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Audited Financial Report for the financial year ended 31 December 2018
Kore Potash plc
(Incorporated in England and Wales)
Registration number 10933682
ASX share code: KP2
AIM share code: KP2
JSE share code:KP2
ISIN: GB00BYP2QJ94
(“Kore Potash” or the “Company”)
AUDITED FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018
The Board of Kore Potash plc is pleased to announce the publication of the annual financial report of the Company, the potash exploration
and development Group, whose flagship asset is the Sintoukola Potash Project, located within the RoC, for the year ended 31 December
2018.
The full financial report is available online at the Company’s website www.korepotash.com
A Glossary of Terms is available at the bottom of this announcement.
Summary of key developments
• On 9 February 2018, the Company through its subsidiary, SPSA, was awarded the Sintoukola 2 Exploration Permit by the government of
the RoC. This permit covers areas the Company believes are prospective for sylvinite mineralisation, and is valid for three years, following
which it may be renewed twice, each time for a further period of two years.
• On 29 March 2018, Kore Potash completed its listing on AIM as well as the main board of the JSE, in addition to retaining its ASX listing.
• USD 13.14 million was raised through the placing and direct subscription of new ordinary shares in the Company and through a
convertible loan note which was subsequently converted into ordinary shares in the Company on 27 July 2018.
• Appointment of Mr José Antonio Merino as a Non-Executive Director on 23 May 2018. José Antonio was nominated by SQM and
replaced Pablo Altimiras, whose resignation was announced on 26 April 2018.
• Appointment of Mr Brad Sampson as CEO and Executive Director, effective from 4 June 2018, replacing Mr Sean Bennett, who resigned
with effect from the same date.
• On 20 August 2018, a maiden Mineral Resource Estimate for the Dougou Extension Deposit was announced, totalling 232 Mt with an
average grade of 38.1% KCl. The Dougou Extension Deposit is located approximately 15 km southwest of the Company’s Kola sylvinite
Deposit. The Mineral Resource Estimate was reported in accordance with the JORC Code.
• On 30 August 2018, a new DUP, which was previously signed by the Ministry of Land Affairs and Public Domain, was gazetted. The DUP
covers the entire Project land area and provides the framework of compensation arrangements required under RoC laws due to the
Group’s intended activity on the land area.
• A licence to use an offshore area for the transhipment of potash and the discharge of waste brine was authorised by the Minister of
Transport, Civil Aviation and Merchant Marine of the RoC and issued on 6 September 2018.
• On 21 November 2018 Kore Potash announced two Exploration Targets for sylvinite. The Exploration Targets were reported in
accordance with the JORC Code and are as follows:
o Kola South; the potential southward extension of the Kola deposit has an Exploration Target of 95 to 175 Mt with an average grade
of between 34 and 42% KCl.
o Dougou Extension North; the potential northward extension of the Dougou Extension Deposit has an Exploration Target of 320 to
600 Mt with an average grade of between 30 and 38% KCl.
The potential quantity and grade of an Exploration Target is conceptual in nature and is an approximation. There has been insufficient
exploration at Kola South and Dougou Extension North to estimate Mineral Resources and it is uncertain if further exploration will result
in the estimation of Mineral Resources.
• The Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licenses was gazetted into law on
29 November 2018 following ratification by the Parliament of the RoC.
• The Company completed its review of the Kola DFS and released a summary of results to Shareholders on 29 January 2019. This included
the reporting of:
o Proved and Probable Ore Reserves for the Kola Deposit totalling 152.4Mt with an average grade of 32.5% KCl.
o Post-tax, NPV10 (real) of USD 1,452 million and a real ungeared Internal Rate of Return of 17% on an attributable basis at life-of-
mine average MoP prices for granular of USD 360 per tonne CFR Brazil and standard of USD 350 per tonne CFR Brazil.
Further details of the summary of the Kola DFS is available on the Company’s website.
• The FC who undertook the DFS was contracted to provide the Company with an EPC proposal, for the construction of Kola, within 3
months of the completion of the DFS. The FC submitted the EPC proposal to the Company on 23 March 2019, which was past the due
date of 28 February 2019. The Company will now review the options available to it for the way forward with the Kola Project.
• The amended Kola ESIA was completed and submitted to the regulator for review prior to submission to the Minister of Environment
for approval.
Summary of financials
`
• During the year ended 31 December 2018, the Group incurred a loss of USD 6.3 million and experienced net cash outflows from
operating and investing activities of USD 23.1 million. Cash and cash equivalents totalled USD 6.2 million as at 31 December 2018.
• The Directors have prepared a cash flow forecast for the period ending 31 December 2020, which indicates that the Group will not have
sufficient liquidity to meet its working capital requirements to the end of the going concern period, primarily being corporate costs,
exploration expenditure, and DFS costs related to the Kola Project. Please refer to the Note 1 to the financial statements for more detail
on the going concern statement.
• Accordingly the Directors have resolved to undertake certain mitigating actions including a capital raise in the second quarter of 2019.
The Company has begun discussions with its major shareholders with regards to its near and mid-term funding requirements.
Brad Sampson, Chief Executive Officer of Kore Potash commented:
“I joined as Chief Executive of Kore Potash for one fundamental reason – the extremely high quality of the assets in the Sintoukola basin and
the potential to bring an entirely new, globally significant potash district into production.
I firmly believe that this a project that needs to be built, a combination of our high grade, shallow depth, and proximity to the coast means
that we can produce MOP at, or amongst, the lowest operating costs anywhere in the world. Combined with the huge size of the resource
this means that the basin can supply an increasing global demand for fertiliser for decades, and longer, to come.
I know that our shareholders, the government of the Republic of Congo, and our local communities wholeheartedly share the Company’s
ambition to see Sintoukola in production as soon as it is possible and I look forward to updating all stakeholders on our progress. While there
is still a significant amount of work ahead I am confident that we will achieve our goals.”
29 March 2019
JSE Sponsor: Rencap Securities (Pty) Limited
For further information, please visit www.korepotash.com or contact:
Kore Potash Tel: +27 11 469 9140
Brad Sampson – CEO info@korepotash.com
Tavistock Communications Tel: +44 (0) 20 7920 3150
Jos Simson kore@tavistock.co.uk
Edward Lee
Canaccord Genuity – Nomad and Broker Tel: +44 (0) 20 7523 4600
Martin Davison korepotash@canaccordgenuity.com
James Asensio
Corporate activities
• On 29 March 2018 the Company successfully completed its admission to AIM and a concurrent secondary listing of its ordinary shares
on the main board of the JSE as part of its strategy to better access capital markets where there is a strong understanding of large scale
African mining projects and therefore attract a broader investor base.
• The Company also raised gross aggregate proceeds of USD 12.89 million, comprising a total of USD 12.89 million from the Placees
through the placing and direct subscription of 83,523,344 ordinary shares in the Company at a placing price of AUD 0.20 per new
Ordinary Share. In addition, the Company raised USD 250,000 from the Chairman, Mr David Hathorn, through a convertible loan note
that subsequently converted into ordinary shares upon shareholder approval at the AGM of the Company held on 27 June 2018. The
Placees and the Chairman were granted 13,144,659 equity warrants on the basis of one equity warrant for every USD 1.00 invested
exercisable at AUD 0.30 for one ordinary share with a 3 year subscription period.
• Brad Sampson was appointed as CEO and Executive Director on 4 June 2018. Brad, a mining engineer, has more than 25 years’ resources
industry experience across numerous locations including West and Southern Africa. In addition to significant mine development and
operating experience, Brad has held leadership positions at several publicly listed companies. Brad was most recently CEO of Australian
Securities Exchange listed Tiger Resources. Prior to this Brad held senior positions at Newcrest Mining Ltd and was CEO at AIM/ASX
listed Discovery Metals Ltd. Other notable positions include General Manager at Goldfields operations in South Africa and Australia.
• Appointment of José Antonio Merino as a Non-Executive Director nominated by SQM. José Antonio joined SQM in 2016 and is currently
Mergers and Acquisitions Director, prior to which he worked at EPG partners as head of a mining private equity fund, at Asset Chile, a
Chilean boutique investment bank and at Santander Investment. He is a qualified civil engineer having graduated from Pontificia
Universidad Catolica de Chile.
• Appointment of SJCS, a London based specialist company secretarial and corporate administration services provider, as interim joint
company secretary with effect from 1 October 2018. SJCS joins current Joint Company Secretary, Henko Vos (based in Perth, Western
Australia). The Board received and accepted the resignation of Francesca Wilson as Joint Company Secretary of the Company with effect
from 30 September 2018.
Operational and exploration activity
Kola Sylvinite Project
Mining Convention
• The Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licenses was gazetted into law on
29 November 2018 following ratification by the Parliament of the RoC. The gazetting of the Mining Convention provides security of title
and the right to develop and operate the Kola Project as well as the adjacent Dougou and Dougou Extension deposits. Under the Mining
Convention the RoC government will be granted a 10% carried equity interest in the project companies (DPM and KPM, which are wholly
owned by SPSA).
• The Mining Convention concludes the framework envisaged in the 25-year renewable Kola and Dougou Mining Licences granted in
August 2013 and May 2017, respectively. The Mining Convention provides certainty and enforceability of the key fiscal arrangements
for the development and operation of Kola and Dougou Mining Licenses, which amongst other items include import duty and VAT
exemptions and agreed tax rates during mine operations. See Note 7 to the financial statements for further details on the terms and
conditions of the Mining Convention.
• The Mining Convention provides strengthened legal protection of the Company’s investments in the RoC through the settlement of
disputes by international arbitration.
ESIA
• The Kola ESIA was performed during 2012 and approved on 10 October 2013 following the issuance of the certificate of environmental
compliance by the Minister of Environment of the RoC. This constituted a key regulatory requirement to be granted the Kola Mining
License.
• The Kola DFS design has incorporated a number of value-adding design changes since the approval of the ESIA and the Company has
undertaken to amend the ESIA accordingly.
• In December 2018, the amended ESIA was submitted to the regulator for review, prior to the Minister of Environment’s final approval.
The Company anticipates receipt of the approved amended ESIA in H1 2019.
DFS Update
• The Company completed its review of the Kola DFS and released a summary of results to Shareholders on 29 January 2019. As part of
the DFS, Met-Chem, a division of DRA Americas Inc., (a subsidiary of the DRA Group) completed an Ore Reserve Estimate for the Kola
Sylvinite Deposit. The Ore Reserves total 152.4 Mt with average grade of 32.5% KCl. The estimate of Ore Reserves was completed by
Met-Chem DRA Global and was prepared in accordance with the JORC Code. Table 1 on page Error! Bookmark not defined. provides
the Proved and Probable Kola Sylvinite Ore Reserves. Further details of the summary of the Kola DFS is available on the Company’s
website.
• The announcement made on 29 January 2019, which is available on the Company’s website, included the following highlights from the
Kola DFS:
Business case highlights potential of the Kola asset
o Post-tax, NPV10 (real) of USD 1,452 million and a real ungeared Internal Rate of Return of 17% on an attributable basis at life-of-
mine average MoP prices for granular of USD 360 per tonne CFR Brazil and standard of USD 350 per tonne CFR Brazil.
o Operating cash margin averaging 75%.
o Average annual EBITDA of approximately USD 585 million.
o 24% annual free cash return on invested capital.
o Average annual free cash flow, post-tax, post commissioning of approximately USD 500 million.
o 4.3-year post-tax payback period from first production.
Industry leading operating costs and cost of sales
o Mine gate operating cost (pre-transshipment) averaging USD 61.71 per tonne, which is in the lowest cost quartile globally based on
equivalent CRU market data.
o Kola forecast to be the lowest cost potash supplier CFR Brazil based on CRU market data.
o Average cost of MoP delivered to Brazil of USD 102.47 per tonne.
Long life and high quality asset
o Nameplate production target of 2.2 Mtpa MoP over a 33 year life, with a scheduled life of 23 years based primarily on Ore Reserves
and including 6% Inferred Mineral Resource and a further 10 years based entirely on Inferred Mineral Resources (in each case,
reported in accordance with the JORC Code).
o There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further
exploration work will result in the determination of indicated mineral resource or that the production target itself will be realised.
o Kola Project Ore Reserves of 152.4 Mt with average KCl grade of 32.5%, reported in accordance with the JORC Code.
Capital program aligned with industry averages
o Pre-production capital cost of USD 2.1 billion (on EPCM basis) which includes USD 110 million contingency, USD 106 million of
escalation and USD 89 million EPCM margin.
o Pre-production capital intensity of USD 956 per tonne MoP annual capacity is in second quartile relative to MoP industry peers and
suggests that further capital optimisation is possible.
o 46-month construction period, with a commencement date to be determined following advancement of construction contract
negotiations and project financing.
Upside potential
o Review of the DFS by Kore and its third party independent consultants have identified opportunities to further improve and optimise
the project indicating that the work completed to date by the FC has not fully optimised the Kola Project.
o Due to high operating margin and high free cash return on invested capital the Company’s financial advisors (Rothschild & Co) has
indicated that the project has a debt carrying potential of up to USD 1.4 billion.
• The FC was contracted to provide the Company with an EPC proposal, for the construction of Kola, within 3 months of the completion
of the DFS. The FC submitted the EPC proposal to the Company on 23 March 2019, which was past the due date of 28 February 2019.
The Company will now review the options available to it for the way forward with the Kola Project.
Workstreams initiated with RoC stakeholders and authorities
• On 30 August 2018, a new DUP, which was previously signed by the Ministry of Land Affairs and Public Domain, was gazetted. The DUP
covers the entire Project land area (mine, over land conveyor, process plant and services corridors) provides the framework of
compensation arrangements required under RoC laws due to the Group’s activity on the land area.
• On 12 September 2018, the Company announced final approval from the Minister of Transport, Civil Aviation and Merchant Marine for
the use of the preferred transhipment zone. This confirms the design assumption on the transhipment arrangement in accordance with
the Kola DFS design and costing.
• On 16 October 2018, the Company received a letter of comfort from the Ministry of Energy and Hydraulic of the RoC confirming the
Company’s exclusive rights to operating the power transmission line when financed and built by the Company for the mining project.
Exploration
Dougou Extension maiden Mineral Resource
Based on the drilling completed in 2017 and interpretation of earlier drilling and seismic survey data the Company declared a maiden Mineral
Resource Estimate for the Dougou Extension Deposit, first reported on 20 August 2018 and reported in accordance with the JORC Code.
Total sylvinite Mineral Resources at Dougou Extension are 232 Mt of sylvinite grading 38.1% KCl, comprised of:
• Indicated Mineral Resource of 111 Mt sylvinite grading 37.2% KCl, and
• Inferred Mineral Resource of 121 Mt sylvinite grading 38.9 %KCl.
The sylvinite at Dougou Extension is contained within two seams, the Top Seam (TS) and the Hangingwall Seam (HWS), separated by between
10 and 15 m of rock-salt. The seams are at a depth of between 310 metres and 490 metres below surface. The Mineral Resource Estimate
was based upon data for 13 holes within or around the deposit area, drilled by Kore or previous explorers. The interpretation of
approximately 160 line km of oil-industry 2D seismic survey data aided modelling of surfaces between the drill-holes. Table 1 includes the
Mineral Resource Estimate for Dougou Extension.
Exploration Targets at Dougou Extension North and Kola South
On 20 November 2018, the Company announced Exploration Targets for sylvinite, as follows:
o ‘Kola South’, the potential southward extension to the Kola Deposit; 95 to 175 Mt with average grade of between 34 and 42% KCl,
o ‘Dougou Extension North’, the potential northward extension to the Dougou Extension Deposit; 320 to 600 Mt with an average
grade of between 30 and 38% KCl,
An Exploration Target is not a Mineral Resource but a statement of exploration potential. The Exploration Targets were based on an
interpretation of all available Company and historical drilling and 2D seismic survey data and the Company’s understanding of the controls
on sylvinite mineralisation.
Changes to Potash Mineral Resources and Ore Reserves between 2017 and 2018
Table 1 provides a comparison of the Company’s Mineral Resources and Ore Reserves, year-on-year between 2017 and 2018, as per ASX
Listing rule 5.21.4. Since 2017 the Company has added the Dougou Extension sylvinite Mineral Resource and the Kola deposit sylvinite Ore
Reserves.
Table 1. Comparison of Potash Mineral Resources and Ore Reserves year-on-year between 2017 and 2018 (including Ore Reserves as
announced on 29 January 2019)
MINERAL RESOURCES 2017 2018
Million Grade Contained Million Grade Contained
Category
Tonnes KCl % KCl (Mt) Tonnes KCl % KCl (Mt)
Measured 216 34.9 75 216 34.9 75
Indicated 292 35.7 104 292 35.7 104
Measured + Indicated 508 35.4 180 508 35.4 180
Kola Sylvinite Deposit
Inferred 340 34.0 116 340 34.0 116
TOTAL 848 34.8 295 848 34.8 295
Measured - - - 0 0.0 0
Indicated - - - 111 37.2 41
Dougou Extension Measured + Indicated - - - 111 37.2 41
Sylvinite Deposit
Inferred - - - 121 38.9 47
TOTAL - - - 232 38.1 88
Measured 341 17.4 59 341 17.4 59
Indicated 441 18.7 83 441 18.7 83
Measured + Indicated 783 18.1 142 783 18.1 142
Kola Carnallite Deposit
Inferred 1,266 18.7 236 1,266 18.7 236
TOTAL 2,049 18.5 378 2,049 18.5 378
Measured 148 20.1 30 148 20.1 30
Indicated 920 20.7 190 920 20.7 190
Dougou Carnallite Measured + Indicated 1,068 20.6 220 1,068 20.6 220
Deposit
Inferred 1,988 20.8 414 1,988 20.8 414
TOTAL 3,056 20.7 634 3,056 20.7 634
Measured 705 23.3 165 705 23.3 165
Indicated 1,653 22.8 377 1,764 23.7 419
TOTAL MINERAL
Measured + Indicated 2,358 23.0 542 2,469 23.6 583
RESOURCES
Inferred 3,594 21.3 3,715 21.9 813
TOTAL 5,953 22.0 1,307 6,185 22.6 1,396
ORE RESERVES 2017 2018
Million Grade Contained Million Grade Contained
Category
Tonnes KCl % KCl (Mt) Tonnes KCl % KCl (Mt)
Proved - - - 61.8 32.1 19.8
Kola Sylvinite Deposit Probable - - - 90.6 32.8 29.7
TOTAL - - - 152.4 32.5 49.5
Notes: The Kola Mineral Resource Estimate was reported 6 July 2017 in an announcement titled ‘Updated Mineral Resource for the High
Grade Kola Deposit’. It was prepared by the Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group. The Ore Reserve Estimate
for Kola was first reported 29 January 2019 in an announcement titled ‘Kola Definitive Feasibility Study’ and was prepared by Met-Chem. The
Dougou carnallite Mineral Resource Estimate was reported 9 February 2015 in an announcement titled ‘Elemental Minerals Announces Large
Mineral Resource Expansion and Upgrade for the Dougou Potash Deposit’. It was prepared by ERCOSPLAN Ingenieurgesellschaft Geotechnik
und Bergbau mbH. The Dougou Extension sylvinite Mineral Resource Estimate was reported 20 August 2018 in an announcement titled
‘Maiden Sylvinite Mineral Resource at Dougou Extension’. It was prepared by Competent Person Mr. Andrew Pedley a full-time employee of
Kore Potash.
