TIDMBEN
RNS Number : 2335O
Bens Creek Group PLC
29 September 2023
29 September 2023
Bens Creek Group plc
("Bens Creek" or "Company" or "Group")
Final results for the year ended 31 March 2023
Posting of Annual Report and Notice of AGM
Bens Creek Group plc (AIM: BEN), the owner of a metallurgical
coal mine in North America supplying the steel industry, announces
its audited results for the year ended 31 March 2023.
Financial highlights for the year to 31 March 2023
Ø Raw tons produced - 494,861 (31 March 2022: 63,562)
Ø Clean tons produced - 272,318 (31 March 2022: 666)
Ø Clean tons sold - 236,631 (31 March 2022: nil)
Ø Revenue of $42.2m (31 March 2022: $5.4m)
Ø Loss before taxation - $24.7m (31 March 2022: profit before
taxation of $25.3m inclusive of a bargain purchase gain of
$33.7m)
Ø Basic loss per share - $6.563 cents (31 March 2022: basic
earnings per share of $6.165 cents)
Ø Net assets, $22.4m (31 March 2022: $31.7m)
Ø Coal reserves, $24.5m (31 March 2022: $24.9m)
Ø Inventory as at 31 March 2023, valued at $5.2m (31 March 2022:
$1.5m)
Ø Operating loss, $21.3m (31 March 2022: $7.5m)
Ø Adjusted EBITDA loss of $8.1m (31 March 2022: $3.4m)
Ø Adjusted basic EPS* loss per share - $2.205 cents (31 March
2022: loss of $1.24 cents per share)
*Adjusted EBITDA and EPS Adjusted EPS before, depreciation,
share-based payment expense, provision expense.
Operational highlights
Ø Mining undertaken by contract mining arrangements
Ø Existing mining infrastructure remediated completed, including
railway line, with additional equipment purchased where
necessary
Ø Total clean coal production of 272k tons of which 237k tons
were sold in the twelve months to March 2023, however first trains
only commenced in June 2022
Ø Second High Wall Miner operating on-site on double shifts
since 11 September 2023, which will result in increased
production
Ø Production steadily increasing month on month - production
reaching 42,000 tons of clean coal in August
Ø Move from contractor model to equipment owner to "face-up"
surface areas to be highwall mined by our contractor, Mega Highwall
Mining, to achieve cost efficiencies
Posting of Annual Report and Notice of AGM
Extracted below is the annual report and accounts of the Group.
A copy of this announcement and the annual report and accounts and
notice of annual general meeting ("AGM") are available to view on
the Company's website (www.benscreek.com). The annual report and
accounts for the year ended 31 March 2023 and notice of AGM are
being posted to shareholders by 30 September 2023. The AGM will be
held at the Royal Overseas League, Hall of India and Pakistan, Six
Park Place, St James's, London SW1A 1LR at 11.00 a.m. on Friday
27th October 2023.
Adam Wilson, Chief Executive Officer, commented:
"We are pleased to present the 2nd annual report and accounts
for the Company following what has been a difficult year with a
range of problems, mostly outside of our control, including a state
of emergency storm in August 2022. We did however successfully pass
a number of milestones including the establishment of our
underground mine, the commencement of rail deliveries and the
introduction of a 2nd high wall miner. In addition, we successfully
raised GBP6m via a placing at 30p per share to fund our transition
from contracted to employed staff and to finance our fleet of earth
moving equipment, 'yellow goods'. We also received, after a long
delay, our new mining permit. The price of coal throughout most of
the year was under severe pressure, down from $284 a ton to a low
of $193 in the summer, which in turn adversely affected our
cashflow and profitability reducing our flexibility, particularly
on capital projects. Fortunately, we have had the support of our
new shareholder, Avani, who has stepped in to provide financing
when required. We have been fortunate with our distributors,
Integrity, who have done an excellent job selling all of the coal
that we have produced, and post year end Avani demonstrated their
commitment to met coal by investing into Bens Creek. Since the
year-end we have seen a small improvement in the underlying price
which has had a positive move and is now at $235 per ton. The drop
in met coal prices and its effect on the results is disappointing
however during the first part of the new financial year we have
made great strides in reducing our overall costs to help improve
margins and we continue to look for ways to improve our
efficiencies in a drive towards profitability. With a rising
product price and full production from our 2 High Wall Miners we
believe that the current year will show a substantial
improvement.'
For further information please contact:
Bens Creek Group plc
Adam Wilson, CEO +44 (0) 204 558
Peter Shea Chief of Staff 2300
Allenby Capital Limited (Nominated Adviser
and Joint Broker)
Nick Athanas / Nick Naylor / George Payne
(Corporate Finance)
Kelly Gardiner / Guy McDougall (Sales and +44 (0) 203 328
Corporate Broking) 5656
W H Ireland Limited (Joint Broker) +44 (0) 207 220
Harry Ansell/Katy Mitchell 1666
BENS CREEK GROUP PLC CHAIRMAN'S STATEMENT
I am pleased to present our second annual report for the year
ended 31 March 2023. As mentioned in our interim report, we
completed the remediation of the wash plant and railway line to the
mine and delivered our first shipment of our High Vol. B
metallurgical coal by rail in early June 2022. We produced 172,390
tons and delivered 152,022 tons during the second half of the year,
which results in a total of 272,318 tons produced and 236,631 tons
sold for the full year. We continue to upgrade the infrastructure
of the mine, plant and load out facility to improve the efficiency
of our operations. All this has only been possible thanks to the
dedication and commitment of our staff.
We are committed to safe and sustainable mining practices. We
mine utilising the least invasive and destructive techniques
available to us to minimise our environmental impact. The safety of
our employees is paramount. We maintain an unwavering commitment to
fostering a culture of safety with vigorous safety protocols along
with comprehensive training programmes. We are proud to have
completed our first full year of operation without any of our
personnel sustaining injuries.
In late June 2022 we exercised our right to have a second high
wall miner provided by Mega High Wall Mining LLC, in anticipation
of the arrival of our new mining permit. This long-awaited permit
finally arrived in September 2022, and we were able to complete the
necessary benching to support the first high wall miner in its new
position to allow mining to recommence. The new location yielded an
improvement in productivity with a wider seam of 50 inches as
compared our original seam which was only 38 inches.
We took the decision in August 2022 to move from using a
contractor for our earth moving to buying our own fleet and
operating it ourselves which was successfully implemented. To
finance this, we placed GBP6m of new shares at 30p and we were
pleased that this was fully subscribed.
Towards the end of 2022, we purchased 26% of BC Rail Holdings
from MBU Capital Group with an option to acquire the balance. We
acquired a further 26% in March 2023 confirming our control of BC
Rail Holdings, which owns the private railway to ship coal out of
our plant. In addition, MBU agreed to convert all of their
outstanding loans, amounting to GBP4.3million, into equity.
In many respects the second half of our financial year to March
2023, and early months of the new financial year, have been
challenging. The price for our product fell sharply in global
markets and delays occurred with the delivery and commissioning of
the second high wall miner. It did not arrive until March 2023 and
then, despite the efforts of all concerned, the machine could not
be brought into service and Mega agreed to replace it. They did so,
with a functioning machine arriving in May 2023. Soon after its
arrival and commissioning, however, we were forced to remove it
from service following a mining incident where the cutterhead and
some beams became stuck inside the coal seam requiring us to stop
production completely for a short period while a recovery programme
was implemented, fortunately successfully. Repairs to this second
high wall miner are now complete, and the machine has been
recommissioned and is back in production.
As previously reported, we appointed Murat Erden as Chief
Financial Officer in July 2022. Murat is a Turkish citizen and his
family home is in the area of the earthquake that occurred in
February 2023. The Company granted Murat a leave of absence at that
time and he subsequently resigned. We have recently started a
search for a new CFO.
In May of this year, we were pleased to welcome Avani Resources
as a new, and the Company's largest, shareholder. They bring vast
knowledge and experience of the global coal market and we are sure
they will contribute enormously to the business. In July we were
pleased to welcome Rajesh Johar as Avani's nominee for the board of
directors.
With prices continuing to be weak in the early part of the new
financial year, we took the decision to seek additional finance
from our new shareholder. They provided us with $13million in new
loans. This allowed us to pay down one of our existing convertible
loan notes and provided the capital required to finance the
purchase of the equipment required to support our second high wall
miner.
Our dedication to the communities in which we operate remains
resolute. We actively engage with local communities striving to
create shared values and sustainable development. We collaborate
with stakeholders where we can in the promotion of education and
healthcare and try to ensure that we have a positive impact.
Whilst it has taken longer than we had hoped to ramp up to full
production, and the market for our product is currently weak, we
remain optimistic for your Company's future. We have a dedicated
and hardworking team, the mine infrastructure and equipment in
place to increase production over the next year, as well as the
support of our major shareholders.
Robin Fryer
Non-Executive Director and Chairman
29 September 2023
BENS CREEK GROUP PLC CHIEF EXECUTIVE'S STATEMENT
To all shareholders,
I am delighted to report to all shareholders and stakeholders in
this, our 2nd annual report and audited financial statements of
Bens Creek Group Plc ("BC").
Since we last reported, we have successfully fully restarted
mining operations at Glen Alum, WV and were in full production,
although not yet quite at full capacity, for the nine months since
June 2022 (when our first train left the property), with one High
Wall Miner ("HWM').
Post the period end, on 11 September 2023, two HWM's started
double shifts and we are confident that we will now reach our
planned production targets.
We thank Integrity for coal sales, who have been marketing our
coal and providing both logistics and financing support to great
effect. Their positive approach has driven our revenue which has
risen some 800% from the start-up in the previous year to, at the
financial year ended 31 March 2023, $42m from the production of
272,318 clean tons.
Please see the Strategic Report for the financial results during
the year ended 31 March 2023. Our adjusted earnings before
Interest, tax, depreciation and amortisation ("adjusted EBITDA")
(the loss per the financial statements after adjusting for
depreciation, depletion, financing costs, share option charge and
provision expenses) was circa $8m loss, this equates to $30 a
ton.
Loss before tax per financial statements (24,715,586)
Depreciation 4,885,932
Depletion 440,915
Interest 3,435,252
Share option charge 2,397,585
Change in accounting estimates 575,580
Change in revaluation of deferred consideration 4,859,839
-------------
Adjusted EBITDA (8,120,483)
-------------
As well as the increase in pricing post period end, we have
reduced costs per ton.
This is best demonstrated in the Underground Mining ("UM"),
which is illustrative of the cost cutting across the whole company,
during the fall off in met coal pricing. In March 2023, we were
paying a contractor $45 a Run of Mine ('ROM") ton, but only
recovering 35% coal per ton extracted. By August 2023, we had
reduced the ROM ton amount to $35, and had increased recovery to
44.2%, this has led to a post balance cost reduction from $128 per
clean ton to $111 per clean ton on the UM.
The biggest issue we have suffered in this calendar year has
been the effect of the falling commodity price, HvB Met Coal, as
measured on the S&P Platts pricing index.
From a high last year in 2022 of $450 a ton, we have seen a
steady decline to $284 as at this time last year (March 2022) and a
low of $193 (summer 2023). The drop in pricing has been the primary
driver for the losses which would have been reversed had the coal
price stayed where it was this time last year. More recently we
have seen HvB rise from its lows of $191 to the current price of
$238 per MT; this increase of $45 will drop straight to our bottom
line.
During the period the Company moved from a contractor fleet to
owner operator at the end of November 2022. This meant we ended the
services of JMAC LLC, who had previously managed all our earth
moving fleet ("Yellow iron"), and we thank them for their early
help in successfully getting the project moving.
The Company started excavating in late November with its own
fleet and raised $6m at 30p in the last quarter of the year to
finance the deposit on further additions to our fleet of yellow
goods. The fleet, broadly complete, is now valued at circa $14m
which ensured that the Company was well prepared ahead of getting
its new permit for High Wall Mining (HWM) which will last for the
next 5 years.
Following the new Department of Environmental Protection permit
granted in November 2022, Marshall Miller produced a positive
resource update which demonstrated and increase to 4m defined tons
on the property compared to the 2.3m previously reported.
The addition of Underground reserves identified by Marshall
Miller, means that the depletion rate has halved from 2022 due to
reserves doubling. This has resulted in an increase to the reserves
in the Statement of Financial Position as it was recognised at fair
value at the date of acquisition.
Further and in line with our policy to ensure minimum
environmental damage we returned the first permit back to the
state, fully reclaimed.
Post the year end, and sadly slightly behind schedule, Mega
brought and assembled their HWM (81) on-site. Unfortunately, this
had an almost immediate incident, which we were able to sort
quickly so that now both miners are working, and we are approaching
our targeted monthly production.
We have now completed all the remediation required and us and
our contractors are in possession of a full set of mining
equipment. So, the issues facing the Company now, are macro issues,
such as the demand for steel, the price of met coal and the general
state of the economy.
As the CEO I remain incredibly bullish for all the above, and
with infrastructure and global rebuilding (particularly in Ukraine)
I expect a positive rebound in HVB Met Coal pricing; this has
already started to come through with the met coal price up some
$45, a 23% increase in a relatively short period of time.
Post the period end we welcomed Avani Resources onto the BC
shareholder list; as the largest importer of Met Coal into India
this must be a positive sign both for BC and the Met Coal market.
India is set to become the world's largest steel market and we
couldn't have picked a better partner.
Integrity remains with us in the US, as a trusted partner in
marketing/sales and logistics and, with Avani looking into the
Indian market, the Company would seem well set to benefit from any
upturn globally and domestically.
The safety strategy, mining efficiency and our concerns for the
environment through reclamation are combined in a three-prong
approach, we now have a full-time mining engineer at the site in
charge of this, and it is at the core of mine planning for Bens
Creek.
Bens Creek continues to use HWM which is the least invasive
mining method available, and we continue to actively reseed and
reclaim areas previously mined as soon as is possible.
Having restarted this project we have created over 100 new jobs
in a previously economically disadvantaged area, and all that have
helped with this should be very proud. The jobs generated have
helped the region greatly, where other employment has been in
decline over recent years.
The safety and security of all our employees is of the utmost
importance to us and we are thankful therefore that we suffered no
injuries in the period.
I want again to thank everyone involved at BC, both in the
London and Charleston offices and at the site at Glen Alum, from
the equipment operators, employees, plant workers, welders,
electricians, operators, contractors as well as all
shareholders.
We are optimistic for the future.
Adam Wilson
Chief Executive Officer
29 September 2023
STRATEGIC REPORT
The Directors present their Strategic Report on the Group for
the year ended 31 March 2023.
Strategic approach
Bens Creek Group plc is a holding company that owns and operates
the Ben's Creek mining project in West Virginia, USA. The Group's
key objective is to deliver sustainable shareholder value through
the production, development and further acquisition of
metallurgical coal assets, the underlying commodity of the Company.
A key component of the Company's success will be the metallurgical
coal price, which has through the period been highly volatile.
The Group may seek to make further acquisitions of metallurgical
coal mines in North America.
Organisation overview
The Group's business is directed by the Board of Directors and
is managed on a day-to-day basis by the Chief Executive Officer.
The Board monitors compliance with objectives and policies of the
Group through monthly performance reporting, budget updates and
periodic operational reviews.
The Board comprises of one Executive Director and four
Non-Executive Directors.
The Corporate Head Office of the Group is located in London and
provides corporate support services to the overseas operations in
West Virginia, United States of America ("USA").
