This announcement contains information which, prior to its disclosure, was inside information as stipulated under Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as amended).

For further information, please visit the Company's website: www.aterianplc.com or contact:

Aterian Plc:

Charles Bray, Executive Chairman - [email protected]

Simon Rollason, Director - [email protected]

 

Financial Adviser and Broker:

Novum Securities Limited

David Coffman / George Duxberry

Colin Rowbury

Tel: +44 (0)207 399 9400

 

Financial PR:
Yellow Jersey PR - [email protected]
Charles Goodwin / Bessie Elliot
Tel: +44 (0)20 3004 9512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2022

			Group
	Notes		Year to	Year to
			31-Dec-22	31-Dec-21
			£'000	£'000
Revenue			-	-
Administrative expenses	4		(996)	(1,020)
Impairment losses	5		(3,045)	-
Share-based payment expense	21		(335)	(267)
Provision for expected credit losses			-	(64)
			(4,376)	(1,351)
Operating loss			(4,376)	(1,351)
Interest payable and similar charges	6		(7)	(18)
Loss before tax			(4,383)	(1,369)
Tax expense	7		-	-
Loss after tax			(4,383)	(1,369)
Other comprehensive income:
Items that may be reclassified to profit or loss
Loss / (gain) on translation of foreign operations			(50)	28
Total comprehensive loss			(4,433)	(1,341)
Loss per share
Basic and diluted loss per share (pence)	8		(0.76)	(0.31)

 

 

All activities relate to continuing operations.

The accompanying notes are an integral part of these financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

		Group			Company
	Notes	31-Dec-22	31-Dec-21		31-Dec-22	31-Dec-21
		£'000	£'000		£'000	£'000
Non-current assets
Investments	9	-	-		3,241	2,261
Goodwill	11	-	2,168		-	-
Exploration and evaluation assets	12	3,241	-		-	-
Trade and other receivables	14	-	-		6	-
Amounts owed by group undertakings	14	-	-		-	1,703
Property, plant and equipment	13	421	1,226		6	-
Total non-current assets		3,662	3,394		3,253	3,964
Current assets
Trade and other receivables	14	319	188		266	143
Cash and cash equivalents	15	110	196		41	190
Total current assets		429	384		307	133
Total assets		4,091	3,778		3,560	4,297
Equity and liabilities
Share capital	20	9,647	5,671		9,647	5,671
Share premium	20	2,177	2,144		2,177	2,144
Share-based compensation reserve	21	2,441	1,615		2,441	1,615
Interest in shares in EBT	21	(839)	(395)		(839)	(395)
Translation reserve		(314)	(263)		-	-
Accumulated losses		(10,968)	(6,629)		(11,784)	(6,373)
Other reserves		-	80		-	58
Merger relief reserve		1,200	1,200		1,200	1,200
Total equity		3,345	3,423		2,843	3,920
Current liabilities
Trade and other payables	16	395	197		366	219
Deferred consideration	17	200	-		200	-
Total current liabilities		595	197		566	219
Non-current liabilities
Borrowings	18	151	158		151	158
Total non-current liabilities		151	158		151	158
Total equity and liabilities		4,091	3,778		3,560	4,297

 

^*: The correction of prior period errors is disclosed in note 2 of the notes to the financial statements.

 

The Company made a loss of £5,433,000 for the year 2022 (2021 - loss of £1,152,000).

 

These financial statements were approved by the Board and were authorised for issue on 28 April 2023 and signed on their behalf by:

 

 

                                                                                    

 

Charles G Bray                                                 

Chairman                                                         

 

Company number: 07496976

The accompanying notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2022

 

	Share  capital	Share premium	Share-based compensation reserve	Interest in shares in EBT	Translation reserve	Other Reserve	Merger relief reserve	Accumulated losses	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2021	4,301	2,144	1,348	(133)	(291)	80	1,200	(5,326)	3,323
Loss for the year	-	-	-	-	-	-	-	(1,369)	(1,369)
Other comprehensive loss	-	-	-	-	28	-	-		28
Transactions with owners:
Transfer from other reserve to accumulated losses	-	-	-	-	-	-	-	66	66
Share based compensation	-	-	267	(262)	-	-	-	-	5
Issue of new shares	1,370	-	-	-	-	-	-	-	1,370
At 31 December 2021	5,671	2,144	1,615	(395)	(263)	80	1,200	(6,629)	3,423
Loss for the year	-	-	-	-	-	-	-	(4,383)	(4,383)
Other comprehensive loss	-	-	-	-	(50)	-	-	-	(50)
Transactions with owners:
Discounting of loan notes	-	-	-	-	-	(36)	-	-	(36)
Transfer from other reserve to accumulated losses	-	-	-	-	-	(44)	-	44	-
Share based compensation	-	-	826	(444)	-	-	-	-	382
Issue of new shares	3,976	33	-	-	-	-	-	-	4,009
At 31 December 2022	9,647	2,177	2,441	(839)	(313)	-	1,200	(10,968)	3,345

 

 

 

Share based compensation reserve

The entry to the share based compensation reserve in the year is made up of £335,000 which was charged to the consolidated statement of comprehensive income (note 21) and £491,000 which related to warrants capitalised in connection with the Altus acquisition (note 10).

