30 Sep Half-year Report
RNS Number : 5765N
African Pioneer Plc
(“African” or the “Company”)
Interim Results for the Six Months Ended 30 June 2021
African Pioneer Plc a company engaging in development of natural resources exploration projects in Sub-Saharan Africa, announces its unaudited interim results for the six months ended 30 June 2021.
OPERATIONAL, FINANCIAL, CORPORATE and STRATEGY REVIEWS
OPERATIONAL REVIEW
The period under review has been transformatory for the Company in that the Company completed an Initial Public Offering (IPO) on the FCA’s Standard List with the shares being admitted to trading on the Main Market for listed securities of the London Stock Exchange and the acquisition of its projects in Namibia, Zambia and Botswana more details of which are provided in the Corporate Highlights section of this review.
From the IPO the Group has been engaged in development of the natural resources exploration projects in Sub-Saharan Africa. The Company’s’ main focus is on evaluating and advancing the Namibian and Zambian Projects as the Botswanan Projects are subject to the Conditional Botswana Licence Sale Agreement as described under the Corporate Review.
Technical review of Projects: After the IPO and having acquired its projects in Namibia, Zambia and Botswana, the Company commenced technical reviews and / or programmes on all of the projects located in Namibia and Zambia. The primary metal in all countries is copper with by-product potential in all of our projects. In Zambia we have potential for cobalt, in Namibia gold and in Botswana potential for silver.
Namibia: In Namibia, the Company is exercising a complete data review with the view to applying for a mining licence for the Ongombo licence which is located on the Matchless Copperbelt. The work to date have been very revealing and it appears that the mineralisation is “open ended” and potential exist for a small open pit which will thereafter facilitate mine entries. We are in discussion with a number of parties for financing the mine development either in whole or in part.
Examination of previous drilling results has indicated that gold may play a significant role in the revenues from a mine and our planning will take note of high value gold areas and our metallurgical design will include a gold recovery circuit. We intend to apply for a mining licence during the second half of 2021 with the view to developing a mine in the shortest practical time subject to mining licence grant.
Zambia: The Zambian project portfolio consists of three large copper/cobalt licences in Northwest Zambia and with two more licences in the Lusaka province. The Northwest projects are considered to be highly prospective resembling the geology of the DRC which is in close proximity in the North. The licences have been flown for air borne geophysics as well as ground geochemistry. Previous work has indicated potential drill targets which will be tested in the near future. The Lusaka licences are prospective for gold and initial reconnaissance and will be carried out during the second half of the year. We have conducted initial reconnaissance in the north-western areas including outcrop identification, topography mapping and establishing logistics for drilling.
Botswana: The Botswana projects are in the Kalahari Copperbelt and are considered highly prospective since they are in the general area of mining development being carried out by Sandfire Resources of Australia. Sandfire subscribed to a Pre-IPO funding round and earned a 15% interest in the Company post IPO as a result of the funding. We have entered into a Conditional Licence Sale Agreement with Sandfire to acquire the Botswana licences for USD1 million together with a commitment to spend a further USD1 million within two years. On identification of viable mineralisation a one-off success payment is to be paid to Company for the first ore reserve reported under JORC Code 2012 edition on which exceeds 200,000 tonnes of contained copper (the “First Ore Reserve”) in the range of US$10 million to US$80 million depending on the amount of contained copper in the First Ore Reserve (the “Success Payment”).
FINANCIAL REVIEW
Financial highlights:
· £184K loss after tax (2020: £16K)
· Approximately £1.62m cash at bank at the period end (2020: £88K)
· The basic and diluted losses per share are summarised in the table below
| Loss per share (pence) | 30 June 21 | 30 June 20 | |
| Basic | Note 3 | (0.45)p | (0.77)p |
| Diluted | Note 3 | (0.39)p | (0.77)p |
· The net asset value as at 30 June 2021 was £4.7m (31 December 2020: £87K)
Fundraisings:
On 11 March 2021 the Company entered into a Convertible Loan Note Subscription Agreement with Sandfire Exploration Limited, listed on the Australian Stock Exchange (“Sandfire”) under which Sandfire subscribed for US$500,000 of interest free unsecured loan notes, which upon listing was converted into Ordinary Shares constituting 15 per cent. of the Company’s issued share capital.
