Final Results, Posting of Annual Report & Accounts

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

30 June 2021

Kropz Plc

("Kropz" or the "Company")

Final Results for the Year ended 31 December 2020,
Posting of Annual Report and Accounts

Kropz plc (AIM: KRPZ), an emerging African producer of plant nutrient feed minerals, announces its results for the year ended 31 December 2020 and the publication of the Company's Annual Report.

The full financial report and Notice of General Meeting will be available online shortly on the Company's website at www.kropz.com and are being posted to shareholders today.

The Company will hold a General Meeting for the purposes of approving the Annual Report which will be held at the offices of Memery Crystal Limited at 165 Fleet Street, London EC4A 2DY on 23 July 2021 at 11:00a.m.

Key developments during the 2020 financial year

Corporate

·      Kropz Plc ("Kropz" or "the Company") secured a convertible loan facility of up to US$ 40 million (not exceeding a maximum of ZAR 680 million) from the ARC Fund ("ARC"), Kropz's major shareholder ("Original Equity Facility") in June 2020, to be used exclusively for the development of the Elandsfontein phosphate project ("Elandsfontein") in South Africa;

·      The first drawdown on the Original Equity Facility occurred on 26 June 2020 for US$ 10 million, and two further drawdowns for US$ 4 million and US$ 5 million in terms of the Original Equity Facility were concluded on 25 September 2020 and 10 December 2020, respectively;

·      Completion of an open offer to existing shareholders to raise up to US$ 4 million, before expenses, at an issue price of 6.75 pence per ordinary share ("Open Offer"). The Open Offer closed on 26 June 2020 and raised US$ 2,163,639, before expenses (approximately GBP 1,744,870). The proceeds of the Open Offer were used for general working capital purposes;

·      Completion of an equity placing to an existing investor and two Directors for US$ 353,595, before expenses (approximately GBP 283,843), at an issue price of 6.75 pence per ordinary share ("the Placing") on 1 June 2020. The proceeds of the Placing were used to progress work at Hinda;

·      Cash and cash equivalents, as at 31 December 2020, of US$ 12 million (2019: US$ 16 million);

·      Restricted cash in terms of the amended facility agreement between Kropz Elandsfontein and BNP Paribas SA ("BNP"), as at 31 December 2020, of US$7 million (2019: US$ Nil); and

·      Property, plant, equipment and development and exploration assets of US$ 159 million (2019: US$ 145 million).

Elandsfontein

·      The primary focus of Kropz in 2020 was the Elandsfontein project in South Africa;

·      Kropz Elandsfontein (Pty) Ltd ("Kropz Elandsfontein") renegotiated and amended the BNP US$ 30 million project finance facility in June 2020, extending the first capital repayment to 31 December 2022, and quarterly thereafter to 30 September 2024. The amended facility agreement caters for an interest rate of 6.5per cent. plus US LIBOR, up to project completion (as per the amended BNP facility agreement expected to be December 2022) and 4.5per cent. plus US LIBOR thereafter, payable quarterly. The BNP facility remains fully drawn;

·      Eriez completed pilot scale test work to confirm and optimise the remedial process flow sheet;

·      The test work confirmed that the modified Elandsfontein processing plant can produce a final concentrate to specification of 68 per cent. BPL (31per cent. P₂O₅);

·      Engineering and design of the plant indicated that additional equipment would be required, including:

·      new stacked screens to optimise the milling circuit;

·      a water treatment plant;

·      attritioning and conditioning circuits;

·      additional flotation cells to float the coarse size fraction of +212 microns; and

·      ancillary infrastructure and modifications of the original Elandsfontein processing plant;

·      Front end engineering design was concluded based on the metallurgical results for the modified flotation circuit to arrive at an AACE Class 3 capital cost estimate;

·      An engineering, procurement, and construction management ("EPCM") contract was awarded to DRA Projects SA (Pty) Ltd ("DRA") in March 2020;

·      Orders were placed for several long lead items, including stacked screens, flotation cells and cyclones;

·      Site based construction activities commenced at Elandsfontein in August 2020 and advanced well through the year, despite the COVID pandemic; and

·      Equipment and steel procurement and fabrication continued, with first major mechanical equipment items delivered to site.

Hinda

·      Kropz concluded a competitive tender process for the updating of the 2015 Hinda feasibility study ("Updated FS");

·      RoC government approval of the new terms of reference for the updated Environmental and Social Impact Assessment ("ESIA"); and

·      Conclusion of a focussed logistics study for Hinda, completed by Hatch Africa (Pty) Ltd ("Hatch") in September 2020.

Key developments post the financial year end

Corporate

·      Kropz secured a further convertible loan facility of up to US$ 5 million (not exceeding a maximum of ZAR 85 million) from ARC ("Further Equity Facility") in February 2021, to be used exclusively for the Hinda Updated FS and general corporate purposes for Kropz;

·      The fourth drawdown on the Original Equity Facility occurred on 10 March 2021 for US$ 7 million;

·      The fifth drawdown on the Original Equity Facility occurred on 23 June 2021 for US$ 11 million;

·      US$ 3 million remains undrawn at 29 June 2021 on the Original Equity Facility;

·      The first drawdown on the Further Equity Facility occurred on 10 March 2021 for US$ 2 million;

·      The second drawdown on the Further Equity Facility occurred on 23 June 2021 for US$ 2 million; and

·      US$ 1 million remains undrawn at 29 June 2021 on the Further Equity Facility.

Elandsfontein

·      Significant progress continues to be made at Elandsfontein and the project remains on track for achieving the target date for commissioning in Q4 2021, within the current projected capital budget;

·      Earthworks and civil construction is complete;

·      Fabrication, installation and assembly of structural steel, platework and piping is ongoing;

·      Major mechanical equipment installation is well advanced with most major equipment installed;

·      The project schedule however remains under strain, with a high number of critical path, and near critical path, items being managed concurrently;

·      A funding shortfall is expected in respect of the Original Equity Facility for the commissioning of Elandsfontein in Q4 2021, due to strengthening of the ZAR against the US$; and

·      As announced on 25 May 2021, Transnet and Elandsfontein are working on a revised solution for the export of Elandsfontein's phosphate rock product. Following several meetings, Transnet has given assurances to deliver a long-term port access agreement for the main export of Elandsfontein's phosphate rock through the port of Saldanha. Exports through Cape Town will be included in the agreement as a mitigation measure, in the event that capacity through Saldanha is unavailable for a limited period of time.