 

 

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2022

	Share  capital	Share premium	Share-based compensation reserve	Interest in shares in EBT	Other Reserve	Merger relief reserve	Accumulated losses	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2021	4,301	2,144	1,348	(133)	80	1,200	(5,221)	3,719
Loss for the year	-	-	-	-	-	-	(1,152)	(1,152)
Transactions with owners:
Other reserve movement	-	-	-	-	(22)	-	-	(22)
Share based compensation	-	-	267	(262)	-	-	-	5
Issue of new shares	1,370	-	-	-	-	-	-	1,370
At 31 December 2021	5,671	2,144	1,615	(395)	58	1,200	(6,373)	3,920
Loss for the year	-	-	-	-	-	-	(5,432)	(5,432)
Transactions with owners:
Discounting of loan notes	-	-	-	-	(36)	-	-	(36)
Transfer from other reserve to accumulated losses	-	-	-	-	(22)	-	22	-
Share based compensation	-	-	826	(444)	-	-	-	382
Issue of new shares	3,976	33	-	-	-	-	-	4,009
At 31 December 2022	9,647	2,177	2,441	(839)	-	1,200	(11,784)	2,843

 

Reserves	Description and purpose
Share capital	Nominal value of the contributions made by shareholders in return for the issue of shares.
Share premium	Amount subscribed for share capital in excess of nominal value.
Share-based compensation reserve	Cumulative fair value of the charge/(credit) in respect of share  options  granted  and recognised as an expense in the Income Statement.
Translation reserve	The translation reserve comprises translation differences arising from the translation of financial statements of the Group's foreign entities into Sterling (£).
Other reserves	The other reserve comprises differences arising from the discounting of loan notes.
Merger relief reserve	The merger relief reserve comprises differences between the fair value and at par value of shares issued for the acquisition of subsidiary
Interest in  shares in  Employees Benefit Trust (EBT)	The Company set up an Employees Benefit Trust on 6 March 2015 (the Equatorial EBT) for the benefit of its employees.  The cost of shares held by the EBT are presented as a deduction from entity.
Accumulated losses	Accumulated losses represents total losses.

 

 

 

 

 

 

 

 

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS

YEAR ENDED 31 DECEMBER 2022

 

	Note	Group			Company
		31-Dec-22	31-Dec-21		31-Dec-22	31-Dec-21
		£'000	£'000		£'000	£'000
Cash flow from operating activities
Loss after tax		(4,383)	(1,369)		(5,433)	(1,151)
Adjustments for:
Depreciation		22	2		-	-
Share based expense		335	267		335	267
Costs not paid cash		50	-		50	-
Interest expense		7	18		7	18
Inter-company interest income		-	-		(264)	(224)
Provisions for expected credit losses		-	64		2,444	64
Provision for impairment of investments	9	-	-		2,261
Provision for impairment of goodwill	11	2,168	-		-	-
Impairment of property plant and equipment	13	877	-		-	-
Foreign exchange gains		(134)	(28)		-	-
Operating loss before working capital changes		(1,058)	(1,046)		(600)	(1,027)
Changes in working capital:
(Increase) / decrease in trade & other receivables		81	337		89	381
Increase / (decrease) in trade & other payables		168	(490)		117	(294)
Net cash outflows from operating activities		(809)	(1,199)		(394)	(940)
Cash flow from investing activities
Purchase of plant and equipment		(10)	(239)		(6)	-
Asset acquisition including directly attributable costs	10	(108)	-		(108)	-
Funds advanced to subsidiary		-	-		(482)	-
Net cash used in investing activities		(118)	(239)		(596)	-
Cash flow from financing activities
Net proceeds from borrowings	18	-	567		-	567
Loan received	20	150	495		150	-
Cash proceeds from issue of shares		691	520		691	520
Net cash flow from financing activities		841	1,582		841	1,086
Net (decrease) / increase in cash & cash equivalents		(86)	144		(149)	141
Cash & cash equivalents at beginning of the year		196	52		190	49
Effect of exchange rate movements on cash		-	-		-	-
Cash and cash equivalents at end of the year		110	196		41	190

 

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2022

 

1.         General information

Aterian plc ("the Company") is an investment company, focussed on African mineral resource investment opportunities. The Company operates through its 100% owned subsidiary, Eastinco Limited ("EME Ltd"), a Rwandan tantalum, tin and tungsten exploration company and Aterian Resources Limited which holds copper-silver and base metal exploration projects in the Kingdom of Morocco.

On 24 October 2022, the Company completed the acquisition of 15 mineral exploration projects covering 762 km2 in the Kingdom of Morocco from Altus Strategies PLC (now called Elemental Altus Royalties Corp). The completion of the acquisition coincided with a move to the Standard Sector of the London Stock Exchange from the AQUIS Stock Exchange, and a change in name from Eastinco Mining and Exploration PLC to Aterian PLC, shortly thereafter.

The Company is incorporated and domiciled in the UK.  The address of its registered office is 27-28 Eastcastle Street, London W1W 8DH.

The registered number of the company is 07496976.

2.         Basis of preparation

2.1        General

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations) as adopted for use in the United Kingdom ("UK adopted IFRS") and the Companies Act 2006. The financial statements have been prepared under the historical cost convention except for the valuation of assets acquired in an asset acquisition which are measured at fair value.

