CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES

Andrada Mining Limited ("Andrada") was incorporated and domiciled in Guernsey on 1 September 2017 and admitted to the AIM market in London on 9 November 2017. The Company's registered office is PO Box 142, Suit 2, Block 2, Hirzel Court, St Peter Port, Guernsey GY1 3HT, and it operates from Illovo Edge Office Park, Ground Floor, Building 3, 5 Harries Road, Illovo, Johannesburg, 2116, South Africa.

These financial statements are for the year ended 28 February 2025 and the comparative figures are for the year ended 29 February 2024.

The Andrada Group comprises Andrada Mining Limited, and its subsidiaries as noted below.

Andrada Mining Limited ("AML") is an investment holding company and holds 100% of Guernsey subsidiary, Greenhills Resources Limited ("GRL"), 100% of South African subsidiary, Andrada Mining (Pty) Ltd ("Andrada South Africa"), 100% of 2 Namibian subsidiaries, Uis Toll Mining Company (Pty) Ltd and Tantalum Investment (Pty) Ltd and 100% of two Mauritian subsidiaries, Andrada Mining (Mauritius) Ltd ("AMM") and Andrada Investments (Mauritius) Ltd ("AIM").

GRL is an investment holding company that holds investments in resource-based tin, tantalum, lithium, tungsten and copper exploration companies in Namibia and Rwanda. GRL holds 100% of Namibian subsidiary, Andrada Mining (Namibia) (Pty) Ltd ("Andrada Namibia") and 100% of Rwandan subsidiary, Uis Tin Mining Rwanda Ltd,  ("UTMR"). The previously held South African subsidiaries, Mokopane Tin Company (Pty) Ltd and Pamish Investments 71 (Pty) Ltd, and their subsidiaries Renetype (Pty) Ltd, Zaaiplaats (Pty) Ltd and Jaxson (Pty) Ltd, were disposed of during the year.

Andrada Namibia owns an 100% equity interest in Uis Tin Mining Company (Pty) Ltd ("UTMC"). During the year, the 15% minority shareholding was purchased from The Small Miners of Uis.

AIM holds 100% of Namibian subsidiary, Grace Timon Investments (Pty) Ltd ("GTI").

As at 28 February 2025, the Andrada Group comprised:

These financial statements are presented in Pound Sterling (£) because that is the currency in which the Group has raised funding on the AIM market in the United Kingdom. Furthermore, Pound Sterling (£) is the functional currency of the ultimate holding company, Andrada Mining Limited.

The Group's key subsidiaries, Andrada Namibia and UTMC, use the Namibian Dollar (N$) as their functional currency. The year-end spot rate used to translate all Namibian Dollar balances was £1 = N$23.32 and the average rate for the financial year was £1 = N$23.29.

MATERIAL ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The consolidated financial statements have been prepared in accordance with UK Adopted International Accounting Standards. The consolidated financial statements also comply with the AIM Rules for Companies, NSX Listing Requirements and the Companies (Guernsey) Law, 2008 and show a true and fair view.

The material accounting policies applied in preparing these consolidated financial statements are set out below. These policies have been consistently applied throughout the period. The consolidated financial statements have been prepared under the historical cost convention except as where stated.

GOING CONCERN

The Group closely monitors and manages its liquidity risk and day-to-day working capital requirements. Cash forecasts are regularly prepared, considering the global logistical challenges around sales, to ensure there is sufficient cash within the Group to meet its obligations. The Group runs sensitivities for different scenarios, including but not limited to changes in commodity prices and exchange rates. The Group also routinely monitors the covenants associated with the borrowing facilities and proactively engages with Bank Windhoek and the Development Bank of Namibia, the lenders, whenever there is any risk. All covenants were met as at 28 February 2025 and based on the year-to date production profile and latest forecast; the Group is expected to meet its covenant obligations for the testing period through February 2027. For the purpose of assessing going concern, the directors have prepared forecasts through February 2027.

The main estimates considered as part of management's going concern assessment include production profiles, tin, lithium and tantalum prices, exchange rates and committed capital. The production profile is based on the Group's current achieved production following the completion of the expansion project, as well as additional production expected from the successful completion of the continuous improvement capital project. In addition, the Group successfully raised £2m through the funding of Orange Trust, with the possibility of future funding through a strategic partner. This further supports the view that the Group has the ability to raise the necessary finance to enable the Group to meet its obligations in the normal course of business until February 2027. The Group also retains the ability to flex its ongoing exploration and metallurgical capital expenditures.