Hinda

·      As announced on 4 February 2021, Kropz appointed Hatch to complete the Hinda Updated FS; and

·      Work is ongoing by Hatch and to date no workstreams have been negatively impacted due to the COVID pandemic.

Aflao

·      Kropz divested its 50 per cent. + 1 share interest in Aflao, as announced on 16 February 2021.

Chairman's Statement

Dear shareholder,

The financial year ended 31 December 2020 was a challenging year, particularly given the global COVID pandemic and the impact that it had on the global economy.

The COVID pandemic has, to date, not had a significant impact on construction activities at Elandsfontein. Remedial measures were successfully implemented by management and we are pleased to report that no cases of COVID had been reported on site since early January 2021.

Thanks to the ARC Fund, Kropz's major shareholder, funding has been secured to significantly complete the Elandsfontein project and complete the Hinda Updated FS.

Kropz entered into the Original Equity Facility with ARC on 13 May 2020 for US$ 40 million (maximum of ZAR 680 million). The Original Equity Facility, together with existing cash of US$ 12 million (approximately ZAR 200 million) at that time, is being utilised to progress the development of Elandsfontein. The Original Equity Facility was approved by shareholders at the Kropz general meeting on 29 May 2020.

In addition, Kropz entered into a Further Equity Facility with ARC on 15 February 2021 for US$ 5 million (maximum of ZAR 85 million), to be utilised to complete the Updated FS at Hinda and for general corporate purposes.

Kropz concluded a placing of US$ 353,595 before expenses (approximately GBP 283,843) in May 2020 and an open offer to existing shareholders on 26 June 2020, which raised US$ 2,163,639 before expenses (approximately GBP 1,744,870).

Kropz Elandsfontein and BNP also entered into an amended facility agreement, extending the first capital repayment date to 31 December 2022. The BNP facility of US$ 30 million is fully drawn.

Significant progress continues to be made at Elandsfontein and the project remains on track for achieving the target date for commissioning in Q4 2021. The present focus is primarily on the site-based construction activities, which are permitted to continue under the current COVID restrictions in place in South Africa. Civil and earthworks are completed and the erection and installation of structural steel, plate work, piping and major mechanical equipment is progressing well. Images of the progress at the Elandsfontein site are available online at www.kropz.com/projects/elandsfontein/gallery-elandsfontein.

Kropz appointed Hatch in February 2021 to complete the Updated FS for Hinda. The Updated FS will target a phased approach in line with the terms of the mining investment agreement, with initial production of one million tonnes per annum ("Mtpa") of phosphate rock being exported from the existing port facility at Pointe-Noire, which is 50 km from Hinda. A second phase production ramp-up of two Mtpa will also be evaluated with export from a new port site, located north of Pointe-Noire. The Updated FS is expected to be concluded by the end of September 2021.

As previously announced, Kropz divested its interest in Aflao in February 2021.

The Board is grateful to all the members of the executive, management and teams on the ground for all their efforts during a very challenging year, to our major shareholder for the further commitment shown by them and to our auditors and advisors. The Board looks forward to updating shareholders on the progress made at Elandsfontein and Hinda.

Lord Robin William Renwick of Clifton

Non-Executive Chairman

29 June 2021

For further information visit www.kropz.com or contact:

About Kropz Plc

Kropz is an emerging African phosphate explorer and developer, with an advanced stage phosphate mining project in South Africa and a phosphate project in the Republic of Congo. The vision of the Group is to become a leading independent phosphate rock producer and to develop into an integrated, mine-to-market plant nutrient company focusing on sub-Saharan Africa.

Market overview

The fundamentals of the fertilizer and phosphate markets remain robust, driven by the need to feed a growing global population from limited agricultural resources. However, phosphate rock prices generally remained under pressure throughout 2020, mainly due to the COVID pandemic. The current rock prices are higher than those experienced in 2020.

Market analysts expect that a post COVID recovery in downstream fertiliser prices will provide support for an increase in global phosphate rock prices until at least 2025, when new production is expected to come on stream, whereafter phosphate rock prices should flatten out.

Significant changes in the state of affairs

Share issues

On 1 June 2020, Kropz announced that it had raised US$353,595 (before expenses) by way of an equity placing of 4,505,060 ordinary shares with an existing investor and two Directors, Lord Robin Renwick and Mark Summers, at a price of 6.75 pence per ordinary share. The placing shares were admitted to trading on AIM on 4 June 2020.

On 25 June 2020, Kropz announced the first drawdown of US$ 10 million of the Original Equity Facility. This drawdown, together with fees associated with ARC providing a bank guarantee on behalf of Kropz Elandsfontein to BNP, resulted in the issue of 130,199,604 ordinary shares to ARC at an issue price of 6.75 pence per ordinary share. The first ARC drawdown and guarantee fee shares were admitted to trading on AIM on 30 June 2020.

On 29 June 2020, Kropz announced that it had raised US$ 2,163,639 before expenses (approximately GBP1,744,870) by way of an open offer of 25,849,920 ordinary shares with ARC Fund, existing investors and a Director, Mark Summers, at a price of 6.75 pence per ordinary share. The placing shares were admitted to trading on AIM on 30 June 2020.

On 24 September 2020, Kropz announced the second drawdown of US$ 4 million of the Original Equity Facility. This drawdown resulted in the issue of 50,962,963 ordinary shares to ARC at an issue price of 6.75 pence per ordinary share. The second ARC drawdown shares were admitted to trading on AIM on 25 September 2020.

On 9 December 2020, Kropz announced the third drawdown of US$ 5 million of the Original Equity Facility. This drawdown resulted in the issue of 63,703,704 ordinary shares to ARC at an issue price of 6.75 pence per ordinary share. The third ARC drawdown shares were admitted to trading on AIM on 10 December 2020.

After the three ARC drawdowns of the Original Equity Facility and the Open Offer and Placing, the issued share capital at 31 December 2020 was 558,627,558 ordinary shares (2019: 283,406,307).

Projects

Elandsfontein

Elandsfontein hosts the second largest phosphate deposit in South Africa, after Foskor's operation in Phalaborwa. The sedimentary deposit is a free-digging operation and does not involve drilling or blasting activities. Elandsfontein has been developed with the capacity to produce circa one Mtpa of phosphate rock concentrate from a shallow mineral resource which is expected to be sold on both local and international markets. The Company owns 74 per cent. of the issued share capital of Kropz Elandsfontein, the company which owns the Elandsfontein project.