The financial statements have been rounded to the nearest thousand pounds.

The Company has taken the exemption under s408 Companies Act 2006 and has therefore not published its own profit and loss account in these financial statements.

During the year, the Group identified a number of presentational matters relating to the year ended 31 December 2021 which have been adjusted in the year ended 31 December 2022. On the basis that this is immaterial, and the errors relate to disclosures, a prior year adjustment was not made. In particular

·      The financial statements for the year ended 31 December 2021 overstated the number (but not the value) of shares issued by 50,000,000 ordinary shares Additionally, the brought forward number of shares in issue was overstated by 510 shares. These financial statements have corrected this by way of presentation restatement in Note 20. The basic and diluted loss per share in 2021 has remained unchanged at 0.31 pence. 

·      The financial statements for the year ended 31 December 2021 understated the number (but not the value) of options issued by 12,346,660 and these financial statements have corrected this by way of presentation restatement in Note 21.

 

2.2        Functional and presentation currency

The financial statements of the Group are presented in Pounds Sterling, which is also the functional currency of the Company. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which it operates (its functional currency).

2.3        Basis of consolidation

The consolidated financial statements comprise the financial statements of Aterian Plc and its subsidiaries as at 31 December 2022. Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has all of the following:

·      Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

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

·      The ability to use its power over the investee to affect its returns

·      Generally, there is a presumption that a majority of voting rights results in control. When the Group has less than a majority of the voting, or similar, rights of an investee, it considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

·      The contractual arrangements with the other vote holders of the investee;

·      Rights arising from other contractual arrangements; and

·      The Group's voting rights and potential voting rights

 

The relevant activities are those which significantly affect the subsidiary's returns. The ability to approve the operating and capital budget of a subsidiary and the ability to appoint key management personnel are decisions that demonstrate that the Group has the existing rights to direct the relevant activities of a subsidiary.

The Group re-assesses 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. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full, on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency.

Business combinations are accounted for under the acquisition method. Under the acquisition method, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries' net assets are determined and these values are reflected in the Consolidated Financial Statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination, and directly expensed.

Any excess of the purchase consideration of the business combination over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill. Goodwill, if any, is not amortised but reviewed for impairment at least annually.

Intra-group transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

2.4        Business combinations

A business combination is defined as an acquisition of assets and liabilities that constitute a business and is accounted for using the acquisition method. A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities. A business consists of inputs, including non-current assets, and processes, including operational processes, that when applied to those inputs, have the ability to create outputs that provide a return to the Company and its shareholders. A business also includes those assets and liabilities that do not necessarily have all the inputs and processes required to produce outputs but can be integrated with the inputs and processes of the Company to create outputs.

When acquiring a set of activities or assets in the exploration and development stage, which may not have outputs, the Company considers other factors to determine whether the set of activities or assets is a business.

The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree.

 

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

·      deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 and IAS 19 respectively;

·      liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date (see below); and

·      assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 are measured in accordance with that Standard.

Acquisition-related costs of a business combination, other than costs to issue equity securities, are expensed as incurred.

2.5        Asset acquisitions

 

Asset acquisitions

Where the Company has determined that the assets acquired do not meet the definition of a business, the transaction is accounted for as an asset acquisition. In such cases, the Company identifies and recognises the individual assets acquired and liabilities assumed. The cost of the group is allocated to the individual identifiable assets and liabilities on the basis of their fair values at the date of purchase. Such a transaction does not give rise to goodwill. At the Group level, the transaction is an acquisition of exploration and evaluation assets. At the Company level, the acquisition is treated as an investment.

When determining the initial measurement of an asset acquisition, the Company assesses both the fair value of the consideration paid as well as the fair value of each asset acquired and liability assumed. The consideration is presumed to equal to the fair value of the net assets acquired unless there is evidence to the contrary. The fair value of the consideration determines the cost to be allocated over the group of assets acquired and liabilities assumed. The fair values of the individual assets and liabilities are used to determine the proportional amount of that cost to be allocated to the identifiable assets and liabilities that make up the transaction. No provision for deferred tax is recognised on the acquisition.

Expenses incurred directly in relation to the acquisition are capitalised as part of the cost of the assets acquired.

2.6        Going concern

The financial statements have been prepared on a going concern basis. The Group has not yet earned revenues and as at 31 December 2022 was in the feasibility, optimisation and commissioning phase of its ore processing plant in Rwanda. In Morocco, each of its assets are in the early stages of exploration and feasibility assessment. Continuing operations of the Group are currently financed from funds raised from shareholders and this will likely continue to be the case until revenue is generated from mining and/or trading and subsequent ore sales. In the short term the Chairman of the Company has made available to the Company a working capital facility, but the Group will likely need to raise further funds in order to progress the Group from the exploration phase into feasibility and eventually into production of revenues.

As at 31 December 2022, the Group had cash and cash equivalents of £110,000 and a working capital facility of £500,000 of which £50,000 remains to be drawn. As at the date of this report, cash balances were approximately £218,000. The Company also hopes to raise additional equity to fund both day-to-day expenditure and potential growth although there can be no certainty that such funding will be forthcoming.

