the 1 May 2011. Upon conversion, of the
warrants to shares, the shares will rank equally with existing
shares. The warrants hold no voting or dividend rights and are not
transferrable. At reporting date, none of the warrants had been exercised or
had lapsed.
The fair value of the share-based payment is based upon the
Black-Scholes formula, a commonly used option pricing model. The calculation
of volatility used in the model is based upon an average of market prices
against current market prices of listed companies operating in the mining
industry.
It has been assumed that all options will be exercised.
All options are equity settled.
Options Warrants
As at As at As at As at
31 December 31 December 31 December 31 December
2009 2008 2009 2008
Outstanding at start of
year 7,600,000 14,300,000 475,000 -
Weighted average
exercise price £0.33 £0.30 £1.00 £
Granted 3,900,000 3,650,000 894,500 475,000
Weighted average
exercise price £1.25 £0.40 £1.00 £1.00
Forfeited (62,500) (600,000) - -
Weighted average
exercise price £0.33 £0.30 - -
Exercised (614,167) (9,750,000) - -
Weighted average
exercise price £0.33 £0.30 - -
_________ _________ _________ _________
Outstanding at end of
year 10,823,333 7,600,000 1,369,500 475,000
_________ _________ _________ _________
As at 31 December 2009 6,143,333 options and 1,369,500 warrants
were exercisable (2008: 3,700,000 options and 475,000 warrants).
The inputs into the Black-Scholes model in respect of options and
warrants granted during the year are as follows:
As at As at
31 December 31 December
2009 2008
£ £
Weighted average
exercise price in pence £1.25 £0.34
Expected volatility 43% 75%
Expected life 4.14 years 2.5 years
Risk free rate 4% 5%
Expected dividends None None
Valuation per option £0.48 £0.21
Valuation per warrant £0.34 £0.12
Volatility has been based on the following:
- The annualised volatility of the Company's shares since
floatation on the AIM market; and
- The volatility of comparable listed Companies that are considered
to be most comparable to Kalahari based on historical share price information
dating back to January 2008.
The Company's mid-market closing share price at
31 December 2009 was 174p (31 December 2008: 44p). The highest and lowest
mid-market closing share prices during the year were 212p (2008: 46.4p) and
39.75p (2008: 24.5p) respectively. The weighted average exercise price of
share options was 113p at 31 December 2009 and 41.5p at 31 December 2008. The
weighted average remaining contractual life of options outstanding at the end
of the year was 3.3years (2008: 3.45years).
22. Related Party Disclosures
No one entity has control over the whole group.
Extract Resources Limited
Extract a company incorporated in Australia, is an associated
undertaking of the Group. No expenses were recharged during the year from
Extract (2008: £53,573). Also during the year, the Group recharged costs
incurred on behalf of Extract totalling £748 (2008: £80,504).
Investments in associated companies are disclosed in note 12.
Management consider compensation paid to key management include
only the Directors. For details please refer to Note 4.
23. Operating Lease Commitments
Land & Land &
buildings buildings
Group 2009 2008
£ £
Within one year 24,000 20,043
After one year - 48,254
_________ _________
24,000 68,297
_________ _________
24. Contingent Liabilities
Access agreements
The Company has entered into various agreements with the Namibian
Ministries and farm owners. These agreements provide for environmental
rehabilitation and damages against the exploration properties. Should staff or
partners of Kalahari Energy (Namibia) (Pty) Ltd be negligent, the Company
could face claims for damages.
The Directors of the Company are of the opinion that the risk is
low and, if necessary, insurance cover will be taken.
25. Post Balance Sheet Events
On 12 February 2010, the Company announced its wholly owned
Australian subsidiary, Kalahari Minerals Pty Ltd, had received acceptances
under its conditional off-market takeover offer for the entire issued ordinary
share capital of Coronet Resources Limited (`Coronet') with respect to 97.61%
of the issued shares in Coronet. The achievement of 90% acceptance level
fulfilled a key condition of the offer and accordingly on the 4 March 2010,
the Company declared its conditional off-market takeover bid for the entire
share capital of Coronet fully closed. Subsequently on 16 April 2010, Kalahari
Minerals Pty Ltd compulsorily acquired the remaining outstanding shares in
Coronet, and the off-market takeover bid for the entire issued share capital
of Coronet was declared fully completed. The consideration for the acquisition
was the issue of 16,000,617 Kalahari Minerals Plc shares. As the initial
accounting for the transaction has not yet been finalised the Group is unable
to provide the information required by IFRS 3 Revised -- Business
Combinations.