Prior to 2020, in excess of US$ 120 million was spent at Elandsfontein on project capital expenditure to construct the processing plant and infrastructure, initial mining and capitalised working capital. Following a suspended commissioning process in 2017, Kropz Elandsfontein conducted significant test work to define a robust circuit, to cater for all ore types present within the Elandsfontein resource.

Elandsfontein's logistics are advantageous and allow for easy access to both local and international markets.

Activity for the year ended 31 December 2020

The focus for the 2020 financial year was completion of the front end engineering design for the required plant modifications, the appointment of the EPCM contractor (DRA), procurement of major mechanical equipment, site based construction contracts and the commencement of site based construction activities.

Mining and geology

The Elandsfontein resource is defined below, on a total (gross) and net attributable basis. No further geological drilling was conducted in 2020.

Mineral Resource Statement, as declared by Snowden and SRK on 31 October 2018

Plant and processing

Based on the test work completed, DRA concluded a revised mechanical equipment list and capital cost estimate, to AACE level 3, with an accuracy range of -20 per cent. to +30 per cent., in early 2020.

Care and maintenance of the existing Elandsfontein infrastructure was routinely conducted in accordance with the approved care and maintenance plan during 2020.

Dewatering of the aquifer also continued, together with the updated ground water management plan.

The Department of Mineral Resources and Energy ("DMRE") issued a directive to Kropz Elandsfontein during 2020 to upgrade its Environmental Management Programme ("EMPr") in line with latest South African legislation. The updated EMPr was submitted to the DMRE in September 2020 and the progress is discussed below under "Post reporting period events".

Safety, health and environment

As at 31 December 2020, the lost time injury frequency rate, per 200,000 man hours, was zero (2019 - 0.179). No environmental or safety incidents were reported during the year.

CSR and sustainability

The execution of the five-year plan, aligned with the 2018 South African Mining Charter, and submitted to the DMRE remains on track. The plan included progressive improvements to obtain compliance on the employment equity and procurement objectives of the South African mining charter scorecard. The following strategic focus areas were identified:

·      Education;

·      Social wellness;

·      Local economic development; and

·      Urban reconstruction and infrastructure upgrades.

Through collaboration with the local community forum, various community development projects were launched in 2020 and will continue throughout 2021.

Small, medium, micro enterprise ("SMME") development

Following the appointment of a specialist service provider in 2020, and extensive community engagement, eighteen start-ups were identified for the SMME development programme, which involved group and individual coaching sessions to develop and boost small businesses.

The SMME development programme was completed in July 2020. Fifteen SMME's successfully completed the programme. Additional funding was sourced from the provincial Department of Economic Development and Tourism to give each SMME seed funding in the form of equipment and materials. In addition, the group was placed into a six-month mentoring programme, which ended in February 2021.

Driver licence training

Eighty-five members of the community were selected for training and driving lessons, in order to improve individual skills and potential for future employment. The focus group was previous mine employees, women and youth from within the community. Against the backdrop of COVID restrictions, the programme was completed at the end of November 2020.

Recognition of prior learning ("RPL") project

A large number of people within the local community were identified to have work experience in the civil and construction industry, despite not having formal qualifications in that field. The RPL project was launched to provide those who demonstrate their competence to do the work, to be formally assessed by a service provider, earn formal accreditation, and ultimately receive certification as artisans, again to improve potential for future employment.

The programme is still ongoing and a total of twenty-one candidates were assessed externally by a qualified service provider and awarded their certificates in bricklaying, painting, tiling and carpentry. These candidates were employed during the construction phase of the project.

Disabled support

A list of twenty-five disabled people were identified to be recipients of basic equipment and infrastructure modifications for their homes.

As at 31 December 2020, modifications were hampered by restricted access to homes under COVID lockdown and this project will be completed during the second half of 2021.

Adult matric certification

A need was identified for individuals, previously unable to complete their school careers, to earn their matric certificates. A local service provider was appointed, and fifty candidates were selected and commenced a two-year programme to complete their secondary school qualification. Retired teachers from within the community were contracted in to provide the evening classes and the local school and community centre were used as venues for the classes.

Forty-eight of the participants applied and registered for the June 2020 exams, which was delayed to November 2020 due to COVID and the program was adjusted to accommodate remote on-line learning. Due to the COVID challenges only thirty-four members managed to participate in the November 2020 exams.

Planning for the 2021 program has been completed and classes for 2021 have resumed. Additional candidates have been accommodated to allow for some of the younger community members to attend the classes who wish to complete their secondary school qualifications.

Thusong community centre upgrade

The construction to increase the classroom and meeting venues at the local community centre were completed in 2020. The new facilities were opened and made available to the community in Q1 2020.

Due to COVID restrictions the second phase of this project will be completed during the last quarter of 2021.

Kropz Elandsfontein continues to engage with the local community on a regular basis.

Post reporting period events

EMPr

On 1 July 2020, the DMRE issued a directive to Kropz Elandsfontein to submit an updated EMPr, in line with the requirements of the National Environmental Management Act. The updated EMPr was submitted to the DMRE in the first week of September 2020.

On Friday 26 March 2021, management received the updated EMPr for the Elandsfontein project from the DMRE. The updated EMPr strongly emphasizes the adherence to the required rehabilitation measures.

Offsets

In July 2020, Kropz Elandsfontein submitted a revised Offset Study to the DMRE. Management informed the DMRE that the 2015 Offset Study for the Elandsfontein project did not adequately consider Kropz Elandsfontein's effective rehabilitation measures which have demonstrated successful implementation over the past three growing seasons. Kropz Elandsfontein's rehabilitation measures have been shown to guarantee future rehabilitation success, if conducted in accordance with the approved and financially secured mine rehabilitation plan drafted by Kropz Elandsfontein's appointed rehabilitation specialist.

Following due consideration of all the comments and responses received during the thirty day public participation period, management received notification from the DMRE on 4 March 2021 that the conditions required to cater for the offsets of land will be removed from the Elandsfontein EMPr.

Several appeals against the DMRE's decision have been lodged and are being dealt with and Kropz will update the market once these matters have been resolved.