As part of their assessment, the Directors have prepared financial cash-flow forecasts on the basis that cost reduction and cost deferral measures can be implemented over the going concern period The Company's base case financial projections show that the Group will continue to operate within the available facilities throughout the next 12 months. Much of the Group's planned exploration expenditure is discretionary and, if necessary, could be scaled back to conserve cash should circumstances coincide with our expectations. 

The Directors have agreed, if circumstances require, to defer payment of their fees until such time as adequate funding is received and if necessary, scale back all discretionary expenditure including exploration expenditure.

 

The Directors have concluded that these circumstances give rise to a material uncertainty relating to going concern, arising from events or conditions that may cast significant doubt on the entity's ability to continue as a going concern if a further fund raise was unsuccessful. However, considering recent successful fund raises the Directors are confident that they can continue to adopt the going concern basis in preparing the financial statements.

The financial statements do not include any adjustment that may arise in the event that the Group is unable to raise finance, realise its assets and discharge its liabilities in the normal course of business.

2.7        Changes in accounting policies

 

New standards, interpretations and amendments adopted from 1 January 2022

There were no new standards or interpretations impacting the Group that will be adopted in the annual financial statements for the year ended 31 December 2022, and which have given rise to changes in the Group's accounting policies.

Standards and interpretations in issue but not yet effective or not yet relevant

At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

		Effect annual periods beginning before or after
IAS 1	Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);	1st January 2023
IAS 8	Amendments regarding the definition of accounting estimates	1st January 2023
IAS 12	Amendments regarding deferred tax on leases and decommissioning obligations	1st January 2023
IFRS 17	Amendments to address concerns and implementation challenges that were identified after IFRS 17 was published	1st January 2023
IAS 1	Amendments to defer the effective date of January 2020 amendments regarding the disclosure of accounting policies	1st January 2023
IFRS 16	Leases (Amendment - Liability in a Sale and Leaseback)	1st January 2024
IAS 1	Presentation of Financial Statements (Amendment - classification of Liabilities as Current or Non-current)	1st January 2024
IAS 1	Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants)	1st January 2024

 

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the Group's financial statements.

2.8        Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenue and expenses relating to transactions with other components of the same entity) whose operating results are reviewed regularly by the entity's chief operating decision maker to make decision about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

The Directors are of the opinion that the Group is engaged in a one operating segment being exploration activity in Africa.                                                                             

2.9        Accounting for interest in own shares held though an Employees Benefit Trust

The funds advanced to acquire the shares have been accounted for under IFRS as a deduction from equity rather than as an asset.

2.10      Financial instruments

A financial instrument is any contract that gives rise to a financial asset of on entity and a financial liability or equity instrument of another.

(a) Financial assets

 

Initial recognition and measurement

Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through OCI, or fair value through profit and loss.

The classification of financial assets at initial recognition that are debt instruments depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

·      Financial assets at amortised cost

·      Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)

·      Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

·      Financial assets at fair value through profit or loss

Financial assets at amortised cost

This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:

·      The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

·      The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group's financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables.

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 (i.e., removed from the Group's consolidated statement of financial position) when:

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

·      The Group has transferred its rights 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 under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets

The Group recognises an allowance for allowance for expected credit losses ("ECLs'') for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group.

A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity. At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

(b) Financial liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables, accruals and loan notes.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Loans and borrowings, trade and other payables, and accruals.

After initial recognition, interest-bearing loans and borrowings, trade and other payables, and accruals are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other 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 as finance costs in the statement of profit or loss and other comprehensive income.

This category generally applies to trade payables, other payables and accruals.

Derecognition

A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.

2.11      Taxation

Current tax is calculated according to local tax rules, using tax rates and laws enacted or substantively enacted at the reporting date. Current and deferred tax is recognised in profit or loss unless it relates to an item recognised in other comprehensive income or equity in which case the related current tax or deferred tax is recognised in other comprehensive income or equity respectively.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, determined using tax rates and laws that are substantively enacted at the reporting date and are expected to apply as or when the temporary differences reverse. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

2.11      Property, plant and equipment

Property, plant, and equipment (PPE) is carried at cost less depreciation and accumulated impairment losses. Where parts of an item of PPE have different useful lives, they are accounted for as separate items of PPE.

The Group assesses at each reporting date whether items of PPE are impaired.

Depreciation is provided on PPE, at rates calculated to write off the cost less the estimated residual value of each asset, on a straight-line basis, over their expected useful lives as follows:

Mining equipment                                                                                                          10 years

Mining Assets (incl exploration and evaluation expenditure)                                       8 years

Office equipment                                                                                                            4 years

Motor vehicles                                                                                                                  5 years

Computer equipment                                                                                                    2 years

Land                                                                                                                                      not depreciated

Mine site                                                                                                                             not depreciated

 

Depreciation methods, useful lives and residual values are reviewed if there is an indication of a significant change since the last annual reporting date in the pattern by which the Group expects to consume an asset's future economic benefits.