Based on the forecasts, additional funding will be required within the next 12 months.  As the Group is also currently expanding its tin operations, which are close to near-term production, the cash flow forecast assumes the successful completion of the jig plant to deliver the business strategy. Further funding will be required for additional exploration and capital projects as well as studies related to the feasibility of the future growth phases. These forecasts are sensitive to fluctuations in the quoted tin price.

The Group believes it has several options available to it, including but not limited to, use of the overdraft facility, restructuring of the debt, additional debt or equity, cost reduction strategies as well as potential offtake arrangements.

As a result of their review, the Directors have confidence in the Group's forecasts and have a reasonable expectation that the Group will continue in operational existence for the going concern assessment period and have therefore used the going concern basis in preparing these consolidated financial statements.

The Group is reliant on additional funding, which is not guaranteed. This indicates that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern and therefore, that the Group may be unable to realise its assets or settle its liabilities in the normal course of business.

The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

BASIS OF CONSOLIDATION

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Inter-company transactions, balances and unrealised gains/losses on transactions between Group companies are eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.

Non-controlling interests

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders that present ownership interests entitling their holders to a proportionate share of the net assets upon liquidation are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. During the year, the Group purchased the 15% minority interest in UTMC from the Small Miners of Uis (refer to Note 22) and disposed of its South African entities for c. £20 000 which had minority shareholders. Subsequent to these transactions, the group does not have any non-controlling interests.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Any excess or deficit of consideration paid over the carrying amount of the non-controlling interests is recognized in equity of the parent in transactions where the non-controlling interests are acquired or sold without loss of control. The Group has elected to recognize this effect in retained earnings.

Investment in associate

An associate is an entity over which the Group has significant influence but not control or joint control. The Group accounts for its investments in associate using the equity method of accounting.

Under the equity method, the investment is initially recognized at fair value, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the investee after the date of acquisition. The Group's share of post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income, with a corresponding adjustment to the carrying amount of the investment.

The investment in an associate is derecognized when the Group ceases to have significant influence. Upon disposal, the difference between the carrying amount of the investment and the proceeds from disposal is recognized in profit or loss.

SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the management steering committee that makes strategic decisions.

The Group currently has a single operating segment consisting of the Namibian operations in Andrada Namibia and UTMC. During the financial year, the Namibian operations earned £23 805 463 revenue from the sale of tin concentrate to the Group's customer, Thailand Smelting and Refining Company ("Thaisarco"). The Namibian operating segment has a non-current asset balance of £47 263 623 (consisting of property, plant and equipment of £37 046 184 and intangible assets of £10 217 439). The Group will continue to monitor their operating segments and provide the necessary disclosure going forward.

FOREIGN CURRENCIES

Functional and presentation currency

The individual financial statements of each Group company are prepared in the currency of the primary economic environment in which that company operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in Pound Sterling, which is the functional currency of the Group, and the presentation currency for the consolidated financial statements.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation date where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

REVENUE RECOGNITION

IFRS 15 "Revenue from Contracts with Customers" establishes a comprehensive framework for determining whether, how much, and when revenue is recognised. The core principle is that an entity recognises revenue to depict the transfer of promised goods and services to the customer of an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Group generates revenue from its primary activity, the sale of tin concentrate, and it generated immaterial revenue from the sale of tantalum and lithium.

The Group produces and sells tin concentrate from its Uis Tin Mine in Namibia. Once concentrate has been produced at the Uis plant, it is sampled, bagged and loaded into containers for transportation to the port in Walvis Bay for shipment.

The Group currently has an offtake agreement with its customer, Thailand Smelting and Refining Company ("Thaisarco"), which was signed on 1 August 2019. This contract was renewed on 1 December 2023 for a further 3 years. As per the contract, Thaisarco pays the Group on the basis of actual tin content in the concentrate per Thaisarco's analysis, at the London Metal Exchange price less treatment charges, unit deductions and impurity charges.

The Group can elect for the sale of each shipment to occur under the following terms:

Option 1: Standard provisional payment

Thaisarco shall pay 90% provisional payment on the basis of actual tin content as per their own analysis. Payment is to be made within 10 working days after the arrival of concentrate at Thaisarco's works. Title shall pass to Thaisarco when the concentrate arrives at the Songkhla Port in Thailand.

Option 2: Provisional payment option against warehouse holding certificate

Thaisarco shall pay 80% provisional payment on the basis of provisional tin content per UTMC's analysis. The provisional payment shall be done against presentation of a provisional invoice and an original warehouse holding certificate. Thaisarco shall pay an additional 10% provisional payment upon presentation of the sea waybill. Title shall pass to Thaisarco when UTMC receives the 80% provisional payment.