Water use licence ("WUL")

The outstanding appeal against the Elandsfontein WUL was heard from 1 to 4 February 2021. During this fourth sitting of the matter, all evidence was heard by the Water Tribunal. The Water Tribunal issued a directive to all parties, setting out the dates to be met for heads of arguments, to allow a ruling on 10 March 2021. The appellant has subsequently been granted two postponements for the submission of their heads of arguments, which has delayed the possible date of the ruling to 31 July 2021.

Transport and logistics

As announced on 25 May 2021, Transnet and Elandsfontein are working on a revised solution for the export of Elandsfontein's phosphate rock product. Following several meetings, Transnet has given assurances to deliver a long-term port access agreement for the main export of Elandsfontein's phosphate rock through the port of Saldanha. Exports through Cape Town will be included in the agreement as a mitigation measure, in the event that capacity through Saldanha is unavailable for a limited period of time.

Hinda

The Hinda project, currently 100 per cent. owned by Cominco S.A., is believed to be one of the world's largest undeveloped phosphate reserves. Ownership is expected to be diluted to 90 per cent. through the participation of the RoC government. It consists of a sedimentary hosted phosphate deposit located approximately 40 km northwest of the city of Pointe-Noire and includes the Hinda Exploitation Licence that covers 263.68 km² of the coastal basin.

Prior to acquisition by Kropz, more than US$ 40 million had been spent on project development, including drilling, metallurgical test work and feasibility studies.

The 2015 definitive feasibility study ("2015 DFS") showed positive economic results for a 4.1 Mtpa project. While the 2015 DFS reported a positive economic outcome, the Company is looking to advance an initially reduced capacity project targeting the phased production of initially one Mtpa, then later two Mtpa to be developed for a significantly lower level of upfront capital investment.

Activity for the year ended 31 December 2020

In early 2020, Kropz completed a competitive tender for an updated feasibility study for the Hinda project. The tender award and associated work programme for Hinda was subject to securing additional funding.

As announced on 6 August 2020, Kropz appointed Hatch to conduct a focussed assessment on the export logistics capacity at its proposed port site in Pointe-Noire. The study was expected to confirm the achievable capacity through the proposed port site in Pointe-Noire and highlight any major drivers influencing throughput, from truck receiving to vessel loading. This, in turn, would enable Kropz to determine the capacity for the first phase of the mining and beneficiation plant at Hinda. The focussed logistics study for Hinda, was completed by Hatch in September 2020. The study identified that the constraints at the Pointe-Noire port would limit export capacity to 1.2 Mtpa.

With the revised mine and plant capacity, and the need to dry concentrate on site, the ESIA required an update and amendment. The terms of reference for the updated ESIA were compiled and lodged with the Ministry of Tourism and Environment. The RoC Department of Tourism and Environment validated the terms of reference of the updated ESIA during 2020.

At the end of 2018, Cominco Resources received the supervisory authority to initiate the process of ratification of the Hinda exploitation convention or mining investment agreement ("MIA"), which sets out the legal and fiscal framework under which Cominco S.A. would invest and operate within the RoC. The MIA was signed by all parties on 10 July 2018. The process of ratification is currently underway, with the expectation that it will be completed in 2021.

In country, given the COVID pandemic, focus was on progressing the port occupancy agreement and sustaining solid relations with the local communities. Kropz maintains communications with a number of key stakeholders, including government, and local service providers.

Declaration d'Utilite Publique ("DUP")

The DUP (declaration of public utility) is a process required by the government of the RoC, whereby land within the mining licence concession area may be expropriated from its existing owners in order to accommodate the needs of the mining project, its works and installations. All households, infrastructure, other structures and land uses (crops and fruit trees), need to be recorded during a survey.

In accordance with Law No. 11-2004, the RoC Minister of Land Affairs signed the Decree 12914 / MAFDP-CAB, dated 16 October 2020, declaring the DUP in respect of the Hinda project. The Land Commission was set up on 6 November 2020 by memorandum n° 262/MAFDPRP-CAB for the area covered by the demarcation plan registered under n° 127 and dated October 2020. The President of the Land Commission is the Director of the Cabinet of the Ministry of Land Affairs in the RoC.

Cominco worked on the area to be covered by this DUP, covering an area of approximately 33 km² to be surveyed. This area caters for the pit extent for approximately 25 years of mining and the plant site and the tailings storage facilities defined during the 2015 DFS.

The survey commenced on 27 November 2020, once the DUP was gazetted.

Mineral resources

The Hinda resource is defined below, on a total (gross) and net attributable basis. No additional drilling was conducted in 2020.

Mineral Resource Statement, as declared by SRK on 31 August 2018

Safety, health and environment

No environmental or safety incidents were reported during the year.

Sustainability

Cominco S.A. continued its interactions with the local communities associated with the Hinda project.

Post reporting period events

Kropz appointed Hatch in February 2021 to complete the Updated FS on Hinda. The Updated FS will target a phased approach in line with the terms of the MIA, with initial production of one Mtpa of phosphate rock being exported from the existing port facility at Pointe-Noire, which is 50 km from Hinda, by road. A second phase production ramp-up of two Mtpa will also be evaluated with export from a new port site, located north of Pointe-Noire. The Updated FS is expected to be concluded by the end of September 2021.

The RoC Supreme Court has given its approval for the ratification of the MIA, and the file is pending presentation to a Council of Ministers for approval. This process has been delayed by the pandemic, but completion is expected in 2021.

The Land Commission completed the survey, required for the DUP process, on 23 January 2021 and management are reviewing the preliminary report, issued by the Land Commission, and auditing and interrogating the results and conclusions, before progressing to the next step in the DUP process.

Strategy

The Company's long-term strategy is to build a portfolio of high-quality phosphate mines and to be a major player within the sub-Saharan African plant nutrient sector. Its priority is to bring Elandsfontein into production and then to develop Hinda.

Business model

The Company's business model is to source high quality resources and to bring them into production to contribute to the Company's strategic competitiveness and profitability.

Once production has commenced at Elandsfontein and Hinda, the Company may consider acquiring additional assets and/or developing some added downstream beneficiation opportunities, where the Board believes shareholder value could be increased.

Objectives and outlook for the year ahead

Objectives

Kropz plc

Kropz's overriding objective is to deliver strong shareholder and stakeholder returns over the long term.