Review of business
The strategic approach of the business has been to complete the
necessary remediation and infrastructure works required to a
dormant mine to enable it to become operational with the aim of
commencing the production of metallurgical coal or met coal.
During the year under review and post 31 March 2023, the Group
has completed several milestones, which chronologically
include:
-- The Group commenced the financial year selling and supplying
raw coal by truck, In late April, with the wash plant fully
remediated, we were able to supply clean coal by truck. By the end
of April, we completed and had approved by the Northern Southern
Railway Company, the rail remediation and we were able to commence
delivery of clean coal via train from June 2022.
-- The Group acquired, on 14 April 2022, a new sub lease from
Star Ridge. It has not yet commenced mining operations at this
site.
-- In May 2022 the Company completed all preparations for the
commencement of underground mining, which started on May 26.
-- Utilising our contract agreement with Mega High Wall Mining
on 26 June 2022, Bens Creek exercised its right for the provision
of a 2nd High Wall Miner.
-- On 18 August 2022 the Company completed a GBP6m placing of
new equity at a price of 30p per share. The placing funded the
transition from contracted staff to employed for earth moving
equipment.
-- On 23 December 2022, the Company purchased 26% of Bens Creek
Rail Holdings for $169k, with an option to acquire the balance.
-- The Company exercised the option to acquire a further 26% on
31 March 2023, at the same price. The Company continues to have the
option to acquire the balance of the Company.
-- Lease acquisition agreements were entered into on 16 December
2021 and 14 April 2022 for sites adjacent to the Group's site in
West Virginia, giving it rights to mine met coal reserves in situ.
At the date of approval of this strategic report, the Company had
not commenced mining operations on these sites.
The Group was also able to report during June 2022, the results
of a reserve base evaluation undertaken by Marshall Miller &
Associates, Inc. which summarised the Group's coal properties in
West Virginia. This report stated the Group has 92.7 million tons
of in-place dry reserves, prior to any recovery of washed coal, and
33.6 million tons that are recoverable reserves.
Outlook
The medium to long term demand for met coal is improving from
the depressed levels we have seen from the beginning of 2023 until
now, which have hurt all companies in the sector. The drop in met
coal process from $485 to below $200 has seen multiple local WV
companies' slow production, and issue WARN notices with respect to
laying of large numbers of staff.
With India overtaking China as the most populated country in the
world, and its inclusion with China into the BRIC's economic
powerhouse, we see this as a major expansion area internationally
for Bens Creek. As such, welcoming Avani, one of the largest
commodity players in Met Coal into India onto our shareholder list
has been a huge step forward. We see in addition infrastructure
spending increasing as well as a robust defence sector supporting
the rise in steel production over the next 12-24 months.
We had hoped to get two HWM in production earlier in the year,
and in time for the Company's year-end in March 2023, but sadly
delays and an incident with a geological anomaly meant that this
wasn't able to happen as fast as we would have liked.
These issues have now all been successfully resolved and I can
report that as of September 11 both High Wall Miners have commenced
double shift production.
Against the backdrop of falling prices for most of the period we
have proactively attacked our costs of mining and have been able to
significantly reduce them in a number of areas and in
particular:
The pricing with the High Wall Miner contractor was reduced from
$28 per ton to $25 with a target for a further reduction to $23 as
production increases.
The pricing with the Underground Mining contractor reduced from
$45 per ROM ton to $35 per ton and recovery improved from 30-35% to
45% by August 2023.
Overtime at the mine site has been reduced significantly,
reducing staffing costs.
We have also been shipping to new users of coal via Integrity,
our long-term offtake partner and hopefully in the future with
Avani. Even with the depressed pricing we have been selling all of
our production to some of the largest steel producers in the
world.
The Group is focused on producing met coal which span two
quality grades, commonly referred to as High Vol A and High Vol B.
The High Vol A product is extracted from the Group's underground
property in West Virginia, whilst the High Vol B is extracted via
highwall mining. The selling prices of the Group's met coal is
correlated to the daily prices published by Standard & Poor's
Global Platts Coal Trader.
The prices quoted are typically for metric tons. The weights
used by the Group in its commercial arrangements are US short tons,
equivalent to 2,000 lbs per metric ton.
The pricing of met coal has since the beginning of 2021
increased substantially, setting record all-time highs in March
2022, the price having increased from $120 to $465 per metric ton.
However, this time last year the pricing was $285, sadly we have
seen it drop to a low of $191, as of writing it is $235 per metric
ton, delivered to the East Coast of the USA.
Financial review
Income Statement
The net loss generated by the Group for the year ended 31 March
2023, before taxation was $24,715,586 (31 March 2022: net profit of
$25,285,795). Basic loss per ordinary share was 6.563 cents (31
March 2022: basic earnings per share of 6.165 cents). The operating
loss was $21,323,294 (31 March 2022: $7,460,142).
The Company commenced the sale of High Vol B clean met coal on a
monthly basis in June 2022 to its offtake partner, Integrity. This
generated revenue of $42,208,848 in 2023 (2022: $5,411,816 related
to raw coal).
The direct costs incurred in connection with the sales made
amounted to $38,091,159. This generated a gross margin of 8%.
The operating loss of $21,323,294 has been driven by
administrative costs of $12,079,599, as set out in note 9 to the
financial statements, which includes the costs of $1,712,746
associated with the operational and remediation costs, insurance
costs of $2,318,757 and staff costs of $3,651,828.
Total share option charges were $2,397,585, for further details
please see note 32 to the financial statements.
Other costs incurred include depletion expenses of $440,915, in
connection with the amortisation of the stock of met coal reserves
sold to Integrity during the year. Further details of the value of
the Company's met coal reserves is contained in note 17 of these
financial statements.
Balance Sheet
The Group's gross assets in its mining activities amounts to $
72,238,170 (2022: $59,175,112), excluding the right of use of
assets and deferred tax asset, and comprises of property, plant and
equipment, coal rights to mine the known met coal reserves along
with the remediation works for the underground mining operations
and railway repairs and improvements recorded as construction in
progress.
Cash and cash equivalents were $471,651 held at the end of the
year (31 March 2022: $5,555,296).
The Group undertook a series of financing for excavating
equipment to move away from the contractor model. Total debt
related to the equipment financing at 31 March 2023 was
$10,568,529. See note 26 for further details.
The Group's coal reserves are valued at $24,514,572, net of
depletion during the year (31 March 2022: $24,955,487).
During the period the Company issued 44,731,978 ordinary shares.
This included the placing of 20,000,000 ordinary shares of the
Group at a price of 30p per ordinary share. Further details of the
shares issued during the period are set out in note 31 to the
financial statements.
On 3 March 2023, MBU agreed to vary the conversion price of the
proportion of the Loan Facility that is convertible at 60p to now
convert at 30p. They then exercised their right to convert in March
2023, following the Conversion MBU received 23,283,728 new Ordinary
Shares.
As part of the Group's transition from a "start-up operation" to
a fully operational mining business, the Board is in the process of
developing an appropriate set of key performance indicators
("KPIs") against which to benchmark how it performs against
operational, health and safety and ESG standards. The Board is
fully committed to ensuring the Group operates to the highest
standards of sustainability and responsibility whilst delivering
shareholder value. The Board intends to communicate its proposed
KPIs once the transition has been fully completed. However, in the
meantime the Board is pleased to report the following KPIs for the
year to 31 March 2023:
KPI / Financial Information 2023 2022
----------------------------- ------------ ------------
Cash and cash equivalents $471,651 $5,555,296
----------------------------- ------------ ------------
Net assets $22,451,173 $31,744,285
----------------------------- ------------ ------------
Clean tons produced 272,318 666
----------------------------- ------------ ------------
ROM tons produced 494,861 63,562
----------------------------- ------------ ------------
Cash has been used to fund the Group's operations and facilitate
its investment activities (refer to the Statements of Cash Flows on
page 41).
The Board continues to monitor the activities and performance of
the Group in delivering its key milestones since IPO.
Principal risks and uncertainties
The management of the business and the execution of the Group's
strategy are subject to a number of risks.
Risks are formally reviewed by the Board, and appropriate
processes are put in place to monitor and mitigate them. If more
than one event occurs, it is possible that the overall effect of
such events would compound the possible adverse effects on the
Group. The key business risks affecting the Group are set out
below:
Mining and processing risks
The Group's principal operation is the mining of met coal. Its
operations are subject to all of the hazards and risks normally
encountered in mining and processing coal. These include unusual
and unexpected geological formations, rock falls, flooding and
other conditions involved in the extraction of material, any of
which could result in damage to the mine and infrastructure,
including, damage to life or property, environmental damage and
possible legal liability. Although adequate precautions to minimise
risk are taken, operations are subject to hazards, which may result
in environmental pollution and consequent liability which could
have a material adverse impact on the business, operations and
financial performance of the Group.
As is common with all mining operations, there is uncertainty
and therefore risk associated with the Group's operating parameters
and costs. These can be difficult to predict particularly in a high
inflationary environment and are often affected by factors outside
the Group's control.
The Group may be required to undertake clean-up programmes
resulting from any contamination from its operations or to
participate in mine rehabilitation programmes which may vary from
project to project. The Group follows all necessary laws and
regulations and is not aware of any present material issues in this
regard.
Dependence on key personnel
The Group is dependent upon its executive management team and
various technical consultants. Whilst it has entered into
contractual agreements with the aim of securing the services of
these personnel, the retention of their services cannot be
guaranteed. The development and success of the Group depends on its
ability to recruit and retain high quality and experienced staff.
The loss of the service of key personnel or the inability to
attract additional qualified personnel as the Group grows could
have an adverse effect on future business and financial
conditions.
Uninsured risk
The Group, as a participant in mining and development
programmes, may become subject to liability for hazards that cannot
be insured against or third party claims that exceed the insurance
cover. The Group may also be disrupted by a variety of risks and
hazards that are beyond control, including geological, geotechnical
and seismic factors, environmental hazards, industrial accidents,
occupational and health hazards and weather conditions or other
acts of God.
Financial risks
The Group's operations expose it to a variety of financial risks
that can include market risk (including foreign currency, price and
interest rate risk), credit risk, and liquidity risk. The Group has
a risk management programme in place that seeks to limit the
adverse effects on the financial performance of the Group by
monitoring levels of debt finance and the related finance costs.
The Group does not use derivative financial instruments to manage
interest rate costs and, as such, no hedge accounting is applied.
Further details on financial risks can be found in note 3 to the
financial statements.
Financial Instruments
The Group's financial instruments comprise of financial assets;
trade and other receivables and cash and cash equivalents, as set
out in note 27 to the financial statements. Financial liabilities
comprise of short and long term borrowings and trade and other
payables also set out in note 27 to the financial statements.
Reserve and resource estimates
The Group's reported reserves and resources are only estimates.
No assurance can be given that the estimated reserves and resources
will be recovered or that they will be recovered at the rates
estimated. Reserve and resource estimates are based on sampling
and, consequently, are uncertain because the samples may not be
representative. Reserve and resource estimates may require revision
(either up or down) based on future actual production
experience.
The ability to extract coal reserves is dependent on obtaining
the necessary permits from the WVDEP.
Volatility of commodity prices
Historically, commodity prices have fluctuated and are affected
by numerous factors beyond the Group's control, including global
demand and supply, international economic trends, currency exchange
fluctuations, expectations for inflation, speculative activity,
consumption patterns and global or regional political events. The
aggregate effect of these factors is impossible to predict.
Fluctuations in commodity prices, over the short term to long term,
may adversely impact the returns of the Group's investments.
A significant reduction in global demand for met coal, leading
to a fall in coal prices, could lead to a significant fall in the
cash flow of the Group, which may have a material adverse impact on
the operating results and financial condition of the Group.
Section 172(1) Statement - Promotion of the Company for the
benefit of the members as a whole
The Directors believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members
as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
-- Consider the impact of the Group's operations on the community and the environment;
The Company is conscious of the impact of its mining operations.
Utilising modern mining techniques means the ecological impact is
minimal. The Company additionally runs a full rehabilitation
programme. The Company supports the community in providing
employment and supports local education via a programme of grants
made available to mining students through the University of West
Virginia.
-- Maintain a reputation for high standards of business conduct;
The Company works closely with many of its suppliers, a number
of whom are permanently represented on site. Regular meetings are
held to ensure that standards are maintained across all areas.
-- Foster the Group's relationships with suppliers, customers and others;
In line with a commitment to business conduct, we support the
relationships we have with suppliers and customers by regular
contact creating a two way dialogue to monitor and improve our
interaction.
-- Consider the interests of the Group's employees;
The interests of our employees are always to the forefront of
any of our decisions. We met regularly with them and provide a
comprehensive support package of health and other benefits for
their wellbeing. Safety is of the utmost importance and this issue
is under constant review.
-- Act fairly between the members of the Group; and
-- Consider the likely consequences of any decision in the long term.
All decisions taken are done so in the light of the potential
impact on all participants. The Company attempts to ensure that no
decision is taken that would unfairly or adversely affect an
individual member or group of members or create a long-term
negative result.
The Group has broadly completed the remediation of the plant and
machinery and mine site to allow for continuous production. In
arriving at this state, the company has made a number of key
decisions during the year. In all cases the Company remained
focused upon the requirements of s172.
During the year ending 31 March 2023, the Board took a number of
decisions which impacted upon or were relevant to s172 (1).
-- A new Chief Financial Officer, Murat Erden was appointed.
-- The company completed a placing at 30p per share to raise
GBP6 million. The money was deployed primarily as deposits for the
purchase of earth moving equipment as the company transitioned from
a contractor model to owner operator.
-- Commenced operations in a newly permitted area of the site.
-- Disposed of our owned High Wall Miner.
-- Acquired a majority interest in Bens Creek Rail Holdings LLC.
-- Commenced repayment of Convertible loan note obligations to ACAM LP.
-- A new non-executive director was appointed.
-- All outstanding obligations to MBU Capital Group Limited were converted into equity.
-- We introduced a scholarship programme at the University of
West Virginia to support mining engineering students.
The Company throughout the year was focussed upon ensuring it
was delivered to all stakeholders in a fair and reasonable fashion.
As a mining group the Board takes seriously its responsibilities to
the communities within which it operates. We follow all local and
UK legislation on bribery and corruption. We engage where possible
with local resources to provide such services as they are able to
in both geological and support functions. This provides both
employment and associated wider economic benefits to the
community.
We follow international best practice on environmental issues
relating to our operations with an intention to meet or exceed such
standards. Our employees are of a primary consideration for the
Board, and we continue to provide the highest level of healthcare
programme and security support to them all.
We thank our Shareholders for their continued support and our
wider family of Stakeholders all of whom have assisted us during
this period of re-establishment of our business.
The Group Strategic Report was approved by the Board on 29
September 2023.
We follow international best practice on environmental issues
relating to our operations with an intention to meet or exceed such
standards. Our employees are of a primary consideration for the
Board, and we continue to provide the highest level of healthcare
programme and security support to them all.
We thank our Shareholders for their continued support and our
wider family of Stakeholders all of whom have assisted us during
this period of re-establishment of our business.
The Group Strategic Report was approved by the Board on 29
September 2023.