At Listing the Company raised £1,750,000 (before expenses) through the issue of 50,000,000 new ordinary shares of no par value in the capital of the Company (“Ordinary Shares”) at 3.5 pence per Ordinary Share.
The funds raised on Admission provided the Group with sufficient money to undertake the exploration and assessment of the Company’s licences in Namibia and Zambia and also in Botswana were the Conditional Botswana Licence Sale Agreement conditions not to be met for at least 18 months. Details of these work programmes are set out in the Company’s Prospectus dated 26 May 2021. As noted below, if the disposal of the Botswanan Projects to Sandfire proceeds, then the funds which would otherwise have been reserved for those projects will be available for the development of the Namibian and Zambian Projects and/or further acquisitions as and when any may be identified.
CORPORATE REVIEW
Company Board: The Board of the Company comprises Colin Bird, Executive Chairman Raju Samtani, Finance Director Christian Cordier, Business Development Director Kjeld Thygesen, Independent Non-executive Director James Nicholas Cunningham-Davis, Non-executive Director
Listing: The Company was admitted to the Official List (Standard Segment) and commenced trading on the Main Market for listed securities of the London Stock Exchange on 1 June 2021 (the “Listing” or “IPO”).
Corporate Acquisitions: At Listing the Company completed the acquisition of projects based in Namibia, Zambia, and Botswana by acquiring:
1) 100% of Zamcu Exploration Pty Ltd (“Zamcu”), for £836,649 of which £687,500 was settled by the issue of Ordinary Shares at 3.5 pence per Share at Listing and cash of £149,149. Zamcu via its subsidiaries holds a 70 per cent. interest in two Namibia Exclusive Prospecting Licenses (“EPLs”) located within the Matchless amphibolite Belt of central Namibia (the “Namibian Projects”);
2) 80% of African Pioneer Zambia Limited (“APZ”), for £1,925,000 which was settled by the issue of Ordinary Shares at 3.5 pence per share at Listing. APZ holds a 100 per cent. interest in five Zambian Prospecting Licenses (PLs) located in two areas namely the Central Africa Copperbelt (Copperbelt), which comprises four PLs and the Zambezi area which comprises one PL (the “Zambian Projects”); and
3) 100% of Resource Capital Partners Pty Ltd (“RCP”), for £350,000 which was settled by the issue of Ordinary Shares at 3.5 pence per Share at Listing. RCP which holds a 100 per cent. interest in eight Botswana Prospecting Licenses (“PLs”) located in two areas namely (1) the Kalahari Copperbelt (KC), which comprises six PLs and (2) the Limpopo Mobile Belt (Limpopo), which comprises two PLs (the “Botswanan Projects”) (together the “Projects”) (the “Subsidiaries”) (together the “Group”).
Lock Up and Orderly Market: All the Ordinary Shares issued to vendors at Listing to acquire Zamcu, APZ and RCP were subject to a 12 month lock up from the IPO followed by a 12 month orderly market arrangement.
Conditional sale of Botswana Licences to Sandfire: The Botswana Projects have been acquired at an attractive purchase price of £350,000, as although unexplored, they are located in an highly prospective area for copper projects and it was the Company’s original intention to conduct an initial 18 month exploration work programme to assess the prospects of the Botswanan Projects and assess the best way of developing them. However, whilst working on the Listing, the Company was approached by Sandfire Resources Limited, listed on the Australian Stock Exchange and capitalised at approximately A$1.2 billion (“Sandfire”), who have a large established presence in the Kalahari Copperbelt, with a proposal to acquire the Botswanan Projects. The Company has seen this as an opportunity for Sandfire to take over ownership and responsibility for the exploration stage of the Botswanan assets whilst allowing the Group to share in the potential upside should the exploration ultimately be successful in establishing a mineable reserve.