New Exploration Permit
SPSA was awarded a new Exploration Licence, Sintoukola 2, by Presidential Decree 2018-34 dated 9 February 2018 granting exploration
rights for 3 years which can be renewed twice for periods of 2 years each, covering an area of 294.4km2 adjoining the Dougou Mining Lease,
covering prospective ground for sylvinite to the northwest of the latter.
Figure1. Location of the Sintoukola Project showing the Kola, Dougou and Dougou Extension Projects
(image available in full report at www.korepotash.com)
Competent person statement
The information relating to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves in this report is based on, or
extracted from previous reports referred to herein, and is available to view on the Company’s website www.korepotash.com The Kola
Mineral Resource Estimate was reported on 6 July 2017 in an announcement titled ‘Updated Mineral Resource for the High Grade Kola
Deposit’. It was prepared by Competent Person Mr. Garth Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a subsidiary of the
DRA Group, and a member of the Association of Professional Engineers and Geoscientists of British Columbia. The Ore Reserve Estimate for
sylvinite at Kola was first reported on 29 January 2019 in an announcement titled ‘Kola Definitive Feasibility Study’ and was prepared by Met-
Chem; the Competent Person for the estimate is Mr. Molavi, member of good standing of Engineers and Geoscientists of British Columbia.
The Dougou carnallite Mineral Resource Estimate was reported on 9 February 2015 in an announcement titled ‘Elemental Minerals
Announces Large Mineral Resource Expansion and Upgrade for the Dougou Potash Deposit’. It was prepared by Competent Persons Dr.
Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und
Bergbau mbH and members of good standing of the European Federation of Geologists. The Dougou Extension sylvinite Mineral Resource
Estimate was reported on 20 August 2018 in an announcement titled ‘Maiden Sylvinite Mineral Resource at Dougou Extension’. It was
prepared by Competent Person Mr. Andrew Pedley a full-time employee of Kore Potash, a registered professional natural scientist with the
South African Council for Natural Scientific Professions and member of the Geological Society of South Africa. The Company confirms that it
is not aware of any new information or data that materially affects the information included in the original market announcements and, in
the case of estimates of Mineral Resources or Ore Reserves that all material assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form
and context in which the Competent Person’s findings are presented have not been materially modified from the original market
announcement.
Business model
The Company’s business strategy for the financial year ahead and, in the foreseeable future, is to continue exploration and development
activities on the Company’s existing potash mineral projects in the RoC. The Company’s current activities do not generate any revenues or
positive operating cash flow. Future development necessary to commence production will require significant capital expenditures.
Position and principal risks
The Company’s business strategy is subject to numerous risks, some outside the Board’s and management’s control. These risks can be
specific to the Company, generic to the mining industry and generic to the stock market as a whole. The key risks, expressed in summary
form, affecting the Group and its future performance include but are not limited to:
o capital requirement and ability to attract future funding;
o country risk in Republic of Congo;
o change in potash commodity prices and market conditions;
o geological and technical risk posed to exploration and commercial exploitation success;
o environmental and occupational health and safety risks;
o government policy changes; and
o retention of key staff.
This is not an exhaustive list of risks faced by the Company or an investment in it. There are other risks generic to the stock market and the
world economy as a whole and other risks generic to the mining industry, all of which can impact on the Company. The management of risks
is integrated into the development of the Company’s strategic and business plans and is reviewed and monitored regularly by the Board.
Further details on how the Company monitors, manages and mitigates these risks are included as part of the Audit and Risk Committee
Report contained within the Corporate Governance Report.
Key Performance Indicators
Given the nature of the business and that the Group is in an exploration and development phase of operations, the Directors are of the
opinion that analysis using KPIs is not appropriate for an understanding of the development, performance or position of our businesses at
this time.
Forward-looking statements
This report contains statements that are "forward-looking". Generally, the words "expect," “potential”, "intend," "estimate," "will" and
similar expressions identify forward-looking statements. By their very nature and whilst there is a reasonable basis for making such
statements regarding the proposed placement described herein; forward-looking statements are subject to known and unknown risks and
uncertainties that may cause our actual results, performance or achievements, to differ materially from those expressed or implied in any of
our forward-looking statements, which are not guarantees of future performance. Statements in this report regarding the Company's
business or proposed business, which are not historical facts, are "forward looking" statements that involve risks and uncertainties, such as
resource estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the
Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and
conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those
currently anticipated in such statements.
Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made.
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Parent Consolidated Entity
Note Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Continuing Operations
Interest income - - 72,873 50,858
Net realised and unrealised
foreign exchange gains 6,679 - 2,886 2,864,226
Directors remuneration (158,733) - (812,575) (365,371)
Equity compensation benefits 2(a) (695,345) (75,546) (695,345) (1,919,924)
Salaries, employee benefits and consultancy 2(c)
expense (19,849) - (1,325,505) (1,595,607)
London listing and re-domicile expenses (304,030) - (1,200,192) (1,549,554)
Administration expenses 2(b) (654,635) (16,774) (2,323,176) (1,746,603)
Fair value change in derivative financial liability 110,114 - 110,114 -
Interest and finance expenses - - (81,407) (39,378)
Loss before income tax expense (1,715,799) (92,320) (6,252,327) (4,301,353)
Income tax 3 - - (17,039) (42,969)
Loss for the year from continuing operations (1,715,799) (92,320) (6,269,366) (4,344,322)
Other comprehensive income/(loss)
Items that may be classified subsequent to profit
or loss
Exchange differences on translating foreign
operations - - (7,104,236) 13,590,884
Other comprehensive income/(loss) for the year - - (7,104,236) 13,590,884
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR
THE YEAR (1,715,799) (92,320) (13,373,602) 9,246,562
Loss attributable to:
Owners of the Company (1,715,799) (92,320) (6,249,696) (4,344,322)
Non-controlling interest - - (19,670) -
(1,715,799) (92,320) (6,269,366) (4,344,322)
Total comprehensive (loss)/income attributable
to:
Owners of the Company (1,715,799) (92,320) (12,832,564) 9,246,562
Non-controlling interest - - (541,038) -
(1,715,799) (92,320) (13,373,602) 9,246,562
Basic and diluted loss per share (cents per share) 24 (0.00) (0.00) (0.75) (0.57)
The accompanying notes from pages 12 to 54 form part of these financial statements.
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Parent Consolidated Entity
Note Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
CURRENT ASSETS
Cash and cash equivalents 4 - - 6,187,113 16,455,490
Trade and other receivables 5 12,681,197 58,857 345,155 281,136
TOTAL CURRENT ASSETS 12,681,197 58,857 6,532,268 16,736,626
NON CURRENT ASSETS
Trade and other receivables 5 - - 120,922 139,163
Property, plant and equipment 6 - - 302,255 413,801
Exploration and evaluation expenditure 7 - - 149,863,323 140,254,520
Investment in subsidiary 8 139,350,094 139,350,094 - -
TOTAL NON CURRENT ASSETS 139,350,094 139,350,094 150,286,500 140,807,484
TOTAL ASSETS 152,031,291 139,408,951 156,818,768 157,544,110
CURRENT LIABILITIES
Trade and other payables 9 144,217 10,000 1,702,392 3,258,054
Derivative financial liability 10 503,398 - 503,398 -
TOTAL CURRENT LIABILITIES 647,615 10,000 2,205,790 3,258,054
TOTAL LIABILITIES 647,615 10,000 2,205,790 3,258,054
NET ASSETS 151,383,676 139,398,951 154,612,978 154,286,056
EQUITY
Contributed equity – Ordinary Shares 11 860,852 771,396 860,852 771,396
Redeemable Preference Shares - 65,631 - 65,631
Reserves 12 152,944,455 138,654,244 213,644,634 206,805,823
Accumulated losses (2,421,631) (92,320) (59,331,800) (53,356,794)
EQUITY ATTRIBUTABLE TO OWNERS OF THE
COMPANY 151,383,676 139,398,951 155,173,686 154,286,056
Non-controlling interests - - (560,708) -
TOTAL EQUITY 151,383,676 139,398,951 154,612,978 154,286,056
The accompanying notes from pages 12 to 54 form part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Consolidated Entity Foreign
Share-Based Share Currency Redeemable Equity Attributable to
Payments Premium Translation Preference Accumulated the Shareholders of Total
Ordinary Shares Reserve Reserve Reserve Merger Reserve Shares Losses Kore Potash plc NCI Equity
Note USD USD USD USD USD USD USD USD USD USD
Balance at 1 January 2017 200,572,926 36,279,828 - (22,338,631) - - (75,637,134) 138,876,989 - 138,876,989
Loss for the period - - - - - - (4,344,322) (4,344,322) - (4,344,322)
Other comprehensive
income for the year - - - 13,590,884 - - - 13,590,884 - 13,590,884
Total comprehensive
(loss)/income for the year - - - 13,590,884 - - (4,344,322) 9,246,562 - 9,246,562
Transfer of previously lapsed
options 12(a) - (26,624,662) - - - - 26,624,662 - - -
Issue of redeemable
preference shares - - - - - 65,631 - 65,631 - 65,631
Share issue (net of costs) 3,937,270 239,680 - - - - - 4,176,950 - 4,176,950
Share based payments 12(a) - 1,919,924 - - - - - 1,919,924 - 1,919,924
Scheme of Arrangement 12(d) (203,738,800) - - - 203,738,800 - - - - -
Balance at
31 December 2017 771,396 11,814,770 - (8,747,747) 203,738,800 65,631 (53,356,794) 154,286,056 - 154,286,056
Loss for the period - - - - - - (6,249,696) (6,249,696) (19,670) (6,269,366)
Other comprehensive loss
for the year - - - (6,563,198) - - - (6,563,198) (541,038) (7,104,236)
Total comprehensive
(loss)/income for the year - - - (6,563,198) - - (6,249,696) (12,812,894) (560,708) (13,373,602)
Transfer of previously lapsed
options 12(a) - (888,202) - - - - 888,202 - - -
Share issue (net of costs) 89,456 - 13,054,936 - - - - 13,144,392 - 13,144,392
Free-attaching warrants - - - - - - (613,512) (613,512) - (613,512)
Redemption of redeemable
preference shares - - - - - (65,631) - (65,631) - (65,631)
Share based payments 12(a) - 1,235,275 - - - - - 1,235,275 - 1,235,275
Balance at
31 December 2018 860,852 12,161,843 13,054,936 (15,310,945) 203,738,800 - (59,331,800) 155,173,686 (560,708) 154,612,978
The accompanying notes from pages 12 to 54 form part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Parent
Share Based Share Redeemable Equity Attributable to
Payments Premium Reorganisation Preference Accumulated the Shareholders of Total
Ordinary Shares Reserve Reserve Merger Reserve Reserve Shares Losses Kore Potash plc NCI Equity
Note USD USD USD USD USD USD USD USD USD USD
Balance at 25 August 2017
(date of incorporation) - - - - - - - - - -
Loss for the period - - - - - - (92,320) (92,320) - (92,320)
Other comprehensive
income for the period - - - - - - - - - -
Total comprehensive
(loss)/income for the period - - - - - - (92,320) (92,320) - (92,320)
Issue of redeemable
preference shares - - - - - 65,631 - 65,631 - 65,631
Share issuance under
Scheme of Arrangement 771,396 11,739,224 - 203,738,800 (76,899,326) - - 139,350,094 - 139,350,094
Share based payments 12(a) - 75,546 - - - - - 75,546 - 75,546
Balance at 31 December
2017 771,396 11,814,770 - 203,738,800 (76,899,326) 65,631 (92,320) 139,398,951 - 139,398,951
Loss for the period - - - - - - (1,715,799) (1,715,799) - (1,715,799)
Other comprehensive
income for the year - - - - - - - - - -
Total comprehensive
(loss)/income for the year - - - - - - (1,715,799) (1,715,799) - (1,715,799)
Transfer of previously
lapsed options 12(a) - (888,202) - - 888,202 - - - - -
Share issue (net of costs) 89,456 - 13,054,936 - - - - 13,144,392 - 13,144,392
Free-attaching warrants - - - - - - (613,512) (613,512) - (613,512)
Redemption of redeemable
preference shares - - - - - (65,631) - (65,631) - (65,631)
Share based payments 12(a) - 1,235,275 - - - - - 1,235,275 - 1,235,275
Balance at 31 December
2018 860,852 12,161,843 13,054,936 203,738,800 (76,011,124) - (2,421,631) 151,383,676 - 151,383,676
The accompanying notes from pages 12 to 54 form part of these financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
Parent Consolidated Entity
Note 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
USD USD USD USD
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (1,178,545) - (6,017,020) (4,957,110)
Income tax paid - - (37,030) -
Net cash used in operating activities 14 (1,178,545) - (6,054,050) (4,957,110)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment (8,452) (94,262)
Payments for exploration activities - - (17,104,196) (28,023,569)
Interest received - - 68,528 50,858
Net cash used in investing activities - - (17,044,120) (28,066,973)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 12,894,392 - 12,894,392 5,000,000
Payment for share issue costs - - - (823,050)
Proceeds from issue of convertible loan note 250,000 - 250,000 -
Amounts advanced to related parties (11,965,847) - - -
Net cash provided by financing activities 1,178,545 - 13,144,392 4,176,950
Net (decrease)/increase in cash & cash
equivalents held - - (9,953,778) (28,847,133)
Cash and cash equivalents at beginning of
financial year - - 16,455,490) 42,609,786)
Foreign currency differences - - (314,599) 2,692,837)
Cash and cash equivalents at end of financial
year 4 - - 6,187,113 16,455,490
The accompanying notes from pages 12 to 54 form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company is a public company incorporated and registered in England and Wales with primary dual listing on the AIM
market and on the ASX, and a secondary listing on the JSE. The consolidated financial statements of the Company as at and
for the year ended 31 December 2018 comprise the Company and its subsidiaries which are disclosed in Note 8 (together
referred to as the “Group”). The Group is involved in mining exploration activity in the RoC.
On 31 August 2017, Kore Potash Limited announced that it proposed to re-domicile in the United Kingdom by way of a
scheme of arrangement (Scheme) between Kore Potash Limited and its shareholders. The Scheme was approved by the
shareholders on 27 October 2017 and the Federal Court of Australia on 6 November 2017. On 20 November 2017, the
Scheme was implemented and as a result the Company is the new parent and Kore Potash Limited is the wholly-owned
subsidiary of the Company.
The registered office of Kore Potash plc’s head office in the United Kingdom is 25 Moorgate, London, United Kingdom EC2R
6AY. The registered office Kore Potash Limited in Australia is Level 3, 88 William Street, Perth 6000 WA.
Basis of Preparation
(a) Statement of Compliance
The annual financial statements of the Company and the Group have been prepared in accordance with IFRS as adopted by
the European Union. The principal accounting policies adopted by the Group and Company are set out below.
The financial statements were authorised for issue by the Directors on 28 March 2019.
(b) Going Concern
During the year ended 31 December 2018, the Group incurred a loss of USD 6,269,366 (2017: USD 4,344,322) and
experienced net cash outflows from operating and investing activities of USD 23,098,170 (2017: USD 33,024,083). Cash and
cash equivalents totaled USD 6,187,113 as at 31 December 2018 (USD 16,455,490 as at 31 December 2017). The Group has
no current source of operating revenue and is therefore dependent on both existing cash resources and future fund raisings
to meet overheads and future exploration requirements as they fall due.
The Directors have prepared a cash flow forecast for the period ending 31 December 2020, which indicates that the Group
will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period, primarily
being corporate costs, exploration expenditure, and costs related to the Kola Project. Forecast costs in the next 12 months
are approximately USD 10 million. However, a significant portion of this cost base is not yet committed, pending completion
of the fund raise, and further steps can therefore be taken to reduce forecast overheads if required.
The Directors have therefore considered mitigating actions, which include:
(a) completion of a capital raising; and
(b) managing and deferring costs where applicable to coincide with the capital raising activity outlined above to ensure all
obligations can be met.
The Directors are planning to raise additional capital in quarter 2 of 2019 to enable the Group to continue to fund its
exploration and development programme and fulfill its working capital requirements. The Directors have identified a number
of funding options available to the Group, and have begun discussions with its major shareholders with regards to its near
and mid-term funding requirements. The Directors note the Group has a history of successfully raising capital on the ASX and
more recently on the AIM and JSE.
The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of
the opinion that there are reasonable grounds to believe that funding will be secured and therefore that the operational and
financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its
obligations as and when they fall due.
(b) Going Concern (Cont)
The ability of the Group to continue as a going concern is dependent on achieving the matters set out above. These conditions
indicate a material uncertainty which may cast significant doubt as to the Group’s ability to continue as a going concern and
therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts
or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.
(c) Basis of Measurement
The consolidated financial statements have been prepared on the basis of historical cost, adjusted for the treatment of
certain financial instruments, as explained in the accounting policies below. Historical cost is generally based on the fair
values of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of
an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would
take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree
to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
(d) Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates. The functional currency of the ultimate parent entity (Kore Potash plc)
is US dollars. The functional currency of the subsidiaries are:
• Kore Potash Limited – US dollars (USD)
• Sintoukola Potash S.A. - CFA Franc BEAC (XAF)
• Dougou Mining S.A. - CFA Franc BEAC (XAF)
• Kola Mining S.A. - CFA Franc BEAC (XAF)
• Kore Potash South Africa (Pty) Ltd – South African RAND (ZAR)
The presentational currency of the Group is US dollars.
(e) Foreign Currency Transactions and Balances
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of
the transaction. Where consideration is received in advance of revenue being recognised the date of the transaction reflects
the date the consideration is received. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the rate of exchange ruling at the reporting date.
All differences in the consolidated financial report are taken to the Statement of Profit or Loss and Other Comprehensive
Income.
(e) Foreign Currency Transactions and Balances (Cont)
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rate at the date the fair value was determined.
As at the reporting date, the assets and liabilities of the foreign subsidiaries are translated into the reporting currency of the
Company at the rate of exchange ruling at the reporting date and the profit or loss in the Statement of Profit or Loss and
Other Comprehensive Income are translated at the weighted average exchange rates for the period. The exchange
differences on the retranslation are taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity is recognised in the profit or loss in the
Statement of Profit or Loss and Other Comprehensive Income. The functional currency for Sintoukola is expected to change
to US dollars upon the commencement of mining.