Option 3: Provisional payment option against sea waybill

Thaisarco shall pay 90% provisional payment on the basis of provisional tin content per UTMC's analysis. The provisional payment shall be done against presentation of a provisional invoice and a sea waybill. Title shall pass to Thaisarco when UTMC receives the 90% provisional payment.

During the financial year, the Group concluded sales under Option 2.

Revenue is recognised at a point in time when title and control of the goods has transferred to the customer, which is when the concentrate arrives at Songkhla Port in Thailand under Option 1 or when provisional payment is received by UTMC under Option 2 and Option 3. There is limited judgement needed to identify the point at which control passes: once physical delivery of the products to the agreed location has occurred, the Group no longer has physical possession of the products. At this point, the Group will have a present right to payment and retains none of the significant risks and rewards of the goods in question.

Pricing for the provisional payment is determined by the published tin price on the date that title and control passes. Pricing for the final payment shall be declared within 20 market days after arrival at Thaisarco's works. The lower of the four LME cash official bid and offer prices and the LME 3-months official bid and offer prices on the agreed date is used in these calculations.

Variable consideration relating to final assay results is constrained in estimating revenue unless it is highly probable that there will not be a future reversal in the amount of revenue recognised when the final assay has been determined.

TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax charge is based on taxable profit for the period. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the "balance sheet liability" method.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised, or the liability is settled based upon rates enacted and substantively enacted at the reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items credited or charged to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

EXPLORATION AND EVALUATION ASSETS

All costs associated with mineral exploration and evaluation are capitalised as intangible exploration and evaluation assets and subsequently measured at cost. These include the costs of: acquiring prospecting licences; mineral production licences and annual licence fees; rights to explore; topographical, geological, geochemical and geophysical studies; and exploratory drilling, trenching, sampling and other activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource.

If an exploration project is successful, the related expenditures will be transferred at cost to property, plant and equipment and depreciated over the estimated life of the commercial ore reserves on a unit of production basis (with this charge being taken through profit or loss). Where capitalised costs relate to both development projects and exploration projects, the Group reclassifies a portion of the costs which are considered attributable to near-term production based on a percentage of the ore resource expected to be mined in the relevant phase. Where a project does not lead to the discovery of commercially viable quantities of mineral resources and is relinquished, abandoned, or is considered to be of no further commercial value to the Group, the related costs are recognised in the income statement.

The recoverability of deferred exploration costs is dependent upon the discovery of economically viable ore reserves, the ability of the Group to obtain necessary financing to complete the development of ore reserves and future profitable production or proceeds from the extraction or disposal thereof.

In 2023, the Group completed the construction of its on-site pilot plant that enables the mine to expedite bulk pilot test work and increase pilot production of lithium concentrate. Both the pilot plant and day to day running costs have been accounted for in accordance with IFRS 6.

IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS

Intangible exploration and evaluation assets are reviewed regularly for indicators of impairment following the guidance in IFRS 6 "Exploration for and Evaluation of Mineral Resources" and tested for impairment where such indicators exist.

In accordance with IFRS 6, the Group considers the following facts and circumstances in their assessment of whether the Group's exploration assets may be impaired:

•       whether the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed; or

•       whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted for nor planned for; or

•       whether exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable deposits and the Group has decided to discontinue such activities in the specific area; or

•       whether sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by sale.

If any such facts or circumstances are noted, the Group, as a next step, performs an impairment test in accordance with the provisions of IAS 36 "Impairment of Assets". In such circumstances, the aggregate carrying value of the mining exploration and evaluation assets is compared to the expected recoverable amount of the cash-generating unit. The recoverable amount is the higher of value in use and the fair value less costs to sell.

SHARE CAPITAL AND RESERVES

i)         Warrant reserve

The warrants issued by the Group are recorded at fair value on initial recognition net of transaction costs. The fair value of warrants granted is recognised as an expense or as share issue costs based on their nature, with a corresponding increase in equity. The fair value of the warrants granted is measured using the Black Scholes valuation model, taking into account the terms and conditions under which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of warrants that vest.

ii)        Share-based payment reserve

Where equity-settled share options are awarded to Directors or employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is charged to the statement of comprehensive income over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with the fair value of goods and services received.

iii)      STIP and LTIP Equity Schemes

The Group operates a short-term incentive plan ("STIP") scheme which runs a financial year basis, with employees receiving either cash or shares subsequent to year end based on their performance during the year. An option pricing model is used to measure the Group's liability at each reporting date, taking into account the terms and conditions on which the bonus is awarded and the extent to which employees have rendered their service. Movement in the liability (other than cash payments) are recognised in the consolidated statement of comprehensive income.