The Company capitalizes expenditures incurred in exploration and evaluation (E&E) activities as project costs, categorized as intangible assets (exploration and evaluation assets), when those costs are associated with finding specific mineral resources. Expenditure included in the initial measurement of project costs and which are classified as intangible assets relate to the acquisition of rights to explore. Capitalization of pre-production expenditure ceases when the mining property is capable of commercial production. Project costs are recorded and held at cost and no amortization is recorded prior to commencement of production. An annual review is undertaken of each area of interest to determine the appropriateness of continuing to capitalize and carry forward project costs in relation to that area of interest, in accordance with the indicators of impairment as set out in IFRS 6.  An impairment provision of £877,000 has been made in the year ended 31 December 2022 (2021: nil) as more fully described in Note 13.

2.13      Intangible assets - Goodwill

Goodwill represents the excess of the cost of a business combination over the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired.  

Cost comprises the fair value of assets given, liabilities assumed, and equity instruments issued, plus the amount of any non-controlling interests in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit or loss. 

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to profit or loss. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date. An impairment provision of £2,168,000 has been made in the year ended 31 December 2022 (2021: nil) as more fully described in Note 11.

2.14      Impairment of non-financial assets (excluding inventories and deferred tax assets)

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill.

Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

 

2.15      Investment in subsidiaries

 

The Company, through its 100% owned Rwanda registered subsidiary, Eastinco Limited which was acquired on 15 October 2019, is actively engaged in mineral exploration and development of its portfolio of critical and strategic metals in Rwanda, with the focus on extracting and recovery of tantalum and tin.

Eastinco Limited also holds a metal trading license, issued by the authorities in Rwanda, which allows for the trading of metals from our mine supply and third-party producers and suppliers.

The Company also holds a portfolio of 15 highly prospective copper-silver and other base metal exploration projects in Morocco, acquired in October 2022 through its 100% owned Moroccan subsidiary, Aterian Resources Limited.

The Directors have reviewed evidence which might suggest whether the investments in the subsidiaries have become impaired.

In particular, the Directors reviewed whether there exist:

·      significant financial difficulty in the subsidiaries;

·      a breach of contract, such as a default or past-due event;

·      it is becoming probable that the subsidiaries will enter bankruptcy or another financial reorganisation;

·      the disappearance of any market for the debt of the subsidiaries because of financial difficulties; or

·      the financial liabilities of the subsidiaries trade at a deep discount that reflects likely incurred credit losses.

As more fully described in Note 9, the Directors have considered the evidence in respect of the Company's investments in its Rwandan subsidiaries and made full impairment against such investment amounting to £2,2,61,000. The Company's subsidiaries as at 31 December 2022 were as follows:

	Shareholding	Nature of Business	Country of Incorporation
Held directly:
Eastinco Limited	100%	Mining & exploration	Rwanda
Eastinco ME Ltd	100%	Mining & exploration	UK
Aterian Resources Ltd	100%	Mining & exploration	UK
Held indirectly:
Musasa Mining Ltd	85%	Dormant	Rwanda
Kinunga Mining Ltd	70%	Mining & exploration	Rwanda
Atlantic Minerals Ltd	100%	Mining & exploration	Seychelles
Adrar Resources S.A.R.L.A.U.	100%	Mining & exploration	Morocco
Azru Resources S.A.R.L.A.U.	100%	Mining & exploration	Morocco
Strat Co Limited	100%	Dormant	Isle of Man

Notes:

(i)    The registered office of each of the UK subsidiaries is: Eastcastle House, 27/28 Eastcastle Street, London, United Kingdom, W1W 8DH.

(ii)   The registered office of each of the Rwandan subsidiaries is: Remera, Gasabo, Umujyi wa Kigali, Rwanda.

(iii)  The registered office of each of the Morrocann subsidiaries is: 18 Rue Jabel Tazekka, 4ème Etage, Appt 9, Agdal, Rabat, Morocco.

(iv)  The registered office of Strat Co Limited is: Alma House, 7 Circular Road, Douglas, Isle of Man, IM1 1AF.

2.16      Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions and deposits with maturities of three months or less from inception.

2.17      Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the reporting date.  Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction.  Exchange differences are taken into account in arriving at the operating result.

On consolidation of a foreign operation, assets and liabilities are translated at the closing rate at the reporting date, income and expenses where the average rate is not materially different to the rates of exchange ruling at the dates of the transactions are translated at average exchange rates.  All resulting exchange differences shall be recognised in other comprehensive income and are accumulated in a separate component of equity. On disposal of the foreign operation the accumulated gains or losses previously recognised in entity are transferred to profit or loss and are recognised as a part of the overall profit or loss on disposal of the foreign operation.

2.18      Share-based payment arrangements
Equity-settled share-based payments are measured at fair value at the date of issue.

Aterian Plc has granted both share options and warrants that will be settled through the issuance of shares of the Company. The cost of equity-settled transactions is measured by reference to the fair value at the date on which they were granted and is recognised as an expense over the vesting period, which ends on the date the recipient becomes fully entitled to the award. Fair value is determined by using the Black-Scholes option pricing model.

In valuing equity-settled transactions, no account is taken of any service and performance conditions (vesting conditions), other than performance conditions linked to the price of the shares of the Company (market conditions). Any other conditions which are required to be met in order for the recipients to become fully entitled to an award are considered to be non-vesting conditions. Market performance conditions and non-vesting conditions are taken into account in determining the grant date's fair value.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance or service conditions are satisfied.