On behalf of the Board
Adam Wilson
Chief Executive Officer
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
For the year ended 31 March 2023
For the For the
year ended year ended
31 March 31 March
2023 2022
Note $ $
------------------------------------------------ ---- ------------ -----------
Revenue 7 42,208,848 5,411,816
Cost of goods sold 8 (31,036,252) (3,051,937)
Cost of sales 8 (9,390,635) (826,628)
------------ -----------
Gross profit before depreciation & depletion 1,781,961 1,533,251
------------ -----------
Depreciation & depletion 8 (5,326,847) (898,521)
------------ -----------
Gross (loss)/profit (3,544,886) 634,730
------------ -----------
Administrative expenses 9 (9,945,404) (5,999,721)
Change in revaluation of deferred consideration 23 (4,859,839) -
Change in estimates for provisions 26 (575,580) -
Share based payment charge 32 (2,397,585) (2,095,151)
Operating Loss (21,323,294) (7,460,142)
------------ -----------
Finance income 42,960 1,235
Finance costs 11 (3,435,252) (997,449)
Fair value (loss)/gain on Convertible Loan
Note embedded derivative - 53,462
Bargain Purchase gain 29 - 33,688,689
(Loss)/profit before taxation (24,715,586) 25,285,795
Tax expense 13 548,835 (8,222,085)
------------ -----------
(Loss)/profit for the year (24,166,751) 17,063,710
------------ -----------
(Loss)/profit) attributable to:
Owners of the parent (24,166,751) 17,063,710
(24,166,751) 17,063,710
------------ -----------
All results arise from continuing operations.
The Accounting Policies and Notes on pages 43 to 78 form part of
these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2023
For the For the
year ended year ended
31 March 31 March
2023 2022
Note $ $
------------------------------------------- ---- ------------ -----------
(Loss)/profit for the year (24,166,751) 17,063,710
Other comprehensive income:
Exchange differences on translation of
foreign operations 705,713 (1,249,783)
Revaluation gain of Plant and equipment - 5,411,476
------------ -----------
Other comprehensive income before taxation (23,461,038) 21,225,403
Taxation relating to other comprehensive
income - (1,488,156)
------------ -----------
Total comprehensive income (23,461,038) 19,737,247
------------ -----------
Basic earnings per share (cents) 14 (6.563) 6.165
Diluted earnings per share (cents) 14 (6.563) 5.922
------------ -----------
The Accounting Policies and Notes on pages 43 to 78 form part of
these financial statements.
CONSOLIDATED AND PARENT STATEMENT OF FINANCIAL POSITION
For the year ended 31 March 2023
Group Company
Group
Group
------------------------- ------------ -----------
Note 31 March 31 March 31 March 31 March
2023 2022 2023 2022
restated
$ Restated $ $
$
------------------------------- ----- ------------ ----------- ------------ -----------
Non-current assets
Property, plant and equipment 15 43,579,689 28,948,808 3,184 539
Coal reserves 17 24,514,572 24,955,487 - -
Other assets 17 - 1,628,605 - -
Right of use assets 18 175,868 61,708 - -
Construction in progress 15 550,644 3,642,212 - -
Restricted investments through
OCI 16 695,120 - - -
Investment in subsidiaries 35 - - 26,684,119 28,385,729
Deferred tax asset 13 576,151 576,151 - -
Trade and other receivables 19 - - 28,610,804 16,026,796
------------ ----------- ------------ -----------
70,092,044 59,812,971 55,298,107 44,413,064
------------ ----------- ------------ -----------
Current assets
Inventory 21 5,150,750 1,528,613 - -
Trade and other receivables 19 1,530,513 570,328 218,560 315,465
Property, plant and equipment
held for sale 14 2,898,145 - - -
Cash and cash equivalents 20 471,651 5,555,296 51,897 2,971,515
10,051,059 7,654,237 270,457 3,286,980
------------ ----------- ------------ -----------
Total assets 80,143,103 67,467,208 55,568,564 47,700,044
------------ ----------- ------------ -----------
Current liabilities
Trade and other payables 22 9,678,100 3,451,346 1,424,153 291,263
Deferred consideration 23 1,254,206 816,000 - -
Borrowings 24 3,462,778 - - -
Lease liability 18 110,706 63,367 - -
Provisions 26 510,000 350,000 - -
Convertible loans 25 11,619,734 6,397,769 11,619,734 6,397,769
Embedded derivatives 25 1,503,775 2,839,817 1,503,775 2,839,817
------------ ----------- ------------ -----------
28,139,299 13,918,299 14,547,662 9,528,849
------------ ----------- ------------ -----------
Non-current liabilities
Borrowings 24 7,105,751 3,280,827 - -
Convertible loans notes 25 - 3,037,819 - 3,037,819
Provisions 26 5,567,987 2,841,888 - -
Deferred consideration 23 6,525,967 2,357,698 - -
Deferred tax liability 13 9,737,557 10,286,392 - -
Lease liability 18 66,534 - - -
------------ ----------- ------------ -----------
29,003,796 21,804,624 - 3,037,819
------------ ----------- ------------ -----------
Total liabilities 57,143,930 35,772,923 14,547,662 12,566,668
------------ ----------- ------------ -----------
Net assets 23,000,008 31,744,285 41,020,902 35,133,376
------------ ----------- ------------ -----------
Equity attributable to owners
of the parent
Share capital 32 538,221 485,273 538,221 485,273
Share premium 32 50,989,150 38,712,008 50,989,150 38,712,008
Share based payments reserve 33 5,033,913 2,647,242 5,033,913 2,647,242
Translation reserve (544,070) (1,249,783) (3,226,486) (1,270,738)
Revaluation reserve 3,923,320 3,923,320 - -
Merger reserve (6,750,420) (6,750,420) - -
Retained losses (30,190,106) (6,023,355) (12,313,896) (5,440,409)
Total equity 23,000,008 31,744,285 41,020,902 35,133,376
------------ ----------- ------------ -----------
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 from presenting the Parent Company Income
Statement and Statement of Comprehensive Income. The loss for the
Company for the year ended 31 March 2023 was $6,873,487 (2022:
$5,440,409).
The Financial Statements were approved and authorised for issue
by the Board on 29 September 2023 and were signed on its behalf
by:
Adam Wilson
Chief Executive Officer
The Accounting Policies and Notes on pages 43 to 78 form part of
these financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2023
Group
-------------
Share Revaluation
Share Share Based Translation Reserve Merger Retained
capital premium Payments Reserve $ Reserve losses Total
Note $ $ $ $ $ $ $
Balance as at 1
April 2021 - - - - - - (1,451,759) (1,451,759)
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Profit for the
year - - - - - - 17,063,710 17,063,710
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Other
comprehensive
income
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Gain on the
revaluation
of fixed assets - - - - 5,411,476 - - 5,411,476
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Taxation on
revaluation - - - - (1,488,156) - - (1,488,156)
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Currency
translation
differences - - - (1,249,783) - - - (1,249,783)
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Total
comprehensive
income for the
year - - - (1,249,783) 3,923,320 - 17,063,710 19,737,247
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Proceeds from
issue
of shares 32 152,390 12,578,569 - - - - - 12,730,959
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Share based
payments 33 - - 2,647,242 - - - - 2,647,242
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Issue of ordinary
shares relating
to business
combination 32 332,883 26,133,439 - - - (6,750,420) (21,635,306) (1,919,404)
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Total
transactions
with owners,
recognised
directly in
equity 485,273 38,712,008 2,647,242 - - (6,750,420) (21,635,306) 13,458,797
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Balance as at 31
March 2022 485,273 38,712,008 2,647,242 (1,249,783) 3,923,320 (6,750,420) (6,023,355) 31,744,285
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Group
-------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Share Revaluation
Share Share Option Translation Reserve Merger Retained
capital premium Reserve Reserve $ Reserve losses Total
Note $ $ $ $ $ $ $
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Balance as at 1
April 2022 485,273 38,712,008 2,647,242 (1,249,783) 3,923,320 (6,750,420) (6,023,355) 31,744,285
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Loss for the year - - - - - - (24,166,751) (24,166,751)
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Other
comprehensive
income
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Currency
translation
differences - - - 705,713 - - - 705,713
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Total
comprehensive
income for the
year - - - 705,713 - - (24,166,751) (23,461,038)
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
Proceeds from
issue
of shares net of
issue costs 32 52,948 12,277,142 - - - - - 12,330,090
Share based
payments 31 - - 2,386,671 - - - - 2,386,671
Total
transactions
with owners,
recognised
directly in
equity 52,948 12,277,142 2,386,671 - - - - 14,716,761
Balance as at 31
March 2023 538,221 50,989,150 5,033,913 (544,070) 3,923,320 (6,750,420) (30,190,106) 23,000,008
------------------ ------ -------- ----------- ---------- ------------ -------------- ------------ ------------- -------------
COMPANY STATEMENT OF CHANGES IN EQUITY
For the period ended 31 March 2023
Company
--------- ------------- ---------- ------------ -------------- -------------
Share
Share Share Option Translation Retained
capital premium Reserve Reserve losses Total
Note $ $ $ $ $ $
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Balance as at 11 - - - - - -
August 2021
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Loss for the period - - - - (5,440,409) (5,440,409)
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Currency translation
differences - - - (1,270,738) - (1,270,738)
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Total other comprehensive
income (1,270,738) (5,440,409) (6,711,147)
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Total comprehensive
income for the period - - - (1,270,738) (5,440,409) (6,711,147)
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Transactions with
owners:
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Proceeds from issue
of shares 32 152,390 12,578,569 - - - 12,730,959
Share based payments 33 - - 2,647,242 - - 2,647,242
Issue of ordinary
shares relating
to business combination 32 332,883 26,133,439 - - (5,440,409) 21,025,913
Total transactions
with owner, recognised
directly in equity 485,273 38,712,008 2,647,242 - (5,440,409) 36,404,114
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Balance as at 31
March 2022 485,273 38,712,008 2,647,242 (1,270,738) (5,440,409) 35,133,376
--------------------------- ------ --------- ------------- ---------- ------------ -------------- -------------
Company
--------- ----------- ---------- ------------ ------------- ------------
Share
Share Share Option Translation Retained
capital premium Reserve Reserve losses Total
Note $ $ $ $ $ $
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Balance as at 1
April 2022 485,273 38,712,008 2,647,242 (1,270,738) (5,440,409) 35,133,376
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Loss for the period - - - - (6,873,487) (6,873,487)
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Currency translation
differences - - - (1,955,748) - (1,955,748)
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Other comprehensive
income
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Total comprehensive
income for the period - - - (1,955,748) (6,873,487) (8,829,235)
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Transactions with
owners:
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Proceeds from issue
of shares net of
issue costs 32 52,948 12,277,142 - - - 12,330,090
Share based payments 31 - - 2,386,671 - - 2,386,671
Total transactions
with owner, recognised
directly in equity 52,948 12,277,142 2,386,671 - - 14,716,761
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
Balance as at 31
March 2023 538,221 50,989,150 5,033,913 (3,226,486) (12,313,896) 41,020,902
------------------------- ------ --------- ----------- ---------- ------------ ------------- ------------
The Accounting Policies and Notes on pages 43 to 78 form part of
these financial statements.
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
Group Company
------------------------------------- ----------- --------------
Year ended Year ended Period
31 March Year ended 31 March ended 31
2023 31 March 2022 2023 March 2022
Note $ $ $ $
------------------------------- ------- ------------------- ---------------- ----------- --------------
Cash flows from operating
activities
(Loss)/profit (24,715,586) 25,285,795 (6,873,487) (5,440,409)
Adjustments for:
Depreciation and amortisation 4,886,904 154,008 341 27
Interest expense 3,435,252 997,449 1,733,555 355,780
Interest income (42,960) (1,235) (1,387,705) (254,686)
Change in revaluation of
deferred
consideration 4,859,839
Change in estimates 575,580 - - -
Fair value gain on revaluation
of embedded derivative (168,691) (53,462) (168,691) (53,462)
Foreign exchange translation 568,329 (1,629,735) (167,588) (588,596)
Share based payment charge 2,397,585 2,095,150 2,397,585 2,095,150
Depletion expense 440,915 744,513 - -
Bargain purchase gain - (33,688,689) - -
Change in working capital
(Decrease)/Increase in trade
and other receivables (960,185) (172,271) 96,905 (315,465)
Increase in trade and other
payables 6,226,754 3,039,997 1,132,891 291,263
(Increase)/decrease in
inventory (3,622,137) 1,528,613 - -
Net cash flows used in
operating
activities (6,118,401) (1,699,687) (3,236,194) (3,910,399)
------------------- ---------------- ----------- --------------
Investing activities
Purchase of property, plant
and equipment (17,024,823) (13,225,108) (2,986) (565)
Disposal of property, plant
and equipment (172,149) - - -
Investment in deposit account (695,120) - - -
Loans granted to subsidiary
undertakings - - (5,979,919) (15,296,261)
Acquisition of subsidiary - (1,412,637) - -
Acquisition of reclamation
assets - (1,493,242) - -
------------------- ---------------- ----------- --------------
Net cash used in investing
activities (17,892,092) (16,130,987) (5,982,905) (15,296,826)
------------------- ---------------- ----------- --------------
Financing activities
Proceeds from borrowings 18,419,042 1,439,252 - -
Proceeds from surety bonding 1,628,605 - - -
Repayment of borrowings (8,054,780) (54,454) (750,000) -
Proceeds from issue of shares,
net of issue costs 7,049,481 10,178,740 7,049,481 10,178,740
Proceeds from issuance of
convertible
loan notes - 12,000,000 - 12,000,000
Repayment of lease liabilities
principal (115,500) (122,934) - -
------------------- ---------------- ----------- --------------
Net cash generated from
financing
activities 18,926,848 23,440,604 6,299,481 22,178,740
------------------- ---------------- ----------- --------------
Net (decrease)/increase in
cash and cash equivalents (5,083,645) 5,609,750 (2,919,618) 2,971,515
Cash and cash equivalents at
beginning of year 5,555,296 (54,454) 2,971,515 -
-------------------
Cash and cash equivalents as
at end of year 471,651 5,555,296 51,897 2,961,515
------------------- ---------------- ----------- --------------
Major non-cash transactions:
Share based payments amounted to $2,397,585 (2022: $2,095,150)
and are set out in note 32 of the financial statements.
Loan conversion into equity on 10 March 2023 amounted to
$5,191,285 and is set out in note 31 of the financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2023
1. General information
The principal activity of Bens Creek Group Plc (the Company) is
that of a holding company and through its subsidiaries, Ben's Creek
Land WV LLC, Ben's Creek Operations WV LLC and Ben's Creek Rail
Holdings WV LLC (the Subsidiaries) (together the Group), the
Group's principal activity is the production and sale of
high-quality metallurgical coal products.
The Company was incorporated on 11 August 2021 in the United
Kingdom. The address of the Company's registered office is 15
Stratton Street, London, United Kingdom, W1J 8LQ. The Company is
listed on the AIM market of the London Stock Exchange.
The Group financial statements cover the period from 1 April
2022 to 31 March 2023.
2. Accounting policies
The principal accounting policies applied in the preparation of
the Financial Statements is set out below (Accounting Policies or
Policies). These Policies have been consistently applied to all the
periods presented, unless otherwise stated.
2.1. Basis of preparing the Financial Statements
The Group and Company Financial Statements has been prepared in
accordance with UK-adopted international accounting standards and
the requirements of the Companies Act 2006. The Group and Company
Financial Statements has also been prepared under the historical
cost convention, subsequent to any fair value adjustments required
upon acquisition via a business combination. Additionally,
convertible loan notes, embedded derivative, deferred consideration
and Plant are held under the fair value through profit or loss
"FVTPL" model. The prior year financial statements were prepared as
noted above other than the Plant which was measured at fair value
at acquisition and subsequently at cost.