The LTIP scheme is a share based scheme that applies to permanent employees at Global 13 and above. The intention of the scheme is to get management to behave like owners through owning shares, driving Company performance. The Group is still in the process of implementing the scheme.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at historical cost less accumulated depreciation.

Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful economic life. The applicable rates are:

•       The mining assets are depreciated using the units of production method from the point that commercial production was achieved. This reflects the production activity in the period as a proportion of the total mining reserve. Where the units of production method is used, the assets are depreciated based on a rate determined by the tonnes of ore processed divided by the estimate of the mineral reserve.

•       Short-lived assets which are used in the mining and processing plant are depreciated over a period of between one and ten years.

•       Right-of-use assets are depreciated over the period of the lease contract.

•       Computer equipment is depreciated over three years.

•       Furniture is depreciated over five years.

•       Vehicles are depreciated over four years.

•       Mobile equipment is depreciated over ten years.

•       Buildings are depreciated over twenty years.

Land and mining assets under construction are not depreciated.

The estimated useful lives, residual values and depreciation methods are reviewed at each year end and adjusted if necessary.

Gains or losses on disposal are included in Profit or Loss.

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.

MINING ASSET - STRIPPING

In open pit mining operations, it is necessary to incur costs to remove overburden and other mine waste materials in order to access the ore body ("stripping costs").

During the development of a mine, stripping costs are capitalised and included in the carrying amount of the related mining property. During the production phase of a mine, stripping costs will be recognised as an asset only if the following conditions are met:

•       it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the entity;

•       the entity can identify the component of the ore body (mining phases) for which access has been improved; and

•       the costs relating to the stripping activity associated with that component can be measured reliably.

Stripping costs incurred and capitalised during the development and production phase are depreciated through Profit or Loss using the unit-of-production method over the reserves and, in some cases, a portion of resources of the area that directly benefit from the specific stripping activity. Costs incurred for regular waste removal that do not give rise to future economic benefits are considered as costs of sales.

RIGHT-OF-USE ASSET

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset, for a period of time, in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

•       the contract involves the use of an identified asset. The asset may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

•       the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

•       the Group has the right to direct the use of the asset. The Group has the right when it has the decision-making rights that are most relevant to changing how and for what purposes the asset is used. In rare cases where the decision about how and for what purposes the assets is used is predetermined, the Group has the right to direct the use of the asset if either:

§  the Group has the right to operate the asset; or

§  the Group designed the asset in a way that predetermines how and for what purposes it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price.

The right-of-use asset is initially measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is annually assessed for impairment and will be adjusted for certain re-measurements of the lease liability.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

At each statement of financial position date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Where there has been a change in economic conditions that indicate a possible impairment in a cash-generating unit, the recoverability of the net book value relating to that unit is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future commodity prices and future costs.

In accordance with IAS 36 Impairment of Assets, the recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less costs of disposal. Management has determined the recoverable amount using the fair value less costs to develop approach, as permitted under IAS 36, because the asset is held for development and sale, and estimating value in use would require cash flow forecasts subject to greater uncertainty. This approach reflects market participant assumptions regarding the price obtainable from the asset in its current stage of development, less the estimated costs necessary to complete development and bring the asset to a condition for sale or use. Management considers this method to provide a more reliable and relevant measure of recoverable amount in the circumstances. In assessing the recoverable amount, the expected future post-tax cash flows from the asset are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The Life of Mine ("LoM") plan is the approved management plan at the reporting date for ore extraction and its associated capital expenditure. The capital expenditure included in the impairment model does not include capital expenditure to enhance the asset performance outside of the existing LoM plan. The ore tonnes included in the LoM plan are those as per the Reserve Statement, which management considers economically viable.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease to the extent that it reverses gains previously recognised in other comprehensive income.

Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.

INVENTORIES

Inventory consists of tin concentrate on hand, the run of mine stockpile, and consumable items.

The tin concentrate is carried at the lower of cost or net realisable value. The cost of the concentrate includes direct materials, direct labour, depreciation, and overhead costs relating to processing and engineering activities. Net realisable value is the estimated selling price net of any estimated selling costs in the ordinary course of business.