(f) Basis of Consolidation
Subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting policies.
Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group,
other than in the event of a Group re-organisation as occurred during the year as described below.
The acquisition of Kore Potash Limited by the Company on 20 November 2017 is considered outside the scope of IFRS 3
Business Combinations and accordingly has been accounted for as a common control transaction. The investment in Kore
Potash Limited acquired by the Company as a result of the internal reorganisation was recognised at a value consistent with
the carrying value of the equity items in the Kore Potash Limited accounts immediately prior to the Scheme. In the Parent
entity, the difference between the carrying amount of share capital and options issued by the Company under the Scheme
and the investment in Kore Potash Limited has been recognised in a Reorganisation Reserve.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and
profit and losses resulting from intra-Group transactions have been eliminated in full.
The acquisition of subsidiaries has been accounted for using the purchase method of accounting, other than in the Group re-
organisation described above. The purchase method of accounting involves allocating the cost of the business combination
to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition.
Accordingly, the consolidated financial statements include the results of subsidiaries for the period from their acquisition.
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are
presented separately in the consolidated Statement of Profit or Loss and Other Comprehensive Income and within equity in
the consolidated Statement of Financial Position.
In the Company’s financial statements, investments in subsidiaries are carried at cost. A list of controlled entities is contained
in Note 8 to the financial statements.
(g) Income Tax
The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or disallowed
items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is
settled. Deferred tax is recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income
except where it relates to items that are recognised directly in equity, in which case the deferred tax is adjusted directly
against equity.
Deferred income tax assets are recognised to the extent it is probable that future tax profits will be available against which
deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable
income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
(h) Property, Plant and Equipment
Property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.
The carrying amount of property, plant and equipment is reviewed at each reporting date to ensure it is not in excess of the
recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows
which will be received from the assets employment and subsequent disposal.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over their estimated useful lives to the Group
commencing from the time the asset is held ready for use. The depreciation rates used for the plant and equipment is in the
range of 20% - 40%. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date. Depreciation of property, plant and equipment in SPSA is included in Capitalised Exploration and Evaluation
Expenditure.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the
carrying amount. These gains or losses are included in the profit or loss in the Statement of Profit or Loss and Other
Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset
are transferred to retained earnings.
(i) Financial Instruments
Financial assets and financial liabilities are recognised in the statement of financial position when the Group becomes a
party to the contractual provisions of the instrument. See Note 1(m) for further details on the recognition and
measurement of trade and other receivables and cash and cash equivalents.
(i) Financial Assets
Investments other than investments in subsidiaries are classified as either held-for-trading or not at initial recognition.
At the year-end date all investments are classified as not held for trading. An irrevocable election has been made to
recognise changes in fair value in other comprehensive income.
Trade and other receivables are initially measured at fair value plus any direct attributable transaction costs. Subsequent
to initial recognition, trade and other receivables are measured at amortised cost using the effective interest method,
less any impairment losses.
Trade receivables are held in order to collect the contractual cash flows and are initially measured at the transaction
price as defined in IFRS 15, as the contracts of the Group do not contain significant financing components. Impairment
losses are recognised based on lifetime expected credit losses in profit or loss.
Other receivables are held in order to collect the contractual cash flows and accordingly are measured at initial
recognition at fair value, which ordinarily equates to cost and are subsequently measured at cost less impairment due
to their short term nature. A provision for impairment is established based on 12-month expected credit losses unless
there has been a significant increase in credit risk when lifetime expected credit losses are recognised. The amount of
any provision is recognised in profit or loss.
(ii) Financial Liabilities and Equity
Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
All other loans including convertible loan notes are initially recorded at fair value, which is ordinarily equal to the
proceeds received net of transaction costs. These liabilities are subsequently measured at amortised cost, using the
effective interest rate method.
(iii) Effective Interest Rate Method
The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and
allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash flows through the expected life of the financial asset or liability, or, where appropriate,
a shorter period, to the net carrying amount on initial recognition.
(j) Impairment of Non-Financial Assets Other Than Exploration and Evaluation Assets
The carrying amounts of the Group’s non-financial assets, are reviewed at each reporting date to determine whether there
is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment
loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment
losses are recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income. In respect of
other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the
loss has decreased or no longer exist. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss has been recognised.
(k) Revenue Recognition
Revenue is measured at the transaction price received or receivable allocated to the performance obligation satisfied and
represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT, GST
and other sales related taxes. As the expected period between transfer of a promised good or service and payment from the
customer is one year or less then no adjustment for a financing component has been made.
Sales of goods are recognised when goods are delivered and control has passed.
Revenue arising from the provision of services is recognised when and to the extent that the customer simultaneously
receives and consumes the benefits of the Group’s performance or the Group does not create an asset with an alternative
use but has an enforceable right to payment for performance completed to date.
Interest income is recognised in the Statement of Profit or Loss and Other Comprehensive Income using the effective interest
method.
(l) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the entity prior to the end of the financial year and
which are unpaid. Trade and other payables are initially recognised at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, trade and other payables are measured at amortised cost using the effective interest
rate method.
(m) Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid
investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant
risk of changes in value.
(n) Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-
for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial
assets held by the entity is the current bid price; the appropriate quoted market price for financial liabilities is the current
ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on
market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used
for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair
value for the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available to the entity for similar financial instruments.
(o) Value-Added Tax (“VAT”) / Goods and Services Tax (“GST”)
Revenues, expenses and assets are recognised net of the amount of VAT / GST, except where the amount of VAT / GST
incurred is not recoverable from the relevant jurisdiction’s Tax Office. In these circumstances the VAT / GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of
financial position are shown inclusive of VAT / GST.
Cash flows are presented in the Statement of Cash Flow on a gross basis, except for the VAT / GST component of investing
and financing activities, which are disclosed as operating cash flows.
(p) Capitalisation of Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the following conditions are satisfied:
• the rights to tenure of the area of interest are current; and
• at least one of the following conditions is also met:
o the exploration and evaluation expenditures are expected to be recouped through successful development and
exploration of the area of interest, or alternatively, by its sale; or
o exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active
and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of
assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement
of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount at the reporting date. The recoverable
amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger
than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment
loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
but only to the extent 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 in previous years.
Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration
and evaluation asset is assessed for impairment and the balance is classified as a development asset. The point at which an
area of interest is considered developmental is based on finalisation of a definitive feasibility study, a bankable feasibility
study and the finalisation of appropriate funding.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to
abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are
amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular
review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest.
Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the
costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building
structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining or petroleum permits. Such
costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted
basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration,
there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation.
Accordingly the costs have been determined on the basis that the restoration will be completed within one year of
abandoning the site.
(q) Share Based Payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of
the equity instruments at the grant date. The fair value grant rate is independently determined using the different option
pricing models that takes into account the exercise price, the term of the option, the market and non-market based vesting
and performance criteria, the impact of dilution, the tradeable nature of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of
the option.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding
increase in equity.
When share options and performance rights are exercised, the Company issues new shares. The proceeds received net of
any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
(r) Employee Benefits
(i) Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave are recognised in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Pension contributions
Contributions are made by the Group to pension funds as stipulated by statutory requirements and are charged as
expenses when incurred.
(iii) Employee benefit on costs
Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and
costs when the employee benefits to which they relate are recognised as liabilities.
(s) Earnings per Share
(i) Basic earnings per share
Basic earnings per share is determined by dividing the net profit after income tax attributable to members of the
Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during
the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation
to dilutive potential ordinary shares.
(t) Issued Capital
Ordinary shares and CDIs are classified as equity.
Costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds. Costs directly attributable to the issue of new shares or options incurred in connection with a business
combination, are included in the cost of the acquisition as part of the purchase consideration.
(u) Critical Accounting Judgements and Estimates
In the application of the Group’s accounting policies, which are described in this note, the directors are required to make
judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors that are considered
to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision and future periods if the revision affects both current and
future periods.
The areas involving significant accounting judgment are set out in the tables below:
Critical accounting
judgement Details
Impairment of The ultimate recovery of the value of exploration and evaluation assets, the Company’s investment in
exploration and subsidiaries, and loans to subsidiaries is dependent on the successful development and commercial
evaluation assets, exploitation, or alternatively, sale, of the exploration and evaluation assets.
recovery of parent
company On a regular basis, management consider whether there are indicators as to whether the asset
investments and carrying values exceed their recoverable amounts. This consideration includes assessment of the
intercompany following:
balances (a) expiration of the period for which the entity has the right to explore in the specific area of interest
with no plans for renewal;
(b) substantive expenditure on further exploration for and evaluation of mineral resources in the
specific area is neither budgeted nor planned;
(c) exploration for and evaluation activities have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to discontinue such activities in the
specific area; and
(d) whether sufficient data exists to indicate that, although a development in the specific area is likely
to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
Management judgement is required to determine whether the expenditures which are capitalised as
exploration and evaluation assets will be recovered by future exploitation or sale or whether they
should be impaired. In assessing this, management determines the possibility of finding recoverable
ore reserves related to a particular area of interest, which is a subject to significant uncertainties.
Many of the factors, judgements and variables involved in measuring resources are beyond the
Group’s control and may prove to be incorrect over time. Subsequent changes in resources could
impact the carrying value of exploration and evaluation assets.
Where an impairment indicator is identified, the determination of the recoverable amount requires
the use of estimates and judgement in determining the inputs and assumptions used in determining
the recoverable amounts.
The key areas of judgement include:
• Recent exploration and evaluation results and resource estimates;
• Environmental issues that may impact on the underlying tenements;
• Fundamental economic factors that have an impact on the operations and carrying values of
assets and liabilities.
Based on the information the Company has on the above, it was concluded by management that
amounts were recoverable, and that no write down of exploration and evaluation assets, the
Company’s investment in subsidiaries, and intercompany balances was recognised. This may change
as new information becomes available.
(u) Critical Accounting Judgements and Estimates (Cont)
Critical accounting
judgement Details
Classification of Management judgement is required as to whether the assets associated with the Kola Project
capitalised represents an exploration asset to be accounted for under IFRS 6 Exploration for and Evaluation of
exploration and Mineral Resources, or a development asset to be accounted for under IAS 16 Property, Plant and
evaluation costs to Equipment or IAS 36 Impairment of Assets. A conclusion that consideration is required under IAS 16 or
date IAS 36 would mean that a full impairment test of the assets associated with the Kola Project would
have been required during 2018.
In reaching the judgement that the assets associated with the Kola Project should remain capitalised
as exploration and evaluation assets, management has assessed whether technical and commercial
viability of extracting mineral resources has been demonstrated. Given the ongoing negotiation with
the FC over the final construction cost, and remaining permits to be obtained from the RoC, the Group
has concluded that final technical and commercial viability of the Kola Project has yet to be finalised.
(v) Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties at 31 December 2018 that have a significant risk of resulting
in a material adjustment to the carrying amounts of assets and liabilities are set out in the table below.
Estimation
Uncertainty Details
Valuation of share- The Group issues options and performance rights as share-based payments arrangements to certain
based payments Directors, KMP and employees. The fair values of the options and performance rights are determined
and judgment on using the Black Scholes Option Pricing Model, the Cox, Ross and Rubinstein Binomial Option Pricing
the probability and Model or the Monte Carlo Option Pricing Model that takes into account the exercise price, the term
timing of achieving of the options and performance rights, the impact of dilution, the share price at valuation date and
milestones related expected price volatility of the underlying share, the expected dividend yield and the risk-free interest
to share-based rate for the term of the options and performance rights.
payment
arrangements in The share-based payments arrangements are expensed on a straight line basis over the vesting period,
existence based on the Group’s estimate of shares that will eventually vest. At each reporting date, vesting
assumptions are reviewed to ensure they reflect current expectations and immediately recognises any
impact of the revision to original estimates. If fully vested share options are not exercised and expire
then the accumulated expense in respect of these is reclassified to accumulated losses.
(w) Segment Reporting
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the Board of Directors, which is responsible for
allocating resources and assessing performance of the operating segments.
(x) New and Revised Accounting Standards and Interpretations Adopted
From 1 January 2018 the following standards and amendments are effective in the Group’s financial statements:
• IFRS 9 Financial instruments; and
• IFRS 15 Revenue from contracts with customers.
The impact of adoption of these standards and the key changes to the accounting policies are disclosed below. Other
amendments to IFRSs that became effective for the period beginning on 1 January 2018 did not have any impact on the
Group’s accounting policies.
Title of Standard IFRS 9 Financial instruments
Nature of change IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial
liabilities, introduces new rules for hedge accounting and a new impairment model for financial
assets.
Adoption date The Group adopted IFRS 9 from 1 January 2018 with no changes to the carrying value of financial
and Impact assets and financial liabilities required. In accordance with the transition provisions in the Standard,
comparatives have not been restated.
Classification of IFRS 9 requires the use of two criteria to determine the classification of financial assets: the entity’s
financial assets business model for the financial assets and the contractual cash flow characteristics of the financial
assets. The Standard goes on to identify three categories of financial assets – amortised cost; fair
value through profit or loss (“FVTPL”); and fair value through other comprehensive income
(“FVOCI”).
There have been no changes to the categorisation of financial assets following the adoption of IFRS
9 and all of the Group’s financial assets remain classified at amortised cost.
Impairment IFRS 9 mandates the use of an expected credit loss model to calculate impairment losses rather than
an incurred loss model, and therefore it is not necessary for a credit event to have occurred before
credit losses are recognised. The new impairment model applies to the Group’s financial assets.
No changes to the impairment provisions were made on transition to IFRS 9. Trade and other
receivables are generally settled on a short time frame and the Group’s other financial assets are
due from counterparties without material credit risk concerns at the time of transition.
Title of Standard IFRS 15 Revenue from contracts with customers
Nature of change IFRS 15 replaced IAS 18 which covered revenue arising from the sale of goods and the rendering of
services and IAS 11 which covered construction contracts. IFRS 15 is based on the principle that
revenue is recognised when control of a good or service transfers to a customer. The standard
permits either a full retrospective or a modified retrospective approach for the adoption
Adoption date and The Group adopted IFRS 15 from 1 January 2018. The implementation of IFRS 15 has not had a
Impact material impact on the Group’s financial statements as it is currently a pre-revenue business.
(y) New and Revised Accounting Standards and Interpretations on Issue but not yet Adopted
Certain new accounting standards and interpretations have been published that are not mandatory for the 31 December
2018 reporting period. Those which may have a significant impact to the Group are set out below. The Group does not plan
to adopt these standards early.
Title of Standard IFRS 16 Leases
Nature of change IFRS 16 replaces the current IAS 17 Leases standard. IFRS 16 removes the classification of leases as
either operating leases or finance leases – for the lessee – effectively treating all leases as finance
leases. Most leases will be capitalised on the balance sheet by recognising a 'right-of-use' asset and
a lease liability for the present value obligation. This will result in an increase in the recognised assets
and liabilities in the statement of financial position as well as a change in expense recognition, with
interest and deprecation replacing operating lease expense. The only exceptions are short-term and
low-value leases.
Lessor accounting remains similar to current practice, i.e. lessors continue to classify leases as finance
and operating leases.
Impact The Group has reviewed all of the Group’s outstanding leasing arrangements in light of the new lease
accounting rules in IFRS 16. The standard will affect primarily the accounting for the Group’s
operating leases.
As at the reporting date, the Group has non-cancellable operating lease commitments of
USD 216,702 (see Note 18). Of these commitments, USD 3,377 relate to a short-term lease which
ended on 31 January 2019 which will be recognised on a straight-line basis as expense in profit or
loss.
For the remaining lease commitments the Group expects to recognise right-of-use assets of
approximately USD 208,453 on 1 January 2019 and lease liabilities of USD 208,453. No change is
expected on the overall net assets and net current assets of the Group. The Group expects that net
losses after tax will increase by approximately USD 4,092 for 2019 as a result of adopting the new
rules. Operating cash flows will increase and financing cash flows decrease by approximately USD
172,721 as repayment of the principal portion of the lease liabilities will be classified as cash flows
from financing activities.
The Group does not have any activities as a lessor and hence there will not be any impact on the
financial statements in this regard.
Date of adoption by The changes in the Group's accounting policies from the adoption of IFRS 16 will be applied from 1
group January 2019 onwards.
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable future transactions.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
NOTE 2: LOSS FOR THE YEAR
Expenses
(a) Equity based payments – directors, KMP
and other employees 695,345 75,546 695,345 1,919,924
695,345 75,546 695,345 1,919,924
(b) Administration Expenses
Accounting, company secretarial and audit fees 236,530 - 399,274 189,270
Insurance expenses 43,370 - 118,779 61,827
Legal fees - - 64,944 202,629
Compliance, registration and other tax feese 155,299 6,774 584,808 239,558
Marketing and investor relations - - 169,591 127,926
Premises and office related costs - - 87,002 100,940
Professional fees - - 143,420 24,766
Recruitment fees 179,017 - 179,017 42,253
Travel and accommodation expenses 36,353 - 417,350 673,237
Other expenses 4,066 10,000 158,991 84,197
654,635 16,774 2,323,176 1,746,603
(c) Salaries, employee benefits and consultancy expense
Salaries and wages - - 409,524 719,381
Termination payment - - - 100,436
Employee benefits – Health insurance benefits - - 147,865 234,486
Consultants 19,849 - 768,116 541,304
19,849 - 1,325,505 1,595,607
(d) Average number of employees Number Number Number Number
Operational - - 17 151
Head Office 1 - 26 21
1 - 43 172
Total staff costs for the Group in the year ended 31 December 2018 were USD 2,279,499 (2017: USD 3,433,660). The staff
costs incurred during the year at a subsidiary, SPSA, of USD 1,869,975 has been capitalised as Exploration and Exploration
Asset (2017: USD 2,714,279).
NOTE 3: INCOME TAX EXPENSE Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
The components of tax expense comprise: USD USD USD USD
Current tax – foreign tax - - 17,039 42,969
Deferred tax - - - -
Total income tax expense - - 17,039 42,969
The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in the
financial statements as follows:
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Loss before tax from continuing operations (1,715,799) (92,320) (6,252,327) (4,301,353)
Parent company tax on loss from continuing operations at the
UK corporation tax rate of 19% (2017: 19.25%) (326,002) (17, 541) - -
Group tax on loss from continuing operations at the Australian
corporation tax rate of 30% (2017: 30%) - - (1,875,698) (1,290,406)
Different tax rates of subsidiaries operating in different
jurisdictions - - 509,939 (23,286)
(326,002) (17,541) (1,365,759) (1,313,692)
Tax effect of:
Net non-deductible expenses 195,462 14,354 811,221 (69,485)
Deferred tax asset not recognised 130,540 3,187 571,577 1,851,349
Prior year tax losses utilised - - - (425,203)
326,002 17,541 1,382,798 1,356,661
Income tax expense - - 17,039 42,969
The statutory tax rate of Kore Potash plc is 19% (2017: 19.25%), representing the UK corporation tax rate. The Group is
subject to varying statutory rates, primarily being Australia (30%), Congo (see Note 7 regarding corporate tax concessions
applicable under the new mining convention) and South Africa (28%). The current tax expense of USD 17,039 (2017: USD
42,969) arose on the pre-tax income generated in South Africa for intercompany management services.