On 12 March 2021 the Company entered into a conditional licence sale agreement with Sandfire (the “Conditional Botswana Licence Sale Agreement”) under which the Company guaranteed the sale to Sandfire following Admission of all the Botswanan Licences in return for a payment at completion of the Conditional Botswana Licence Sale Agreement of US$1,000,000 with US$500,000 in cash and US$500,000 by the issue of 107,271 Sandfire Shares (which will not be subject to any trading restrictions). Sandfire has the in country infrastructure and technical expertise and financial resources to accelerate the rate of expenditure on the Botswanan assets by agreeing to fund a minimum of US$1 million of expenditure (compared to the Group’s 18 month budget of US$176,000) and the proceeds from the sale to Sandfire will allow the Group to concentrate its increased financial resources and its management capabilities on its remaining projects in Namibia and Zambia.
The Conditional Botswana Licence Sale Agreement is conditional inter alia on ministerial consent and applicable competition approval in Botswana. Upon these conditions precedent being met the Botswana licences will no longer form part of the Group. However, if the conditions precedent of the Conditional Botswana Licence Sale Agreement are not met by the long stop date of 30 September 2021 or such later date as agreed by the parties then the Botswana licences will remain part of the Group. The Company is currently finalizing negotiations with Sandfire in relation to the Conditional Botswana Licence Sale Agreement and anticipates making an announcement in this regard in the near future.
Under the Conditional Botswana Licence Sale Agreement Sandfire will be committed to spend a minimum of US$1M within 2 years of settlement (the “Exploration Period”) and if the US$1M is not spent, any shortfall will be paid to APP. In addition, a one-off success payment to be paid to APP for the first ore reserve reported under JORC Code 2012 edition on the Included Licences which exceeds 200,000 tonnes of contained copper (the “First Ore Reserve”) in the range of US$10 million to US$80 million depending on the amount of contained copper in the First Ore Reserve (the “Success Payment”).
STRATEGY REVIEW
The Company’s short to medium term strategic objectives are to enhance the value of its mineral resource Projects through exploration and technical studies conducted by the Company or through joint venture or other arrangements (such as sale of the Botswanan Projects to Sandfire) with a view to establishing the Projects can be economically mined for profit. With a positive global outlook for both base and precious metals, the Directors believe that the Projects provide a base from which the Company will seek to add significant value through the application of structured and disciplined exploration.
Outlook
Outlook for Copper: The future price forecast for copper is extremely positive as is the forecast for the by-product metals. The outlook for copper supply is quite bleak and we are likely to see more smaller mines being developed since most large mining copper projects have been shelved for political or economic reasons. Thus the Company is well positioned with all its projects, to take part in an acquisition boom or alternatively be a subject which attracts financing which might not have been available in the immediate past.
The major mining companies are seeking new projects for acquisition and all of our projects have fundamentals which may attract the attention of larger companies and we have already entered into an agreement with Sandfire in relation to the Botswana Projects.
Whilst politicians are trying to persuade us that inflation is at least 3 years away, the evidence is somewhat different and we feel there is a strong possibility that the spectre of inflation will loom much sooner. This might slow down major stock markets but may be good for the small mines sector since in such times they have been seen to outperform.
The Board feels they have assembled an enviable portfolio of projects and are pleased that Sandfire have elected to take a position in the Company. We look forward to advancing all our projects in the second half and providing our shareholders with the prospects of enhanced value flowing into next year.
Post Period Events
On 27 August 2021 the Company announced it had entered into an agreement to acquire a further 15% interest in its Ongombo Project and Ongeama Project in Namibian (the “Namibian Projects”) by increasing its interest in the Namibian Projects to 85% (further details are in Note 10 to the unaudited Interim Results).
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management Report in accordance with the Financial Conduct Authorities (“FCA”) Disclosure Guidance and Transparency Rules (“DTR”). The Directors consider the preceding Operational, Financial, Corporate and Strategy Review of this Half Yearly Financial Report provides details of the important events which have occurred during the period and their impact on the financial statements as well as the outlook for the Company for the remaining six months of the year ended 31 December 2021.