Elandsfontein

The primary focus of the year ahead will be to advance the project execution in line with the project budget and schedule, which will support the commissioning of the mine in Q4 2021.

Hinda

Cominco Resources appointed Hatch and commenced the Updated FS to define the economics of the proposed development option.

Cominco S.A. is expecting the completion of the ratification and formal implementation of the MIA before the end of 2021. It will also look to sign a formal port occupancy agreement to secure the space required for targeted future export operations out of Pointe-Noire.

Outlook

Kropz remains in a development phase, however the Company is confident in the inherent value contained within each of its core assets. Global phosphate rock demand and pricing continues to improve, and the work being carried out at its projects will provide Kropz with invaluable direction for the next phase of its development, subject to short-term challenges being managed. The year ahead should provide the Company with a solid foundation for its future development.  

Financial review for the year ended 31 December 2020

Summary financial highlights for the year:

·      Cash and cash equivalents of US$ 12 million (2019: US$ 16 million)

·      Restricted cash in terms of the amended facility agreement between Kropz Elandsfontein and BNP of US$ 7 million (2019: US$ Nil);

·      Trade and other payables of US$ 5 million (2019: US$ 2 million); and

·      Property, plant, equipment and development and exploration assets of US$ 159 million (2019: US$ 145 million).

Key performance indicators

The Company is a mining and exploration entity whose assets comprise exploration assets and an advanced stage phosphate mining project that is not yet at the production stage. Currently, no revenue is generated from operations. The key performance indicators for the Company are therefore linked to the achievement of project milestones and the increase in overall enterprise value.

Principal risks and uncertainties

The Company and its subsidiaries ("the Group") are subject to various risks relating to political, economic, legal, social, industry, business and financial conditions. The following risk factors, which are not presented in any order of priority, do not purport to be a complete list or explanation of all the risks involved in the Company or the Group's activities.

Completion of commissioning of Elandsfontein

The Elandsfontein project requires a number of modifications to the processing facility, further funding and successful commissioning in order to commence operations in Q4 2021. Any delays in securing of additional funding and the delivery of mechanical equipment items or, in the construction and commissioning periods, will have an adverse impact on the business and financial performance of the operation. There can be no guarantee that implementation of the modifications identified by the Company and its technical consultants will result in a successful commissioning of the mine. Failure to complete the commissioning of the Elandsfontein project, or a significant delay in the completion of the commissioning, could result in a material adverse impact on the business, and the financial performance and position of the Group. Further, see risk factor: COVID Outbreak.

Access to infrastructure

Mining, processing, development and exploration activities depend, to a significant degree, on adequate infrastructure. In the course of developing future mines, the Group may need to construct and support the construction of infrastructure, which includes permanent water supplies, tailings storage facilities, power, rail and maintenance facilities and logistics services and access roads.

Reliable rail facilities, roads, bridges, power sources and water supply are important determinants, which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could materially adversely affect the Group's operations, financial condition and results of operations. Any such issues arising in respect of the supporting infrastructure or on the Group's sites could materially adversely affect the Group's results of operations or financial condition. Furthermore, any failure or unavailability of the Group's operational infrastructure (for example, through equipment failure, disruption to its transportation arrangements or reduced port capacity) could materially adversely affect the production output from its mines or impact its exploration activities or development of a mine or project.

Limited or reduced port capacity at the Port of Saldanha and the port of Pointe-Noire, as well as the associated cost increase for procuring alternative logistics could have an adverse impact on the business and financial performance of the Group.

Operational targets

The Group's principal asset, the Elandsfontein project, is an advanced stage mining project that has no operating track record upon which to base estimates of future production rates, operating costs, capital expenditures or financial performance. The operational targets of the Group will be subject to the completion of planned operational goals on time and according to budget, and are dependent on the effective support of personnel, systems, procedures and controls. Any failure of these may result in delays in the achievement of operational targets with a consequent material adverse impact on the business, operations and financial performance of the Group. It is, therefore, possible that mining and production rates might fluctuate.

The financial performance of the Group is subject to its ability to achieve a target concentrate specification and production efficiency at its Elandsfontein project, according to its pre-determined budget. Failure to do this may result in failure to achieve operational targets with a consequent material adverse impact on the business, operations and financial performance of the Group. Further, mining and production rates might fluctuate.

Excessive overburden stripping, non-economical mining of ore and the dilution of feed grade to the processing facility could all have an adverse impact on the processing operations. Furthermore, a high variability in the daily feed grades could also have an adverse impact on operations and financial performance of the Group.

Once mining has commenced at Elandsfontein, any further unscheduled interruptions in the Group's operations due to mechanical or other failures or industrial relations related issues or problems or issues with the supply of goods or services could have a serious impact on the financial performance of those operations. The Group will not generate any material income until mining and processing has successfully re-commenced, while continuing to expend its cash reserves.

New entrant risk

Kropz Elandsfontein will, once production has been achieved of a commercial saleable grade product, be a new entrant in the global phosphate rock market, selling its products into a globally competitive and established market. Competitors can be very difficult to dislodge having already established their products in the global market.

There can be no guarantee that the sales estimates set by Kropz Elandsfontein will be achieved until a successful track record has been achieved. Not achieving appropriate selling prices for its commercial grade products, would have a material adverse effect on the business, operations and financial performance of the Group.

Mining risks

The business of mining and mineral processing involves a number of risks and hazards, including industrial accidents, labour disputes, community conflicts, activist campaigns, unusual or unexpected geological conditions, geotechnical risks, equipment failure, changes in the regulatory environment, environmental hazards, ground water and weather and other natural phenomena such as earthquakes and floods. The Group may experience material mine or plant shutdowns or periods of reduced production as a result of any of the above factors. Such occurrences could result in material damage to, or the destruction of, mineral properties or production facilities, human exposure to pollution, personal injury or death, environmental and natural resource damage, delays in mining, monetary losses and possible legal liability, and may result in actual production differing, potentially materially, from estimates of production, whether expressly or by implication. There can be no assurance that the realisation of operating risks and the costs associated with them will not materially adversely affect the results of operations or financial conditions of the Group.

Geotechnical risks could have a material adverse impact on the safety, business and financial performance of the Group's operation.