The Group and Company Financial Statements are presented in
United States Dollars rounded to the nearest dollar, which is the
Group's functional currency.
The preparation of Group and Company Financial Statements
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 Financial
Information are disclosed in note 4 to these financial
statements.
a) Changes in Accounting Policies
i) New and amended standards adopted by the Group
There were no new or amended accounting standards that required
the Group to change its accounting policies for the year ended 31
March 2023 and no new standards, amendments or interpretations were
adopted by the Group
ii) New IFRS Standards and Interpretations not adopted
At the date on which the Group and Company Financial Statements
was authorised, there were no Standards, Interpretations and
Amendments which had been issued but were not effective for the
period ended 31 March 2023 that are expected to materially impact
the Group and Company Financial Statements.
iii) New standards, amendments and interpretations in issue but
not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet
effective and have not been early adopted are as follows:
Standard Impact on initial application Effective date
------------------------ ------------------------------- ---------------
IFRS 17 Insurance contracts 1 January 2023
------------------------------- ---------------
IAS 8 Accounting estimates 1 January 2023
------------------------------- ---------------
IFRS Practice Statement
2
------------------------------- ---------------
IAS 1 Classification of Liabilities 1 January 2023
as Current or Non-Current.
------------------------------- ---------------
IFRS 16 Lease liability in sale and 1 January 2024
leaseback
------------------------------- ---------------
IAS 12 Income Taxes Deferred Tax Related to Assets 1 January 2023
and Liabilities
------------------------------- ---------------
IAS 1 Non-current liabilities with 1 January 2024
covenants
------------------------------- ---------------
The Group is evaluating the impact of the new and amended
standards above which are not expected to have a material impact on
the Group's results or shareholders' funds.
2.2. Basis of consolidation
The Group and Company Financial Statements consolidates the
financial information of the Company and the accounts of all of its
subsidiary undertakings for all periods presented.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the
assets transferred, the liabilities incurred to the former owners
of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred unless they
result from the issuance of shares, in which case they are offset
against the premium on those shares within equity.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Investments in subsidiaries are accounted for at cost less
impairment.
Where considered appropriate, adjustments are made to the
financial information of subsidiaries to bring the accounting
policies used into line with those used by other members of the
Group. All intercompany transactions and balances between Group
enterprises are eliminated on consolidation.
2.3. Going concern
The Group's and Company's business activities, together with the
factors likely to affect their future development, performance and
position are set out in the Strategic Report. The Directors' Report
includes the Group's and Company's objectives, policies and
processes for managing their capital, their financial risk
management objectives and their exposure to credit risk and
liquidity risk.
The Directors have reviewed the cashflow forecast and the future
requirements of the Group for the period to 30 June 2025. They have
considered current and future offtake agreements, changes in the
economic climate and other contracts, such as vendors in place.
Key assumptions in the cashflow were production rates, pricing,
and recovery rates. The Directors and executive team discussed
these assumptions in detail to ensure future cashflow forecasts are
accurate. Details of assumptions are as follows.
The Group is confident that it will be able to achieve its
targeted increased production rates using two High Wall Miners on
double shifts. Although there is a risk of not being able to
achieve this due to repairs, maintenance and anomalies, the Group
considers the risk of downtime is minimal. One of the biggest
contributors to downtime was the risk of generators breaking down.
The Group in September 2023 installed Line Power to one of the High
Wall Miners, which will now result in far less downtime due to
having two generators and Line Power to ensure both High Wall
Miners are running.
There are an estimated 92m tons of reserve in situ, which was
confirmed by Marshall Miller, an independent expert in the field.
This indicates that there is significant coal both underground and
overground in which the Group can explore and mine in the future.
This gives management confidence that there are enough reserves to
continue mining beyond 10 years.
The price of metallurgical coal has fluctuated in the year and
post year-end, with a sharp fall in the price to a low of $191/
metric ton, High Vol B. However, management is confident even at
the current price ($235/ metric ton, High Vol B) that the Group
will be able to generate positive cash flows in the future.
The Group undertook a cost-cutting exercise amid the fall in
coal prices post year-end. Contractor costs have decreased
significantly, as underground mining has been cut from $45/ton to
$35/ton. In addition to the reduction in costs the recoverability
of underground mining has significantly improved since August 2023.
It was achieving lows of 32% to currently around 45%, which
significantly improves the profitability.
High wall mining costs have been cut from $28/ton to $25/ton
with a view to achieving further decreases at full production.
These and other costs that have been reduced have significantly
helped the cash flow during the low of the coal prices.
Several events occurred post year-end which have given further
reassurance that the Group is a going concern. The most immediate
of which was the issuance of two loan notes to provide extra
funding for both working capital and repayment of outstanding
convertible loan notes. At 30 June 2023 the convertible loan note
issued in February 2022 was due for repayment (post modification of
repayment date). To ensure the Group was able to meet this
repayment, some of the funds were used to repay this loan.
The Directors are also confident that the Group is able to raise
funds elsewhere if required. This can be done through several
methods including raising finance against property, plant and
equipment currently on the balance sheet, re-negotiating with
contractors and suppliers for lower rates or an equity raise.
The Directors are of the opinion that the Group has adequate
resources to continue in operational existence 18 months from
signing of the audited annual report. The financial statements have
been prepared on a going concern basis, however there is a material
uncertainty.
2.4. Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer.
2.5. Foreign currencies
a) Functional and presentation currency
Items included in the Financial Statements are measured using
the currency of the primary economic environment in which the
entity operates (the functional currency). Bens Creek Group Plc,
the parent company, is based in the United Kingdom and has a
functional currency in GBP Sterling. The Financial Statements are
presented in US Dollars, rounded to the nearest dollar as this is
where the entity primarily operates.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at period-end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognised in the Statement of Profit and Loss. All
other foreign exchange gains and losses are presented in the
Consolidated Statement if Comprehensive Income.
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary financial
assets measured at fair value, such as equities classified as
available for sale, are included in Consolidated Statement of
Profit and Loss.
c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities for each period end date presented are
translated at the period-end closing rate;
-- income and expenses for each Income Statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive income.
2.6. Property, plant and equipment
Vehicles, office equipment, plant, underground equipment and
leasehold improvements are stated at cost, plus any purchase price
allocation uplift. Plant upon acquisition has been accounted for
under the fair value method of accounting, less accumulated
depreciation and any accumulated impairment losses. Subsequent
costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The
carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the Income Statement during
the financial period in which they are incurred.
Depreciation is provided to write off the cost less estimated
residual value of each asset over its expected useful economic life
on a straight-line basis at the following annual rates:
Equipment 5 year straight-line
Plant and machinery 5 year straight-line
Vehicles 5 year straight-line
Plant 10 year straight-line
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
net gains/(losses)' in the Statement of Profit and Loss.
2.7. Inventory
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the average costing method.
Components of inventories consist of coal, parts and supplies, net
of allowance for obsolescence. Coal inventories represent coal
contained in stockpiles, coal that has been mined and hauled to the
wash plant for processing raw coal and coal that has been processed
(crushed, washed and sized) and stockpiled for shipment to
customers.
The cost of raw and prepared coal comprises extraction costs,
direct labour, other direct costs and related production overheads
(based on normal operating capacity). It excludes borrowing costs.
Net realisable value is the estimated selling price in the ordinary
course of business, less applicable variable selling expenses.
2.8. Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represent amounts receivable for goods
supplied, stated net of discounts, returns and value added taxes.
Under IFRS 15 there is a five-step approach to revenue recognition
which is adopted across all revenue streams. The process is:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the
contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance
obligations in the contract; and
Step 5: Recognise revenue as and when the entity satisfies the
performance obligation.
The Group has two revenue streams being the sale of coal and
other aggregate bi-products produced by the Group through trucking
and trains. During the year under review, such revenue was
recognised at the point of contact at a pre-agreed fixed price on a
per tonnage basis. For deliveries made via truck the revenue is
recognised once the product leaves the Group's premises, which is
the point at which the risk and rewards are transferred to the
customer. For sales made via railway it is at the point at which
the coal has arrived at the dock and is of satisfactory
quality.
2.9. Construction in Progress
Assets under construction are accounted for at cost, based on
the value of receipts and other direct costs incurred to the
relevant financial reporting date. They are not depreciated until
the period in which they are brought into use, where the asset is
transferred to the relevant category and depreciated the following
month.
There were no costs committed at the year end.
2.10. Assets held of sale
Current assets held for sale at the end of the year are measured
at lower of cost or net realisable value.
2.11. Coal rights and restoration assets
Coal land, mine development costs, which include directly
attributable construction overheads, land and coal rights are
recorded at cost, plus any purchase price allocation uplift if
applicable upon acquisitions accounted for under the acquisition
method of accounting. Coal land and mine development are depleted
and amortised, respectively, using the units of production method,
based on estimated recoverable tonnage. The depletion of coal
rights and depreciation of restoration costs are expensed by
reference to the estimated amount of coal to be recovered over the
expected life of the operation .
Future cost requirements for land reclamation are estimated
where surface operations have been conducted, based on the Group's
interpretation of the technical standards of regulations enacted by
the U.S. Office of Surface Mining, as well as West Virginia state
regulations. These costs relate to reclaiming the pit and support
acreage at surface mines and sealing portals at deep mines. Other
costs include reclaiming refuse and slurry ponds as well as related
termination/exit costs.
The Group records asset retirement obligations that result from
the acquisition, construction or operation of long-lived assets at
fair value when the liability is incurred. Upon the initial
recognition of a liability, that cost is capitalised as part of the
related long-lived asset and expensed over the useful life of the
asset. The asset retirement costs are recorded in Coal Rights and
Restoration Assets - see note 16 of these financial statements.
The Group expenses reclamation costs prior to the mine closure.
The establishment of the end of mine reclamation and closure
liability is based upon permit requirements and requires
significant estimates and assumptions, principally associated with
regulatory requirements, costs and recoverable coal lands.
Annually, the end of mine reclamation and closure liability is
reviewed and necessary adjustments are made, including adjustments
due to mine plan and permit changes and revisions of cost and
production levels to optimize mining and reclamation efficiency.
The amount of such adjustments is reflected in the year end
reclamation provision calculation - see note 26 of these financial
statements.
2.12. Restricted investments
The Group's placed funds in a Morgan Stanely investment account
as a result of Surety bonding. The investment is treated as a
non-current it is restricted until the liability has been
cleared.
2.13. Financial assets
Classification
The Group's financial assets consist of loans and receivables.
The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of
its financial assets at initial recognition.
(i) Loans and Receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date. These are
classified as non-current assets. The Group's loans and receivables
comprise trade and other receivables and cash and cash equivalents
at the year-end.
Recognition and Measurement
Regular purchases and sales of financial assets are recognised
on the trade date - the date on which the Group commits to
purchasing or selling the asset. Financial assets carried at fair
value through profit or loss are initially recognised at fair
value, and transaction costs are expensed in the Statement of
Profit and Loss. Financial assets are derecognised when the rights
to receive cash flows from the assets have expired or have been
transferred, and the Group has transferred substantially all of the
risks and rewards of ownership.
Loans and receivables are subsequently carried at amortised cost
using the effective interest method.
Gains or losses arising from changes in the fair value of
financial assets at fair value through profit or loss are presented
in the Statement of Profit and Loss within "Other (Losses)/Gains"
in the period in which they arise.
Impairment of Financial Assets
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset, or a group of
financial assets, is impaired. A financial asset, or a group of
financial assets, is impaired and impairment losses are incurred,
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the assets (a "loss event"), and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset,
or group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine that there Is
objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor;
-- a breach of contract, such as a default or delinquency in interest or principal repayments;
-- the Group, for economic or legal reasons relating to the
borrower's financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider; and
-- it becomes probable that the borrower will enter bankruptcy
or another financial reorganisation.
The Group first assesses whether objective evidence of
impairment exists.
The amount of the loss is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been
incurred), discounted at the financial asset's original effective
interest rate. The asset's carrying amount is reduced and the loss
is recognised in the Statement of Profit and Loss.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the
Statement of Profit and Loss.
The Group recognises an 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 effective interest rate. 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.
Derecognition
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset's carrying amount and the
sum of the consideration received and receivable is recognised in
profit or loss. This is the same treatment for a financial asset
measured at FVTPL.
2.14. Trade receivables
Trade receivables are amounts due from third parties in the
ordinary course of business. If collection is expected in one year
or less, they are classified as current assets. If not, they are
presented as non-current assets. Trade receivables are recognised
initially at fair value, and subsequently measured at amortised
cost using the effective interest method, less provision for
impairment.
2.15. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
are subject to an insignificant risk of changes in value.
2.16. Reserves
Equity comprises the following:
-- "Share capital" represents the nominal value of the Ordinary shares;
-- "Share Premium" represents consideration less nominal value
of issued shares and costs directly attributable to the issue of
new shares;
-- "Other reserves" represents the merger reserve, translation
reserve, revaluation reserve and share based payments reserve
where;
o "Merger reserve" represents the difference between the fair
value of an acquisition and the nominal value of the shares
allotted in a share exchange;
o "Revaluation reserve" represents the change in valuation of
assets measured at fair value;
o "Translation reserve" (foreign currency) represents the
translation differences arising from translating the financial
statement items from functional currency to presentational
currency; and
o "Share based payments reserve" represents share options
awarded by the Group;
-- "Retained earnings" represents retained profits and losses.
2.17. Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.18. Share Based Payments
The Group operates a number of equity-settled, share-based
schemes, under which it receives services from employees or third
party suppliers as consideration for equity instruments (options
and warrants) of the Group. The Group may also issue warrants to
share subscribers as part of a share placing. The fair value of the
equity-settled share based payments is recognised as an expense in
the income statement or charged to equity depending on the nature
of the service provided or instrument issued. The total amount to
be expensed or charged is determined by reference to the fair value
of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
In the case of warrants the amount charged to the share premium
account is determined by reference to the fair value of the
services received if available. If the fair value of the services
received is not determinable, the warrants are valued by reference
to the fair value of the warrants granted as previously
described.
Non-market vesting conditions are included in assumptions about
the number of options or warrants that are expected to vest. The
total expense or charge is recognised over the vesting period,
which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting
period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original
estimates, if any, in the income statement or equity as
appropriate, with a corresponding adjustment to a separate reserve
in equity.
When the options are exercised, the Company issues new shares.
The proceeds received, net of any directly attributable transaction
costs, are credited to share capital (nominal value) and share
premium.
2.19. Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method.
2.20. Provisions
The Group provides for the costs of restoring a site where a
legal or constructive obligation exists. The estimated future costs
for known restoration requirements are determined on a site-by-site
basis and are calculated based on the present value of estimated
future costs. The Group also provides for minimum lease payments on
land where they have leased and are obligated per agreements. The
estimated cost of these leases over the shorter of the life of the
mine or the lease terms is calculated at present value.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is material).
The increase in provisions due to the passage of time is included
in the Consolidated Statement of Profit or Loss and Comprehensive
Income. Any increase in provision due to reclamation obligations is
capitalised as part of the mine asset and subsequently depreciated.
This is through depletion or impairment if the provision is larger
than the carrying value of the mine.
2.21. Convertible Loan Notes
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual agreement.