The following statement of the Principal Risks and Uncertainties, the Related Party Transactions, the Statement of Directors’ Responsibilities and the Operational, Financial, Corporate and Strategy Review constitute the Interim Management Report of the Company for the six months ended 30 June 2021.
Principal Risks and Uncertainties
The principal risks that are specific to the Company were detailed under this heading in Part 1 Summary of the Company’s prospectus which was published on 26 May 2021 (the “Prospectus”) which is available on the Company’s website at www.africanpioneerplc.com Part II Risk factors of the Prospectus provides more details of risk factors specific and material to the Group and to the Natural Resources Sector. The Board are of the opinion that these risk factors will continue to remain unchanged for the forthcoming six month period.
The principal risks and uncertainties facing the group are as follows:
· There are significant risks associated with any exploration project and the ability of the Company to explore, develop and generate operational cashflows from its projects
· No assurances can be given that minerals will be discovered in economically viable quantities at the Company’s projects
· Adverse foreign exchange fluctuations
The Board has also reviewed emerging risks which may impact the forthcoming six-month period and the main risk facing the Company is the ongoing impact of the COVID-19 pandemic which to date has not had a significant impact on the Company’s operations.
Related Party Transactions during the period
1. Issue of shares at the IPO as disclosed in the Prospectus
a) The Company entered into a Share Purchase Agreement, dated 29 October 2020 (“Zamcu SPA”) with Tonehill Pty Ltd, Coreks Super Pty Ltd and Breamline Pty Limited (“Zamcu Sellers”) under which the Zamcu Sellers (which are controlled by Christian Cordier) agreed to sell to the Company their collective 100 per cent. ownership interests in Zamcu in return for 10,000,000 shares issued at the IPO with an issue price of 3.5 pence per share in the Company (“Consideration Shares”) . The sale is subject to a 12 month lock-in during which the Zamcu Sellers are not permitted to sell their Consideration Shares in the Company, followed by a 12 month orderly markets period during which the Zamcu Sellers are required to work with the Company’s broker for 30 days prior to making any sale.
b) The Company entered into a Share Purchase Agreement, dated 29 October 2020 (“RCP SPA”) with M&A Wealth Pty Ltd and Breamline Pty Limited (a company controlled by Christian Cordier) (“RCP Sellers”) under which the RCP Sellers agreed to sell to the Company their collective 100 per cent. ownership interests in RCP in return for 10,000,000 Consideration Shares in the Company issued at the IPO, of which each RCP Seller received 5,000,000 Consideration Shares. The sale is subject to a 12 month lock-in during which the RCP Sellers are not permitted to sell their Consideration Shares in the Company, followed by a 12 month orderly markets period during which sellers are required to work with the Company’s broker for 30 days prior to making any sale.
c) The Company entered into a Share Purchase Agreement, dated 25 November 2020 (“APZ SPA”) with Raju Samtani, Colin Bird, Mohamad Ahmad, Caleb Amos Mulenga, Lukonde Makungu and Camden Park Trading (a company controlled by Colin Bird) (“AP Zambia Sellers”) under which the AP Zambia Sellers agreed to sell to the Company their collective 80 per cent. ownership interests in African Pioneer Zambia Pty Limited (“AP Zambia”) in return for 55,000,000 Consideration Shares in the Company issued at the IPO, in proportion to their existing holdings of which 15,000,000 Considerations Shares were issued to each of Colin Bird and Raju Samtani and 5,000,000 Consideration Shares were issued to Camden Park Trading. The sale is subject to a 12 month lock-in during which the AP Zambia Sellers are not permitted to sell their Consideration Shares in the Company, followed by a 12 month orderly markets period during which sellers are required to work with the Company’s broker for 30 days prior to making any sale.