The run of mine stockpile is carried at the lower of cost or net realisable value. The cost of the stockpile includes direct materials, direct labour, depreciation and overhead costs relating to mining activities. Net realisable value is the estimated selling price net of necessary processing costs and any estimated selling costs in the ordinary course of business, including both government and Orion royalties.

Consumables are valued at the lower of cost (determined on the weighted average basis) and net realisable value. Cost comprises all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition. Replacement cost is used as the best available measure of net realisable value.

FINANCIAL INSTRUMENTS

Financial instruments are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

FINANCIAL ASSETS

The Group has the following financial assets:

•       Trade and other receivables

•       Cash and cash equivalents

•       Derivative financial asset

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.

Financial assets are classified as at amortised cost only if the asset is held to collect the contractual cash flows and the contractual terms of the asset give rise to cash flows that are solely payments of principal and interest. At subsequent reporting dates, financial assets at amortised cost are measured at amortised cost less any impairment losses.

For assets measured at fair value, gains and losses will be recorded in profit or loss.

The derivative financial asset is measured at fair value as the group is hedging against the risk of changes in the fair value of its forecasted sales due to fluctuations in the tin price.

IMPAIRMENT OF FINANCIAL ASSETS

The Group assesses on a forward-looking basis the expected credit loss, defined as the difference between the contractual cash flows and the cash flows that are expected to be received, associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables only, the simplified approach permitted by IFRS 9 "Financial Instruments" is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Losses are recognised in the income statement. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the income statement.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.

The expected loss rates are based on the payment profiles of sales over a period of 24 months before 28 February 2025 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of our customer to settle the receivables balance.

FINANCIAL LIABILITIES

Financial liabilities include trade and other payables, borrowings and other financial liabilities classified into one of the following categories:

•       Fair value through profit or loss ("FVTPL"): The liabilities are carried in the statement of financial position at fair value with changes in fair value recognised in the income statement. The Group currently has no financial liabilities carried at fair value through profit or loss.

•       Financial liabilities carried at amortised cost.

Borrowings and other financial liabilities are classified as either financial liabilities or as equity in accordance with the substance of the contractual agreement.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is: (i) a contingent consideration that may be paid by an acquirer as part of a business combination; (ii) held for trading; or (iii) designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains and losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the fair value adjustment line item in the statement of comprehensive income.

Financial liabilities at amortised cost

After initial recognition at fair value, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate ("EIR") method. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs.

Borrowings

Interest-bearing debt is initially recorded at fair value less transaction costs, and is subsequently measured at amortised cost, calculated using the effective interest rate method.

Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalised up to the date when the qualifying asset is ready for its intended use.

Compound debt

Upon issuance, the fair value of the compound financial instrument is established. The liability component is assessed at the fair value of a comparable liability that lacks an equity conversion feature. The equity component is calculated as the remaining amount after subtracting the fair value of the liability component from the total fair value of the instrument. Any transaction costs are distributed between the liability and equity components based on their respective fair values. The liability component is subsequently evaluated at amortised cost using the effective interest method. The equity component remains unchanged after initial recognition.

Hybrid debt

The proceeds received on the issue of the Group's convertible debt are allocated to their debt and derivative liability components. The amount initially attributable to debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include as option to convert. Subsequently, the debt component is accounted for as a financial liability measured at amortised cost until extinguished on conversion or maturity of the debt. The remainder of the proceeds is allocated to the conversion option and recognised as a derivative liability.

DERECOGNITION

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

•       the rights to receive cash flows from the asset have expired; or

•       the Group has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party, and either:

§  the Group has transferred substantially all the risks and rewards of the asset; or

§  the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires, or it is cancelled.

Any gain or loss on derecognition is taken to the profit or loss.

REHABILITATION PROVISION

The net present value of estimated future rehabilitation costs is provided for in the financial statements and capitalised within property, plant and equipment on initial recognition. Rehabilitation will generally occur on or after closure of a mine.

Initial recognition is at the time that the construction or disturbance occurs, and thereafter as and when additional construction or disturbances take place. The estimates are reviewed annually to take into account the effects of inflation and changes in the estimated cost of the rehabilitation works and are discounted using rates that reflect the time value of money. Annual increases in the provision due to the unwinding of the discount are recognised in the statement of comprehensive income as a finance cost. The present value of additional disturbances and changes in the estimate of the rehabilitation liability are recorded to mining assets against an increase/decrease in the rehabilitation provision.