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
as the proceeds are received, net of direct issue costs.
Where warrants are granted in conjunction with other equity
instruments, which themselves meet the definition of equity, they
are recorded at their fair value, which is measured using an
appropriate valuation model. Warrants which do not meet the
definition of equity are classified as derivative financial
instruments.
The component parts of compound instruments, such as Convertible
Loan Notes, issued by the Group are classified separately as
financial liabilities and equity in accordance with the substance
of the contractual arrangement.
If the conversion feature of a Convertible Loan Notes issued
does not meet the definition of an equity instrument, that portion
is classified as an embedded derivative and measured accordingly.
The debt component of the instrument is determined by deducting the
fair value of the conversion option at inception from the fair
value of consideration received for the instrument as a whole. The
debt component amount is recorded as a financial liability on an
amortised cost basis using the effective interest rate method until
extinguished upon conversion or at the instrument's maturity
date.
Where debt instruments issued by the Group are repurchased for
cancellation, the financial liability is derecognised at the point
at which the cash consideration is settled. Upon derecognition, the
difference between the liability's carrying amount that has been
cancelled and the consideration paid is recognised as a gain in the
Statement of Profit and Loss, net of any direct transaction
costs.
In December 2021 and February 2022 the Group raised $6m and $6m
respectively from the placement of two Convertible Loan Notes. They
were both issued at par and carry a coupon of 15% and 12% payable
quarterly in arrears. The Convertible Loan Notes are convertible
into fully paid Ordinary Shares with the initial conversion prices
set at GBP0.28 and GBP0.40 per ordinary share. The number of
Ordinary shares at the year end that could be issued if all the
Convertible Loan Notes were converted is 33,325,929 (assuming that
the exchange rate at the year-end is $1.235/GBP1). Unless
previously converted, redeemed or purchased and cancelled, the
Convertible Loan Notes will be redeemed at par on 13 December 2023
and 28 February 2024 respectively. During the year, the Group
negotiated a change in repayment date for the second Convertible
Loan forward to 30 June 2023.
The conversion feature of the Convertible Loan Notes is
classified as an embedded derivative as the number of shares issued
to settle the liability is not fixed due to the variable nature of
the US$ and GBP exchange rate. Therefore, the Convertible Loan Note
does not meet the 'fixed for fixed' criteria outlined in IAS 32 for
recognition as an equity instrument. It has therefore been measured
at fair value through profit and loss. The amount recognised at
inception in respect of the host debt contract was determined by
deducting the fair value of the conversion option at inception (the
embedded derivative) from the fair value of the consideration
received for the Convertible Loan Notes. The debt component is then
recognised at amortised cost, using the effective interest method,
until extinguished upon conversion or maturity. The effective
interest rate applicable to the debt component is 15% and 12%
respectively.
Embedded derivatives
Derivatives embedded in financial instruments or other host
contracts that are not financial assets are treated as separate
derivatives when their risks and characteristics are not closely
related to those of the host contracts and the host contracts are
not measured at FVTPL. Derivatives embedded in financial
instruments or other host contracts that are financial assets are
not separated; instead, the entire contract is accounted for either
at amortised cost of fair value as appropriate.
An embedded derivative is presented as current due to the
remaining maturity of the compound instrument to which the embedded
derivative relates is less than 12 months and is expected to be
realised or settled within 12 months.
The table below analyses the derivatives, by valuation method.
The different levels are defined as follows:
Level Level Level Total
1 2 3
Financials instruments by $ $ $
valuation method $
---------------------------- ----- ---------- ----------- ----------
Fair value at 31 March 2022 - 9,436,021 2,839,817 12,275,838
Repayments - (750,000) - (750,000)
Interest - 1,766,362 - 1,766,362
Foreign exchange movement - - (168,691) (168,691)
Revaluation - 1,167,351 (1,167,351) -
----- ---------- ----------- ----------
Fair value at 31 March 2023 - 11,619,734 1,503,775 13,123,509
----- ---------- ----------- ----------
The embedded derivative component of the Convertible Loan Note
is categorised within Level 3 of the fair value hierarchy, as the
derivatives themselves are not traded on an active market and their
fair values are determined using a valuation technique that uses
one key input that is not based on observable market data, being
share price volatility.
Borrowing costs
Borrowing costs directly relating to the construction or
production of a qualifying capital project under construction are
capitalised and added to the project cost during construction until
such time as the assets are substantially ready for their intended
use, i.e. when they are capable of commercial production. The
amount of borrowing costs eligible to be capitalized is reduced by
an amount equivalent to any interest income received on temporary
reinvestment of those borrowings.
Borrowings
Interest-bearing loans are recognised initially at fair value
less attributable transaction costs. All borrowings are
subsequently stated at amortised cost with the difference between
initial net proceeds and redemption value recognised in the
Statement of Profit or Loss over the period to redemption on an
effective interest basis.
Debt component Derivative
$ component Total
$ $
------------------------- --------------- ------------ -----------
As at 1 April 2022 9,436,021 2,839,817 12,275,838
Repayments (750,000) - (750,000)
Foreign exchange losses - (168,691) (168,691)
Fair value gains 1,167,351 (1,167,351) -
Interest charged 1,766,362 - 1,766,362
As at 31 March 2023 11,619,734 1,503,775 13,123,509
------------------------- --------------- ------------ -----------
2.22. Taxation
Tax is recognised in the Statement of Profit or Loss, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
No current tax is yet payable in view of the losses to date.
Deferred tax is recognised for using the liability method in
respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of
goodwill; deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets (including
those arising from investments in subsidiaries), are recognised to
the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be
utilised.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit
available against which the temporary difference can be used.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in except where the Group is
able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Deferred tax is calculated at the tax rates (and laws) that have
been enacted or substantively enacted by the statement of financial
position date and are expected to apply to the period when the
deferred tax asset is realised or the deferred tax liability is
settled.
Deferred tax assets and liabilities are not discounted.
2.23. Leases and right of use assets
The Group leases certain property, plant and equipment. Leases
of plant and equipment where the Group has substantially all the
risks and rewards of ownership are classified as finance leases
under IFRS 16. Finance leases are capitalised on the lease's
commencement at the lower of the fair value of the leased assets
and the present value of the minimum lease payments. Other leases
are either under the de-minimis in value or cover a period of less
than 12 months and are therefore exempt from IFRS 16.
The lease liability is initially measured at the present value
of the lease payments that are not paid. Lease payments generally
include fixed payments less any lease incentives receivable. The
lease liability is discounted using the interest rate implicit in
the lease or, if that rate cannot be readily determined, the
Group's incremental borrowing rate. The Group estimates the
incremental borrowing rate based on the lease term, collateral
assumptions, and the economic environment in which the lease is
denominated. The lease liability is subsequently measured at
amortised cost using the effective interest method. The lease
liability is remeasured when the expected lease payments change as
a result of new assessments of contractual options and residual
value guarantees.
The right-of-use asset is recognised at the present value of the
liability at the commencement date of the lease less any incentives
received from the lessor. Added to the right-of-use asset are
initial direct costs, payments made before the commencement date,
and estimated restoration costs. The right-of-use asset is
subsequently depreciated on a straight-line basis from the
commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The
right-of-use asset is periodically reduced by impairment losses, if
any, and adjusted for certain remeasurements of the lease
liability.
Each lease payment is allocated between the liability and
finance charges. The corresponding rental obligations, net of
finance charges, are included in lease liabilities, split between
current and non-current depending on when the liabilities are due.
The interest element of the finance cost is charged to the
Statement of Profit and Loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. Assets obtained under finance leases
are depreciated over their useful lives. The lease liabilities are
shown in note 18 to these financial statements.
2.24. Earnings per share
The calculation of the total basic earnings per share is based
on the loss attributable to equity holders of the parent company
and on the weighted average number of ordinary shares in issue
during the year.
In accordance with IAS 33, basic and diluted earnings per share
for the year ended 31 March 2023 are identical for the Group as the
effect of the exercise of share options would be to decrease the
earnings per share due to the Group making a loss.
2.25. Deferred consideration
The Deferred Consideration consists of ongoing royalty payments
over the life of the mine which the Directors estimated to be 10
years. It is recognised at the present value over the life of the
mine considering the tonnage of clean coal predicted to be produced
and sold. This is split between current and non-current
liabilities.
3. Financial risk management
3.1. Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk, credit risk and liquidity risk. The Group's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse
effects on the Group's financial performance.
Risk management is carried out by the management team under
policies approved by the Board of Directors.
a) Market Risk
The Group is exposed to market risk, primarily relating to
interest rate, foreign exchange and commodity prices. The Group has
not sensitised the figures for fluctuations in interest rates,
foreign exchange or commodity prices as the Directors are of the
opinion that these fluctuations are immaterial and would not have a
significant impact on the Financial Statements at the present time.
The Directors will continue to assess the effect of movements in
market risks on the Group's financial operations and initiate
suitable risk management measures where necessary.
b) Credit Risk
Credit risk arises from cash and cash equivalents as well as
exposure to customers including outstanding receivables. To manage
this risk, the Group periodically assesses the financial
reliability of customers and counterparties. The Group regularly
reviews ageing of receivables to ensure there is no risk of
default.
No credit limits were exceeded during the year, and management
does not expect any losses from non-performance by these
counterparties.
c) Liquidity Risk
The Group's continued future operations depend on the ability to
raise sufficient working capital through the issue of equity share
capital or debt. The Directors are reasonably confident that
adequate funding will be forthcoming with which to finance
operations. Controls over expenditure are carefully managed.
3.2. Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, in order to
enable the Group to continue its activities, and to maintain an
optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the issue of shares or sell assets to reduce debts.
The Group defines capital based on the total equity of the
Company. The Group monitors its level of cash resources available
against future planned operational activities and the Company may
issue new shares in order to raise further funds from time to
time.
The gearing ratio at 31 March 2023 is as follows:
31 March
2023
$
------------------------------------------ ----------
Total borrowings (Notes 24 & 25) 22,188,263
Less: Cash and cash equivalents (Note 20) (471,651)
----------
Net debt 21,716,612
Total equity 22,674,442
Gearing ratio 96%
----------
4. Critical accounting judgements and estimates
The preparation of the Financial Statements in conformity with
UK-adopted IAS requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the Financial Statements and the reported amount of
expenses during the year. Actual results may vary from the
estimates used to produce these Financial Statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
a) Valuation of provision for reclamation costs (see note 26)
The Group's provision for reclamation costs has a carrying value
at 31 March 2023 of $4,147,212 (2022: $1,949,888) and relates to
the Group's reclamation obligations. The provision for reclamation
costs is calculated by discounting the future cash outflows in
respect of reclamation work based on the estimated future cost
provided by independent experts (Heritage Technical Associates,
Inc). The reclamation costs are expected to be incurred in 10 years
(at the end of the mine life per management's forecasted mine
plan). The cash outflows have been discounted at 15% and an
inflation rate of 8.3% has been used. The discounted provision for
reclamation costs is broadly equivalent to the reclamation bond
assessments made by the WVDEP. The restoration provision is a
commitment to restore the site to a safe and secure environment.
The provisions are reviewed annually and res-estimated if there are
significant changes in underlying assumptions.
b) Deferred Consideration (See note 23)
The Deferred Consideration was initially comprised of
$4,485,428, payable to Ben's Creek Holding LLC. This comprised the
re-imbursement of reclamation bonds of $1,412,637 and ongoing
royalty payments of $3,072,791 over the life of the mine based on
initial assessment pre-production. In May 2021, $130,000 was paid
to Ben's Creek Holding LLC (the seller) in respect of the
re-imbursement of reclamation bonds with the outstanding balance
having been paid from the listing proceeds. The ongoing royalties
payable, has been accepted at a rate of $2 per tonne of clean coal
mined and sold, over the expected life of the mines discounted at
15% in calculating the deferred consideration. The deferred
consideration has been recalculated due management's production and
valuation based on forecasted production over 10 years.
The Group completed the re-imbursement of the reclamation bonds
earlier than planned and on 23 July 2021, it paid $1,258,520 to the
seller in full and final settlement. MBU Capital Group Limited
provided a bridging loan of
GBP 918,164 ($1,258,520) to the Group to fund the
re-imbursement. The bridging loan accrued interest at 1% per month.
This bridging loan was paid from the proceeds following the Group's
IPO.
c) Share based payments (See note 33)
The Group has made awards of options and warrants over its
unissued share capital to certain Directors and employees as part
of their remuneration package which have market conditions attached
in relation to the performance of the Company's share price. The
valuation of these options and warrants involves making a number of
critical estimates relating to price volatility, future dividend
yields, expected life of the options and forfeiture rates. These
assumptions have been described in more detail in note 32 to these
financial statements.
d) Embedded derivative (See note 25)
Valuation of the embedded derivative within the Convertible Loan
Notes requires a number of estimates, the most significant of which
is the estimated equivalent bond yield applied to the debt
component. The fair value calculations and related sensitivities
for the embedded derivative are disclosed in note 24 to these
financial statements.
In December 2021 and February 2022, the Group raised $6m and $6m
respectively from the placement of two Convertible Loan Notes. They
were both issued at par and carry a coupon of 15% and 12% payable
quarterly in arrears. The Convertible Loan Notes are convertible
into fully paid Ordinary Shares with the initial conversion prices
set at GBP0.28 and GBP0.40. The number of Ordinary shares at the
year-end that could be issued if all the Convertible Loan Notes
were converted is 33,325,929 (assuming that the exchange rate at
the year-end is $1.235/GBP1). Unless previously converted,
redeemed, or purchased and cancelled, the Convertible Loan Notes
will be redeemed at par on 13 December 2023 and 28 February 2024
respectively. During the year, the Group negotiated a change in
repayment date for the second Convertible Loan forward to 30 June
2023 which was treated as a modification and subsequent revaluation
of the associated embedded derivative.
e) Impairment of Investment in subsidiaries (See note 35)
The Company's investment in its subsidiaries has a carrying
value at 31 March 2023 of $26,684,119.
Management tests annually whether the investment in subsidiaries
have future economic value in accordance with the accounting
policies. The investment is subject to an annual impairment review
by management. This calculates the net present value of future cash
flows of the subsidiary's operations over managements estimated
life of the mine which is 10 years. The review takes into
consideration changing coal prices, anticipated resources estimated
by experts (92m in situ), increases in production and sales volumes
and cost of production. The estimated future cash flows are
discounted (15%) to their present value at the Company's cost of
capital in order to determine the recoverable amount of the
mine.
The Group currently has an intra group loan between Bens Creek
Group Plc and Ben's Creek Carbon WV LLC. The terms of the loan are
over 5 years, with a total facility of $20,000,000. Interest is
accrued monthly at 6% which is considered a market rate. As the
interest rate is deemed market value the loan has not been
discounted over the term.
f) Minimum lease payments (See note 26)
The Group has a provision in place at a value of $2,734,218 in
relation to minimum lease payments. This is based on minimum lease
payments for leases with mining rights. The present value of the
minimum lease payments has been calculated based on the life of the
mine or if shorter, the lease term. The provision will be
discounted over this period at 15%. During the year the Group
acquired a new lease for mining rights which have been discounted
over the estimated life of the mine of 10 years.
g) Valuation of coal reserves (See note 17)
The Group has coal reserves of $24,514,572 as at 31 March
2023.