2. Directors’ Letters of Appointment and Service Agreements as disclosed in the Prospectus
a) Pursuant to an agreement dated 24 May 2021, the Company renewed the appointment of James Cunningham-Davis as a Director. The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing. James Cunningham-Davis is entitled to director’s fees of £12,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties which will be invoiced by Cavendish Trust Company Ltd an Isle of Man Trust Company that James Cunningham-Davis is a founder and managing director of. James Cunningham-Davis is not entitled to any pension, medical or similar employee benefits. The agreement replaces all previous agreements with James Cunningham-Davis and/or Cavendish Trust Company Ltd in relation to the appointment of James Cunningham-Davis as a director of the Company.
b) Pursuant to an agreement dated 24 May 2021, the Company appointed Kjeld Thygesen as a non-executive Director with effect from the date of the IPO. The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing and Kjeld Thygesen is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Kjeld Thygesen is not entitled to any pension, medical or similar employee benefits.
c) Pursuant to an agreement dated 24 May 2021, the Company renewed the appointment of Colin Bird as a Director. The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing. Colin Bird is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Colin Bird is not entitled to any pension, medical or similar employee benefits. The agreement replaces all previous agreements with Colin Bird in relation to his appointment as a director of the Company.
d) Pursuant to a consultancy agreement dated 24 May 2021, the Company has, with effect from the date of the IPO, appointed Colin Bird as a consultant to provide technical advisory services in relation to its current and future projects including but not limited to assessing existing geological data and studies, existing mine development studies and developing exploration programs and defining the framework of future geological and mine study reports (the “Colin Bird Services”). The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing. Colin Bird is entitled to fees of £3,500 per month for being a consultant to the Company plus reasonable and properly documented expenses incurred during the performance of the Colin Bird Services.
e) Pursuant to an agreement dated 24 May 2021, the Company renewed the appointment of Raju Samtani. The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing. Raju Samtani is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Raju Samtani is not entitled to any pension, medical or similar employee benefits. The agreement replaces all previous agreements with Raju Samtani in relation to his appointment as a director of the Company.
f) Pursuant to a consultancy agreement dated 24 May 2021, the Company has ,with effect from the date of Admission, appointed Raju Samtani as a financial consultant to provide financial advisory services to the Company (the “Raju Samtani Services”). The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing. Raju Samtani is entitled to fees of £2,667 per month for being a consultant to the Company plus reasonable and properly documented expenses incurred during the performance of the Raju Samtani Services.
g) Pursuant to an agreement dated 24 May 2021, the Company appointed Christian Cordier as a Director with effect from the date of Admission. The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing. Christian Cordier is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Christian Cordier is not entitled to any pension, medical or similar employee benefits.
h) Pursuant to a consultancy agreement dated 24 May 2021, with Mystic Light Pty Ltd a personal service company of Christian Cordier the Company has secured the services of Christian Cordier, with effect from the date of the IPO, as a business development consultant to provide business development l advisory services to the Company in relation to its existing and future projects (the “Christian Cordier Services”). The appointment continues unless terminated by either party giving to the other 3 months’ notice in writing. Mystic Light Pty Ltd is entitled to fees of £1,000 per month for providing the Christian Cordier Services plus reasonable and properly documented expenses incurred during the performance of the Christian Cordier Services.
3. Related Party transactions described in the annual report to 31 December 2020
Other than disclosed above there have been no changes in the related parties transactions described in the annual report for the year ended 31 December 2020 that could have a material effect on the financial position or performance of the Company in the first six months of the current financial year
Responsibility Statement
The Directors, whose names and functions are set out in this report under the heading Company Board, are responsible for preparing the Unaudited Interim Condensed Consolidated Financial Statements in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority (‘DTR’) and with International Accounting Standard 34 on Interim Financial reporting (IAS34). The Directors confirm that, to the best of their knowledge, this Unaudited Interim Condensed Consolidated Report, which has been prepared in accordance with IAS34, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the interim management report includes a fair review of the information required by DTR 4.2.7 R and by DTR 4.2.8 R, namely:
· an indication of key events occurred during the period and their impact on the Unaudited Interim Condensed Consolidated Financial Statements and a description of the principal risks and uncertainties for the second half of the financial year; and
· material related party transactions that have taken place during the period and that have materially affected the financial position or the performance of the business during that period.”
For and on behalf of the Board of Directors
Colin Bird
Executive Chairman
29 September 2021
The full Interim Results for the Six Months Ended 30 June 2021 can be found in our Financial Section.