The rehabilitation asset is amortised over the life of the mine once commercial production commences using the straight-line method. Rehabilitation projects undertaken, included in the estimates, are charged to the provision as incurred. Environmental liabilities, other than rehabilitation costs, which relate to liabilities arising from specific events, are expensed when they are known, probable and may be reasonably estimated.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

In the application of the Group's accounting policies, the Directors are required to make judgements, 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. Information about significant areas of estimation uncertainty considered by management in preparing the financial statements is provided below.

Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the year in which the estimates are revised if the revision affects only that year, or in the year of revision and in future years if the revision affects both current and future years.

i)         Going concern and liquidity

Significant estimates were required in forecasting cash flows used in the assessment of going concern including tin and tantalum prices, the levels of production, operating costs, and capital expenditure requirements. For further details, refer to going concern considerations laid out earlier in Note 2.

ii)        Decommissioning and rehabilitation obligations

Estimating the future costs of environmental and rehabilitation obligations is complex and requires management to make estimates and judgements, as most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. The resulting provisions (see Note 19) are further influenced by changing technologies, and by political, environmental, safety, business, and statutory considerations.

The Group's rehabilitation provision is based on the net present value of management's best estimates of future rehabilitation costs. Judgement is required in establishing the disturbance and associated rehabilitation costs at period end, timing of costs, discount rates, and inflation. In forming estimates of the cost of rehabilitation which are risk adjusted, the Group assessed the Environmental Management Plan and reports provided by internal and external experts. Actual costs incurred in future periods could differ materially from the estimates, and changes to environmental laws and regulations, life of mine estimates, inflation rates, and discount rates could affect the carrying amount of the provision.

The carrying amount of the rehabilitation obligations for the Group at 28 February 2025 was £1 604 389 (FY 2024: £1 152 121). In determining the amount attributable to the rehabilitation liability, management used a discount rate of 11.02% (FY 2024: 12.3%), an inflation rate of 4.0% (FY 2024: 4.8%) and an estimated mining period of 11.65 years (FY 2024: 12.56 years), being the Phase 1 expansion life of mine.

A 1% increase or decrease in the inflation rate used would result in a £189 149 difference in the liability. A 2% increase or decrease in the discount rate used would result in a £398 489 difference in the liability.

iii)      Impairment indicator assessment for exploration and evaluation assets

Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including specific impairment indicators prescribed in IFRS 6 "Exploration for and Evaluation of Mineral Resources". If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future tin prices, future capital expenditures, environmental and regulatory restrictions, and the successful renewal of licences.

The Directors have concluded that there are no indications of impairment in respect of the carrying value of Namibian intangible assets at 28 February 2025 based on planned future development of the Namibian projects, and current and forecast tin prices. Exploration and evaluation assets are disclosed fully in Note 11.

iv)       Impairment assessment for property, plant and equipment

Management have reviewed the Uis mine for indicators of impairment and have considered, among other factors, the operations to date at the Uis Tin Mine, forecast commodity prices, production profile, inflation rate, post- tax discount rate and market capitalisation of the Group. In undertaking the impairment review, management have also reviewed the underlying LoM valuation model for Uis. The LoM valuation model  represents a value in use model and includes assessments of different scenarios associated with capital improvements and expansion opportunities. The impairment testing performed by management did not result in an impairment.

The forecasts require estimates regarding forecast tin, tantalum and lithium prices, ore resources, production, operating and capital costs. Under the base case forecast scenario, management used a forecast tin price of $32 000 per tonne, tantalum price of $175 000 per tonne, lithium price of $1 120 per tonne, discount rate of 11.5% post tax real rate (23.2% pre-tax real rate). The forecast indicates sufficient headroom as at 28 February 2025.

IAS 36 outlines both external and internal indicators that may suggest an asset is impaired. As part of this review, management has considered these indicators in relation to the Uis mining asset. Based on IAS 36, no immediate indicators of impairment have been identified. However, management acknowledges that the recoverability of the mining asset is sensitive to the following key assumptions:

•       Volatility in tin prices, which directly impacts revenue projections. The estimation of future tin price is subject to uncertainty considering the volatility of the market. Management has therefore compared the forecast tin price with the economic consensus estimates.

•       Ramp-up of tin production anticipated from FY2028 onwards, following the completion of the ore sorters expansion project. Management's forecasts are dependent on tin production increasing by 45% to 2 600 tonnes of tin concentrate within the next 3 years, therefore, the Group's upcoming focus will be to deliver on its expansion projects

Management has considered these indicators and tested the recoverability of the net book value of the mining asset against the estimated discounted future cash flows based on expectations of future commodity prices and future costs.