At each reporting date before vesting, the cumulative expense is calculated; representing the extent to which the vesting period has expired and management's best estimate of the number of equity instruments that will ultimately vest. The movement in the cumulative expense since the previous reporting date is recognised in profit and loss, with a corresponding entry in equity.

Where the terms of the equity-settled award are modified, or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if the difference is negative.

Where an equity-based award is cancelled (including when a non-vesting condition within the control of the entity or employee is not met), it is treated as if it had vested on the date of the cancellation, and the cost not yet recognised in profit and loss for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense.

2.19      Retirement and termination benefit costs

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit plans are accounted for as payments to defined contribution plans where the Group's obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

The Group has several joint venture agreements in relation to operating at the mining sites.  These are not yet operational and therefore no assets or liabilities have been consolidated into these accounts as at 31 December 2023.

2.20      Exploration, evaluation and development expenditures

 

Exploration expenditue

Exploration expenditures reflect the costs related to the initial search for mineral deposits with economic potential or obtaining more information about existing mineral deposits. Exploration expenditures typically include costs associated with the acquisition of mineral licences, prospecting, sampling, mapping, geophysical survey, laboratory work, diamond drilling and other work involved in searching for mineral deposits. All expenditures relating to exploration activities are expensed as incurred except for the costs associated with the acquisition of mineral licences which are capitalised.

Evaluation expenditure

Evaluation expenditures reflect costs incurred at projects related to establishing the technical and commercial viability of mineral deposits identified through exploration or acquired through a business combination or asset acquisition.

Evaluation expenditures include the cost of:

·      establishing the volume (tonnage) and grade of deposits through drilling of core samples, trenching and sampling activities for an ore body that is classified as either a mineral resource or a proven and probable reserve;

·      determining the optimal methods of extraction and metallurgical and treatment processes;

·      studies related to surveying, transportation and infrastructure requirements;

·      permitting activities; and

·      economic evaluations to determine whether development of the mineralised material is commercially viable, including scoping, prefeasibility and final feasibility studies.

Evaluation expenditures are capitalised if management determines that there is evidence to support probability of generating positive economic returns in the future. A mineral resource is considered to have economic potential when it is expected that the technical feasibility and commercial viability of extraction of the mineral resource can be demonstrated considering long-term metal prices. Therefore, prior to capitalising such costs, management determines that the following conditions have been met:

·      There is a probable future benefit that will contribute to future cash inflows;

·      The Group can obtain the benefit and control access to it; and

·      The transaction or event giving rise to the benefit has already occurred.

The evaluation phase is complete once technical feasibility of the extraction of the mineral deposit has been determined through the preparation of a reserve and resource statement, including a mining plan as well as receipt of required permits and approval of the Board of Directors to proceed with development of the mine. On such date, capitalised evaluation costs are assessed for impairment and reclassified to development costs.

Development expenditure

Development expenditures are those that are incurred during the phase of preparing a mineral deposit for extraction and processing. These include pre-stripping costs and underground or open-pit development costs to gain access to the ore that is suitable for sustaining commercial mining, preparing land, construction of plant, equipment and buildings and costs of commissioning the mine and processing facilities. It also includes proceeds received from pre-commercial production.

Expenditures incurred on development projects continue to be capitalised until the mine and mill move into the production stage. The Group assesses each mine construction project to determine when a mine moves into the production stage. The criteria used to assess the start date are determined based on the nature of each mine construction project, such as the complexity of a plant or its location. Various relevant criteria are considered to assess when the mine is substantially complete and ready for its intended use and moved into the production stage. The criteria considered include, but are not limited to, the following:

·      the level of capital expenditures compared to construction cost estimates;

·      the completion of a reasonable period of testing of mine plant and equipment;

·      the ability to produce minerals in saleable form (within specification); and

·      the ability to sustain ongoing production of minerals.

If the factors that impact the technical feasibility and commercial viability of a project change and no longer support the probability of generating positive economic returns in the future, expenditures will no longer be capitalised and the capitalised development costs will be assessed for impairment.

2.21      Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the group's accounting policies.  The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed below:

Key judgements:

a)         Acquisition of Aterian Resources Limited

As part of its preparation of consolidated financial statements for the year ended 31 December 2022, the Company has considered relevant accounting guidance and.in particular, whether the acquisition of Aterian Resources Limited falls within IFRS3 Business Combinations. In determining whether the acquisition falls within the scope of IFRS 3 the Company has considered a number of factors outlined below.

A business combination must involve the acquisition of a business, which generally has three elements:

·      Inputs - an economic resource (e.g. non-current assets, intellectual property) that creates outputs when one or more processes are applied to it

·      Process - a system, standard, protocol, convention or rule that when applied to an input or inputs, creates outputs (e.g. strategic management, operational processes, resource management)

·      Output - the result of inputs and processes applied to those inputs

Considering this guidance, management has determined that Aterian Resources' projects are in the exploratory phase and have not yet started revenue-generating operations. In particular, it holds research permits and a mining licence for mining projects, mainly copper, in Morocco.

In assessing whether there are inputs and substantive process, management has considered whether the business has outputs or not.

Management believes there are no such outputs present on acquisition. In these circumstances, when it does not have outputs, then inputs should include an organized workforce and other inputs that the workforce can develop or convert into outputs.

As an alternative to assessing whether the acquisition comprised inputs, substantive process and all other features of business, IFRS 3 introduced a new simplification option - The Concentration of fair value test.