The biggest geotechnical risk to the mining at Elandsfontein is the possibility of pit 'basal heave failure' below the mineralised zone. A detailed study has been conducted by SRK (SA) including numerical modelling of the pit - based on shear strength parameters determined by geotechnical test work. SRK (SA) concluded that the base of the excavation should be limited to a 50m width in order to mitigate this risk. In order to achieve this, discipline must be employed in ensuring that backfilling never lags mining and that dewatering systems remain effective.

Possible groundwater inflow into the pit has also been identified by SRK (SA) as a potential geotechnical risk as increased water pressures could lead to pit wall instability. This risk has been mitigated by the borehole dewatering system that has been implemented, which coupled with in-pit sump dewatering has proven to be effective to date and working as designed. Diligent and regular monitoring of the efficacy of the dewatering is required to ensure that pit wall instability is minimised.

Failure to successfully dewater the mining area and maintain water levels in the mining area at the Elandsfontein project could have a material adverse impact on the operational performance, financial performance and financial condition of the Group.

WUL and associated litigation

There is currently an administrative appeal which is pending before the Water Tribunal in South Africa. The applicant and appellant is a small group of local residents who have formed a local action group which has opposed the Elandsfontein project from the outset.

The administrative appeal currently pending before the Water Tribunal seeks the setting aside of the Elandsfontein Project's integrated WUL. The third, and final appeal hearing was held from 1 to 4 February 2021 and the decision of the Water Tribunal is not known yet. Pending the Water Tribunal's decision, there is no legal impediment to the continuation with the water use activities authorised in the integrated WUL.

There can be no guarantee that the administrative appeal will be rejected, or that there will not be future successful actions or appeals against Kropz's WUL. If the ongoing appeal or any future actions were to be successful, this would have a material adverse effect on the business, operations and financial performance of the Group.

Enforcement of contractual rights in the RoC may be brought into question

The legal system in the RoC is based on the French civil law system (the Civil Code of the former French Equatorial Africa), which has enacted the Uniform Act to harmonise business law in Africa in order to guarantee legal and judicial security for investors and companies in its member states, as well as a Uniform Act on Arbitration Law, allowing recourse to a standard arbitration mechanism for the settlement of contractual disputes arising from civil or commercial contracts concluded in the RoC as an alternative to RoC courts for legal proceedings relating to contracts.

Under Congolese law, parties may enter into private contracts in the language of their choice, however, a French translation is always required for them to be used before any constituted authority in the RoC. In addition, enforcement of contracts concluded outside of Congo before an RoC court, administrations and other constituted authorities, requires their prior registration with the Office for Registration and Stamp Duties and, in the absence of a specific exemption, payment of the applicable registration fees and stamp duties.

Certain contracts concluded in the RoC (such as leases) must also be presented for registration with the Office for Registration and Stamp Duties, due to their nature and listing in the General Tax Code, Volume 2. Moreover, certain contracts (such as commercial leases) must also be notarised or authenticated by a notary if concluded as private deeds, prior being registered as described above.

If any of these processes are not strictly followed, the RoC courts and administrations may disregard the concerned contract and, as regards the requirement to register certain contracts with the Office for Registration and Stamp Duties, the tax administration may apply fines of 100 per cent. of the amount of registration fees due. Further, the tax administration tends to disregard any payment conventional exemption for the purpose of applying these fines.

If any of the Group's contracts are deemed unenforceable, this could have a material adverse effect on the operations and financial results of the Group.

COVID Outbreak

The current outbreak of COVID has had an impact on the Group's businesses and operations and will continue to do so. The timescale attached to this risk is not currently known. There is a risk that the outbreak, and subsequent waves of infections in different countries, has a material adverse impact on the Group's operations and financial results.

Directives are issued and measures implemented, from time to time, by the South African and RoC Governments to contain the spread of COVID involving lockdowns, curfews, quarantine requirements and travel restrictions ("Directives"). Kropz continuously monitors the situation closely, both in South Africa and the RoC, and codes of practice are in place to deal with outbreaks on site.

Kropz is currently unable to quantify the impact of the Directives going forward, but the Group will continue to progress all its workstreams as previously outlined. The Elandsfontein project timetable is not currently affected.

Commodity pricing

The future profitability and viability of the Group's operations will be dependent upon the market price of phosphate rock to be sold by the Group. Mineral prices fluctuate widely and are affected by numerous factors beyond the control of the Company. The level of interest rates, the rate of inflation, the world supply of mineral commodities, the global level of demand from consumers and the stability of exchange rates can all cause significant fluctuations in prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. Commodity prices have fluctuated widely in recent years, and future price declines could cause commercial production to be impracticable, thereby having a material adverse effect on the Company's business, financial condition and results of operations. A significant or sustained downturn in commodity prices would adversely affect the Group's available cash and liquidity and could have a material adverse effect on the business, results of operations and financial condition of the Group in the longer term.

In recent years, global phosphate rock and fertilizer supply growth has out-paced demand. As a result, sharp declines have taken place in both phosphate rock and phosphate fertilizer prices since 2011. A failure of the market price for phosphate rock to recover in line with market expectations could have an adverse impact on the Company's business, financial condition and results of operations. Furthermore, reserve estimates and feasibility studies using significant lower commodity prices could result in material write-downs of the Group's investment in its assets and increased amortisation, reclamation and closure charges.

In addition to adversely affecting the Group's reserve estimates and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the Elandsfontein project and the Hinda project are ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.

Environmental regulation and environmental compliance

Mining operations have inherent risks and liabilities associated with damage to the environment and the disposal of waste products occurring as a result of mineral exploration and production. Environmental and safety legislation and regulation (e.g. in relation to reclamation, disposal of waste products, pollution and protection of the environment, protection of wildlife and otherwise relating to environmental protection) is frequently changing and is generally becoming more restrictive with a heightened degree of responsibility for companies and their Directors and employees and more stringent enforcement of existing laws and regulations. Future changes could impose significant costs and burdens on the Group (the extent of which cannot be predicted) both in terms of compliance and potential penalties, liabilities and remediation.

Breach of any environmental obligations could result in penalties and civil liabilities and/or suspension of operations, any of which could adversely affect the Group. Further, approval may be required for any material plant modifications or additional land clearing and for ground disturbing activities. Delays in obtaining such approvals could result in the delay to anticipated exploration programmes or mining activities.

