EXPRESSED IN US DOLLARS

EXPRESSED IN US DOLLARS

 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.    GENERAL INFORMATION

Premier African Minerals Limited ('Premier' or the ''Company'), together with its subsidiaries (the 'Group'), was incorporated and domiciled in the Territory of the British Virgin Islands under the BVI Business Companies Act, 2004. The address of the registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands. Premier's shares were admitted to trading on the London Stock Exchange's AIM market on 10 December 2012.

The Group's operations and principal activities are the mining, development and exploration of mineral reserves, primarily on the African continent. The presentational currency of the condensed consolidated interim financial statements is US Dollars ("$").

2.    BASIS OF PREPARATION

These unaudited condensed consolidated interim financial statements for the six months ended 30 June 2022 were approved by the Board and authorised for issue on 30 September 2022.

These interim financial statements have been prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards ("IFRS") as endorsed by the EU. 

The accounting policies applied in the preparation of these consolidated interim financial statements are consistent with the accounting policies applied in the preparation of the consolidated financial statements for the year ended 31 December 2021.

The figures for the six months ended 30 June 2021 and 30 June 2022 are unaudited and do not constitute full accounts. The comparative figures for the year ended 31 December 2021 are extracts from the 2021 audited accounts. The independent auditor's report on the 2021 accounts was unqualified.

Going Concern

The Directors have prepared cash flow forecasts for the next 12 months, taking into account working capital and expenditure forecasts for the rest of the Group including overheads and other development costs.

The forecasts include additional preproduction finance which the directors believe can be met. In the event that the Company is unable to obtain additional preproduction finance for the Group's working capital and capital expenditure requirements, a material uncertainty exists which may cast significant doubt on the ability of the Group to continue as a going concern and therefore be unable to realise its assets and settle its liabilities in the normal course of business.

3.    SEGMENTAL REPORTING

Segmental information is presented in respect of the information reported to the Directors. The segmental information reports the revenue generating segments of RHA Tungsten Private Limited ("RHA"), that operates the RHA Tungsten Mine, and Zulu Lithium Private Limited ("Zulu"). The RHA segment derives income primarily from the production and sale of wolframite concentrate. All other segments are primarily focused on exploration and on administrative and financing segments. Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As at the reporting date, the company has significant holdings in Zimbabwe. As indicated in the audited annual financial statements, the Zimbabwean government mandated that with effect of 1 March 2019 the only functional currency is the RTGS Dollar. Since the introduction of RTGS Dollars the Zimbabwean inflation rate has gone into hyperinflationary percentages. Hyperinflationary accounting requires a restatement of the local currency assets and liabilities to reflect the effect of the hyperinflation before translating the local currency to the reporting currency. Refer to the audited annual financial statements of 31 December 2021 for more detailed information.

* Represents 100% of the results and financial position of RHA whereas the Group owns 49%.

4.    INTANGIBLE EXPLORATION AND EVALUATION ASSETS

During the period to 30 June 2021, $4.563 million was the reversal of impairment for Zulu.

5.    INVESTMENTS

During the six months ended 30 June 2022, Premier sold its shares in Circum Minerals Limited ('Circum'), together with other minority shareholders, to Vortex Limited ('Vortex') in exchange for an equal value investment in Vortex. Premier's investment in Vortex / Circum was designated as Fair Value through Other Comprehensive Income. As such the investment is required to be measured at fair value at each reporting date. As Vortex / Circum is unlisted there are no quoted market prices. The fair value of Vortex shares was derived using the previous issue price of Circum shares and validating it against the most recent placing price on 11 May 2021. The shares are considered to be level 3 financial assets under the IFRS 13 categorisation of fair value measurements. Premier continues to hold 5 010 333 shares in Vortex / Circum currently valued in total at $6.263 million.

Premier's investment in MN Holdings Limited ('MNH') is classified as an FVOCI as such is required to be measured at fair value at the reporting date. As MNH is unlisted there are no quoted market prices. The Fair value of the MNH shares as at 30 June 2022 and 31 December 2021 was based on the latest transactions and supported by an external evaluation conducted by Bara Consulting.

6.    PROPERTY, PLANT AND EQUIPMENT

7.    LOANS RECEIVABLE

The above loans are made to a subsidiary and a related party of MN Holdings (Pty) Ltd and are held at amortised cost.