Whist optional, it is relevant to the Company as the principal question in this test is:

Is substantially all of the fair value of the gross assets concentrated in a single identifiable asset or group of similar identifiable assets. The assembled workforce was small and of low value. No other assets were acquired. Management has assessed this to be the case and therefore considers the acquisition is not that of a business falling under IFRS 3, i.e. it is an asset purchase and the following accounting treatment applies:

·      The total transaction price of the acquisition is allocated to individual items or group of similar items based on their relative fair values;

·      No goodwill is recognised;

·      Transaction costs are capitalised; and

·      Contingent consideration is not recognised until it is confirmed whether or not the conditions are met. In particular, this applies to the Royalty Deeds and Musasa Royalty Deed.

In applying this test, management has judged that substantially all the fair value is concentrated in a group of assets, these being the Moroccan projects acquired. In particular, management considered:

·      The Gross assets acquired (being exploration and evaluation assets) do not include cash and cash equivalents, deferred tax assets and goodwill arising from the effects of deferred tax liabilities.

·      The fair value of the gross assets acquired includes any consideration transferred in excess of the fair value of net identifiable assets acquired.

·      A single identifiable asset must include any asset or group of assets that would be recognised and measured as a single identifiable asset in a business combination.

·      When assessing whether assets are similar, management has considered the nature of each single identifiable asset and the risks associated with managing and creating outputs from the assets (that is, the risk characteristics).

On the basis of the above, management has concluded that the acquired set of activities and assets is not a business.

 

Exploration and Evaluation assets acquired in a business combination are initially recognised at fair value, including resources and exploration potential that is considered to represent value beyond proven and probable reserves. Similarly, the costs associated with acquiring an E&E asset (that does not represent a business) are also capitalised. They are subsequently measured at cost less accumulated impairment. Once JORC-compliant (or equivalent) resources and/or reserves are established and development is sanctioned, E&E assets are to be tested for impairment and transferred to 'Mines under construction'. No amortisation is charged during the E&E phase.

Acquisition and other transaction expenses

The Company has considered how the costs of the acquisition, which involved both issuing new shares and Admission to the Official List (by way of Standard Listing) should be accounted for. In accordance with IAS 32 Financial Instruments: Presentation, the Company has allocated such costs as follows:

-       Incremental costs that are directly attributable to issuing new shares should be deducted from equity where such shares are issued at a premium - in this case, all shares were issued at par so no deduction has been made and all such costs have been expensed - IAS 32.37; and

-       Costs that relate to the stock market listing or are otherwise not incremental and directly attributable to issuing new shares, should be recorded as an expense in the statement of comprehensive income.

-       Costs that relate to the acquisition have been capitalised.

IAS 32.37 requires that: "The costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit)". Raising additional equity through the offering and issuance of new shares is an equity transaction for this purpose, but the listing procedure is not. Only costs attributable to the offer of new shares may be deducted from equity.

The acquisition and listing was a combined exercise. Certain costs, such as stamp duties and broking fees, are clearly attributable to raising additional equity. Other costs, such as listing fees, relate only to the listing and have been expensed. The costs of due diligence are considered to be related to the acquisition and thus, as an asset purchase, have been capitalised.

The Company has identified the following costs to be directly related to the acquisition and Admission:

Transaction costs	£
Total costs capitalised as part of the acquisition	87,958
Costs expensed in profit and loss	308,440
Total fair value of assets acquired	396,398

 

b)    Going concern

In their assessment of going concern, the Directors have prepared cash flow forecasts which require a number of judgments to be made including the Directors' ability to access further financing and to implement cost saving and deferral measures, where necessary.

The Directors have prepared a cash flow forecast to 30 September 2024 which assumes that the Group is not able to raise additional funds within the going concern period and if that was the case, the forecasts demonstrate that mitigating measures can be implemented, or significant project expenditure delayed to reduce the cash outflows to the minimal contracted and committed expenditure while also maintaining the Group's licences and permits.

In this going concern analysis, the base case cash flow forecast has been prepared on the following bases:

·      Separate budgets have been prepared for each of the Kinunga and Musasa projects in Rwanda and the Moroccan projects, as well as the Rwanda trading operations and corporate expenditure for the 18 months to September 2024.

·      Each project has an assumed sampling, mapping, drilling testing and survey exploration programme with supporting overhead functions and capital expenditure in a phased approach.

·      In Morocco, exploration is planned primarily for the Agdz and Tata permits, with lower levels of expenditure for Azra, Jebilet and others.

·      Trading activity commencing in Q2 with the first sales proceeds being received in July 2023.

·      In particular, the Company anticipates Ore purchases that will be sold to off-takers who are currently buying at between $215 and $225/Kg of Ta205. A trading cacility is subject to financial due diligence and is expected to be concluded in May 2023. The facility will incorporate a funding schedule with funds being disbursed in tranches as agreed. Interest at 15% per annum will be payable monthly in arrears and secured by a first-ranking fixed charge over the Company's assets.

·      Trade funding is provided for 100% of the commodity acquisition costs.

·      Corporate expenditure is assumed to continue at current levels.

·      New equity funds are not assumed although the Directors are in discussion with advisors and investors for an additional funding round. We have similarly excluded related fundraising costs.

·      Inflationary assumptions have not been specifically factored as the impact is not considered material.

The significant judgements involved in this going concern assessment included consideration of a heightened inflationary environment and the availability of working capital facilities. In the Directors' judgement, many of the Group's expenditures are fixed in nature and as a consequence inflation doesn't represent a significant source of estimation uncertainty.

Based on their assessment of the financial position, the Directors have a reasonable expectation that the Group will be able to continue in operational existence for the next twelve months and continue to adopt the going concern basis of accounting in preparing these financial statements.

Key estimates:

a)   Share-based payments

 

The Company recognises compensation expense for share-based transactions by reference to the fair value of the related instruments at the date at which they are granted. Estimating fair value for share-based payments requires making assumptions and determining the most appropriate inputs to the valuation model and estimating the number of units expected to vest. This estimate is based on a Black and Scholes model which utilises a key number of assumptions The inputs used in the valuations are presented in note 20.

The sensitivity to changes in volatility assumptions is particularly significant. An increase / decrease of 10% (from the 67% volatility rate assumed) would have the following impact on the share-based payment expense for the year and the amounts recognised within the purchase consideration of Aterian Resources, respectively:

	Expense		Purchase consideration
	£		£
10% increase in volatility	18,533		68,907
10% decrease in volatility	(18,807)		(71,790)

 

b)    Impairment of intangible assets

 

The Group tests annually for impairment or more frequently if there are indications that the Company's investments or the Group's goodwill and exploration and evaluation assets might be impaired.

IFRS requires management to test for impairment if events or changes in circumstances indicate that the carrying amount of a finite life asset may not be recoverable.

For the year ended 31 December 2022, the Group performed a review for indicators of impairment in the values of its intangibles and evaluated key assumptions. These included considering any revisions to the mine plan, including current estimates of recoverable mineral reserves and resources, recent operating results and future expected production.

Management performed a detailed impairment review of the Rwandan exploration assets. In management's opinion, the recoverable amount of the Rwandan assets do not support either the Company's investment carrying value of £2,261,000 or the Group's goodwill of £2,168,000.

Management has determined that all expenditure capitalised in relation to the Group's Musasa Project should be fully impaired on the basis that all production activity has been suspended. Accordingly, the Group's goodwill of £2,168,000 and the Company's investment in Eastinco ME Limited, amounting to £2,261,000 have been impaired.

The Company's investment in Aterian Resources Limited of £3.2m was based on the agreed transaction price with Altus Strategies Plc. The Directors have not conducted detailed impairment testing at 31 December 2022 as no impairment triggers have been identified during the period since acquisition in October 2022. The data generated since acquisition and published on the Company's website  demonstrates the strong potential for economic discovery However, the Directors have given consideration to a research note from the Company's broker which was published when there were 10 projects held in Morocco by Altus. The Company acquired 15 projects and since this research, copper was identified on the Tata and Azrar projects. Tata has the potential to be large-scale and would significantly increase overall valuations. The research note prepared in 2021 assigned a $5 million valuation to the 10 projects. In the Directors' opinion, based on test results since acquisition, the carrying value of the Moroccan assets would be no less than the agreed transaction price.

3.         Directors' remuneration

Director salaries	Fees and salaries	Share-based payment expense	2022 Totals	2021 Totals
	£'000	£'000	£'000	£'000
Executive Directors
Charles Bray	26	3	29	-
Simon Rollason	24	-	24	200
Non-Executive Directors
Simon Retter	-	1	1	-
Devon Marais	-	1	1	-
Alister Hume	-	-	-	-
Kasra Pezeshki	-	-	-	-
Mike Staten	-	-	-	-
	50	5	55	200

 

 

4.         Administrative expenses

	2022	2021
	£'000	£'000
Directors' salaries	50	200
Staff costs	91	71
Auditor's remuneration	75	63
Travel expenses	12	1
Metallurgical tests	55	-
Legal expenses	194	129
Professional fees	216	361
Accounting fees	30	27
Depreciation	22	2
Other expenses	251	166
	996	1,020

 

Auditor's remuneration

	2022	2021
	£'000	£'000
Auditor's remuneration:
-  Audit fee	75	63
	75	63

 

 

 

 

 

Staff Costs

During the year the average number of employees (including Directors) was 22 (2021: 38).

 

 

Aggregate staff costs including directors comprise:	2022	2021
	£'000	£'000
Salaries and wages	130	65
Staff welfare	3	2
Social security and pension contributions	8	4
Share capital issued as remuneration	-	200
	141	271

 

Key management personnel of the Group comprised the directors.

5.         Impairment losses

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. As more fully described in Notes 11 and 13, the Group has made provisions to fully impair the carrying value of goodwill and property, plant and assets related to the Group's Musasa Project as follows:

	2022	2021
	£'000	£'000
Impairment of goodwill (Note11)	2,168	-
Impairment of property, plant and equipment (Note 13)	877	-
	3,045

 

6.         Finance costs

	2022	2021
	£'000	£'000
Interest expense on loan notes	6	18
Interest on related party loan	1	-
	7	18

 

7.         Taxation

	2022	2021
	£'000	£'000
Current tax: UK taxation Overseas taxation	- -	- -
Total tax	-	-