No deferred tax has been recognised in respect of the Group’s tax losses of USD 11,499,637 (2017: USD 9,189,501) that are
available for offset against any future taxable profits in the companies in which the losses arose. Of these tax losses,
USD 10,801,215 arose from the Australian entity and USD 698,422 arose from the parent entity (2017: USD 9,178,133 from
the Australian entity and USD 11,368 from the parent entity).
The tax losses which arose from the Australian entity can be carried forward indefinitely to be offset against future years’
profits. A deduction for prior years’ losses will be denied where the Company cannot satisfy a ‘continuity of ownership’ test
or, failing this, the alternative ‘same business test’.
With effect from 1 April 2017, new tax legislation has been introduced in the UK with regard to the use of brought forward
tax losses. The impact of these rules means that the tax treatment of brought forward losses may be different for losses
arising before and after 1 April 2017. The majority of the tax losses which arose from the Parent entity arose after 1 April
2017, and therefore there is a potential restriction on how much these can be used to offset against any future years' profits.
Generally, the amount of profit which can be offset against losses carried forward is restricted to 50% of the amount of
profits in excess of GBP 5 million. Profits under the annual GBP 5 million group deduction allowance can be offset by losses
in full. Where a company is in a group the USD 5 million allowance will apply to the group. Based on the Parent entity's
current income tax position the majority of its tax losses can be offset against any future income in the Parent, or can be
group relieved.
Deferred tax assets have not been recognised in respect of the losses arising from the Australian entity or the parent entity
due to the uncertainty around timing of generating sufficient taxable profits in future to utilise the losses. These losses may
also not be utilised to offset taxable profits elsewhere in the group
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
NOTE 4: CASH AND CASH EQUIVALENTS
Cash at bank - - 6,187,113 16,455,490
- - 6,187,113 16,455,490
NOTE 5: TRADE AND OTHER RECEIVABLES
Current
Advance to employees - - 112,071 -
Amount due from directors in respect of preference shares
issued - 65,631 - 65,631
Interest receivable - - 4,345 -
Net GST, PAYE and VAT recoverable 135,121 - 82,739 28,768
Prepayments 47,073 - 56,400 91,569
Amounts due from / (due to) a subsidiary 12,499,003 (6,774) - -
Other receivables - - 89,600 95,168
12,681,197 58,857 345,155 281,136
Non-Current
Deposits related to investments in DPM and KPM - - 120,922 139,163
- - 120,922 139,163
Total Trade and Other Receivables 12,681,197 58,857 466,077 420,299
The amount due to a subsidiary is interest-free and is repayable on demand.
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
Plant and equipment – at cost - - 1,855,971 1,947,447
Less accumulated depreciation - - (1,553,716) (1,533,646)
- - 302,255 413,801
Reconciliation:
Opening balance - - 413,801 374,316
Additions - - 8,452 97,091
Depreciation capitalised under exploration and evaluation - - (90,023) (87,961)
Depreciation expensed - - (7,078) (16,612)
Disposals - - (5,500) -
Foreign exchange differences - - (17,347) 46,967
Closing balance at period end - - 302,255 413,801
NOTE 7: EXPLORATION AND EVALUATION EXPENDITURE Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Opening balance - - 140,254,520 95,798,269
Exploration and evaluation expenditure capitalised during the
year - - 16,107,446 30,688,177
Foreign exchange differences - - (6,498,643) 13,768,074
Closing balance at period end - - 149,863,323 140,254,520
Exploration and evaluation expenditure relating to:
Kola mining project - - 128,878,868 118,082,437
Dongou mining project - - 20,984,455 22,172,083
- - 149,863,323 140,254,520
(i) On 8 June 2017, a new mining convention was signed by the Group and the Government of the RoC. The convention
governs the conditions of construction, operation and mine closure of the Kola and Dougou (including Dougou
Extension) mining projects. The terms and conditions of the mining convention include key investment promotion
provisions, including the following:
• Corporate tax concessions applicable for the first 10 years of each mining permit as production capacity is extended,
which includes zero corporation tax for the first five years from profitability, and a corporation tax rate of 7.5% for
the next five years;
• An ongoing corporation tax rate of 15% for the rest of the life of mine;
• Exemptions from withholding taxes including interest, dividends and capital gains during the term of the mining
convention;
• VAT and import duty exemptions (including all subcontractors) during construction;
• Royalties of 3% payable to the RoC, which is based on an equivalent to EBITDA;
• Guarantee from the RoC that it will facilitate and support the implementation of the project, as defined in the
convention (for example, in granting the necessary consents to permit export of the final product through the use
of a dedicated jetty); and
• The RoC to be granted a 10% carried equity interest in the project companies, which are currently wholly-owned
by Kore Potash Limited’s subsidiary, SPSA.
The mining convention has a term which covers the life of the Kola and Dougou mining permits including any extension
(25 years plus 15 year extension, renewable indefinitely upon proven mineable ore resources). The Group was awarded
the Sintoukola 2 Exploration Permit dated 9 February 2018 by the government of the RoC.
(ii) The ultimate recoupment of costs carried forward for exploration expenditure phases is dependent on the successful
development and commercial exploitation, or alternatively, the sale of the respective areas of interest.
NOTE 8: CONTROLLED ENTITIES Percentage Percentage
Owned Investment Owned Investment
Country of 31 Dec 2018 31 Dec 2018 31 Dec 2017 31 Dec 2017
Controlled Entities Incorporation % USD % USD
Held directly:
Kore Potash Limited Australia 100 139,350,094 100 139,350,094
Held through Kore Potash Limited:
Sintoukola Potash S.A. (“SPSA”) Republic of Congo 97 9,387,413 97 9,387,413
Kore Potash South Africa (Pty) Ltd South Africa 100 1,192 100 1,192
Held through Sintoukola Potash S.A.:
Kore Potash Mining S.A. (“KPM”) Republic of Congo 100 18,264 100 18,264
Dougou Potash Mining S.A. (“DPM”) Republic of Congo 100 18,264 100 18,264
The principal activity of Kore Potash Limited during the financial year was for administrational and operational support for
the exploration for potash minerals prospects. The registered office of Kore Potash Limited is Level 3, 88 William Street, Perth
WA 6000.
The principal activity of SPSA and its two subsidiaries, KPM and DPM, during the financial year was exploration for potash
minerals prospect. The registered office for the three entities is 24 Avenue Charles de Gaulle, Immeuble Atlantic Palace BP
662 Pointe Noire, République du Congo.
The principal activity of Kore Potash South Africa (Pty) Ltd during the financial year was for South African administrative and
operational support for the exploration for potash minerals prospects. The registered office is 33 Ballyclare Drive, Ballywoods
Office Park, Cedarwood House, Bryanston 2021 South Africa.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
NOTE 9: TRADE AND OTHER PAYABLES
Current
Trade and other creditors - - 388,350 502,684
Accruals 144,217 10,000 1,293,613 2,710,325
Income tax payable - - 20,429 45,045
Total Trade and Other Payables 144,217 10,000 1,702,392 3,258,054
Trade and other creditors are non-interest bearing and are normally settled on 30 day terms.
NOTE 10: DERIVATIVE FINANCIAL INSTRUMENTS Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Equity warrants exercisable at AUD 0.30
each expiring on 29 March 2021 503,398 - 503,398 -
503,398 - 503,398 -
The above amounts relate to the following:
The value of the free-attaching warrants provided to shareholders who participated in the share issue completed on 29
March 2018 (83,523,344 shares issued at AUD 0.20 each). A total of 12,894,659 equity warrants exercisable at AUD 0.30
expiring 29 March 2021 were issued with a Black & Scholes valuation method of USD 0.0476 per warrant.
The derivative financial liability was revalued at 31 December 2018 using the Black Scholes valuation method with the net
change in fair value of the derivative financial liability of USD 110,114 taken to the statement of profit or loss and other
comprehensive income.
The inputs used in the measurement of these warrants were as follows:
Input into the model At grant date At 31 Dec 2018
Spot price AUD 0.145 GBP 0.072
Expected volatility 91.67% 110.60%
Life of warrants 3 years 2.24 years
Fair value per warrant USD 0.0476 USD 0.039
NOTE 11: ISSUED CAPITAL Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
860,852,693 Fully Paid Ordinary Shares at par value of USD
0.001 each (31 December 2017: 771,395,766 Fully Paid
Ordinary Shares at par value of USD 0.001) 860,852 771,396 860,852 771,396
Fully Paid Ordinary Shares 860,852 771,396 860,852 771,396
NOTE 11: ISSUED CAPITAL (CONT)
Movement in Share Capital of Consolidated Entity
Date Details No. of Shares) USD)
1 Jan 2017 Opening balance (i) 728,944,470 200,572,926
3 Feb 2017 Vesting of performance rights 4,850,060 -
27 Apr 2017 Share placement at AUD 0.25 each 26,504,000 5,000,000
Less: Costs of issuing free attaching options - (239,680)
Less: Costs of raising capital - (1,646,050)
29 May 2017 Shares issued in relation to the balance of a consultant’s fee at AUD 0.21 each 5,193,522 823,000
30 Jun 2017 Vesting of performance rights 2,666,090 -
20 Nov 2017 Balance prior to Scheme of Arrangement implementation (ii) 768,158,142 204,510,196
20 Nov 2017 Recognition of surplus value over nominal value of Kore Potash plc shares in
Merger Reserve (ii) (iii) - (203,738,800)
20 Dec 2017 Vesting of performance rights (ii) (iii) 3,237,624 -
31 Dec 2017 Balance at 31 Dec 2017 (ii) (iii) 771,395,766 771,396
29 Mar 2018 Capital raising at AUD 0.20 each (iv) 83,523,344 83,523
29 Mar 2018 Share-based capital raising costs at AUD 0.12 each (v) 4,315,333 4,315
27 Jul 2018 Conversion of USD 250,000 convertible loan note calculated by reference to
the price of shares being at AUD 0.20 per share (vi) 1,618,250 1,618
31 Dec 2018 Closing balance 860,852,693 860,852
(i) At 31 December 2016, Kore Potash Limited was the parent company of the Group and had 728,944,470 Fully Paid
Ordinary Shares in issuance with a nominal value of USD 200,572,926.
(ii) The Company became the Group’s parent company on 20 November 2017 in accordance with the Scheme of
Arrangement with Kore Potash Limited and its shareholders (‘the Scheme’). In line with UK Company Law, the
Company’s shares have a par value of USD 0.001. Under the Scheme, the Company issued 768,158,142 ordinary shares
(initially to be held in the form of Chess Depositary Interests (CDIs)) as consideration for the transfer of Kore Potash
Limited shares to the Company. Subsequently on 20 December 2017, 3,237,624 ordinary shares (CDIs) were issued by
the Company on conversion of certain Performance Rights.
(iii) As a result, the Group’s Fully Paid issued capital has a nominal value of USD 771,396 at 31 December 2018. The shares
in the Company were issued on a 1:1 basis with shares in Kore Potash Limited which had a nominal value of USD
204,510,196 at the date of the commencement of the Scheme. The surplus value of USD 203,738,800 compared to the
nominal value of the Company’s shares has been recognised in a new Merger Reserve. Please refer to Note 12(d) for
details.
(iv) On 29 March 2018, a total of USD 12,894,659 was raised from existing and new investors through the placing and direct
subscription of 83,523,344 ordinary shares in the Company at a placing price of AUD 0.20 per new ordinary share. The
par value of the 83,523,344 ordinary shares was USD 83,523.
(v) On 29 March 2018, 4,315,333 ordinary shares were issued to Canaccord Genuity Ltd and Rencap Securities (Pty) Limited
as part of their placing fee at a deemed issued price of AUD 0.12 per ordinary share. The par value of the 4,315,333
ordinary share was USD 4,315.
(vi) On 26 March 2018, the Company entered into a convertible loan note with the Chairman, David Hathorn, to lend USD
250,000 to the Company. The convertible loan note did not attract interest and was unsecured. At the Company’s AGM
on 27 June 2018, the shareholders approved the conversion of the convertible loan note into 1,618,250 shares at AUD
0.20 per share and 250,000 free-attaching warrants. The shares and warrants were issued on 27 July 2018.
NOTE 12: RESERVES Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
SBP reserve (a) 12,161,843 11,814,770 12,161,843 11,814,770
Share premium reserve (b) 13,054,936 - 13,054,936 -
Foreign currency translation reserve (c) - - (15,310,945) (8,747,747)
Merger reserve (d) 203,738,800 203,738,800 203,738,800 203,738,800
Reorganisation reserve (e) (76,011,124) (76,899,326) - -
Total Reserve 152,944,455 138,654,244 213,644,634 206,805,823
(a) SBP Reserve
Opening balance 11,814,770 - 11,814,770 36,279,828
Transfer from Kore Potash Limited (i) - 11,739,224 - -
Value of lapsed options transferred to (888,202) - (888,202) (26,624,662)
accumulated losses (ii)
Share based payment vesting expense (iii) 1,235,275 75,546 1,235,275 1,919,924
Free attaching options issued (iv) - - - 239,680
Closing balance 12,161,843 11,814,770 12,161,843 11,814,770
(i) In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders, 58,191,226
Unlisted Options and 48,077,728 Performance Rights/Shares, valued at USD 11,739,224 were issued on 20 November
2017 from the Company to the holders of Unlisted Options or Performance Rights/Shares in Kore Potash Limited in
consideration for the cancellation of those Kore Potash Limited Unlisted Options and Performance Rights/Shares.
(ii) For further details, refer to Note 12(e).
(iii) The value of the above Parent entity’s SBPs for the year ended 31 December 2017 refer to the value of Performance
Rights vested/cancelled after the Unlisted Options and Performance Rights/Shares were transferred from Kore Potash
Limited to the Company. On 20 December 2017, 3,237,624 Performance Rights and Performance Shares vested and
converted into 3,237,624 Chess Depositary Interests (CDI’s) and 2,245,000 Performance Rights previously granted were
cancelled following the resignation of Werner Swanepoel (Project Director). The share based payments of these
Performance Rights and Shares was USD 75,546. Further details of the SBP vesting expense for the year ended 31
December 2018 is included in Note 23.
(iv) The cost of USD 239,680 in 2017 relates to the value of the free attaching unlisted options provided to shareholders
who participated in the rights issue completed on 27 April 2017 (26,504,000 shares issued at AUD 0.25 each). A total
of 5,000,000 unlisted options exercisable at AUD 0.30 expiring 15 November 2019 were issued with a Black Scholes
valuation method of AUD 0.0642 per option. The volatility used was 85.68% with risk-free interest rate of 1.76%.
(v) For parameters used in the valuation of for the above options and performance rights see Note 23.
(a) SBP Reserve (Cont)
Movement in SBP Reserve of the Consolidated Entity
Date Details No. of Options No. of Rights USD
1 Jan 2017 Opening balance 53,441,226 36,717,020 32,279,828
3 Feb 2017 Exercise of performance rights - (7,516,150) -
27 Apr 2017 Issue of free attaching unlisted options 5,000,000 - 239,680
22 May 2017 Lapsing of unlisted options (250,000) - -
29 May 2017 Issue of performance rights - 18,216,858 -
1 Jun 2017 Issue of performance rights - 660,000 -
30 Jun 2017 SBP vesting expenses - - 906,265
20 Dec 2017 Exercise of performance rights - (3,237,624) -
20 Dec 2017 Cancellation of performance rights - (2,245,000) -
1 Dec 2017 SBP vesting expenses - - 1,013,659
31 Dec 2017 Transfer value of lapsed options to Accumulated Losses - - (26,624,662)
31 Dec 2017 Balance at 31 Dec 2017 58,191,226 42,595,104 11,814,770
30 Jun 2018 Lapsing of unlisted options (value of lapsed options
transferred to Accumulated Losses) (8,191,226) - (888,202)
30 Jun 2018 SBP vesting expenses (vi) - - 676,255
1 Aug 2018 Issue of unlisted options (vii) 21,200,000 - -
1 Aug 2018 Cancellation of performance rights (viii) - (14,000,000) -
1 Aug 2018 Issue of performance rights (viii) - 4,500,000 -
1 Aug 2018 Cancellation of performance rights (ix) - (1,025,000) -
31 Dec 2018 SBP vesting expenses - - 559,020
31 Dec 2018 Closing balance 71,200,000 32,070,104 12,161,843
(vi) The shareholders approved the issue of 500,000 and 1,050,000 Performance Rights to Sean Bennett at the Company’s
AGM to recognise his contribution to the Company and the transition of his position as CEO to a successor and his role
in successfully implementing the re-domicile of the Group in the United Kingdom, the listing of the Company on the
AIM and the JSE and the recent completion of a capital raising. These Performance Rights vested upon Mr Bennett’s
resignation. The Performance Rights are yet to be issued and converted into shares. The SBP vesting expenses includes
the value of these Performance Rights of USD 115,785.
(vii) At the Company’s AGM on 27 June 2018, the shareholders approved the grant of 17,200,000 unlisted options to Brad
Sampson and the grant of 4,000,000 unlisted options to David Hathorn. The unlisted options were subsequently issued
on 1 August 2018. See information on Option Series 31 and Option Series 32 in Note 23 for further details on these
options.
(viii) The shareholders also approved the cancellation of the below existing Performance Rights and the grant of new
Performance Rights to the below Non-Executive Directors at the Company’s AGM.
Director Number of existing Number of new
Performance Rights Performance Rights
David Hathorn 11,000,000 1,500,000
Jonathan Trollip 2,000,000 750,000
Leonard Math 1,000,000 750,000
David Netherway Nil 750,000
Timothy Keating Nil 750,000
The old Performance Rights were subsequently cancelled and the new Performance Rights subsequently issued on 1
August 2018. See information on Rights Series 16 to Rights Series 20 (inclusive) in Note 23 for further details on these
Performance Rights.
(ix) 1,025,000 Performance Rights were cancelled upon Mr Bennett’s resignation
(a) SBP Reserve (Cont)
The SBP reserve is used to accumulate proceeds received from the issuing of options and accumulate the value of options
and performance rights issued in consideration for services rendered and to record the fair value of options and performance
rights issued but not exercised. The reserve is transferred to accumulated losses upon expiry or recognised as share capital
if exercised.