As an additional test, management has performed the following sensitivity analyses:

•       lowering the forecast tin prices by 10%,

•       raising the discount rate to 13% post tax real rate,

•       lowering plant recovery by 10% and

•       increasing operating costs by 10%.

In each of these circumstances, the forecast indicated sufficient headroom as at 28 February 2025. If the tin price decreased by more than 15%, this would result in an impairment of the asset, of £1.1m, however based on the average historical prices, management believe this would be unlikely.

v)        Depreciation

Judgement is applied in making assumptions about the depreciation charge for mining assets when using the unit- of-production method in estimating the ore tonnes held in reserves. The relevant reserves are those included in the current approved LoM plan which relates to the Phase 1 expansion. Judgement is also applied when assessing the estimated useful life of individual assets and residual values. The assumptions are reviewed at least annually by management and the judgement is based on consideration of the LoM plan, as well as the nature of the assets. The reserve assumptions included in the LoM plan are evaluated by management.

vi)       Capitalisation and depreciation of waste stripping

The Group has elected to capitalise the costs of waste stripping activities as these are necessary to allow improved access to the ore and, therefore, will result in future economic benefits. The costs of drilling, blasting and load and haul of waste material is capitalised until such time that the underlying ore is used in production. These costs are then expensed on a proportional basis. The capitalised costs are included in the mining asset in property, plant and equipment and are expensed back into the statement of comprehensive income as depreciation. Capitalisation of waste stripping requires the Group to make judgements and estimates in determining the amounts to be capitalised. These judgements and estimates include, amongst others, the expected life of mine stripping ratio for each separate open pit, the determination of what defines separate pits, and the expected volumes to be extracted from each component of a pit for which the stripping asset is depreciated.

vii)     Determination of ore reserves

The estimation of ore reserves primarily impacts the depreciation charge of evaluated mining assets, which are depreciated based on the quantity of ore reserves. Reserve volumes are also used in calculating whether an impairment charge should be recorded where an impairment indicator exists.

The Group estimates its ore reserves and mineral resources based on information, compiled by appropriately qualified persons, relating to geological and technical data on the size, depth, shape, and grade of the ore body and related to suitable production techniques and recovery rates.

The estimate of recoverable reserves is based on factors such as tin prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body.

There are numerous uncertainties inherent in estimating ore reserves and mineral resources. Consequently, assumptions that are valid at the time of estimation may change significantly if or when new information becomes available.

viii)    Valuation of inventories

Judgement is applied in making assumptions about the value of inventories and inventory stockpiles, including tin prices, plant recoveries and processing costs, to determine the extent to which the Group values inventory and inventory stockpiles. The Group uses forecast tin prices to determine the net realisable value of the ROM stockpile and the tin concentrate inventory on hand at year end. Inventory stockpiles are measured using actual mining and processing costs.

ix)       Determining the fair value of royalty debt

The Group entered into a royalty agreement during the prior financial year. The measurement of the royalty obligation factored in numerous key inputs and the use of a technical expert. These inputs include the forecast of the tin production and price over a period of 30 years, the risk-free rate and the credit spread. The tin price forecast was based on estimates provided by the Group as of 28 February 2025. The risk-free rate was based on the United States Constant Maturity Treasury rates commensurate with the terms as of the valuation date, as reported on the Federal Reserve website. The Group used a credit spread of 10.58% computed by backsolving the convertible notes to par and further adjusted down 3.5% to account for the lower risk factor as a result of the ongoing operations at the Uis Tin Mining Company (operating subsidiary). The operating subsidiary attracts a lower risk factor due to it being closely aligned to the underlying Tin mining operation and its performance since commissioned, relative to the holding company, which is implicitly subordinated. The royalty obligation is measured at fair value through profit and loss.

x)        Fair value estimation on the consideration paid during the acquisition of mining rights

When the fair values of assets recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. As part of the accounting for the acquisition of the non-controlling interest in UTMC, part of the consideration was settled using the ML129 license. Due to the nature of the assets, certain exploration activities were undertaken, but the information gathered was insufficient to delineate a Mineral Resource as defined by the JORC 2012 (Joint Ore Reserves Committee) Mineral Reporting Code, or any other broadly accepted mineral reporting standard. As a result, management estimated the fair value to be equivalent to the exploration costs, which will serve as the base amount for the transaction.

xi)       Assessment of Control and Classification of Investment in Grace Simba Investments (Pty) Ltd ("GSI") as an Associate

The Group exercises judgement in assessing whether it has control, joint control, or significant influence over another entity. In accordance with the requirements of IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, the determination of control involves evaluating whether the Group has:

•       Power over the investee,

•       Exposure or rights to variable returns from its involvement with the investee, and

•       The ability to use its power to affect the amount of the investor's returns.