Management tests annually whether the asset should be impaired
through calculating the net present value of future cash flows of
the subsidiary's operations over managements estimated life of the
mine which is 10 years. The review takes into consideration
changing coal prices, anticipated resources confirmed by experts
(92m in situ), increases in production and sales volumes and cost
of production. The estimated future cash flows are discounted (15%)
to their present value at the Company's cost of capital in order to
determine the recoverable amount of the mine.
5. Dividends
No dividend has been declared or paid by the Company during the
period ended 31 March 2023 (31 March 2022: $Nil).
6. Segment information
Management has determined the operating segments based on
reports reviewed by the Board of Directors that are used to make
strategic decisions. During the year the Group had interests in two
geographical segments, the United Kingdom and the United States of
America ("USA"). Activities in the UK are mainly administrative in
nature whilst the activities in the USA relate to coal production
and sale of coal. The reportable operating segments derive their
revenue from the sale of prepared coal to industrial and retail
customers. All of the revenue and costs of Ben's Creek Carbon are
US based, whereas all the costs of Ben's Creek Group Plc are from
the UK.
USA UK Total
2022 $ $ $
---------------------------------- ------------ ------------ ------------
Revenue 5,411,816 - 5,411,816
Cost of sales (3,878,565) - (3,878,565)
Administrative & other expense (3,600,617) (5,392,776) (8,993,393)
Operating loss (2,067,366) (5,392,776) (7,460,142)
---------------------------------- ------------ ------------ ------------
Additions to plant and equipment 12,325,171 565 12,325,736
---------------------------------- ------------ ------------ ------------
Reportable segment assets 64,179,689 3,287,519 67,467,208
---------------------------------- ------------ ------------ ------------
Reportable segment liabilities 23,156,255 12,566,668 35,772,923
---------------------------------- ------------ ------------ ------------
USA UK Total
2023 $ $ $
-------------------------------- -------------- ------------ -------------
Revenue 42,208,848 - 42,208,848
Cost of sales ( 45,753,734) - (45,753,734)
Administrative & other expense (11,250,771) (6,527,637) (17,778,408)
Operating loss (14,795,657) (6,527,637) (21,323,294)
-------------------------------- -------------- ------------ -------------
Reportable segment assets 79,869,462 273,641 80,143,103
-------------------------------- -------------- ------------ -------------
Reportable segment liabilities 43,144,268 14,547,662 57,691,930
-------------------------------- -------------- ------------ -------------
7. Revenue
31 March 31 March
2022 2022
$ $
----------- ---------- ---------
Coal sales 42,208,848 5,411,816
----------
42,208,848 5,411,816
---------- ---------
Revenue was derived from one external customer. This revenue was
all generated in the USA.
8. Cost of sales
31 March 31 March
2023 2022
$ $
----------------------------- ---------- ---------
Production costs 31,036,252 3,051,937
Transportation costs 3,145,205 -
Coal & sale taxes 2,335,728 -
Royalty expense (See note 4) 3,909,702 826,628
Depreciation 4,885,932 154,008
Coal Depletion 440,915 744,513
---------- ---------
45,753,734 4,777,086
---------- ---------
Production costs include staff costs directly attributable to
production including subcontracted Underground and High Wall Mining
costs.
9. Administrative expenses
31 March 31 March
2023 2022
$ $
---------------------------------- --------- ---------
Expenses by nature:
Operational and remediation costs 1,794,153 -
Staff costs 3,651,828 1,928,301
Legal, professional and brokerage 1,118,565 1,420,034
Travel and subsistence 353,958 139,920
Insurance 2,318,757 564,551
AIM related costs 66,824 1,299,484
Sale of scrap - (133,982)
Loss on disposal 115,333 -
Foreign exchange 32,455 (125,505)
Other administrative costs 493,531 906,918
Total administrative expenses 9,945,404 5,999,721
--------- ---------
During the year the Group obtained the following services from
the Company's auditors and its subsidiaries :
31 March 31 March
2023 2022
$ $
------------------------------------------------------- -------- --------
Fees payable to the Group's auditor and its associates
for the audit of the Company and Consolidated
Financial Statements 172,913 152,456
Fees payable to the Company's auditor for other
services:
-
* Reporting accountant services 30,877
104,494
* Interim financial statements review 3,000
203,790 259,950
-------- --------
10. Employee benefits expense
31 March 31 March 31 March 31 March
2023 2022 2023 2022
Group Group Company Company
Staff costs $ $ $ $
------------------------------ --------- --------- --------- --------
Salaries and wages 5,146,900 1,139,642 1,136,204 139,934
Bonuses 1,790,211 624,079 1,460,247 624,079
Social security contributions
and similar taxes 440,061 89,449 94,735 13,568
Other benefits 409,072 75,131 - -
7,786,244 1,928,301 2,691,186 777,581
--------- --------- --------- --------
Direct mining salaries are capitalised as part of inventory
costs in so far as they related to the year-end inventory balance
held. Net salaries not related to this can be seen in note 9.
Share based payment expenses totalled $2,397,585 (2022:
$2,095,151).
31 March 31 March 31 March
2023 2022 31 March 2022
Group Group 2023 Company Company
Average number of employees by function Numbers Numbers Numbers Numbers
---------------------------------------- -------------- -------- ------------- --------
Operations 31 10 - -
Administration 8 2 2 -
Directors - - 4 4
39 12 6 4
-------------- -------- ------------- --------
Details of the directors' emoluments are set out in note 30 to
these financial statements.
11. Finance costs
31 March 31 March
2023 2022
$ $
----------------------------------------------------- ----------- ----------
Interest expense 2,774,704 682,130
Unwinding of discount of reclamation liability 247,441 315,319
Unwinding of discount of minimum lease payments 113,195 -
Unwinding of discount of deferred consideration 299,192 -
Total finance costs 3,435,252 997,449
----------- ----------
12. Taxation
31 March 31 March
2023 2022
Tax recognised in profit or loss $ $
------------------------------------------------ ------------------ ----------
Current tax - -
Deferred tax (note 13) 548,835 10,286,392
------------------ ----------
Total tax charge in the Statement of Profit and
Loss - 10,286,392
------------------ ----------
The tax on the Group's profit/(loss) before taxation differs
from the theoretical amount that would arise using the weighted
average tax rate applicable to the profits/(losses) of the
consolidated entities as follows:
31 March 31 March
2023 2022
$ $
------------------------------------------------- ------------ ----------
(Loss)/profit on ordinary activities before tax (24,715,586) 25,285,795
Tax on profit on ordinary activities at combined
CT rate of 29.3% ( 2021: 27.5%) - 7,408,738
Effects of:
Disallowed Expenditure 3,289,011 767,687
Tax losses not recognised (3,289,011) 726,846
Brought forward deferred tax asset on US losses
not previously recognised - (143,017)
Other timing differences - (538,169)
------------ ----------
Tax charge - 8,222,085
------------ ----------
The overseas tax rate used is a combination of 21% US federal
tax rate and 6.5% West Virginia state tax rate, to give an
applicable rate of 27.5%. The rate used for the UK tax is 19%,
which with the overseas tax rate gives a blended rate of 29.3%.
The Group has tax losses of approximately $15,970,995 available
to carry forward against future taxable profits. No deferred tax
asset has been recognised in respect of Group tax losses due to the
uncertainty on timing in which they may be offset against future
expected profits.
13. Deferred tax
Group
--------------- -----------
Deferred Deferred
tax liability tax asset
$ $
-------------------- --------------- -----------
As at 1 April 2022 10,286,392 576,151
Movement (548,835) -
--------------- -----------
Total deferred tax 9,737,557 576,151
--------------- -----------
Current - -
--------------- -----------
Non-current 9,737,557 576,151
--------------- -----------
A deferred tax liability of $8,798,236 arose in the year ended
31 March 2022 as part of the acquisition of Ben's Creek Operations
LLC and Ben's Creek Land LLC. Additionally, a deferred tax
liability of $1,488,151 was recognised on the increase in fair
value of the plant in relation to Other Comprehensive Income. The
total deferred tax liability amounted to $10,286,392. The charge in
the profit and loss of $8,222,085 consisted of the liability from
the acquisition of $8,798,236 less a deferred tax asset of $576,151
recognised on the basis of future profits. Additionally, a deferred
tax liability of $1,488,151 was recognised on the increase in fair
value of the plant for the prior year. The total deferred tax
liability amounted to $10,286,392.
The movement in the year ended 31 March 2023 relates to the
depletion and depreciation on the plant and reserves recognised at
fair value upon acquisition.
14. Earnings per share
The calculation of the total basic loss per share of 6.563 cents
is based on the profit/loss attributable to equity holders of the
Company of ($24,166,751) (2022: $17,063,710) and on the weighted
average number of ordinary shares of 368,214,862 (2022:
276,774,515) in issue during the period. Diluted loss per share is
6.563 (2022: 5.922 cents) based on a weighted average of
388,838,846 shares (2022: 288,162,165 shares).
Details of share options that could potentially dilute earnings
per share in future periods are set out in note 33 to these
financial statements.
15. Property, Plant and Equipment
Group
Underground Leasehold Construction
Vehicles Equipment Plant equipment Improvements in progress Total
$ $ $ $ $ $ $
---------------------- -------- ------------- ----------- ----------- ------------- -------------- ------------
Cost or valuation
As at 1 April - - - - - - -
2021
Acquired from
business combination - - - - - 13,692,000 13,692,000
Additions during
the year 114,597 420,396 - - 544,379 12,325,736 13,405,108
Transfers - - 18,588,524 3,787,000 - (22,375,524) -
Gain on revaluation - - 5,411,476 - - - 5,411,476
-------- ------------- ----------- ----------- ------------- -------------- ------------
As at 31 March
2022 124,397 531,821 24,000,000 3,787,000 544,379 3,642,212 32,629,809
-------- ------------- ----------- ----------- ------------- -------------- ------------
As at 1 April
2022 124,397 531,821 24,000,000 3,787,000 544,379 3,642,212 32,629,809
Additions during
the year 7,500 1,304,649 394,635 891,320 14,426,719 17,024,823
Transfers - 14,126,947 - 493,194 - (14,620,142) -
Assets held for
sale - - - - - (2,898,145) (2,898,145)
Acquired through
business combinations - - - - 650,000 - 650,000
Change in estimate
(Note 26) - - 1,949,883 - - - 1,949,883
Disposals - (420,000) - - - - (420,000)
As at 31 March
2023 131,897 15,543,418 25,949,883 4,674,829 2,085,699 550,644 48,936,370
-------- ------------- ----------- ----------- ------------- -------------- ------------
Depreciation
As at 1 April
2021 (653) (1,169) - - - - (1,822)
Depreciation during
the year (4,367) (14,454) - - (18,146) - (36,967)
As at 31 March
2022 (5,020) (15,623) - - (18,146) - (38,789)
-------- ------------- ----------- ----------- ------------- -------------- ------------
As at 1 April
2022 (5,020) (15,623) - - (18,146) - (38,789)
Depreciation during
the year (25,629) (1,428,286) (2,400,000) (682,426) (242,574) - (4,778,915)
Disposals - 11,667 - - - - 11,667
As at 31 March
2023 (30,649) (1,432,242) (2,400,000) (682,426) (260,720) - (4,806,037)
-------- ------------- ----------- ----------- ------------- -------------- ------------
Net book value
as at 31 March
2022 119,377 516,198 24,000,000 3,787,000 526,233 3,642,212 32,591,020
-------- ------------- ----------- ----------- ------------- -------------- ------------
Net book value
as at 31 March
2023 101,248 14,111,176 23,549,883 3,992,403 1,824,979 550,644 44,130,333
-------- ------------- ----------- ----------- ------------- -------------- ------------
Assets held for sale relate to a Highwall Miner
($2,898,145).
Assets acquired through business combinations relate to the
purchase of Bens Creek Rail Holdings LLC and its associated assets.
This is the rail line on the Glen Alum site which link to the
Norfolk Southern Railway.
The Group has not had an expert value the Plant in the year.
Management have assessed the value and are confident there is no
material change.
Company
Office
equipment Total
$ $
-------------------------------------- ---------- -----
Cost or valuation
As at 1 April 2022 565 565
Acquired during period 2,986 2,986
As at 31 March 2023 3,551 3,551
---------- -----
Depreciation
As at 1 April 2022 (26) (26)
Depreciation charge during the period (341) (341)
As at 31 March 2023 (367) (367)
---------- -----
Net book value as at 31 March 2023 3,184 3,184
---------- -----
Net book value as at 31 March 2022 539 539
---------- -----
16. Investments
31 March 31 March
2023 2022
$ $
----------------------------------------------------- ---------- ----------
Investment 695,120 -
Investments total 695,120 -
---------- ----------
During the year the Company released its reclamation bonding
through a Surety. As part of the Surety requirements $695,120 is
held in an investment account until the reclamation obligations
have been fulfilled.
17. Coal reserves and reclamation assets
Group Coal Reserves
$
-------------------------- -------------
Cost or valuation 25,700,000
As at April 2021 25,700,000
Additions during the year -
-------------
As at 31 March 2022 25,700,000
-------------
As at 1 April 2022 25,700,000
As at 31 March 2023 25,700,000
-------------
Depletion
As at 1 April 2021 -
-------------
Additions during the year (744,513)
-------------
As at 31 March 2022 (744,513)
-------------
As at 1 April 2022 (744,513)
Charge for the period (440,915)
As at 31 March 2023 (1,185,428)
-------------
Net book value
As at 1 April 2022 24,955,487
-------------
As at 31 March 2023 24,514,572
-------------
Movement in the year relates to the depletion of coal reserves
from coal mined underground during the year.
The reclamation bond is based on a number of mining permits
which is held with the West Virginia Department of Environmental
Protection and is interest bearing.
The group has provided certificates of deposit as collateral to
secure mine reclamation obligations as required by the West
Virginia Department of Environmental Protection. The certificates
were released during the year through a Surety. This enabled the
Company to realise the cash element of the Deposits.
Group Company
------------------- ------------------
31 March 31 March 31 March 31 March
2023 2022 2023 2022
$ $ $ $
------------------------ -------- --------- -------- --------
Certificates of deposit - 1,628,605 - -
-------- --------- -------- --------
18. Leases
The following lease liabilities arose in respect of the
recognition of right of use assets with a net book value of
$177,240 (2022: $63,367). The Group holds two leases that it
accounts for under IFRS 16.
Office Housing Vehicle Total
$ $ $ $
----------------------------- -------- -------- -------- ---------
Balance at 1 April 2021 92,073 76,727 67,964 237,214
Disposal right of use assets - - (59,804) (59,804)
Principal reduction (60,000) (50,000) (12,934) (122,934)
Interest 2,490 2,077 4,324 8,891
----------------------------- -------- -------- -------- ---------
Balance as 31 March 2022 34,563 28,804 - 63,367
----------------------------- -------- -------- -------- ---------
Balance at 1 April 2022 34,563 28,804 - 63,367
Disposal right of use assets - - - -
Additions 121,172 100,977 - 222,149
Principal reduction (63,000) (52,500) - (115,500)
Interest 3,941 3,283 - 7,224
Balance at 31 March 2023 96,676 80,564 - 177,240
----------------------------- -------- -------- -------- ---------
Less: Current portion (60,385) (50,321) - (110,706)
----------------------------- -------- -------- -------- ---------
Non-current portion 36,291 30,243 - 66,534
----------------------------- -------- -------- -------- ---------
The leases are split between current and non-current portions.