(b) Share Premium Reserve Parent Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Movements during the period USD USD USD USD
Opening balance - - - -
Capital raising on 29 March 2018 at AUD 0.20 each 12,810,869 - 12,810,869 -
Share-based capital raising costs on 29 March 2018 at AUD 395,685 395,685
- -
0.12 each
Less: Capital raising costs (400,000) - (400,000) -
Conversion of USD 250,000 convertible loan note on 27 July
2018 calculated by reference to the price of shares being at AUD
0.20 per share 248,382 - 248,382 -
Closing balance 13,054,936 - 13,054,936 -
The share premium reserve is used to record the difference between the monies received from capital raising and the par
value of the Company’s shares, being USD 0.001 per fully paid ordinary share (see Note 11).
(c) Foreign Currency Translation Reserve Parent Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Movements during the period USD USD USD USD
Opening balance - - (8,747,747) (22,338,631)
Currency translation differences arising during the year - - (6,563,198) 13,590,884)
Closing balance - - (15,310,945) (8,747,747)
The foreign currency translation reserve is used to record currency differences arising from the translation of the financial
statements of the foreign subsidiary.
(d) Merger Reserve
As described above in Note 11, as part of the Scheme the Company issued 771,395,768 shares with a par value of USD 0.001
each in respect of the shares on Kore Potash Limited, which had issued share capital at the date of the transaction with a
value of USD 204,510,196. As a result of this transaction, a Merger Reserve of USD 203,738,800 was created in both the
Parent and Consolidated Entity.
(e) Reorganisation Reserve
In accordance with the Scheme of Arrangement, the Company became the new parent on 20 November 2017 and Kore
Potash Limited is the wholly-owned subsidiary of the Company. The Company elected to account for the acquisition of Kore
Potash Limited as a common control transaction. As a consequence, no acquisition accounting under IFRS 3 Business
Combination has arisen. The investment in Kore Potash Limited acquired by the Company as a result of the internal
reorganisation was recognised at a value consistent with the carrying value of the equity items in the Kore Potash Limited
accounts immediately prior to the Scheme. In the Parent entity, the difference between the carrying amount of share capital
and options issued by the Company under the Scheme and the investment in Kore Potash Limited totalling USD 76,899,326
was recognised in a Reorganisation Reserve in the parent company accounts during the year ended 31 December 2017.
During the year, 8,191,226 SBP options expired during the year. The value of the options of USD 888,802 was transferred to
Accumulated Losses in the Australian subsidiary Kore Potash Limited, and to the Reorganisation Reserve in the Parent
company.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Movements during the period USD USD USD USD
Opening balance (76,899,326) - - -
Share issuance under Scheme of Arrangement - (76,899,326) - -
Value of share-based payment options expired during the year 888,202 - - -
Closing balance (76,011,124) (76,899,326) - -
NOTE 13: DIVIDENDS
No dividends have been proposed or paid during the year ended 31 December 2018 (2017: Nil).
NOTE 14: NOTES TO STATEMENT OF CASH FLOWS Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Reconciliation of cash flows from operating activities:
Loss for the year (1,715,799) (92,320) (6,269,366) (4,344,322)
Adjustments for:
Depreciation expensed - - 7,078 16,612
Loss on asset disposals - - 5,974 -
Equity compensation benefits 695,345 75,546 695,345 1,919,924
Net realised foreign exchange gain - - 3,793 (2,864,226)
Interest received not classified as operating activities cash - - (72,873) (50,858)
inflow
Fair value change in derivative financial liability (110,114) - (110,114) -
Operating loss before changes in working capital
(Increase)/Decrease in receivables (149,775) - (150,283) (8,176)
Increase in tax payable - - (19,990) 42,970
Increase in payables 101,798 16,774 (143,613) 330,966
Net cash used in operating activities (1,178,545) - (6,054,050) (4,957,110)
NOTE 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Overview
The Group has exposure to the following risks from their use of financial instruments:
• market risk,
• credit risk, and
• liquidity risks.
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the business. The Group will use different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign
exchange and other price risks and ageing analysis for credit risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes
for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework. Management monitors and manages the financial risks
relating to the operations of the Group through regular reviews of the risks.
(a) Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is
to manage and control market risk exposures within acceptable parameters, while optimising the return.
(i) Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and are exposed to foreign currency risk through
foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and
cashflow forecasting.
(a) Market Risk (Cont)
(i) Foreign currency risk (cont)
As a result of the operating activities in the RoC and the ongoing funding of overseas operations from Australia, the Group's
Statement of Financial Position can be affected by movements in the Australian Dollar (AUD) / US Dollar (USD) exchange
rate, British Pound (GBP) / US Dollar (USD) exchange rate, Congolese Franc (XAF) / US Dollar (USD) exchange rate, Euro (EUR)
/ US Dollar (USD) exchange rate and the South African Rand (ZAR) / US Dollar (USD) exchange rate. Funds in EUR is held to
hedge the Definitive Feasibility Study (DFS) payments.
A substantial portion of the Group's transactions are denominated in USD, with historically, the majority of costs relating to
drilling activities also denominated in the unit's functional currency.
The summary quantitative data about the Group’s financial instruments’ exposure to significant currency risk as presented
in USD is as follows:
31 December 2018 31 December 2017
EUR GBP XAF ZAR EUR AUD ZAR GBP
FINANCIAL
ASSETS
Cash at bank 1,143,346 - 309,789 61,406 13,805,462 49,158 100,778 -
Receivables - 102,702 321,103 9,302 - 47,031 - 65,631
FINANCIAL
LIABILITIES
Payables (553,000) (185,730) (300,369) (203,418) (2,184,134) (189,924) (846) (52,956)
Derivative - (503,398) - - - - - -
financial liability
Net exposure 590,346 (586,426) 330,523 (132,710) 11,621,328 (93,735) 99,932 12,675
The Group did not have significant currency risk from net exposure to financial instruments’ denominated in AUD at 31
December 2018 (31 December 2017: no significant currency risk from net exposure to financial instruments’ denominated
in XAF).
Sensitivity analysis (Group)
A reasonably possible strengthening (weakening) of the EUR, GBP, XAF and ZAR against USD at 31 December 2018 would
have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit
or loss for the Group by the amounts shown below. This analysis assumes all other variables, in particular interest rates,
remain constant. The impact of the possible strengthening (weakening) of the AUD and any other currencies against USD is
minimal and is not analysed.
Equity Profit or Loss
Strengthening Weakening Strengthening Weakening
Gain/(Loss) Gain/(Loss) (Gain)/Loss (Gain)/Loss
USD USD USD USD
31 December 2018
EUR (5% movement) 29,517 (29,517) (29,517) 29,517
GBP (5% movement) (29,321) 29,321 29,321 (29,321)
XAF (5% movement) 16,526 (16,526) (16,526) 16,526
ZAR (5% movement) (6,636) 6,636 6,636 (6,636)
(a) Market Risk (Cont)
(i) Foreign currency risk (cont)
The summary quantitative data about the Parent’s financial instruments’ exposure to significant currency risk as presented
in USD is as follows:
31 December 2018 31 December 2017
EUR GBP XAF ZAR EUR AUD ZAR GBP
FINANCIAL
ASSETS
Cash at bank - - - - - - - -
Receivables - 102,702 - - - - - 65,631
FINANCIAL
LIABILITIES
Payables - (111,798) - - - - - (10,000)
Derivative - (503,398) - - - - - -
financial liability
Net exposure - (512,494) - - - - - 55,631
Sensitivity analysis (Parent)
A reasonably possible strengthening (weakening) of the GBP against USD at 31 December 2018 would have affected the
measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss for the Parent
by the amounts shown below. This analysis assumes all other variables, in particular interest rates, remain constant.
Equity Profit or Loss
Strengthening Weakening Strengthening Weakening
Gain/(Loss) Gain/(Loss) (Gain)/Loss (Gain)/Loss
USD USD USD USD
31 December 2018
GBP (5% movement) (25,625) 25,625 25,625 (25,625)
(ii) Interest rate risk
The Group is exposed to movements in market interest rates on short term deposits.
The Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets
and financial liabilities is set out in the following table:
Weighted Average Fixed Floating Non-Interest
Effective Interest Rate Interest Rate Interest Rate Bearing
Dec 2018 Dec 2017 Dec 2018 Dec 2017 Dec 2018 Dec 2017 Dec 2018 Dec 2017
% % USD USD USD USD USD USD
FINANCIAL ASSETS
Cash at bank 1.45% 0.04% 4,000,000 - 2,187,113 16,455,490 - -
Receivables - - - - 409,677 346,993
Total financial assets 4,000,000 - 2,187,113 16,455,490 409,677 346,993
FINANCIAL LIABILITIES
Payables (non-derivative) - - - - 1,198,994 3,267,317
Derivative financial - - - - -
503,398
liablity
Total financial liabilities - - - - 1,702,392 3,267,317
Sensitivity analysis
A change of 100 basis point in interest rates at the reporting date would have increased (decreased) equity or profit or loss
by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant. This analysis is performed the same basis for the Consolidated Entity for 2017.
Profit or Loss
100bp 100bp
Increase Decrease
USD USD
31 December 2018
Variable rate instrument 21,871 (21,871)
31 December 2017
Variable rate instrument 164,555 (164,555)
All receivables and payables in the Parent at 31 December 2018 and at 31 December 2017 are non-interest bearing.
Financial assets
Trade receivables from other entities are carried at cost less any allowance for doubtful debts. Other receivables are carried
at cost. Interest is recorded as income using the effective interest rate method.
Financial liabilities
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the
group.
Net fair value of financial assets and liabilities
The carrying amount of financial assets and liabilities at 31 December 2018 and 31 December 2017 is equivalent to the fair
value.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and cash and investment
deposits. The Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient
collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having
similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any provisions
for losses, represents the Group’s maximum exposure to credit risk.
(c) Liquidity and capital risk
The Group’s total capital is defined as the shareholders’ net equity plus any net debt. The objectives when managing the
Group’s capital is to safeguard the business as a going concern, to maximise returns to shareholders and to maintain an
optimal capital structure in order to reduce the cost of capital.
The Group does not have a target debt / equity ratio, but has a policy of maintaining a flexible financing structure so as to
be able to take advantage of investment opportunities when they arise. There are no externally imposed capital
requirements.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
(c) Liquidity and capital risk (cont)
The table below analyses the Group’s financial liabilities into maturity groupings based on the remaining period from the
balance date to the contractual maturity date.
31 Dec 2018 Within 1 Month 1-3 Months 3-12 Months
USD USD USD
Non-derivatives
Non-interest bearing
Trade and other payables 451,184 1,285,455 -
Total Financial Liabilities 451,184 1,285,455 -
31 Dec 2017 Within 1 Month 1-3 Months 3-12 Months
USD USD USD
Non-derivatives
Non-interest bearing
Trade and other payables 3,267,317 - -
Total Financial Liabilities 3,267,317 - -
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash
flows.
If the Group anticipates a need to raise additional capital within 6 months to meet forecasted operational activities, then the
decision on how the Company will raise future capital will depend on market conditions existing at that time.
(d) Fair Value of Financial Instruments
This note provides information about how the Group determines fair values of various financial assets and financial liabilities.
The Directors consider that carrying amounts at financial assets and financial liabilities recognised in the consolidated
financial statements approximate to their fair value.
Fair value hierarchy as at 31 December 2018 Amortised
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
Financial assets
Financial assets held at amortised cost
- Trade and other receivables - - - - 409,677
Total - - - - 409,677
Financial liabilities
Financial liabilities held at amortised cost:
- Trade and other payables - - - - 1,702,392
Financial liabilities held at fair value:
- Derivative financial liability - 503,398 - 503,398 -
Total - 503,398 - 503,398 1,702,392
Fair value hierarchy as at 31 December 2017 Amortised
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
Financial assets
Financial assets held at amortised cost
- Trade and other receivables - - - - 346,993
Total - - - - 346,993
Financial liabilities
Financial liabilities held at amortised cost:
- Trade and other payables - - - - 3,267,317
Total - - - - 3,267,317
The information on the fair values of various financial assets and financial liabilities for the Parent are as follows:
Fair value hierarchy as at 31 December 2018 Amortised
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
Financial assets
Financial assets held at amortised cost
- Trade and other receivables - - - - 12,634,124
Total - - - - 12,634,124
Financial liabilities
Financial liabilities held at amortised cost:
- Trade and other payables - - - - 144,217
Financial liabilities held at fair value:
- Derivative financial liability - 503,398 - 503,398 -
Total - 503,398 - 503,398 144,217
Fair value hierarchy as at 31 December 2017 Amortised
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
Financial assets
Financial assets held at amortised cost
- Trade and other receivables - - - - 65,631
Total - - - - 65,631
Financial liabilities
Financial liabilities held at amortised cost:
- Trade and other payables - - - - 16,774
Total - - - - 16,774
NOTE 16: SEGMENT INFORMATION
Management has determined that the Company and the Group has one reporting segment being mineral exploration in
Central Africa.
As the Group is focused on mineral exploration in Central Africa, management make resource allocation decisions by
reviewing the working capital balance, comparing cash balances to committed exploration expenditure and reviewing the
current results of exploration work performed. This internal reporting framework is the most relevant to assist the Board
with making decisions regarding the Group and its ongoing exploration activities, while also taking into consideration the
results of exploration work that has been performed to date and capital available to the Company.
NOTE 17: EVENTS SUBSEQUENT TO REPORTING DATE
On 29 January 2019 the Company publicly announced the outcomes of the Kola DFS on the AIM market, ASX and on JSE. The
Kola DFS was undertaken by the FC during 2017 and 2018. The highlights of the Kola DFS are detailed on pages Error!
Bookmark not defined. to Error! Bookmark not defined. of the Annual Report and the full announcement can be found on
the Company’s website.
The FC who undertook the Kola DFS was contracted to deliver a proposal for an EPC contract within 3 months of the
completion of the DFS. The FC submitted an EPC proposal on 23 March 2019 which was past the agreed due date of
28 February 2019. The Company is now assessing its options for the way forward on the Kola Project which could include
seeking competitive EPC proposals from European companies.
On 13 February 2019, 1,886,996 Class C Performance Rights were converted into 1,886,996 fully paid ordinary shares
following satisfaction of vesting conditions.
There are no other significant events that have occurred since reporting date requiring separate disclosure.
NOTE 18: OPERATING LEASE ARRANGEMENTS
Leasing Arrangements
Operating leases relate to leases of offices and other property with lease terms of up to 5 years. The Group does not have
an option to purchase the leased property at the expiry of the lease periods.
Non-Cancellable Operating Lease Commitments
Parent Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Not later than 1 year - - 176,097 115,483
Later than 1 year and not later than 5 years - - 40,604 85,632
Later than 5 years - - - -
- - 216,702 201,115
No liabilities have been recognised in respect of non-cancellable operating leases.
NOTE 19: COMMITMENTS FOR EXPENDITURE
Exploration and Evaluation Expenditure Commitments
In order to maintain current rights of tenure to exploration permits, the Group is required meet minimum expenditure
requirements by performing exploration and development work. As at year end, the minimum expenditure requirement has
not yet been determined with respect to the Group’s Sintoukola 2 exploration permit. However, when the minimum
expenditure requirement is confirmed this will need to be satisfied over a period of 3 years.
The are no minimum expenditure requirements with respect to the Group’s mining licences. One of the key investment
promotion provisions for the Mining Convention includes that the RoC is to be granted a 10% carried equity interest in the
project companies, which are currently wholly-owned by the Group’s subsidiary, SPSA.
If the Group decides to relinquish certain licences and/or does not meet the obligations of the new mining convention, assets
recognised in the statement of financial position may require review to determine the appropriateness of the carrying values.
The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations.
Kola DFS Commitment
On 28 February 2017 the Company signed a contract with TechnipFMC, VINCI Construction Grands Projets, Egis and Louis
Dreyfus Armateur (the FC), for the implementation of the DFS.
At the date of this report, the Group had the following DFS commitment:
Parent Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Not later than 1 year - - 935,563 9,259,776
Later than 1 year and not later than 5 years - - 1,575,750 -
Later than 5 years - - - -
- - 2,511,313 9,259,776
NOTE 20: AUDITORS’ REMUNERATION
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Fees payable to the Company’s auditor and their associates for
the audit of the Company’s annual accounts
Deloitte – External Audit 105,000 35,000 165,108 103,679
Total audit fees 105,000 35,000 165,108 103,679
Fees payable to the Company’s auditor and their associates for
other non-audit services to the Group
Half-year review 39,217 - 57,665 40,763
Review of prior years for South African subsidiary - - 6,546 -
Services in connection with the AIM listing - - 148,632 411,015
Tax, Research and Development consulting - - 113,866 34,188
Total non-audit services 39,217 - 326,709 485,966
Total fees payable to the Company’s auditor and their
associates 144,217 35,000 491,817 589,645
NOTE 21: RELATED PARTY TRANSACTIONS
Directors remuneration
The expense of USD 812,575 recognised (2018: USD 365,371) includes directors fees paid and remuneration for the current
and outgoing Chief Executive Officer.
The Company paid USD 6,050 (2017: USD 13,652) to Piaster Pty Ltd as trustee for the Trollip Family Superannuation Fund for
Mr Jonathan Trollip’s director fees. Mr Trollip is a director of and has a beneficial interest in Piaster Pty Ltd.
On 27 June 2018, the shareholders approved the grant of 17,200,000 unlisted options to Brad Sampson, valued at a total of
USD 1,171,320 and 4,000,000 unlisted options to David Hathorn, valued at a total of USD 145,600 at the Company’s AGM.
The shareholders also approved the cancellation of the below existing Performance Rights and the grant of new Performance
Rights to the below Non-Executive Directors at the Company’s AGM.
Director Number of existing Number of new
Performance Rights Performance Rights
David Hathorn 11,000,000 1,500,000
Jonathan Trollip 2,000,000 750,000
Leonard Math 1,000,000 750,000
David Netherway Nil 750,000
Timothy Keating Nil 750,000
The new Performance Rights have a total value of USD 336,150.
On 27 June 2018, the shareholders also approved the issue of 500,000 and 1,050,000 Performance Rights to Sean Bennett
at the Company’s AGM to recognise his contribution to the Company and the transition of his position as CEO to a successor
and his role in successfully implementing the re-domicile of the Group in the United Kingdom, the listing of the Company on
the AIM and the JSE and the recent completion of a capital raising. These Performance Rights have a total value of
USD 115,785.
The details of the unlisted options and Performance Rights granted are in the Company’s Notice of General Meeting
announced on 1 June 2018.
No other director has entered into a material contract (apart from employment) with the Company since the incorporation
of the Company and there were no material contracts involving directors’ interests at the half-year end. Remuneration
arrangements of KMP are disclosed in the Directors’ Remuneration Report on pages Error! Bookmark not defined. to Error!