In the current reporting period, the Group holds 100% of the equity interest in GSI, along with representation on the board of directors and participation in key operating decisions. However, after evaluating the relevant facts and circumstances, including decision-making rights, and contractual arrangements, management concluded that the Group does not have control over GSI, but has significant influence over its financial and operating policies.

Accordingly, the investment in GSI has been accounted for using the equity method, in accordance with IAS 28.

This assessment required significant judgement, as despite having majority shareholding, Andrada cannot unilaterally direct relevant activities due to the other party holding substantive governance rights and holding the casting vote with board decisions.

Management will review such relationships periodically to assess whether any changes in facts or circumstances require a reassessment of control or influence.

ADOPTION OF NEW AND REVISED STANDARDS

The following amendments standards and interpretations were adopted by the group from 1 March 2024:

•       Supplier Finance Arrangements (Amendments to IAS 7 & IFRS 7);

•       Lease Liability in a Sale and Leaseback (Amendments to IFRS16);

•       Classification of Liabilities as Current or Non-Current (Amendments to IAS 1); and

•       Non-current Liabilities with Covenants (Amendments to IAS 1).

These amendments to various IFRS Accounting Standards are mandatorily effective for reporting periods beginning on or after 1 March 2024. These amendments had no effect on the consolidated financial statements of the Group.

Supplier Finance Arrangements (Amendments to IAS 7 & IFRS 7)

On 25 May 2023, the IASB issued Supplier Finance Arrangements, which amended IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures. The amendments require entities to provide certain specific disclosures (qualitative and quantitative) related to supplier finance arrangements. The amendments also provide guidance on characteristics of supplier finance arrangements.

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

On 22 September 2022, the IASB issued amendments to IFRS 16 - Lease Liability in a Sale and Leaseback (the Amendments). Prior to the Amendments, IFRS 16 did not contain specific measurement requirements for lease liabilities that may contain variable lease payments arising in a sale and leaseback transaction. In applying the subsequent measurement requirements of lease liabilities to a sale and leaseback transaction, the Amendments require a seller-lessee to determine 'lease payments' or 'revised lease payments' in a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use retained by the seller-lessee.

Classification of Liabilities as Current or Non-Current and Non-current Liabilities with Covenants (Amendments to IAS 1)

The IASB issued amendments to IAS 1 in January 2020 Classification of Liabilities as Current or Non-current and subsequently, in October 2022 Non-current Liabilities with Covenants.

The amendments clarify the following:

•       An entity's right to defer settlement of a liability for at least twelve months after the reporting period must have substance and must exist at the end of the reporting period.

•       If an entity's right to defer settlement of a liability is subject to covenants, such covenants affect whether that right exists at the end of the reporting period only if the entity is required to comply with the covenant on or before the end of the reporting period.

•       The classification of a liability as current or non-current is unaffected by the likelihood that the entity will exercise its right to defer settlement.

•       In case of a liability that can be settled, at the option of the counterparty, by the transfer of the entity's own equity instruments, such settlement terms do not affect the classification of the liability as current or non-current only if the option is classified as an equity instrument.

ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET APPLIED

The following standards, interpretations and amendments are effective for the period beginning 1 March 2025:

•       Lack of Exchangeability (Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates). Effective 1 January 2025.

•       Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments Disclosures). Effective 1 January 2026.

•       Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments Disclosures). Effective 1 January 2026.

•       IFRS 18 Presentation and Disclosure in Financial Statements. Effective 1 January 2027.

•       IFRS 19 Subsidiaries without Public Accountability: Disclosures. Effective 1 January 2027.

Management is in the process of assessing the impact of the updated standards, interpretations and amendments. The most significant impact is expected due to the updates of IFRS 9, IFRS 7 and IFRS 18.

REVENUE

Recognised in the statement of comprehensive income

The Group made their first sales of tantalum and lithium during the financial year. The revenue from the sale of tin, tantalum, lithium and sand is recognised at the point in time at which control transfers.

Other revenue relates to the change in the fair value of amounts receivable under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date. Refer to Note 2 for further details.

COST OF SALES

Recognised in the statement of comprehensive income:

ADMINISTRATIVE EXPENSES

Recognised in the statement of comprehensive income:

Other costs are mainly comprised of corporate overheads necessary to run the South African head office.

STAFF COSTS

OTHER INCOME

Recognised in the statement of comprehensive income: