Strategic Report

Fair Business Review

The Company was incorporated on 6 May 2021 under the BVI Business Companies Act. As at the date of this report, the Group comprises the Company and its sole wholly owned subsidiary, Hamak Gold Limited Liberia, which was incorporated in Liberia on 27 May 2021.

To enable to Group to pursue its principal activities, it sought an IPO of the Company's securities on the London Stock Exchange through a Standard Listing to raise the necessary funds required for the execution of its business strategy. The IPO was successfully completed after the period end, and the Company's shares were admitted for trading on 1 March 2022.

The Group's main mineral exploration focus is the discovery of orogenic gold, Archaean and Paleoproterozoic greenstone hosted gold, and shear zone hosted gold type mineralization in underexplored yet highly prospective areas of Liberia. The Group is also applying modern exploration techniques for the discovery of base metals within its exploration licences. Being an exploration business without producing mines, the Group will have no revenue and will have to rely on debt and/or equity as its major source of funding. If the Group is successful in its exploration activities, it will seek to transition into an exploration and development business.

The Group acquired on 15 February 2022 two mineral exploration licences in Liberia, Nimba and Gozohn, covering 1,752 square kilometres and also has an option over a further five exploration licences covering an area of 3,213 square kilometres.  Exploration has initially focused on detailed geochemical soil sampling in the Gozohn and Nimba licences, with further details provided in the Directors Report.

In the Group's Prospectus dated 24 February 2022, the Competent Person ranked the seven mineral exploration licences (MELs) individually and in accordance with their geological and spatial relationship with specific geological structures as well as on the scale of gold mining activity in or near those licences. Often licences can be grouped according to their prospectivity and relative proximity to each other. Thus, the following ranking of the licences is advised by the Competent Person:

Rank No. 1: Cestos shear zone and greenstone belts

·      Nimba Licence

·      Gozohn Licence

Rank No. 2: Dube shear zone and Birimian greenstones

·      River Gee Licence

Rank No. 3: Lofa and Yambesei shear zones and greenstones

·      Fasama

·      Lofa

Rank No. 4: Juazohn shear zone and amphibolites

·      Cestos Licence

·      Sinoe Licence

Initially two MELs, Nimba and Gozohn, have been transferred on 15 February 2022 to the Group following approval of such licence transfer from the Minister of Mines and Energy of Liberia on 3 August 2021.. The Group retains an option with respect to the other five MELs, which if exercised will result in the transfer of these licences into its portfolio.

Business plan and strategic objectives

The Group's long-term strategic objectives are to be a best-in-class, regionally competitive gold exploration and mining business and an industry leader in terms of health and safety, Environmental, Social, and Governance ("ESG"), operational efficiency and asset quality. The Group will seek to achieve these aims through managing its operations safely and sustainably, with a view to ensuring that, subject to successfully discovering commercially viable and extractable mineral deposits, the Group will be in an optimal position to create value and generate returns for Shareholders and significant benefits for all stakeholders including local communities.

There are a number of risks associated with newly listed entities in the natural resources sector, especially in West Africa. The Board regularly reviews the risks to which the Group is exposed and also endeavors to mitigate them as far as possible.

The following summary, which is not exhaustive, outlines some of the risks and uncertainties the Group may be exposed to:

Geopolitical

The Group will be subject to risks associated with operating in Liberia which include economic, social or political instability. The legal system is less developed than in more established countries and there is a risk of crime and corruption from operating in Liberia

No operating history

The Group is a newly formed entity with no operating history other than the successful Admission which was completed after the period on 1 March 2022.  However, the Board and Management of the Group have considerable exploration, development and mining experience in the West Africa region, in particular in Liberia, Sierra Leone and Guinea.

Exploration and development risks

Following the Group's acquisition of its target licences in the natural resources sector subsequent to period end, they are likely to be subject to a high degree of risk as mineral exploration and development can be highly speculative. The economics of developing mineral properties are affected by many factors including the cost of operations, variations of the grade of ore mined, fluctuations in the price of the minerals being mined, fluctuations in exchange rates, costs of development, infrastructure and processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection.

In addition, the grade of mineralisation ultimately mined may differ from that indicated by drilling results and such differences could be material. As a result of these uncertainties, there can be no guarantee that mineral exploration and development of any of the Group's investments will result in profitable commercial operations.

Liquidity risk

Whilst the directors are confident that the Group will be able to raise additional funds as and when required and will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the consolidated financial statements, there can be no assurance that such funds as may be required will be raised.

Industry-specific risks

The natural resources sector is inherently tied to the performance of the global economy and fluctuations in the price of global commodities. As a result, segments of the natural resources sectors (or even the sector as a whole) could be affected by changes in general economic activity levels and other changes which are beyond the Group's control. The revenues and earnings from developing its assets will rely on commodity prices, and the Group will be unable to control the prices for commodities, which may adversely affect the Group's business, results of operations, financial condition or prospects.

Key performance indicators

Appropriate key performance indicators will be identified in due course as the business strategy is implemented.

Gender analysis

A split of directors by gender during the year is shown below:

Directors and employees                  

The Group currently has only male directors and is committed to promoting gender equality based on relevant skills and experience as it progresses through its life cycle.

Environment, Social and Corporate Governance (ESG)

As a new Group focused on early-stage exploration, we aim to conduct our business with honesty, integrity and openness, respecting human rights and the interests of our shareholders, employees and local community stakeholders. We aim to provide timely, regular and reliable information on the business to all our shareholders and conduct our operations to the highest standards.

Environment

The Group has in place all necessary environmental permissions for the Nimba and Gozohn licences which are the focus of our exploration activity.  These permits are issued by the Environmental Protection Agency (EPA) of Liberia according to the prevailing laws of the country. 

Social

The Group is performing regional exploration work so is not yet focused on any defined areas within its licences.  However, the Group adheres to the social requirements within the country of working with local communities at all times, engaging with them so they are aware of our activities and where possible recruiting labour from nearby communities.  In addition, the Mineral Law of Liberia requires that 2% of exploration expenditure be invested in education or health facilities in the exploration licences where the work is conducted.  The Group will adhere to this requirement and make such provision at the end of each financial year once the expenditure has been calculated for the period.

Corporate Governance

Being a public Group listed on the LSE Standard Exchange, the Group will adopt all required Governance rules and has in place the necessary structure of Board committees to oversee the business of the Group to ensure adherence to best practice procedures.

Health and Safety

We strive to create a safe and healthy working environment for the wellbeing of our staff and create a trusting and respectful environment, where all members of staff are encouraged to feel responsible for the reputation and performance of the Group. We aim to establish a diverse and dynamic workforce with team players who have the experience and knowledge of the business operations and markets in which we operate. Through maintaining good communications, members of staff are encouraged to realize the objectives of the Group and their own potential.

Amara Kamara

Executive Chairman

8 June 2022