Bookmark not defined. of this Annual Report.
Loans to KMP and its related parties
David Hathorn (Chairman) and Sean Bennett (previous CEO) were each issued with 25,000 Redeemable (Non-Voting)
Preference Shares at GBP 1.00 each in the Kore Potash plc (held directly). Under the Scheme of Arrangement, both Directors
gave an irrevocable undertaking to pay the Company the sum of GBP 25,000 on or before the date that is five years from the
date of the undertaking or, if sooner, immediately upon a written demand or demands by the Company. At 31 December
2017, the amount owing by the two Directors to the Company was USD 65,631 (GBP 50,000). Upon completion of the Scheme
of Arrangement, and upon the Company’s capital raising on 23 March 2018, the Redeemable Preference Shares were
redeemed and the amounts payable by the Directors were offset by an amount payable by the Company back to the
Directors.
On 26 March 2018, the Company entered into a convertible loan note agreement with the Chairman to lend USD 250,000 to
the Company. The convertible loan note did not attract interest and was unsecured. At the Company’s AGM on 27 June 2018,
the shareholders approved the conversion of the convertible loan note into 1,618,250 shares at AUD 0.20 per share and
250,000 free-attaching warrants. The shares and warrants were issued on 27 July 2018.
Other transactions with the Company and the Group
No KMP has entered into a material contract (apart from employment) with the Company and the Group. Please refer to the
Remuneration Report in the Directors’ Report for the remuneration paid to the KMP. No amount of remuneration is
outstanding at 31 December 2018 (31 December 2017: nil).
Nexia Perth Pty Ltd is engaged to provide accounting, administrative and company secretarial services for the Group on
commercial terms. Mr Henko Vos, who is based in Perth, Australia has been appointed as joint company secretary and is also
currently an employee with Nexia Perth. During the year, the total amount paid to Nexia Perth by the Group for providing
accounting, administration and company secretarial services was USD 163,445 (2017: USD 117,387).
FKW Consulting Ltd was engaged to provide company secretarial services for the Company on commercial terms prior to Mrs
Francesca Wilson’s resignation as joint company secretary on 30 September 2018. Mrs Francesca Wilson, who is based in
London, UK was appointed as joint company secretary up until 30 September 2018 and is also currently an employee with
FKW Consulting Ltd during the year. During the year, the total amount paid to FKW Consulting Ltd by the Group for providing
company secretarial services was USD 11,134 (2017: 13,383).
Following Mrs Francesca Wilson’s resignation as joint company secretary on 30 September 2018, St James’s Corporate
Services Limited was appointed on 1 October 2018, and engaged to provide company secretarial services for the Company
on commercial terms. During the year, the total amount paid to St James’s Corporate Services Limited by the Group for
providing company secretarial services was USD 29,100.
There were no other transactions with KMP and its related parties.
NOTE 22: KMP DISCLOSURES
The following were KMP of the Company and the Group at any time during the reporting period and unless otherwise
indicated were KMP for the entire period.
Executive Directors
Brad Sampson Chief Executive Officer (appointed on 4 June 2018)
Sean Bennett Chief Executive Officer (appointed on 20 November 2015, resigned on 4 June 2018)
Non-Executive Directors
David Hathorn Non-Executive Chairman (appointed on 20 November 2015)
Jonathan Trollip Non-Executive Director (appointed on 21 April 2016)
Leonard Math Non-Executive Director (appointed on 24 April 2014)
Timothy Keating Non-Executive Director (appointed on 15 November 2016)
David Netherway Non-Executive Director (appointed on 12 December 2017)
José Antonio Merino Non-Executive Director (appointed on 23 May 2018)
Pablo Altimiras Non-Executive Director (appointed on 15 November 2016, resigned on 23 May 2018)
Executives
Henko Vos Joint Company Secretary (appointed on 16 November 2016)
St James’s Corporate Joint Company Secretary (appointed on 1 October 2018)
Services Limited
Francesca Wilson Joint Company Secretary (appointed on 29 November 2017,
resigned on 30 September 2018)
John Crews Chief Financial Officer (appointed on 22 May 2017)
Julien Babey Business Development and Head of RoC (appointed on 1 January 2016)
Gavin Chamberlain Chief Operating Officer (appointed 1 October 2017)
Lawrence Davidson Chief Financial Officer and Risk Officer (resigned on 1 January 2018)
Joint Company Secretary (resigned on 25 January 2018)
(i) David Hathorn and Sean Bennett were appointed as the directors of Kore Potash plc on the date of incorporation of the
Company on 25 August 2017.
(ii) In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders, Jonathan Trollip,
Leonard Math, Timothy Keating and Pablo Altimiras were appointed as the directors of the Company on 17 November
2017.
KMP compensation
The KMP compensation included in “Directors Remuneration”, “Equity Compensation Benefits” “Employee and Consultant
Expenses” and “Exploration Expenditure” is as follows:
Consolidated Entity
Dec 2018 Dec 2017
USD USD
Short-term employee benefits 1,807,001 1,510,100
Post-employment benefits 6,050 13,652
Termination benefits 325,705 256,986
Equity compensation benefits 981,042 1,286,133
3,119,798 3,066,871
There were seven directors who held office at the end of the 2018 and 2017 years. Details of directors’ remuneration are
provided in the Directors’ Remuneration Report on pages Error! Bookmark not defined. to Error! Bookmark not defined. of
this Annual Report.
Individual directors and executives compensation disclosures
Information regarding individual directors and executives’ compensation and equity instruments disclosures is provided in
the Remuneration Report section of the Directors’ Report. Apart from the details disclosed in this note, no director has
entered into a material contract with the Company or the Group since the end of the previous financial year and there were
no material contracts involving directors’ interests existing at year-end.
NOTE 23: SHARE-BASED PAYMENTS
Recognised share-based payments
The expense recognised for employee and consultant services during the year is shown in the table below:
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Expense arising from equity-settled share-based payment
transactions 695,345 75,545 695,345 1,919,924
In addition, the amounts capitalised to exploration and evaluation expenditure from share-based payment transactions for
staff whose services are directly attributable to the operational activities of the Kola and Dougou mining projects are as
follows:
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Amounts capitalised to exploration and evaluation
expenditure arising from equity-settled share-based payment
transactions 539,930 - 539,930 -
Parent
In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders, 58,191,226 Unlisted
Options and 48,077,728 Performance Rights/Shares were issued on 20 November 2017 from the Company to the holders of
Unlisted Options or Performance Rights/Shares in Kore Potash Limited in consideration for the cancellation of those Kore
Potash Limited Unlisted Options and Performance Rights/Shares.
The value of the above Parent entity’s share-based payments in 2017 refer to the value of Performance Rights
vested/cancelled after the Unlisted Options and Performance Rights/Shares were transferred from Kore Potash Limited to
the Company. On 20 December 2017, 3,237,624 Performance Rights and Performance Shares vested and converted into
3,237,624 Chess Depositary Interests (CDI’s) and 2,245,000 Performance Rights previously granted were cancelled following
the resignation of Werner Swanepoel (Project Director). The share based payments of USD 75,545 in 2017 relate to KMP.
Consolidated Entity
The Group granted shares rights and options to KMP and other employees as part of as an incentive for future services and
as a reward for past services. The table above shows the vesting expense recognised during the year of USD 695,345 (2017:
USD 1,919,924) and vesting expenses capitalised to exploration and evaluation expenditure of USD 539,930 (2017: Nil).
Details of the share options outstanding during the year are as follows:
2018 2017
Weighted Weighted
Number of share average Number of average
options exercise price share exercise price
options
Outstanding at beginning at year 8,191,226 AUD 0.33 8,441,226 AUD 0.35
Granted during the year 21,200,000 GBP 0.11 - -
Forfeited during the year - - - -
Exercised during the year - - - -
Lapsed during the year (8,191,226) AUD 0.33 (250,000) AUD 0.90
Outstanding at the end of the year 21,200,000 GBP 0.11 8,191,226 AUD 0.33
The share options outstanding at 31 December 2018 had a weighted average exercise price of GBP 0.11 and a weighted
average contractual life of 8 years.
Details of options and performance rights issued to KMP
Option Series 19 to 21
During the 2013 financial year, 250,000 options exercisable at AUD 0.90 expiring 22 May 2017 were issued to a previous
Director, Mr Robert Franklyn, following shareholder approval at the AGM held on 22 May 2013. The details of the options
are as per below.
The options were valued using the Black Scholes Option Pricing Model. The table below shows the fair value of the options
and the inputs used in determining the fair value.
Inputs into the model Tranche 1 Tranche 2 Tranche 3
(Series 19) (Series 20) (Series 21)
Grant date 22 May 2013 22 May 2013 22 May 2013
Share price at grant date AUD 0.39 AUD 0.39 AUD 0.39
Exercise price AUD 0.90 AUD 0.90 AUD 0.90
Expiry date 22 May 2017 22 May 2017 22 May 2017
Expected volatility 100% 100% 100%
Dividend yield 0% 0% 0%
Risk free rate 2.75% 2.75% 2.75%
Vesting date 22 May 2014 22 May 2015 22 May 2016
Vesting period (years) 0.90 1.90 2.90
Fair value per option calculated AUD 0.2181 AUD 0.2181 AUD 0.2181
based on above inputs
Number of options 83,333 83,333 83,334
The above options expired during the 2017 financial year on 22 May 2017.
Option Series 22 to 24
On 9 April 2014, the Company granted 6,509,013 Options exercisable at AUD 0.33 expiring 15 April 2018 to employees under
the Group’s Employee Share Option Plan.
The options were subject to the following vesting conditions:
• 1/3rd which vested on 15 April 2014;
• 1/3rd which vested on 15 April 2015; and
• 1/3rd which vested on 15 April 2016.
None of the options had any voting rights, any entitlement to dividends or any entitlement to the proceeds of liquidation in
the event of a winding up.
The fair value of the equity-settled share options granted was estimated as at the grant date using the Binomial Option
Pricing Model taking into account the terms and conditions upon which the instruments were granted. Expected volatility
was based on the historical share price volatility over the previous years.
Details of options and performance rights issued to KMP (cont)
Option Series 22 to 24 (Cont)
The input used in the measurement of the fair value at grant date of equity settled share based payments plan were as
follows:
Inputs into the model Tranche 1 Tranche 2 Tranche 3
(Series 22) (Series 23) (Series 24)
Grant date share price AUD 0.26 AUD 0.26 AUD 0.26
Exercise price AUD 0.33 AUD 0.33 AUD 0.33
Expected volatility 100% 100% 100%
Option life 4 years 4 years 4 years
Dividend yield 0% 0% 0%
Risk free interest rate 2.5% 2.5% 2.5%
Weighted average grant date AUD 0.1242 AUD 0.1391 AUD 0.1522
fair value
Number of options 2,169,671 2,169,671 2,169,671
During the 2014 year, a total of 817,787 of options lapsed, 408,893 from Tranche 2 (Option Series 23) and 408,894 from
Tranche 3 (Option Series 24).
The remaining options expired during the 2018 financial year on 15 April 2018.
Option Series 25 to 27
On 12 May 2014, the Company granted 1,000,000 options exercisable at AUD 0.33 expiring 15 April 2018 to an employee
under the Group’s Employee Share Option Plan.
The options were subject to the following vesting conditions:
• 1/3rd which vested on 15 April 2014;
• 1/3rd which vested on 15 April 2015; and
• 1/3rd which vested on 15 April 2016.
None of the options had any voting rights, any entitlement to dividends or any entitlement to the proceeds of liquidation in
the event of a winding up.
The fair value of the equity-settled share options granted was estimated as at the grant date using the Binomial Option
Pricing Model taking into account the terms and conditions upon which the instruments were granted. Expected volatility
was based on the historical share price volatility over the past years.
Option Series 25 to 27 (Cont)
The input used in the measurement of the fair value at grant date of equity settled share based payments plan were as
follows:
Inputs into the model Tranche 1 Tranche 2 Tranche 3
(Series 25) (Series 26) (Series 27)
Grant date share price AUD 0.22 AUD 0.22 AUD 0.22
Exercise price AUD 0.33 AUD 0.33 AUD 0.33
Expected volatility 100% 100% 100%
Option life 4 years 4 years 4 years
Dividend yield 0% 0% 0%
Risk free interest rate 2.5% 2.5% 2.5%
Weighted average grant date AUD 0.0948 AUD 0.1073 AUD 0.1194
fair value
Number of options 333,333 333,333 333,333
The above options expired during the 2018 financial year on 15 April 2018.
Option Series 28 to 30
On 30 May 2014, the Company issued 1,500,000 Options exercisable at AUD 0.33 expiring 26 June 2018 to the following
previous Directors under the Group’s Employee Share Option Plan
Mr John Iain Macpherson 1,100,000 Options
Mr Robert Samuel Middlemas 400,000 Options
The options were subject to the following vesting conditions:
• 1/3rd which vested on 15 April 2014;
• 1/3rd which vested on 15 April 2015; and
• 1/3rd which vested on 15 April 2016.
None of the options had any voting rights, any entitlement to dividends or any entitlement to the proceeds of liquidation in
the event of a winding up.
The fair value of the unlisted options granted was estimated as at the grant date using the Binomial Option Pricing Model
taking into account the terms and conditions upon which the instruments were granted. Expected volatility was based on
the historical share price volatility over the previous years.
The input used in the measurement of the fair value at grant date of equity settled share based payments plan were as
follows:
Inputs into the model Tranche 1 Tranche 2 Tranche 3
(Series 28) (Series 29) (Series 30)
Grant date share price AUD 0.25 AUD 0.25 AUD 0.25
Exercise price AUD 0.33 AUD 0.33 AUD 0.33
Expected volatility 100% 100% 100%
Option life 4 years 4 years 4 years
Dividend yield 0% 0% 0%
Risk free interest rate 2.5% 2.5% 2.5%
Weighted average grant date AUD 0.1177 AUD 0.1303 AUD 0.1432
fair value
Number of options 500,000 500,000 500,000
The above options expired during the 2018 financial year on 26 June 2018.
Option Series 31 and 32
At the Company’s AGM on 27 June 2018, the Company’s shareholders approved the grant of 17,200,000 unlisted options to
Brad Sampson and 4,000,000 unlisted options to David Hathorn. The vesting conditions for the unlisted options include
milestones being achieved in relation to the Kola Project, as follows:
Brad Sampson David Hathorn
Vesting conditions (Option Series 31) (Option Series 32)
Completion of project financing 5,733,333 4,000,000
Completion of project 11,466,667 -
Total 17,200,000 4,000,000
Expiry 27/06/2028 27/06/2020
The fair value at grant date of the unlisted options issued to Brad Sampson and to David Hathorn was estimated at
GBP 0.0518 and GBP 0.0241 respectively, using the Black Scholes Option Pricing Model taking into account the terms and
conditions as set out above. The input used in the measurement of the fair value at grant date of the unlisted options were
as follows:
Input into the model Option Series 31 Option Series 32
Grant Date Share Price GBP 0.06 GBP 0.06
Expected Volatility 108.90% 108.90%
Options Life 10 years 2 years
Grant date fair value GBP 0.0518 GBP 0.0241
Rights Series 4 to 6
On 17 September 2015, the Company issued 7,998,270 Performance Rights to the following employees of the Group under
the Group’s Employee Performance Rights Plan.
Employee Class A Class B Class C
Lawrence Davidson 376,374 376,374 376,374
Julien Babey 521,957 521,957 521,957
Other employees 1,767,759 1,767,759 1,767,759
Total 2,666,090 2,666,090 2,666,090
Rights and each class’ vesting conditions is as follows:-
Rights Series 4 - Class A Performance Rights (Employee)
Performance Rights vest as one Share for each Performance Right subject to the satisfaction of the following performance
criteria within 24 months from the date of issue:-
• the Company’s market capitalisation averaging over a period of 60 consecutive days of trading a daily average of not
less than AUD 85 million; and
• completing 12 months of continuous service with the Company.
Rights Series 5 - Class B Performance Rights (Employee)
Performance Rights vest as one Share for each Performance Right subject to the satisfaction of the following performance
criteria within 36 months from the date of issue:
• the Company’s market capitalisation averaging over a period of 60 consecutive days of trading a daily average of not
less than AUD 100 million; and
• completing 24 months of continuous service with the Company.
Rights Series 6 - Class C Performance Rights (Employee)
Performance Rights vest as one Share for each Performance Right subject to the satisfaction of the following performance
criteria within 48 months from the date of issue:
• the Company’s market capitalisation averaging over a period of 60 consecutive days of trading a daily average of not
less than AUD 120 million; and
• completing 36 months of continuous service with the Company.
The fair value of the performance rights granted was estimated as at the grant date using the Monte-Carlo Pricing Model
taking into account the terms and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Inputs into the model Series 4 – Class A Series 5 – Class B Series 6 – Class C
Grant date share price AUD 0.185 AUD 0.185 AUD 0.185
Expected volatility 80% 80% 80%
Rights life 2 years 3 years 4 years
Grant date fair value AUD 0.1451 AUD 0.1507 AUD 0.1510
During the 2017 and 2018 years, the Class A, Class B and Class C Performance Rights vested and the following shares were
subsequently issued to the following employees of the Group:
Employee Shares (i) Shares (ii) Shares (iii)
Lawrence Davidson 376,374 376,374 376,374
Julien Babey 521,957 521,957 521,957
Other employees 1,767,759 1,767,759 1,767,759
Total 2,666,090 2,666,090 2,666,090
(i) The shares from Class A Performance Rights were issued during the 2017 year.
(ii) The shares from Class B Performance Rights were issued during the 2018 year.
(iii) The shares from Class C Performance Rights were issued subsequent to year end on 13 February 2019.
Rights Series 7 - Performance Rights (Previous Project Director)
On 29 February 2016, the Company granted 5,000,000 Performance Rights to Mr Werner Swanepoel, Project Director, under
the Group’s Employee Performance Rights Plan. The rights were contractually agreed to on 7 December 2015 pursuant to
Mr Swanepoel’s employment agreement. The Performance Rights vest as one Share for each Performance Right subject to
the satisfaction of the following:
Vesting Conditions
Joining K2P
(1) - sign on bonus 250,000
(1) - allocated after 1 year service 250,000
(1) - allocated after 2 years service 250,000
(1) - allocated after 3 years service 250,000
Kola Resource & Mine
(2) - DFS Completion 1,000,000
(3) - Off-take secured to support debt finance for mine build 500,000
(4) - Complete finance package for mine build 500,000
Dougou Resource
(5) - Development advanced to commencement of DFS 500,000
Yangala Resource
(6) - Development advanced to completion of PFS 500,000
Share Price Allocation Matrix 1,000,000
25% initial tranche (Note 1(a)) 250,000
straight line between AUD 0.50 and AUD 2.00 (Note 1(b))
100% 1,000,000
TOTAL 5,000,000
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more, the Initial Tranche plus 500 Shares for each one tenth
of a cent that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years), the number of Shares to be issued at the end of each
Vesting Period (6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day average daily VWAP for the current Vesting Period
is AUD 0.50 or more, the Initial Tranche plus 500 Shares for each one tenth of a cent that the 30 day average
daily VWAP exceeds AUD 0.50 on the basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day average daily VWAP for any pervious Vesting Period,
nil.