On 26 February 2010, the Company issued 118,000 ordinary £0.01
shares, of which 75,000 ordinary shares were issued at a premium of £0.29 per
share and 43,000 ordinary shares were issued at a premium of £0.39 per share.
On 1 March 2010, the Company announced the appointment of Mr.
Jonathan Leslie as Chief Executive Officer of Extract, following a period of
evaluation of a short list of high calibre applicants, with necessary
expertise to advance the associates world class Husab Uranium Project towards
production. Jonathan's appointment was strongly endorsed by Kalahari given his
exceptional level of experience in the uranium sector, particularly marketing
and management, stemming from his role as Managing Director of Rossing
Uranium, Rio Tinto's subsidiary which operates the producing Rössing Mine from
1991 to 1994. Further, on the 12 April 2010, Jonathan was appointed as
Executive Director of Extract.
On 5 March 2010, the Company announced the Board appointment of Mr
Richard Lockwood as a Non-executive Director. Mr Lockwood has 50 years of
experience in institutional investment, primarily with Hoare Govett in London
and Australia and AMVESCAP London. He is currently a Senior Fund Manager for
City Natural Resources High Yield Trust, New City High Yield Fund, Geiger
Counter Limited and Golden Prospect Precious Metals.
On 25 March 2010, ITOCHU Corporation, a major Japanese trading
house, agreed to acquire 15% interest in the issued share capital of Kalahari,
through its wholly owned subsidiary Nippon Uranium Resources (Australia) Pty
Ltd. As at 1 June 2010, ITOCHU is interested in 33,781, 505 ordinary shares of
the Company, representing 14.94% in the issued share capital of the Company.
ITOCHU's share acquisition significantly solidified and strengthened the
Company's shareholder base, and provides the support of a corporation which
has actively been involved in the trading of uranium since 1998 and has
delivered over 4,000 tonnes of uranium to the market in 2009, one of the
biggest uranium traders in the world.
As part of the corporate agreement with Kalahari, ITOCHU is
entitled to maintain a nominated representative on the Board, as a
Non-executive Director, conditional upon ITOCHU (or any member of the Group)
being interested (either conditionally or unconditionally) in at least 13.5%
of the entire issued share capital of the Company. Accordingly, on the 23
April 2010, the Company announced the Board appointment of Mr. Takashi Yasuda
as a Non-executive Director.
On 29 March 2010, the Company issued 343,667 ordinary £0.01 shares,
of which 81,667 ordinary shares were issued at a premium of £0.29 per share
and 262,000 ordinary shares were issued at a premium of £0.39 per share.
On 15 April 2010, the Company issued 475,000 ordinary £0.01 shares
at a premium of £0.31 per share.
On 4 May 2010, the Company announced that APAC Resources Limited
(`APAC'), a major Hong Kong listed Company, focussed on natural resource
investment opportunities and base metals trading, had agreed to acquire up to
a 7.1% interest in the issued share capital of Kalahari. Under the terms of
the agreement between Coronet, Kalahari and APAC, Kalahari's wholly owned
subsidiary Coronet has agreed to sell up to
16,000,000 ordinary shares in Kalahari at a share price of £1.85 in cash per
share, equating to £29,600,000. The strategic investment and APAC's invaluable
relationships and contacts in the Chinese commodities market, further
strengthens Kalahari's exposure to the Asian resource sector following the
strategic shareholding acquired by ITOCHU. As at 1 June 2010, APAC is
interested in 10,063,250 ordinary shares of the Company, representing 4.45% in
the issued share capital of the Company.
Since the year end the Group has increased its interest in
associate Extract by 0.37% to 40.78% (as at 1 June 2010) and its interest in
North River was diluted by 0.19% to 44.7% (as at 1 June 2010).