There may also be unforeseen environmental liabilities resulting from mining activities, which may be costly to remedy. If the Group is unable to fully remedy an environmental problem, it may be required to stop or suspend operations or enter into interim compliance measures pending completion of the required remedy. The potential exposure may be significant and could have a material adverse effect on the Group. The Group has not purchased insurance for environmental risks (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) as it is not generally available at a price which the Group regards as reasonable.

In South Africa, the Regulations Pertaining to the Financial Provision for Prospecting, Exploration, Mining or Production Operations 2015 (R1147 of 20 Nov 2015) provides that the holder of a mining right must provide for rehabilitation and remediation costs, with particular reference to when the mine is decommissioned at the end of mining, or production operations. It is expected that mining operations at Elandsfontein will cease in year 2030. The under-provision of such a rehabilitation liability could result in future liabilities being payable, which could have a material adverse impact on the financial condition of the Group.

Government regulation and political risk

The Group's operating activities are subject to laws and regulations governing expropriation of property, health and worker safety, employment standards, waste disposal, protection of the environment, mine development, land and water use, prospecting, mineral production, exports, taxes, labour standards, occupational health standards, toxic wastes, the protection of endangered and protected species and other matters. While the Directors believe that the Group is in substantial compliance with all material current laws and regulations affecting its activities, future changes in applicable laws, regulations, agreements or changes in their enforcement or regulatory interpretation could result in changes in legal requirements or in the terms of existing permits and agreements applicable to the Group or its properties, which could have a material adverse impact on the Group's current operations or planned development projects. Where required, obtaining necessary permits and licences can be a complex, time consuming process and the Group cannot assure whether any necessary permits will be obtainable on acceptable terms, in a timely manner or at all.

The costs and delays associated with obtaining necessary permits and complying with these permits and applicable laws and regulations could stop or materially delay or restrict the Group from proceeding with any future exploration or development of its properties. Any failure to comply with applicable laws and regulations or permits, even if inadvertent, could result in interruption or closure of exploration, development or mining operations or material fines, penalties or other liabilities.

The Group has operations located in South Africa and the RoC and the Group's activities may be affected in varying degrees by political stability and governmental regulations. Any changes in regulations or shifts in political attitudes in South Africa and the RoC are beyond the control of the Group and may adversely affect its operations.

Adverse sovereign action

The Group is exposed to the risk of adverse sovereign action by the governments of South Africa, RoC and other governments. The mining industry is important to the economies of these countries and thus can be expected to be the focus of continuing attention and debate. In similar circumstances in other developing countries, mining companies have faced the risks of expropriation and/or renationalisation, breach or abrogation of project agreements, application to such companies of laws and regulations from which they were intended to be exempt, denials of required permits and approvals, increases in royalty rates and taxes that were intended to be stable, application of exchange or capital controls, and other risks.

Governance

The Board considers sound governance as a critical component of the Group's success and the highest priority. The Company has an effective and engaged Board, with a strong non-executive presence from diverse backgrounds, and well-functioning governance committees. Through the Group's compensation policies and variable components of employee remuneration, the Remuneration and Nomination Committee ("Remuneration Committee") of the Board seeks to ensure that the Company's values are reinforced in employee behaviour and that effective risk management is promoted.

More information on our corporate governance can be found in the Corporate Governance Report on pages 41 to 53.

Directors' section 172 statement

The following disclosure describes how the Directors have had regard to the matters set out in section 172 and forms the Directors' statement required under section 414CZA of The Companies Act 2006. This reporting requirement is made in accordance with the corporate governance requirements identified in The Companies (Miscellaneous Reporting) Regulations 2018, which apply to company reporting on financial years starting on or after 1 January 2019.

The matters set out in section 172(1) (a) to (f) are that a Director must act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

a.   the likely consequences of any decision in the long term;

b.   the interests of the Company's employees;

c.   the need to foster the Company's business relationships with suppliers, customers and others;

d.   the impact of the Company's operations on the community and the environment;

e.   the desirability of the Company maintaining a reputation for high standards of business conduct; and

f.    the need to act fairly between members of the Company.

The analysis is divided into two sections, the first to address Stakeholder engagement, which provides information on stakeholders, issues and methods of engagement. The second section addresses principal decisions made by the Board and focuses on how the regard for stakeholders influenced decision-making.

Section 1: Stakeholder mapping and engagement activities within the reporting period

The Company continuously interacts with a variety of stakeholders important to its success, such as equity investors, joint venture partners, debt providers, employees, government bodies, local community and vendor partners. The Company works within the limitations of what can be disclosed to the various stakeholders with regards to maintaining confidentiality of market and/or commercially sensitive information.

Section 2: Principal decisions by the Board

Principal decisions are defined as both those that have long-term strategic impact and are material to the Group, but also those that are significant to key stakeholder groups. In making the following principal decisions, the Board considered the outcome from its stakeholder engagement, the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company.

During the financial year ending 31 December 2020

            Convertible loan facility for $40 million from ARC, entered into on 13 May 2020

ARC and the Company agreed on a US$ 40 million convertible loan facility (not exceeding a maximum of ZAR 680 million) in May 2020, in order to secure the required funding for the completion of Elandsfontein. The Original Equity Facility was approved by Kropz's shareholders at a general meeting on 29 May 2020. Quarterly draw downs under the Original Equity Facility are at the sole discretion of Kropz. The first draw down on the Original Equity Facility occurred on 26 June 2020 for US$ 10 million, and two further drawdowns for US$ 4 million and US$ 5 million in terms of the Original Equity Facility were concluded on 25 September 2020 and 10 December 2020, respectively. Repayment of the Original Equity Facility and any interest thereon will be in the form of immediate conversion into ordinary shares in Kropz and issued to ARC, at a conversion price of 6.75 pence per ordinary share each quarter, and any US$ amount will be converted to GBP at an agreed rate of US$ 1 = 0.86 GBP.

The US$ 40 million Original Equity Facility is to be used exclusively for the completion of Elandsfontein. To secure the US$ 40 million funding from ARC, ARC entered into a funding undertaking with Kropz Elandsfontein and secured this funding undertaking with a bank guarantee for US$ 40 million (not exceeding a maximum of ZAR 680 million) from Rand Merchant Bank in South Africa.

At the date of this Annual Report and since year end, further draw downs of US$ 7 million and US$ 11 million were made on 10 March 2021 and 23 June 2021, respectively. US$ 3 million remains to be drawn down in 2021.

The key stakeholder groups that could be materially impacted are existing shareholders and potential investors.