(iii) where the 30 day average daily VWAP is equal to or more than the highest previous 30 day average daily VWAP,
500 Shares for each one tenth of a cent that the 30 day average daily VWAP exceeds the highest previous 30 day
average daily VWAP.
The fair value of the operational performance rights granted (4,000,000) is calculated based on the share price at grant date.
The fair value of these operational performance rights is AUD 0.19.
The fair value of the remaining performance rights granted with a share price threshold (1,000,000) is estimated as at the
grant date using the Monte-Carlo Pricing Model taking into account the terms and conditions upon which the instruments
were granted.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Inputs into the model Series 7
Grant date share price AUD 0.19
Expected volatility 80%
Rights life 5 years
Grant date fair value AUD 0.1167
On 29 February 2016, 250,000 Fully Paid Ordinary Shares were issued following the vesting of the Performance Rights as a
sign on bonus for the Project Director. In addition, subsequent to year end on 3 February 2017, 250,000 Fully Paid Ordinary
Shares were issued to the Project Director following the vesting of the Performance Rights due to one year of service being
completed on 7 December 2016. On 18 December 2017, 2,245,000 Performance Rights was cancelled upon Mr. Swanepoel’s
resignation. The remaining 2,255,000 Performance Rights were outstanding as at 31 December 2018.
Rights Series 8 - Performance Rights (Chairman)
On 2 March 2016, following shareholders’ approval, the Company granted 13,000,000 Performance Rights to Mr David
Hathorn under the Group’s Employee Performance Rights Plan. Performance Rights vested as one Share for each
Performance Right subject to the satisfaction of the following:
Vesting Conditions
Joining K2P
(1) - allocated after 1 year service 1,000,000
(1) - allocated after 2 years service 1,000,000
(1) - allocated after 3 years service 1,000,000
Share Price Allocation Matrix 10,000,000
20% 2,000,000
straight line between AUD 0.50 and AUD 2.00 (Note 1(b))
100% 10,000,000
TOTAL 13,000,000
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil.
(ii) where the 30 day average daily VWAP is AUD 0.50 or more, the Initial Tranche plus 5,333 Shares for each one
tenth of a cent that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years), the number of Shares to be issued at the end of each
Vesting Period (6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day average daily VWAP for the current Vesting Period
is AUD 0.50 or more, the Initial Tranche plus 5,333 Shares for each one tenth of a cent that the 30 day average
daily VWAP exceeds AUD 0.50 on the basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day average daily VWAP for any previous Vesting Period,
nil.
(iii) where the 30 day average daily VWAP is equal to or more than the highest previous 30 day average daily VWAP,
5,333 Shares for each one tenth of a cent that the 30 day average daily VWAP exceeds the highest previous 30
day average daily VWAP.
The fair value of the operational performance rights granted (3,000,000) was calculated based on the share price at grant
date. The fair value of these operational performance rights was AUD 0.20.
The fair value of the remaining performance rights granted with a share price threshold (10,000,000) is estimated as at the
grant date using the Monte-Carlo Pricing Model taking into account the terms and conditions upon which the instruments
were granted.
The input used in the measurement of the fair value at grant date of these performance rights were as follows:
Inputs into the model Series 8
Issue date share price AUD 0.165
Expected volatility 80%
Rights life 5 years
Grant date fair value AUD 0.1475
On 3 February 2017 and on 20 December 2017, 2,000,000 Fully Paid Ordinary Shares were issued to the Chairman following
the vesting of the Performance Rights due to his one and two years of service being completed on 20 November 2016 and
20 November 2017, respectively.
The remaining 11,000,000 Performance Rights were cancelled following shareholder approval at the Company’s AGM on 27
June 2018.
Rights Series 9 - Performance Rights (Previous CEO)
On 2 March 2016, following shareholders’ approval, the Company granted 8,500,000 Performance Rights to Mr Sean Bennett
under the Group’s Employee Performance Rights Plan. Performance Rights vest as one Share for each Performance Right
subject to the satisfaction of the following:
Vesting Conditions
Joining K2P
(1) - sign on bonus 531,250
(1) - allocated after 1 year service 531,250
(1) - allocated after 2 years service 531,250
(1) - allocated after 3 years service 531,250
Kola Resource & Mine
(2) - DFS Completion 850,000
(3) - Off-take secured to support debt finance for mine build 850,000
(4) - Complete finance package for mine build 850,000
Dougou Resource
(5) - Development advanced to commencement of DFS 850,000
Yangala Resource
(6) - Development advanced to completion of PFS 850,000
Share Price Allocation Matrix 2,125,000
25% initial tranche (Note 1(a)) 531,250
straight line between AUD 0.50 and AUD 2.00 (Note 1(b))
100% 2,125,000
TOTAL 8,500,000
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more, the Initial Tranche plus 1,062 Shares for each one
tenth of a cent that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years), the number of Shares to be issued at the end of each
Vesting Period (6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day average daily VWAP for the current Vesting Period
is AUD 0.50 or more, the Initial Tranche plus 1,062 Shares for each one tenth of a cent that the 30 day average
daily VWAP exceeds AUD 0.50 on the basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day average daily VWAP for any pervious Vesting Period,
nil.
(iii) where the 30 day average daily VWAP is equal to or more than the highest previous 30 day average daily VWAP,
1,062 Shares for each one tenth of a cent that the 30 day average daily VWAP exceeds the highest previous 30
day average daily VWAP.
The fair value of the operational performance rights granted (6,375,000) is calculated based on the share price at grant date.
The fair value of these operational performance rights is AUD 0.20.
The fair value of the remaining performance rights granted with a share price threshold (2,125,000) is estimated as at the
grant date using the Monte-Carlo Pricing Model taking into account the terms and conditions upon which the instruments
were granted.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Inputs into the model Series 9
Issue date share price AUD 0.165
Expected volatility 80%
Rights life 5 years
Grant date fair value AUD 0.1469
The following Fully Paid Ordinary Shares were issued to the previous CEO during the 2017 and 2018 years:
Date Shares
2 March 2016 531,250 Following vesting due to sign-on bonus.
3 February 2017 531,250 Following 1 year of service being completed on 20 November 2016.
20 November 2017 531,250 Following 2 years of service being completed on 20 November 2017.
Total 1,593,750
On 4 June 2018, 1,025,000 Performance Rights were cancelled following the resignation of the previous CEO. The remaining
5,881,250 was outstanding at year end.
Rights Series 10 - Performance Rights (Non-Executive Director - J Trollip)
On 6 July 2016, following shareholders’ approval, the Company granted 2,000,000 Performance Rights to Mr Jonathan Trollip
under the Group’s Employee Performance Rights Plan. Performance Rights vest as one Share for each Performance Right
subject to the satisfaction of the following:
Vesting Conditions
Share Price Allocation Matrix 2,000,000
25% initial tranche (Note 1(a)) 500,000
straight line between AUD 0.50 and AUD 2.00 (Note 1(b))
100% 1,500,000
TOTAL 2,000,000
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more, the Initial Tranche plus 1,000 Shares for each one
tenth of a cent that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years), the number of Shares to be issued at the end of each
Vesting Period (6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day average daily VWAP for the current Vesting Period
is AUD 0.50 or more, the Initial Tranche plus 1,000 Shares for each one tenth of a cent that the 30 day average
daily VWAP exceeds AUD 0.50 on the basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day average daily VWAP for any pervious Vesting Period,
nil.
(iii) where the 30 day average daily VWAP is equal to or more than the highest previous 30 day average daily VWAP,
1,000 Shares for each one tenth of a cent that the 30 day average daily VWAP exceeds the highest previous 30
day average daily VWAP.
The fair value of the performance rights granted with a share price threshold (2,000,000) was estimated as at the grant date
using the Monte-Carlo Pricing Model taking into account the terms and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Inputs into the model Series 10
Issue date share price AUD 0.190
Expected volatility 80%
Rights life 5 years
Grant date fair value AUD 0.1258
The above Performance Rights were cancelled following shareholder approval at the Company’s AGM on 27 June 2018.
Rights Series 11 - Performance Rights (Non-Executive Director - L Math)
On 6 July 2016, following shareholders’ approval, the Company granted 1,000,000 Performance Rights to Mr Leonard Math
under the Group’s Employee Performance Rights Plan. Performance Rights vest as one Share for each Performance Right
subject to the satisfaction of the following:
Vesting Conditions
Share Price Allocation Matrix 1,000,000
25% initial tranche (Note 1(a)) 250,000
straight line between AUD 0.50 and AUD 2.00 (Note 1(b))
100% 750,000
TOTAL 1,000,000
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more, the Initial Tranche plus 500 Shares for each one tenth
of a cent that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years), the number of Shares to be issued at the end of each
Vesting Period (6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day average daily VWAP for the current Vesting period
is AUD 0.50 or more, the Initial Tranche plus 500 Shares for each one tenth of a cent that the 30 day average
daily VWAP exceeds AUD 0.50 on the basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day average daily VWAP for any pervious Vesting Period,
nil.
(iii) where the 30 day average daily VWAP is equal to or more than the highest previous 30 day average daily VWAP,
500 Shares for each one tenth of a cent that the 30 day average daily VWAP exceeds the highest previous 30 day
average daily VWAP.
The fair value of the performance rights granted with a share price threshold (1,000,000) is estimated as at the grant date
using the Monte-Carlo Pricing Model taking into account the terms and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Inputs into the model Series 11
Issue date share price AUD 0.190
Expected volatility 80%
Rights life 5 years
Grant date fair value AUD 0.1258
The above Performance Rights were cancelled following shareholder approval at the Company’s AGM on 27 June 2018.
Rights Series 12
On 29 May 2017, the Group granted 2,000,000 performance rights to its employees, under the Group’s Employee
Performance Rights Plan, to recognise their overall contribution and performance during 2016. These performance rights
vest as one fully paid ordinary share for each performance right in 2 years on 31 May 2019, on the condition that the
employee is still employed by the Group.
The fair value of the performance rights was estimated at AUD 0.17 per performance rights, calculated based on the share
price at grant date using the Cox, Ross and Rubinstein Binomial Option Pricing Model.
The inputs used in the measurement of the fair value at grant date of these performance rights were as follows:
Inputs into the model Rights Series 12
Grant date spot price AUD 0.17
Expected volatility 75%
Life of performance share 2 years
Grant date fair value AUD 0.17
Rights Series 13
In addition, following shareholders’ approval at the Group’s 2017 AGM on 31 May 2017, the Group granted 660,000
performance rights to Mr Sean Bennett, the Group’s previous CEO, under the Group’s Employee Performance Rights Plan.
These performance rights were granted on the same basis as the 2,000,000 Performance Shares as detailed above. The
660,000 performance rights vested in full upon Mr Bennett’s resignation on 4 June 2018.
The fair value of the performance rights was estimated at AUD 0.17 per performance rights, calculated based on the share
price at grant date using the Cox, Ross and Rubinstein Binomial Option Pricing Model.
The inputs used in the measurement of the fair value at grant date of these performance rights were as follows:
Inputs into the model Rights Series 13
Grant date spot price AUD 0.17
Expected volatility 75%
Life of performance share 2 years
Grant date fair value AUD 0.17
Rights Series 14
On 29 May 2017, the Group announced that under an STIP the Board resolved and agreed to issue up to 4,482,005
performance rights for employees for 2017. Under the STIP, the final amount of performance rights issued may be reduced
by the Board (in its sole discretion) depending upon each employee’s performance during the 2017 year. Under the STIP, in
accordance with the Group’s remuneration strategy, the employee’s performance is assessed by the Board against a range
of objectives including delivery of the Kola DFS on time and in budget, progressing the Kola ESIA and maintaining control of
costs within the business. The performance rights vest a third on award, a third after 1 year of continuous service and a third
after 2 years continuous service, as one fully paid ordinary share for each performance right.
The fair value of the performance rights was estimated at AUD 0.17 per performance right, calculated based on the share
price at grant date using the Cox, Ross and Rubinstein Binomial Option Pricing Model.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Inputs into the model Rights Series 14
Grant date spot price AUD 0.17
Expected volatility 75%
Life of performance share 2 years
Grant date fair value AUD 0.17
During the 2018 year, the Board approved the allocation of 2,845,314 STIP performance rights to various KMP and other
employees. In addition, during the 2017 year, at the Board’s discretion, 735,000 was allocated to two employees (including
Mr Werner Swanepoel, who was allocated 490,000 STIP performance rights), which vested immediately and were converted
into fully paid ordinary shares upon their resignation.
Rights Series 15
On 29 May 2017, the Group announced that the Board resolved and agreed to issue up to 11,734,853 performance rights
available to employees under the LTIP. These performance rights vest as one fully paid ordinary share for each performance
right, of which the final amount issued may be reduced by the Board (in its discretion) depending upon the employee’s
performance against the following objectives:
Non-market performance conditions
• Completing the DFS in line with the Group’s objectives and milestones
• Successful completion of the financing of the Kola Project
• Achieving the appropriate level of off-take for the Kola Project
Market performance conditions
• The Company’s share price being between AUD 0.50 and AUD 2.00 (or GBP equivalent), vesting on the basis of one
fully paid ordinary share for each performance right vesting, and calculated using a Share Price Allocation Matrix
(straight-line basis).
The fair value of the performance rights attached to the non-market performance conditions is estimated at AUD 0.17 per
performance right, calculated based on the share price at grant date using the Cox, Ross and Rubinstein Binomial Option
Pricing Model.
The input used in the measurement of the fair value at grant date of the performance rights attached to non-market
performance conditions were as follows:
Inputs into the model Rights Series 15
Grant date spot price AUD 0.17
Expected volatility 75%
Life of performance share 5 years
Grant date fair value AUD 0.17
The fair value of the performance rights attached to the market performance condition is estimated at AUD 0.104 per
performance right at grant date, using the Monte-Carlo Simulation Model, and taking into account the terms and conditions
upon which the performance rights were granted.
The input used in the measurement of the fair value at grant date of the performance rights attached to market performance
conditions were as follows:
Inputs into the model Rights Series 15
Grant date spot price AUD 0.17
Expected volatility 75%
Life of performance share 5 years
Grant date fair value AUD 0.104
As at reporting date, the Board has not yet determined the allocation of the LTIP performance rights. The allocation will be
determined against each objective for each employee on a case by case basis.
Rights Series 16 to 20
At the Company’s AGM on 27 June 2018, the Company’s shareholders approved the grant of performance rights to the
following Non-Executive Directors:
Number of
Series Director Performance Rights
Rights Series 16 David Hathorn 1,500,000
Rights Series 17 Jonathan Trollip 750,000
Rights Series 18 Leonard Math 750,000
Rights Series 19 David Netherway 750,000
Rights Series 20 Timothy Keating 750,000
The performance rights are a one-off award and will unconditionally vest in three equal tranches on the first, second and
third anniversary of the Company’s admission to the AIM market. They will vest as one fully paid ordinary share for each
performance right, and will expire on 22 May 2022.
The fair value of the performance rights granted was estimated as at the grant date at GBP 0.0564 per performance right,
using the Black Scholes Option Pricing Model taking into account the terms set out above.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Inputs into the model Rights Series 16 Rights Series 17 Rights Series 18
Grant date share price GBP 0.06 GBP 0.06 GBP 0.06
Expected volatility 90.12% 90.12% 90.12%
Rights life 4 years 4 years 4 years
Grant date fair value GBP 0.0564 GBP 0.0564 GBP 0.0564
Inputs into the model Rights Series 19 Rights Series 20
Grant date share price GBP 0.06 GBP 0.06
Expected volatility 90.12% 90.12%
Rights life 4 years 4 years
Grant date fair value GBP 0.0564 GBP 0.0564
Rights Series 21 and 22
At the Company’s AGM on 27 June 2018, the Company’s shareholders approved the grant 500,000 (Rights Series 21) and
1,050,000 (Rights Series 22) performance rights to Sean Bennett, the Company’s previous CEO, to recognise his contribution
to the Company and the transition of his position as CEO to a successor and his role in successfully implementing the re-
domicile of the Group in the United Kingdom, the listing of the Company on the AIM and JSE and the recent completion of a
capital raising.
The performance rights have no vesting conditions and will be exercisable on and from the date of their issue, with each
performance right being convertible into one fully paid ordinary share.
At reporting date, both parcels of performance rights were yet to be issued and converted to shares.
The fair value at grant date of the performance rights was estimated at GBP 0.0564 per performance right, using the Black
Scholes Option Pricing Model. The input used in the measurement of the fair value at grant date of the performance rights
were as follows:
Input into the model Rights Series 21 Rights Series 22
Grant date share price GBP 0.06 GBP 0.06
Expected volatility 90.12% 90.12%
Rights life 4 years 4 years
Grant date fair value GBP 0.0564 GBP 0.0564
The following options from share based payment arrangements were in existence during the current and prior periods:
Grant Number of Fair Value at
Date Vesting Date Options Expiry Date Grant Date Exercise Price
Option Series 19 * 22/05/2013 22/05/2014 83,333 22/05/2017 AUD 0.2181 AUD 0.90
Option Series 20 * 22/05/2013 22/05/2015 83,333 22/05/2017 AUD 0.2181 AUD 0.90
Option Series 21 * 22/05/2013 22/05/2016 83,334 22/05/2017 AUD 0.2181 AUD 0.90
Option Series 22 ** 9/04/2014 10/04/2014 2,169,671 15/04/2018 AUD 0.1242 AUD 0.33
Option Series 23 ** 9/04/2014 10/04/2015 1,760,778 15/04/2018 AUD 0.1391 AUD 0.33
Option Series 24 ** 9/04/2014 10/04/2016 1,760,777 15/04/2018 AUD 0.1522 AUD 0.33
Option Series 25 ** 12/05/2014 10/04/2014 333,333 15/04/2018 AUD 0.0948 AUD 0.33
Option Series 26 ** 12/05/2014 10/04/2015 333,333 15/04/2018 AUD 0.1073 AUD 0.33
Option Series 27 ** 12/05/2014 10/04/2016 333,334 15/04/2018 AUD 0.1194 AUD 0.33
Option Series 28 ** 30/05/2014 10/04/2014 500,000 26/06/2018 AUD 0.1177 AUD 0.33
Option Series 29 ** 30/05/2014 10/04/2015 500,000 26/06/2018 AUD 0.1303 AUD 0.33
Option Series 30 ** 30/05/2014 10/04/2016 500,000 26/06/2018 AUD 0.1432 AUD 0.33
Option Series 31 *** 27/06/2018 Refer below 17,200,000 27/06/2028 GBP 0.0518 GBP 0.11
Option Series 32 *** 27/06/2018 Refer below 4,000,000 27/06/2020 GBP 0.0241 GBP 0.11
* Option Series expired during the previous financial year.