The purpose of the Outback Investments Pty Ltd loan was to enable MNH to lease and acquire the remaining extent of the Ebenezer No 377 Farm which contains untreated tailings facilities from the Purity Mining Project as announced on the 8^th of July 2019. The loan will be forgiven following the uninterrupted use of the farm land for the treatment of the tailing facilities for a period of up to 10 years. During this period Premier has rights to these tailings facilities. The loan is interest free. The loan is only repayable upon default by Outback Investments.

The loan to Otjozondu Mining is to assist with funding the day to day operations and is in accordance with the RNS of 31^st August 2021. Premier has provided a loan of $265,000 which bear interest of 20% and is repayable in instalments of $25,000 per shipment of manganese shipped from Namibia. The balance of $180,000 has been provided interest free as it is linked to the loan from Neil Herbert, further details of which are set out in note 8 below.

8.    BORROWINGS

Borrowings comprise loans from a related party and a non-related party. Loans from a related party are further disclosed in Note 32, Related Party Transactions.

Neil Herbert made available a loan of US$180,000 to the Company. Under the terms of the Director Loan, the loan is both unsecured and will not attract any interest and is repayable in full by the Company on the signing of a new off-take agreement at Otjozondu. The purpose of the Director Loan is to provide funding to Premier to allow an amendment to the Otjozondu Loan while Premier, acting collectively with Otjozondu, looks to secure the best possible off-take funding package.

At 30 June 2022 the off-take funding had not been secured and Mr Herbert has agreed to the deferment of the repayment of the loan until such off-take agreement has been secured.

9.    SHARE CAPITAL

Authorised share capital

The total number of voting rights in the Company on the 30 June 2022 was 22 418 009 831.

Issued share capital

10.  OTHER INCOME

11.  FOREIGN EXCHANGE GAINS AND LOSSES

As indicated in note 3. Segmental Reporting, the company has significant holdings in Zimbabwe. With effect from the 1^st of March 2019, the Zimbabwean government mandated that the only functional currency is RTGS Dollar. Since the introduction of RTGS Dollar the currency has devalued from the introductory rate of
RTGS Dollar 1: US$ 1 to RTGS Dollar 370.9646 at 30 June 2022 (RTGS Dollar 85.4234 - 30 June 2021). This currency has continued to devalue.  As defined in IAS29, the Zimbabwean economy is considered to be hyperinflationary. As most of the group's Zimbabwean assets have been impaired the result in liabilities are adjusted for the hyperinflationary effect. This leads to a net gain on translation into the reporting currency. For further information refer to the audited financial statement of 31 December 2021.

12.  TAXATION

There is no taxation charge for the period ended 30 June 2022 (30 June 2021 and 31 December 2021: Nil) because the Group is registered in the British Virgin Islands where no corporate taxes or capital gains tax are charged. However, the Group may be liable for taxes in the jurisdictions of the underlying operations.

The Group has incurred tax losses in Zimbabwe; however, a deferred tax asset has not been recognised in the accounts due to the unpredictability of future profit streams. 

The Group operates across different geographical regions and is required to comply with tax legislation in various jurisdictions. The determination of the Group's tax is based on interpretations applied in terms of the respective tax legislations and may be subject to periodic challenges by tax authorities which may give rise to tax exposures. 

13.  LOSS PER SHARE

The calculation of loss per share is based on the loss after taxation attributable to the owners of the parent divided by the weighted average number of shares in issue during each period.

As the Group incurred a loss for the period (2020: profit), there is no dilutive effect from the share options and warrants in issue or the shares issued after the reporting date.

14.  EVENTS AFTER THE REPORTING DATE

1)            Corporate matters

In August, the Company concluded the definitive transaction documents in respect of the Marketing and Pre-Payment Agreement with Suzhou TA&A Ultra Clean Technology Co. Ltd to provide a pre-payment against future sales invoices in the amount of US$34,644,385 to enable the construction and commissioning of a large-scale pilot plant at Zulu. To date Premier has received approximately $24 million of this pre-payment.

Further in August, the Company received a payment of US$250,000 from Li3 Resources Inc. in exercise of their option to acquire a 50% interest in Premier's hard-rock lithium assets located in the Mutare Greenstone Belt in Zimbabwe.