Existing shareholders may have conflicting interests with the Original Equity Facility due to potential dilution of their shareholding. The Directors considered the impact of this and concluded that obtaining the convertible facility from ARC was the only funding opportunity available to the Company in order to get Elandsfontein into commercial production. Various funding alternatives had been investigated by the Directors over the last two years, both from an equity raise perspective and through possible project finance facilities.  Equity markets were subdued and no new or existing equity investors were prepared to provide the funding required for Elandsfontein. Given the extensive security package that BNP has in accordance with their fully drawn US$ 30 million project finance facility agreement, no security alternative was available for potential new project finance funders.

Due to the fact that Machiel Reyneke, the ARC representative on the Board, and Mike Nunn, representing Kropz International are considered to be concert parties, they were not permitted to consider or vote on the approval of the proposed US$ 40 million Original Equity Facility by the Board. The independent, non-executive Directors, being Lord Robin Renwick, Linda Beal and Mike Daigle, and the CEO, Mark Summers, considered the transaction to be fair and reasonable.

As a result of the Original Equity Facility and further funding to the Company in terms of an open offer in June 2020, ARC would increase its interest in the Company by a further approximate 30 per cent., taking its eventual interest in the Company to more than 80 per cent.

The conclusion was that the Original Equity Facility was fair and reasonable and the transaction was approved by the independent Directors and announced on RNS on 13 May 2020.

Post 31 December 2020

Convertible loan facility for $5 million from ARC, entered into on 15 February 2021

Kropz secured a further convertible loan facility of up to US$ 5 million (not exceeding a maximum of ZAR 85 million) from ARC ("Further Equity Facility") in February 2021, to be used exclusively for the Hinda Updated FS and general corporate purposes for Kropz. Quarterly draw downs under the Equity Facility are at the sole discretion of Kropz. The first draw down of US$ 2 million on the Further Equity Facility occurred on 10 March 2021 and the second draw down of US$ 2 million occurred on 23 June 2021. No specific shareholder approval was required for the Further Equity Facility as the Company received the necessary authority at the AGM in August 2020 to allot shares for cash, without first offering them to existing shareholders in proportion to their existing shareholdings, of approximately 20 per cent. of the Company's issued share capital at that time, representing 88,792,180 new ordinary shares. Ordinary shares to be issued to ARC in terms of the Further Equity Facility will be a maximum of 86,863,398 ordinary shares.

The next drawdown is anticipated on 10 September 2021, and quarterly thereafter until the facility is fully drawn down in 2021/2022. Repayment of the Further Equity Facility and any interest thereon will be in the form of immediate conversion into ordinary shares in Kropz and issued to ARC, at a conversion price of 4.202 pence per ordinary share each quarter, and any US$ amount will be converted to GBP at an agreed rate of US$ 1 = 0.73 GBP.

The key stakeholder groups that could be materially impacted are existing shareholders and potential investors.

Existing shareholders may have conflicting interests with the Further Equity Facility due to potential dilution of their shareholding. The Directors considered the impact of this and concluded that obtaining the convertible facility from ARC was the only funding opportunity available to the Company in order to secure funding for the Hinda Update FS and for general working capital for the Group. Various funding alternatives had been investigated by the Directors, in conjunction with its brokers and advisers, over the last year, both from an equity raise perspective and through possible project finance facilities.  Equity markets were subdued and no new or existing equity investors were prepared to provide the funding required for the Hinda Updated FS and Kropz's working capital requirements.

Due to the fact that Machiel Reyneke, the ARC representative on the Board, and Mike Nunn, representing Kropz International are considered to be concert parties, they were not permitted to consider or vote on the approval of the proposed US$ 5 million Further Equity Facility by the Board. The independent, non-executive Directors, being Lord Robin Renwick, Linda Beal and Mike Daigle, and the CEO, Mark Summers, considered the transaction to be fair and reasonable.

As a result of the Further Equity Facility, ARC would increase its interest in the Company by a further approximate 4 per cent., taking its eventual interest in the Company to approximately 84 per cent.

The conclusion was that the Further Equity Facility was fair and reasonable and the transaction was approved by the independent Directors and announced on RNS on 26 February 2021.

At the date of this Annual Report and since year end, further draw downs of US$ 2 million each were made on 10 March 2021 and 23 June 2021, respectively. US$ 1 million remains to be drawn down in 2021 / 2022.

            Proposed divestment by the Company of its equity interest in Aflao, Ghana, entered into on 16 February 2021:

During 2020, the Board agreed to divest from its 50 per cent. plus 1 share interest in First Gear Exploration Limited ("FGE"), the owner of the Aflao prospecting right. During February 2021, Kropz disposed of its interest in FGE to Consortium Minerals Ltd ("Consortium"), for a consideration of US$ 327,529, made up as follows:

·      US$ 5,000 in cash ("Share Consideration"); and

·      US$ 322,529 ("Loan Consideration") deferred cash consideration in respect of the shareholder loan from Kropz to FGE, which is being novated to Consortium.

The Share Consideration will be payable by Consortium within seven days of completion. The Loan Consideration will be payable by Consortium to Kropz upon, the earlier of,

(i)     the sign-off by a competent person of a definitive feasibility study on the Aflao deposit, as defined in the JORC Code 2012 edition; or

(ii)    Consortium disposing or transferring the Shares prior to the event described in (i) being achieved; or

(iii)   Consortium disposing or transferring the prospecting right prior to the event described in (i) being achieved.

Consortium is a subsidiary of Russell Brooks Ltd, who is a minority shareholder in FGE, with a 15 per cent. shareholding prior to the acquisition from Kropz.

The decision is aligned with the business model set out in the Company strategy, which is to invest in high quality assets in the phosphate rock market.

In making the above principal decisions, the Directors believe that they have considered all relevant stakeholders, potential impact and conflicts, the Company's business model and its long-term strategic objectives, and have acted accordingly to promote the success of the Company for the benefit of its members as a whole.

This Strategic Report was approved by the Board of Directors.

Mark Summers

Chief Executive Officer

29 June 2021

Consolidated Statement of Financial Position as at 31 December 2020

The Notes form an integral part of these Consolidated Financial Statements. The Financial Statements were approved and authorised for issue by the Board of Directors and signed on its behalf by:

Mark Summers

Chief Executive Officer

29 June 2021