The cash flows of the leases are as follows:
31 March 31 March
2023 2022
Current $ $
-------------------- -------- --------
Interest charge 4,794 801
Principal reduction 115,500 64,167
Depreciation 107,989 44,077
Non-current
-------------------- -------- --------
Interest charge 841 -
Principal reduction 67,375 -
Depreciation 64,793 -
-------------------- -------- --------
The right of use assets are as follows:
Apartment Vehicle
Office lease lease lease Total
$ $ $ $
------------------------- ------------ --------- -------- ---------
Balance at 1 April 2021 91,360 76,133 77,689 245,182
Disposal - - (68,156) (68,156)
Additions - - - -
Depreciation (57,701) (48,084) (9,533) (115,318)
------------------------- ------------ --------- -------- ---------
Balance at 31 March 2022 33,659 28,049 - 61,708
------------------------- ------------ --------- -------- ---------
Balance at 1 April 2022 33,659 28,049 - 61,708
Disposal - - - -
Additions 121,172 100,977 - 222,149
Depreciation (58,903) (49,086) - (107,989)
Balance at 31 March 2023 95,928 79,940 - 175,868
------------------------- ------------ --------- -------- ---------
During the period, the Group leased an office for $121,853
recognised in administrative expenses. The operating lease was a
short-term lease and therefore not recognised as a right of use
asset.
19. Trade and other receivables
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
Current $ $ $ $
------------------ ---------------------------------------- ------------------ -------- -------
Trade receivables 475,000 - - -
Prepayments 352,103 298,096 131,090 146,517
Other receivables 703,410 272,232 87,470 168,948
1,530,513 570,328 218,560 315,465
---------------------------------------- ------------------ -------- -------
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
Non-current $ $ $ $
----------------------------------------- --------- --------- ------------ --------------
Amount due from Ben's Creek Carbon LLC - - 28,610,804 16,026,796
- - 28,610,804 16,026,796
--------- --------------------------------------------------- ------------ --------------
Amount due from Ben's Creek Carbon LLC is funding provided by
the parent company to Bens Creek Carbon LLC for working capital and
other projects. Interest is accruing at 6% per annum and the loan
is repayable immediately following the first business day of the
fifth anniversary of Admission, or a later day as the parties may
agree.
20. Cash and cash equivalents
Group Company
------------------- -------------------
31 March 31 March 31 March 31 March
2023 2022 2023 2022
$ $ $ $
------------------------- -------- --------- -------- ---------
Cash at bank and on hand 471,651 5,555,296 51,897 2,971,515
-------- --------- -------- ---------
471,651 5,555,296 51,897 2,971,515
-------- --------- -------- ---------
The carrying amounts of the majority of the Group's cash and
cash equivalents are denominated in USD.
21. Inventory
Group
--------------------------
As at 31 As at 31
March 2023 March 2022
$ $
---------------- ------------ ------------
Coal inventory 5,150,750 1,528,613
------------ ------------
22. Trade and other payables
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
Current $ $ $ $
--------------------------------- --------- --------- --------- ----------
Trade payables 1,442,491 2,367,290 77,452 91,111
Tax liabilities 447,507 - - -
Other payables 5,924,025 30,150 - -
Payroll liabilities 402,725 27,971 95,052 24,123
Accruals 1,461,352 1,025,935 1,251,648 176,029
9,678,100 3,451,346 1,424,153 291,263
--------- --------- --------- ----------
23. Deferred consideration
Total $
------------------------------------- -------- ------------- -----------
As at 1 April 2022 3,173,698
Payments in the year (552,556)
Unwinding of discount 299,192
Change in estimate 4,859,839
As at 31 March 2023 7,780,173
--------------------------------------------------- --------- -----------
31 March 31 March
2023 2022
Group Group
$ $
--------------------------------------------------- ---------- ----------
Current liabilities
Deferred consideration 1,254,206 816,000
---------- ----------
1,254,206 816,000
---------- ----------
Non-current liabilities
Deferred consideration 6,525,967 2,357,698
----------
6,525,967 2,357,698
---------- ----------
The deferred consideration relates to the purchase consideration
for the acquisition of Ben's Creek Operations LLC and Ben's Creek
Land LLC. For further information, see notes 4 and 29 of the prior
year financial statements.
Increase in deferred consideration relates to the increase in
the rate of extraction predicted over the next 10 years based on
management's estimate and impairment reviews.
24. Borrowings
MBU Capital
Group
$
-------------------- -----------
As at 1 April 2021 1,646,768
Drawdowns 1,439,252
Interest charge 194,807
Payments -
-----------
As at 31 March 2022 3,280,827
-----------
As at 1 April 2022 3,280,827
Drawdown 5,254,410
Interest charge 768,142
Repayment (4,086,995)
Conversion (5,216,384)
-----------
As at 31 March 2023 -
-----------
The Loan provided by MBU Capital Group Limited was a convertible
facility up to GBP10,000,000 (GBP) draw down. The loan commenced on
1 November 2020 and is repayable in full by 30(th) June 2023 or
such earlier date as may be agreed between lender and borrower. The
interest rate is 7% per annum, accruing monthly. On 3 March 2023
MBU exercised their conversion of the loan at 15p & 30p
respectively. For further details of this transaction please see
the related party note disclosed in note 34 of these financial
statements.
31 March
2023
$
-------------------- -----------
Equipment financing
Principal 13,164,632
Interest 621,682
Repayments (3,217,785)
-----------
As at 31 March 2023 10,568,529
-----------
Current 3,462,778
-----------
Non-current 7,105,751
-----------
The primary reason for borrowings in the year were for equipment
financing. During the period the Group moved away from a contractor
model to an equipment owned model for excavation, therefore
financing was undertaken to fund this change.
25. Convertible Loan Notes
Debt component Derivative
$ component Total
$ $
------------------------- --------------- ------------ -----------
As at 1 April 2022 9,436,021 2,839,817 12,275,838
Repayments (750,000) - (750,000)
Foreign exchange losses - (168,691) (168,691)
Fair value gains 1,167,351 (1,167,351) -
Interest charged 1,766,362 - 1,766,362
As at 31 March 2023 11,619,734 1,503,775 13,123,509
------------------------- --------------- ------------ -----------
31 March
31 March 2022
2023 Group Group
$ $
------------------------- --------------- ------------
Current liabilities
Convertible loan 11,619,734 6,397,769
Embedded derivative 1,503,775 2,839,817
--------------- ------------
13,123,509 9,237,586
--------------- ------------
Non-current liabilities
Convertible loan - 3,037,819
Embedded derivative - -
---------------
- 3,037,819
--------------- ------------
The fair value of the embedded derivative was determined using
the Black Scholes valuation model. The parameters used are detailed
below:
Loan
-----------
Granted on: 17 Feb
2022
Life (years) 24 months
Exercise price 40 pence
(cents per share)
Risk free rate 5.13%
Expected volatility 25.2%
Fair value per GBP0.00004
share
In December 2021 and February 2022, the Group raised $6m and $6m
from the placement of two Convertible Loan Notes. They were both
issued at par and carry a coupon of 15% and 12% respectively
payable quarterly in arrears. The Convertible Loan Notes are
convertible into fully paid Ordinary Shares with the initial
conversion prices set at GBP0.28 and GBP0.40. The number of
Ordinary shares at the year-end that could be issued if all the
Convertible Loan Notes were converted is 33,325,929 (assuming that
the exchange rate at the year-end is $1.235/GBP1). Unless
previously converted, redeemed, or purchased and cancelled, the
Convertible Loan Notes will be redeemed at par on 13 December 2023
and 28 February 2024 respectively. During the year, the Group
negotiated a change in repayment date for the second Convertible
Loan forward to 30 June 2023.Volatility is calculated by reviewing
historic share price movements of comparable companies to the Group
being newly listed, as well as historic foreign exchange volatility
between USD and GBP (5%). The derivative is to be revalued at the
year-end based on the year-end foreign exchange rate.
A prior year adjustment has been made in relation to the
Convertible Loan Notes. The adjustment relates to the
classification of current/non-current liabilities. This is purely a
reclassification of liabilities and has no effect on the net assets
as at 31 March 2022. For more information, please see note 37.
After the year-end the Convertible Loan Note raised in February
2022 was fully repaid. Please see note 38 for further
information.
26. Provisions
Minimum lease
Reclamation payments
provision Total
$ $ $
----------------------- ----------- ------------- ---------
As at 1 April 2022 1,949,888 1,242,000 3,191,888
Additions - 302,146 302,147
Change in estimate 1,949,883 273,434 2,223,322
Unwinding of discount 247,441 113,195 360,636
----------------------- ----------- ------------- ---------
As at 31 March 2023 4,147,212 1,930,775 6,077,987
----------------------- ----------- ------------- ---------
Current provisions - 510,000 510,000
----------------------- ----------- ------------- ---------
Non-current provisions 4,147,212 1,420,775 5,567,987
----------------------- ----------- ------------- ---------
The Group's provision for reclamation costs has a carrying value
at 31 March 2023: $4,147,212 (31 March 2022 of $1,949,888) and
relates to the Group's reclamation obligations. The provision for
reclamation costs is calculated by discounting the expected future
cash outflows in respect of reclamation work based on the estimated
future cost provided by independent experts (Heritage Technical
Associates, Inc), being $7,816,773. The reclamation costs are
expected to be incurred in 10 years (at the end of the mine life
per the management's mine plan). The cash outflows have been
discounted at 15% and inflation assumed to be 8.6%. The reclamation
provision is a commitment to restore the site to a safe and secure
environment. The provisions are reviewed annually.
The Group's provision for minimum lease payments amount to
$1,930,775 relate to leases held with Pocahontas, MGC, Carbon Fuels
and Star Ridge. In the agreements with each respectively there is a
minimum monthly payment which has been calculated based on the life
of the mine or if shorter the lease agreement. The lease payments
have been discounted to present value and will be reviewed
annually. The royalty agreements contain further clauses in which
further royalties are payable when mining on the land. However, as
there is no accurate method to estimate the level of production, no
provision has been included.
27. Reconciliation of debt
Group As at Cash transactions Non-cash As at 31
1 April transactions March 2022
2021
2022 $ $ $ $
------------------------ ---------- ------------------ -------------- ------------
Borrowings (note 23) 1,701,203 1,384,798 194,826 3,280,827
Convertible loan notes
(note 24) - 12,000,000 275,405 12,275,405
Lease liability (note
17) 237,214 (122,934) (50,913) 63,367
---------- ------------------ -------------- ------------
As at Cash transactions Non-cash As at 31
1 April transactions March 2023
2022
2023 $ $ $ $
------------------------ ----------- ------------------ -------------- ------------
Borrowings (note 24) 3,280,827 (2,050,370) 9,338,072 10,568,529
Convertible loan notes
(note 25) 12,275,838 (750,000) 1,597,671 13,123,509
Lease liability (note
18) 63,367 (115,500) 229,373 177,240
----------- ------------------ -------------- ------------
Company As at Cash transactions Non-cash As at 31
1 April transactions March 2022
2021
2022 $ $ $ $
------------------------ ---------- ------------------ -------------- ------------
Convertible loan notes
(note 24) - 12,000,000 275,405 12,275,405
---------- ------------------ -------------- ------------
As at 1 Cash transactions Non-cash As at 31
April 2022 transactions March 2023
2023 $ $ $ $
------------------------- ------------ ------------------ -------------- ------------
Convertible loan notes
(note 25) 12,275,838 (750,000) 1,597,671 13,123,509
------------ ------------------ -------------- ------------
28. Financial instruments by category
Consolidated 31 March 2023
----------------------- ----------
At amortised
cost FVTPL Total
Financial Assets $ $ $
--------------------------------------- ------------ --------- ----------
Trade and other receivables (excluding
prepayments) 1,178,410 - 1,178,410
Cash and cash equivalents 471,651 - 471,651
1,650,061 - 1,650,061
------------ --------- ----------
At amortised
cost FVTPL Total
Financial Liabilities $ $ $
--------------------------------------- ------------ --------- ----------
Borrowings 22,188,263 1,503,775 23,692,038
Trade and other payables 9,678,100 - 9,678,100
Lease liability 110,706 - 110,706
------------ --------- ----------
31,977,069 1,503,775 33,480,844
------------ --------- ----------
Consolidated 31 March 2022
----------------------- ----------
At amortised
cost FVTPL Total
Financial Assets $ $ $
--------------------------------------- ------------ --------- ----------
Trade and other receivables (excluding
prepayments) 272,231 - 272,231
Cash and cash equivalents 5,555,296 - 5,555,296
------------ --------- ----------
5,827,527 - 5,827,527
------------ --------- ----------
At amortised
cost FVTPL Total
Financial Liabilities $ $ $
--------------------------------------- ------------ --------- ----------
Borrowings 12,716,415 2,839,817 15,556,232
Trade and other payables 2,425,411 - 2,425,411
Lease liability 63,367 - 63,367
------------ --------- ----------
15,205,193 2,839,817 18,045,010
------------ --------- ----------
The periods where the financial liabilities are payable are as
follows:
31 March 2023
------------------- ------
Between Between
Less than 1 and 2 2 and 5 Over 5
1 year years years years
$ $ $ $
------------------------- ---------- --------- -------- ------
Borrowings 15,082,512 7,105,751 - -
Trade and other payables 9,678,100 - - -
Leases 110,706 - - -
24,871,318 7,105,751 - -
---------- --------- -------- ------
31 March 2022
-------------------- ------------
Between Between
Less than 1 and 2 2 and
1 year years 5 years Over 5 years
$ $ $ $
------------------------- --------- ---------- -------- ------------
Borrowings - 15,556,232 - -
Trade and other payables 2,425,411 - - -
Leases 63,367 - - -
2,488,778 15,556,232 - -
--------- ---------- -------- ------------
Company 31 March 2023
--------------------- ----------
Loans
& receivables FVTPL Total
Financial Assets $ $ $
--------------------------------------- -------------- ----- ----------
Trade and other receivables (excluding
prepayments) 87,470 - 87,470
Cash and cash equivalents 51,897 - 51,897
-------------- ----- ----------
139,367 - 139,367
-------------- ----- ----------
At amortised
cost FVTPL Total
Financial Liabilities $ $ $
--------------------------------------- -------------- ----- ----------
Borrowings 11,619,734 - 13,123,509
Trade and other payables 1,424,153 - 1,424,153
-------------- ----- ----------
13,043,887 - 13,043,887
-------------- ----- ----------
The periods where the financial liabilities are payable are as
follows:
31 March 2023
------------------ ------
Between Between
Less than 1 and 2 2 and 5 Over 5
1 year years years years
$ $ $ $
------------------------- ---------- -------- -------- ------
Borrowings 11,619,734 - - -
Trade and other payables 1,424,153 - - -
13,043,887 - - -
---------- -------- -------- ------
29. Fair Value of Financial Assets and Liabilities Measured at Amortised Costs
Financial assets and liabilities comprise the following:
-- Trade and other receivables;
-- Cash and cash equivalents; and
-- Trade and other payables.
The fair values of these items equate to their carrying values
as at the reporting date .
30. Business combinations
On 22 December 2022, the Group acquired 26% of the membership
interests in Ben's Creek Rail Holding LLC ("BCRH"), Delaware United
States of America, which is registered and incorporated in
Delaware, United States of America and operates from its office in
West Virginia, United States of America. On 31 March 2023, the
Group acquired a further 26% of the membership interest. This
brought the Companies total shareholding to 52%, with a further
option to purchase the remaining consideration of 48%. The purchase
was made by Bens Creek Carbon LLC and therefore is not part of the
investment value in Bens Creek Group Plc. On 22 December 2022 BCRH
was considered to be controlled by the Group due to the Group's
ability to obtain the rest of the shareholding.