** Option Series expired during the current financial year.
*** These options were issued to Brad Sampson (Option Series 31) and David Hathorn (Option Series 32). The vesting
conditions for these Options include milestones being achieved in relation to the Kola Project. The fair value of the options
granted was estimated as at the grant date using the Black Scholes Option Pricing Model taking into account the terms
and conditions upon which the instruments were granted. The input used in the measurement of the fair value at grant
date of the options were as follows:
Input into the model Option Series 31 Option Series 32
Grant Date Share Price GBP 0.06 GBP 0.06
Expected Volatility 108.90% 108.90%
Options Life 10 years 2 years
Grant date fair value GBP 0.0518 GBP 0.0241
The following Performance Rights from share based payment arrangements were in existence during the current and prior
periods:
Number of Fair Value at
Grant Date Vesting Date Rights Expiry Date Grant Date
Rights Series 4 (1) 17/09/2015 1 Dec 2016 2,666,090 16/09/2017 AUD 0.1451
Rights Series 5 (2) 17/09/2015 Refer below 2,666,090 16/09/2018 AUD 0.1507
Rights Series 6 (3) 17/09/2015 Refer below 2,666,090 16/09/2019 AUD 0.1510
Rights Series 7 (4) 07/12/2015 Refer below 5,000,000 06/12/2020 AUD 0.1753
Rights Series 8 (5) 20/11/2015 Refer below 13,000,000 01/03/2021 AUD 0.1596
Rights Series 9 (6) 20/11/2015 Refer below 8,500,000 01/03/2021 AUD 0.1867
Rights Series 10 (7) 6/07/2016 Refer below 2,000,000 30/06/2021 AUD 0.1258
Rights Series 11 (7) 6/07/2016 Refer below 1,000,000 30/06/2021 AUD 0.1258
(1) Fully vested on 1 December 2016 pursuant to the satisfaction of performance criteria. Performance Rights were
converted to fully paid ordinary shares on 3 February 2017.
(2) On 3 February 2017, 402,720 Performance Rights vested and were converted into fully paid ordinary shares. In addition,
on 30 June 2017, 2,263,370 Performance Rights vested and were converted into fully paid ordinary shares.
(3) On 30 June 2017, 402,720 Performance Rights vested and were converted into fully paid ordinary shares. In addition,
on 20 December 2017, 376,374 Performance Rights vested and were converted to fully paid ordinary shares on the
resignation of Mr Lawrence Davidson. The remaining 1,886,996 Performance Rights vested on 17 May 2018 pursuant
to the satisfaction of performance criteria and were converted into fully paid ordinary shares on 13 February 2019.
(4) 250,000 Performance Rights vested and were converted to fully paid ordinary shares on 29 February 2016. In addition,
on 3 February 2017, 250,000 fully paid ordinary shares were issued to Mr Werner Swanepoel following the vesting of
the Performance Rights due to one year of service being completed on 7 December 2016. On 20 December 2017,
2,245,000 of these Performance Rights were cancelled following his resignation. The remaining 2,255,000 Performance
Rights of this series has not yet vested.
(5) On 3 February 2017, 1,000,000 fully paid ordinary shares were issued following vesting of one year service conditions
on 20 November 2016. On 20 December 2017, 1,000,000 fully paid ordinary shares were issued to Mr David Hathorn
following the vesting of the Performance Rights due to his two years of service being completed on 20 November 2017.
The remaining 11,000,000 Performance Rights were cancelled on 27 June 2018 following shareholder approval at the
Company’s AGM.
(6) 531,250 performance rights vested and converted to fully paid ordinary shares on 2 March 2016. In addition, on 3
February 2017, 531,250 fully paid ordinary shares were issued to Mr Sean Bennett following vesting of one year service
condition on 20 November 2016. On 20 December 2017, 531,250 Fully Paid Ordinary Shares were issued to him
following the vesting of the Performance Rights due to two years of service being completed on 20 November 2017. On
4 June 2018, 1,025,000 of these Performance Rights were cancelled following his resignation. Out of the remaining
5,881,250 Performance Rights of this series, 531,250 vested on 4 June 2018 (upon resignation) and is yet to be converted
into shares, and the remaining has not yet vested.
(7) These Performance Rights were cancelled on 27 June 2018 following shareholder approval at the Company’s AGM.
The following Performance Rights from share based payment arrangements were in existence during the current and prior
periods (cont):
Number of Fair Value at
Grant Date Vesting Date Rights Expiry Date Grant Date
Rights Series 12 (8) (9) 29/05/2017 Refer below 2,000,000 31/05/2019 AUD 0.1700
Rights Series 13 (8) (10) 31/05/2017 4 June 2018 660,000 31/05/2019 AUD 0.1700
Rights Series 14 (8) (11) 29/05/2017 Refer below 4,482,005 31/05/2020 AUD 0.1700
Rights Series 15 (12) 29/05/2017 None vested 11,734,853 31/05/2022 AUD 0.17 / AUD 0.104
(8) The fair value of the performance rights granted was estimated as at the grant date using the Cox, Ross and Rubinstein
Binomial Option Pricing Model taking into account the terms and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant date of the performance rights were as follows:
Input into the model Rights Series 12 Rights Series 13 Rights Series 14
Grant date share price AUD 0.17 AUD 0.17 AUD 0.17
Expected volatility 75.00% 75.00% 75.00%
Rights life 2 years 2 years 2 years
Risk free rate 1.66% 1.66% 1.66%
Grant date fair value AUD 0.1700 AUD 0.1700 AUD 0.1700
(9) The On 20 December 2017, 595,000 Performance Rights vested and were converted into ordinary shares following the
resignation of certain employees.
(10) These Performance Rights fully vested on 4 June 2018 following Mr Sean Bennett’s resignation, and are yet to be
converted into fully paid ordinary shares as at 31 December 2018.
(11) On 20 December 2017, 735,000 Performance Rights vested and were converted into ordinary shares following the
resignation of certain employees. In addition, 948,438 Performance Rights vested on 21 May 2018 following Board
assessment and approval of the award portion of these rights, and are yet to be converted into fully paid ordinary shares
at reporting date. The remaining 2,798,567 Performance Rights have not yet been vested.
(12) The fair value of the performance rights granted was estimated as at the grant date using the Cox, Ross and Rubinstein
Binomial Option Pricing Model (for performance rights with performance conditions) and the Monte Carlo Simulation
Model (for performance rights with market conditions) taking into account the terms and conditions upon which the
instruments were granted. The input used in the measurement of the fair value at grant date of the performance rights
were as follows:
Input into the model Rights Series 15 Rights Series 15
(Performance (Market
Conditions) Conditions)
Grant date share price AUD 0.17 AUD 0.17
Expected volatility 75.00% 75.00%
Rights life 5 years 5 years
Risk free rate 2.05% 2.05%
Grant date fair value AUD 0.1700 AUD 0.1040
The following Performance Rights from share based payment arrangements were in existence during the current and prior
periods (cont):
Number of Fair Value at
Grant Date Vesting Date Rights Expiry Date Grant Date
Rights Series 16 (13) 27/06/2018 None vested 1,500,000 22/05/2022 GBP 0.0564
Rights Series 17 (13) 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
Rights Series 18 (13) 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
Rights Series 19 (13) 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
Rights Series 20 (13) 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
(13) These performance rights were issued to the following Non-Executive Directors following shareholder approval at the
Company’s AGM on 27 June 2018:
Series Director Number
Rights Series 16 David Hathorn 1,500,000
Rights Series 17 Jonathan Trollip 750,000
Rights Series 18 Leonard Math 750,000
Rights Series 19 David Netherway 750,000
Rights Series 20 Timothy Keating 750,000
The performance rights are a one-off award and will unconditionally vest in three equal tranches on the first, second
and third anniversary of the Company’s admission to the AIM market. These performance rights will expire on 22 May
2022.
The fair value of the performance rights granted was estimated as at the grant date using the Black Scholes Option
Pricing Model taking into account the terms and conditions upon which the instruments were granted. The input used
in the measurement of the fair value at grant date of the performance rights were as follows:
Input into the model Rights Series 16
to 20 (Inclusive)
Grant date share price GBP 0.06
Expected volatility 90.12%
Rights life 4 years
Grant date fair value GBP 0.0564
The Performance Rights outstanding at 31 December 2018 had a weighted average remaining contractual life of 1.3 years.
NOTE 24: LOSS PER SHARE
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in basic earnings per share.
Classification of securities as potential ordinary shares – share options and rights outstanding
The Company has granted share options in respect of a total of 71,200,000 ordinary shares at 31 December 2018 (31
December 2017: 58,191,226), 13,144,659 equity warrants (31 December 2017: None) and 32,070,104 performance rights
(31 December 2017: 42,595,104). Options, equity warrants and rights are considered to be potential ordinary shares.
However, as the Company and Group are in a loss position they are anti-dilutive in nature, as their exercise will not result in
a diluted earnings per share that shows an inferior view of earnings performance of the Company and Group than is shown
by basic earnings per share. The options, warrants and performance rights have not been included in the determination of
basic earnings per share.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD Cents USD Cents USD Cents USD Cents
Basic and diluted loss per share from continuing operations (0.00) (0.00) (0.75) (0.57)
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Earnings reconciliation USD USD USD USD
Loss attributable to ordinary shareholders (1,715,799) (92,320) (6,249,696) (4,344,322)
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Number Number Number Number
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share 838,752,968 756,305,819 838,752,968 756,305,819
Headline earnings/loss per share
It is a JSE listing requirement to disclose headline earnings/loss per share, a non-IFRS measure. It is considered to be a useful
metric as it presents the earnings/loss per share after removing the effect of re-measurements to assets and liabilities (for
example impairment of property, plant and equipment) otherwise recognised in the profit/loss for the year. During the
current and prior year there was no difference between earnings/loss per share and headline earnings/loss per share and
therefore no reconciliation between the two measures has been presented.
NOTE 25: CONTINGENT LIABILITIES AND ASSETS
As at the date of this report, the Company’s subsidiary, SPSA, has been in litigation before the Administrative Chamber of
the Supreme Court of the Republic of Congo and before the Labour Tribunal. These two proceedings result from an action
taken by a former employee, as well as a group of 30 claimants following the retrenchment of these 31 employees on 20
November 2014.
On 14 June 2018 the Supreme Court confirmed that the retrenchments had followed due process and cancelled the previous
decision of the Minister of Labour against SPSA. The Labour Tribunal action is anticipated to be favourably concluded
following the Supreme Court findings. In order to bring to a conclusion the litigation and ensure equitable treatment
following the amicable settlement with 4 employees, who waived any further recourse whatsoever, SPSA proposed to make
an offer to remaining employees. This offer was made and was subject to acceptance by all staff within a set timeframe. The
offer lapsed on 5 September 2018 as the criteria were not met.
On 28 August 2018, 25 former employees working on the exploration site from 2009 to 2013 instituted further action before
the Labour Tribunal, claiming compensation for unpaid overtime and damages. The legal proceedings are ongoing, with the
next scheduled court date being on 13 May 2019.
The Directors have concluded that any possible exposure and cash flow out from the Group as a result of the two legal
proceedings would be immaterial.
There are no other significant contingent liabilities or assets.
GLOSSARY
Acronym / Stands For / Meaning Definition and/or Additional Information
Term
$ Denotes USD or United States dollars. The USD is the functional and presentation currency of the
Company and the Group.
2016 UK Code 2016 UK Corporate Governance Code The UK corporate governance code that is applicable to this
reporting period.
2018 UK Code 2018 UK Corporate Governance Code The UK corporate governance code that came into effect on 1
January 2019 and applies to accounting reference periods
commencing on and after that date.
AGM Annual General Meeting The mandatory yearly gathering of the Company’s interested
shareholders. The latest AGM was held on 27 June 2018.
AIM Alternative Investment Market AIM (formerly the Alternative Investment Market) is a sub-
market of the LSE.
ASX Australian Securities Exchange The ASX is Australia's primary securities exchange.
AUD Australian dollars The official currency of the Commonwealth of Australia.
Board The board of directors of Kore Potash plc As listed on page Error! Bookmark not defined. of the Annual
Report.
Carnallitite A rock type comprised predominantly of the Carnallitite may be replaced by the word carnallite for
potash mineral carnallite (KMgCl3·6H2O) and simplicity.
halite (NaCl).
CDIs CHESS Depositary Interests CDIs are instruments traded on the ASX that allow non-
Australian companies to list their shares on the exchange and
use the exchange’s settlement systems. In the Company’s
case, one CDI is equivalent to one share traded on the AIM
market or on the JSE.
CEO Chief Executive Officer As listed on page Error! Bookmark not defined. of the Annual
Report.
CFR Cost and Freight "Cost and Freight" means that the seller must pay the costs
and freight necessary to bring the goods to the named port of
destination but the risk of loss of or damage to the goods, as
well as any additional costs due to events occurring after the
time the goods have been delivered on board the vessel is
transferred from the seller to the buyer when the goods pass
the ship's rail in the port of shipment.
Company Kore Potash plc Kore Potash plc is public company incorporated and registered
in England and Wales (registered number 10933682).
CRU Commodity Research Unit
DFS Definitive Feasibility Study A DFS is an evaluation of a proposed mining project to
determine whether the mineral resource can be mined
economically.
Dougou Denotes the Dougou Project The Dougou Project (including the Dougou Extension Project)
is part of the Sintoukola Potash Project.
DPM Dougou Potash Mining S.A. DPM is one of the subsidiaries of SPSA.
DUP Déclaration d'Utilité Publique A DUP, or, translated as a “declaration of public utility”, is a
formal recognition in Congolese law that a proposed project
has public benefits.
EBITDA Earnings Before Interest, Taxes, Depreciation and
Amortization
EPC Engineering, Procurement and Construction A particular form of contracting arrangement used in some
industries where the EPC contractor is made responsible for all
the activities from design, procurement, construction,
commissioning and handover of the project to the end-user or
owner.
EPCM Engineering, Procurement and Construction As opposed to EPC which the Contractor is responsible for the
Management construction directly, not only the management of it.
ESIA Environmental and social impact assessment A process for predicting and assessing the potential
environmental and social impacts of a proposed project,
evaluating alternatives and designing appropriate mitigation,
management and monitoring measures.
FC The French Consortium of Engineering Companies The FC is a consortium of engineering companies who
undertook the DFS on the Kola Project. The FC consists of
TechnipFMC, VINCI Construction Grands Projets, Egis and
Louis Dreyfus Armateur.
GBP British pound sterling The official currency of the United Kingdom.
Granular MoP The selling description for compacted MoP.
Group Kore Potash plc and its controlled entities A list of the controlled entities within the Group are on page
25 under Note 8.
Insoluble Here refers to clays, organic material and other Low insoluble content is considered advantageous.
material insoluble components of the sylvinite.
JORC Australasian Joint Ore Reserves Committee JORC is sponsored by the Australian mining industry and its
professional organisations.
JORC Code The Australasian Code for Reporting of Exploration The JORC Code is one of the most accepted standards for the
Results, Mineral Resources and Ore Reserves reporting of a company's Mineral Resources and Ore Reserves.
JSE Johannesburg Stock Exchange The exchange operated by JSE Limited.
KCI Potassium Chloride
KMP Key Management Personnel Refers to those persons having authority and responsibility for
planning, directing and controlling the activities of the Group,
directly or indirectly, including any director (whether
executive or otherwise) of the Group.
Kola Denotes the Kola Project. The Kola Project is part of the Sintoukola Potash Project.
Kore Potash Kore Potash plc See definition for “Company” above.
KPM Kola Potash Mining S.A. KPM is one of the subsidiaries of SPSA.
LSE London Stock Exchange The LSE is the primary stock exchange in the United Kingdom.
LTIP Long Term Incentive Plan
Mt Million tonnes
Mining Denotes the mining convention signed by the The mining convention governs the conditions of construction,
Convention Group and the government of RoC. operation and mine closure of the Kola and Dougou (including
Dougou Extension) mining projects.
MoP Muriate of Potash The saleable form of potassium chloride (KCl), comprising of a
minimum 95% KCl.
NPV Net Present Value NPV10 denotes the Net Present Value calculated at a 10%
discount rate.
Placees Denotes the existing and new investors through
which the Company raised USD 12.89 million on 26
March 2018.
Placing Shares Denotes the placing and direct subscription of
83,523,344 ordinary shares in the Company on 26
March 2018.
Potash Refers to potassium compounds, especially those Refer to MoP and SoP for the definitions on the two main
of potassium chloride (MoP) or sulfate (SoP) types of potash.
RoC Republic of Congo The RoC is where the Group’s exploration activities are
located.
Rock-salt In this case, a rock comprised predominantly of the
mineral halite (NaCl)
SBP Share-Based Payment(s)
SGRF The State General Reserve Fund of Oman SGRF, is a sovereign wealth fund in Oman, and is one of the
Company’s substantial shareholders. Their investment in the
Company is held in the name of Princess Aurora Company Pte.
Sintoukola Denotes the large potash project operated by the The Sintoukola Potash Project includes the Kola Project, the
Potash Project Group through SPSA located in the Kouilou Dougou Project and the Dougou Extension Project (previously
Province of the Republic of Congo. known as the Yangala Project).
SJCS St James’s Corporate Services Limited SJCS, together with Henko Vos, is the Company’s joint
company secretary.
SoP Sulfate of Potash Also called potassium sulphate, arcanite, or archaically known
as potash of sulfur. SoP is the inorganic compound with
formula K2SO4. It is a white water-soluble solid. It is commonly
used in fertilizers, providing both potassium and a source of
sulfur.
SPSA Sintoukola Potash S.A. SPSA is the Company’s 97%-owned subsidiary located in the
RoC, owned through the Company’s Australian subsidiary.
SQM Sociedad Quimica y Minera de Chile S.A. SQM is a New York listed Chilean lithium & potash company
and is one of the Company’s substantial shareholders.
Standard MoP The selling description for uncompacted MoP.
STIP Short Term Incentive Plan
Sylvinite A rock type comprised predominantly of the
potash mineral sylvite (KCl) and halite (NaCl)
Transshipment Transshipment or transhipment is the shipment of
goods or containers to an intermediate
destination, then to another destination.
USD United States dollars The official currency of the United States of America and its
territories, as well as being the functional and presentation
currency of the Company and the Group.
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