The following table summarises the consideration paid for Ben's
Creek Rail Holding LLC and the values of the net assets assumed at
the acquisition date. Acquisition accounting has been completed
using merger accounting, as the transaction was between entities
under common control, and is not within the scope of IFRS 3 -
Business Combinations:
2023
$
---------------------------------- ------------------------------------------------------
Recognised amounts of assets and liabilities
acquired
Total assets 659,939
Total liabilities (659,452)
-----------------------
Total identifiable net assets 477
Total consideration paid so far is $348,000. As the Group has
the option to purchase the remaining 48%, the subsidiary is
considered 100% controlled by the Group.
The identifiable net assets of Ben's Creek Rail Holding LLC have
been consolidated into the results of the Group as at 31 March
2023. Liabilities owed to Bens Creek Carbon LLC in relation to
intercompany loans have been eliminated on consolidation. Bens
Creek Rail Holding LLC is immaterial to the group.
31. Directors' emoluments
Year ended 31 March 2023
Short-term
benefits Short-term Share
salary Bonuses Total options
Notice
period $
months $ $ No.
-------------------- -------------- -------------- ---------- --------- ---------
Executive Directors
Adam Wilson 6 586,895 816,928 1,403,823 -
Raju Haldankar 6 164,586 123,777 288,363 2,000,000
Non-executive
Directors
Robin Fryer - 108,489 123,777 232,266 -
David Harris - 82,872 99,022 181,893 -
Mark Cooper - 12,862 - 12,862 -
955,704 1,163,504 2,119,207 2,000,000
-------------- ---------- --------- ---------
Year ended 31 March 2022
Short-term
benefits Short-term Share
salary Bonuses Total options
Notice
period $
months $ $ No.
-------------------- -------------- -------------- ---------- -------- ----------
Executive Directors
Adam Wilson 6 259,489 459,848 719,337 10,500,000
Raju Haldankar 6 43,759 98,539 142,298 -
Non-executive
Directors
Robin Fryer - 21,428 26,277 47,705 -
David Harris - 16,151 19,708 35,859 -
Mohammed Iqbal - - - -
340,827 604,372 945,199 10,500,000
-------------- ---------- -------- ----------
On 6 May 2022, Raju Haldankar was granted 2,000,000 share
options in the Company at an exercise price of 5p per ordinary
share. The vesting conditions of the grant were related to
performance criteria as set out in the Group's admission document.
The performance criteria was such that three targets of 2,000,000
share options would vest on conditions that the ordinary share
price of the Group's shares would increase by 100%, 200% and 300%
of the admission price of the Group following its IPO on 19 October
2021. These conditions have been met.
Short term benefits paid to Adam Wilson include a discretionary
bonus of $816,928 (GBP660,000) in connection with his employment
contract with Bens Creek Operations WV LLC. Short term benefits
paid to Raju Haldankar includes a discretionary bonus of $123,777
(GBP100,000). The discretionary bonuses paid to both Adam Wilson
and Raju Haldankar were in recognition of their efforts in managing
the affairs of the Group's subsidiaries including the rapid
development of the business.
On 14 March 2023, Raju Haldankar exercised 250,000 share options
in the Company at an exercise price of 5p per ordinary share. The
market value of the ordinary shares at the time of exercise was
18.50p, which resulted in a profit of $40,925 (GBP33,750).
32. Share capital and share premium
Shares Ordinary
issued shares Share premium Total
$ $ $
---------------------------------- ----------- ------------------- ----------------- ----------
As at 1 April 2022 353,991,751 485,273 38,712,008 39,197,281
Issue of shares - 12 April 2022 40,000 53 5,200 5,253
Issue of shares - 18 May 2022 250,000 312 30,904 31,216
Issue of shares - 18 May 2022 118,250 145 14421 14,566
Issue of shares - 30 August 2022 20,000,000 23,383 6,991,397 7,014,780
Issue of shares - 14 October 2022 790,000 887 43,457 44,344
Issue of shares - 10 March 2023 23,283,728 27,869 5,163,416 5,191,285
Issue of shares - 17 March 2023 250,000 300 14,744 15,044
Exercise of options - - 89,326 89,326
Share issuance costs - - (75,723) (75,723)
----------- ------------------- ----------------- ----------
398,723,728 538,221 50,989,150 51,527,371
----------- ------------------- ----------------- ----------
On 12 April 2022, warrants were exercised for 40,000 new
ordinary shares in the capital of the Company at a price of 10p per
share, with the proceeds of issue amounting to $5,253
(GBP4,000).
On 18 May 2022, warrants were exercised for 368,250 new ordinary
shares in the capital of the Company at a price of 10p per share,
with the proceeds of issue amounting to $45,783 (GBP36,825).
On 30 August 2022, 20,000,000 ordinary shares of the Group were
issued by way of a placing at a price of 30p per ordinary share.
The aggregate gross proceeds of this issue was $7,014,780
(GBP6,000,000).
On 14 October 2022, options were exercised for 790,000 new
ordinary shares in the capital of the Company at a price of 5p per
share.
On 10 March 2023, MBU agreed to vary the conversion price of the
proportion of the Loan Facility that is convertible at 60p to now
convert at 30p. Following the Conversion MBU received 23,283,728
new Ordinary Shares.
On 17 March 2023, options were exercised for 250,000 new
ordinary shares in the capital of the Company at a price of 5p per
share.
33. Share based payments reserve
Share options and warrants
Share options and warrants outstanding at the end of the year
have the following expiry dates and exercise prices:
Share options
Exercise
price
in GBP 31 March
Grant Date Expiry Date per share 2023
------------------ --------------- ----------- ------------
Opening 16,300,000
Exercised (1,165,000)
1 April 2022 31 March 2023 0.05 150,000
6 May 2022 5 May 2023 0.05 1,750,000
17 May 2022 16 May 2023 0.05 150,000
14 August
15 August 2022 2023 0.05 50,000
22 November
23 November 2022 2023 0.05 50,000
29 December 2022 N/a 0.05 1,000,000
31 December
1 January 2023 2023 0.05 300,000
18,585,000
---------------------------------- ----------- ------------
Warrants
Exercise
price
in GBP 31 March
Grant Date Expiry Date per share 2023
------------------ --------------- ----------- ------------
Opening 2,291,014
Exercised (408,250)
25 April 2022 24 April 2025 0.93 206,389
29 August
30 August 2022 2025 0.23 100,000
29 August
30 August 2022 2025 0.23 200,000
2,189,153
---------------------------------- ----------- ------------
Total 20,774,153
----------------------------------- ----------- ------------
The Company and Group have no legal or constructive obligation
to settle or repurchase the options or warrants in cash.
The fair value of the share options were determined using the
Monte Carlo model and warrants were determined using the Black
Scholes valuation model. The parameters used are detailed below
using the weighted average:
Options Warrants Warrants
------------- ----------- ------------
Granted: 2022 April 2022 August 2022
Life (years) 10 years 3 years 3 years
Average price at grant 52 pence 93 pence 37 pence
Exercise price (pence 5 pence 93 pence 30 pence
per share)
Risk free rate 1.63 - 3.67% 1.25% 1.25%
Expected volatility 50% 26.3% 26.3%
Average fair value per GBP0.0979 GBP0.1548 GBP0.0960
share
Volatility is calculated looking back at the historic exchange
rate movement.
A reconciliation of share options and warrants granted and
lapsed during the period ended 31 March 2023 are
shown below:
Number
----------------------------------------- --------------------
Outstanding as at 1 April 2022 18,591,014
Granted 3,700,000
Exercised (1,523,250)
Outstanding as at 31 March 2023 20,767,764
----------------------------------------- --------------------
Exercisable at 31 March 2023 20,767,764
----------------------------------------- --------------------
The total fair value of the options and warrants granted in the
current year resulted in a charge of $2,386,671 (2022: $2,095,151)
to the Consolidated Statement of Comprehensive Income. The total
charge to share premium at 31 March 2023 was $13,603 of which
$89,326 related to exercising of options and ($75,723) related to
issue of warrants. (2022: $552,091) due to the broker warrants
which had not been exercised at the year end and exercised share
options during the year.
34. Related party transactions
MBU Capital Group Limited ("MBU"), at 31 March 2023 owned 60% of
the voting issued share capital of the
Company.
The Group is party to the following arrangements with MBU:
MBU loan facility
MBU, was a member of Ben's Creek Carbon LLC until 22 September
2021, had a GBP GBP10,000,000 draw down
facility with the Group. This facility commenced on 1 November
2020 and was repayable in full by 30 June 2023 or such earlier date
as may be agreed between lender and borrower. The facility also
allowed MBU to convert any funding provided, along with accrued
interest, into ordinary shares of the Group at a premium of 50% of
the IPO price of 10p per share. Accordingly, the conversion price
is 15p per share. The interest applicable on this facility is 7%
per annum, which accrued monthly. During the year total interest
accrued was $159,689.
On 7 April 2022, the Group renegotiated and agreed with MBU, the
balance of the unused facility, if drawn down
by the Group, can be converted at a price of 60p per ordinary
share, if MBU exercises its option to convert into
shares of the Group rather than seeking repayment of it loan and
accrued interest. On 3 March 2023 the Group renegotiated the
conversion price from 60p to 30p.
Subsequently MBU exercised their conversion right on all
outstanding loans. Following the Conversion MBU received 23,283,728
new shares the value of which was $5,216,384.
On 3 March 2023 MBU converted its total loan balance of
$3,184,596 (GBP2,647,917) into 17,652,770 ordinary shares. As at 31
March 2023 the outstanding balance was $Nil (2022: $3,180,826).
The Group purchased from MBU Group Limited, the membership
interests in Ben's Creek Rail Land LLC. Additionally, the Group
terminated MBU administrative services and licence agreement.
Executive Directors
The Board of Directors includes one Executive Director: Raju
Haldankar (CFO resigned during the year) and one Non-Executive
Director: Mark Cooper (appointed 27 February 2023), who were
regarded as related parties by virtue of their employment with MBU
GBR Limited, a 100% subsidiary of MBU.
During the year Raju Haldankar received 2,000,000 share options,
for full details of his emoluments please see note 31.
35. Investment in Subsidiaries
Company
31 March 2023
$
----------------------------------------- ----------------
Shares in Group
At beginning of period 28,385,729
Consideration -
Deferred consideration for subsidiaries -
Foreign exchange (1,701,610)
At end of period 26,684,119
----------------------------------------- ----------------
Investments in Group undertakings are stated at cost, which is
the fair value of the consideration paid, less any impairment
provision. Investments are eliminated upon consolidation.
Country of Proportion of
incorporation ordinary shares
and place of held by parent
Name of subsidiary business (%) Nature of business
------------------- --------------- ----------------- -------------------
Ben's Creek Carbon United States 100% Direct Mining
LLC
------------------- --------------- ----------------- -------------------
Ben's Creek WV United States 100% Indirect Mining
Operations LLC
------------------- --------------- ----------------- -------------------
Ben's Creek Land United States 100% Indirect Lease rights
WV LLC
------------------- --------------- ----------------- -------------------
Ben's Creek Rail United States 52% Indirect Lease rights
Holdings LLC
------------------- --------------- ----------------- -------------------
The registered address of all three subsidiary companies is 109
Capitol St, Charleston, WV, 25301. The subsidiaries are exempt from
individual audits.
36. Ultimate Controlling Party
As at 31 March 2023, MBU Capital Group Limited is the ultimate
controlling party as a result of owning 60% (2022: 59.25%) of the
Group.
37. Prior year adjustment
The Group has restated the year-ended 31 March 2022 balance
sheet in relation to the Convertible Loan Notes. This is a
reclassification restatement and has no effect on the net assets of
the Group as of 31 March 2022.
The two Convertible Loan Notes entered into in December 2021 and
February 2022 have a two-year Final Maturity Date. Both Notes also
have an early redemption clause on the first anniversary of the
date of the Notes, to the extent if demanded by the Noteholders by
20 Business Days' notice in writing to the Group prior to first
anniversary of the Notes. This early redemption clause entitles the
Noteholders to demand fifty per cent of the Notes together with the
accrued and unpaid interest. To the extent the that the Noteholders
have not made such demand, all outstanding Notes are due on the
Final Maturity Dates, i.e December 2023 and February 2024.
Accordingly, the Group has reclassified fifty per cent of the
Notes together with the accrued and unpaid interest of the Notes to
current liabilities as of 31 March 2022.
Please refer to note 25 on details on the renegotiation of these
loans.
38. Events After Reporting Date
On 23 June 2023 Bens Creek Operations entered into an unsecured
loan note agreement with Avani Resources Pte Ltd (the Company's
largest shareholder) for a total subscription of $6,500,000 in Loan
Notes. The Loan Notes have a term of two years and interest will
roll up and be repaid as a bullet on the second anniversary of the
Loan Note.
Bens Creek Operations will repay to the Lender $2 per tonne of
clean coal sold within 7 business days of production. The principal
outstanding under the Loan Notes, less coal payments or other
prepayments, will be repayable on the repayment date.
Simple interest shall be added to the principal amount of the
outstanding Notes on each relevant repayment date. The interest
shall be calculated at a rate of 15.1% per annum from and including
the date of issue of each Note up to and including the date of the
redemption or repurchase of the relevant Notes. The interest shall
be payable in the same manner as in the case of the original
principal amount of the Note and shall otherwise be treated as
principal of the Note for all purposes.
In the event Bens Creek Operations redeems or fully repays any
Note prior to the repayment date it shall, together with the
payment of the principal amount outstanding, pay for the account of
the Avani a prepayment calculated at a rate of 15% per annum from
and including the date of issue of each Note up to and including
the date of the redemption or repurchase of the relevant Notes.
On 7 July 2023 Bens Creek entered into a second unsecured loan
note agreement with the Avani Resources Pte Ltd for a total
subscription of $6.5 million of Loan Notes. The Loan Notes have a
term of 18 months and interest will roll up and be repaid as a
bullet at the maturity of the Loan Note. The terms of the loan note
are the same as the note issued on 23 June 2023.
Proceeds from the Loan Note issuance were used to repay one of
the Convertible Loan Notes held by ACAM LP which was due at 30 June
2023. Total repayment amounted to $5.7m.
On 7 July 2023 Bens Creek also issued c.$7.57 million of
unsecured loan notes to ACAM LP.
The Loan Notes have been issued to ACAM in replacement for the
now cancelled $6m of convertible loan notes issued to ACAM on 14
December 2021, full details of which were included in the Company's
announcement of 15 December 2021. The CLNs were due for repayment
on 31 December 2023.
Following negotiations with ACAM it has been agreed that they
would cancel the CLNs and accept the Loan Notes by way of
replacement. The Loan Notes have a term of 18 months. The Loan
Notes are not convertible into new ordinary shares in the
Company.
The terms of the Loan Notes are the same as the loan notes
issued to Avani Resources Pte Ltd.
The Company has also issued ACAM with a total of 21,082,257
warrants to subscribe for new ordinary shares in Bens Creek
exercisable at 28 pence per ordinary share. The warrants have a
life of five years from the date of issue and can be exercised at
any time by ACAM during the period ending 10 July 2028.
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