The directors present the strategic report for the period ended 31 December 2023.
The Company participates in investment ownership and management with a view to delivering long term income and capital gains for its investors. It was incorporated on 17 May 2023 and made its investment in GLCR Limited on 23 June 2023, which is the parent company of the Rosh Pinah mine in Namibia. The Company is a special purpose vehicle under the delegated control of Appian Capital Advisory LLP ("Appian"). Appian is an advisor to private equity funds that invest in the metals, mining and infrastructure sectors.
Given the investment focus of the Company, it has been designated as an investment entity (as defined in IFRS 10) and therefore does not prepare group financial statements. Instead, the investments are held at fair value through profit and loss.
The Company is exposed to a variety of financial and operational risks as detailed below:
Liquidity and cash flow risk
This is the risk that the Company's available cash will not be sufficient to meet its financial obligations. This is mitigated by the Directors performing simple cash flow management techniques, which are non-complex given the straightforward nature of the Company's operations.
The primary imminent risk is the repayment of the investor loan owed to Appian at the end of 2024, however Appian have provided written confirmation of continued support for the Company which mitigates this risk.
Interest rate risk
At the balance sheet date, the Company is exposed to interest rate risk as its investment loans carry interest at a variable rate of return, whilst it pays at a fixed rate of 5% on the loans from shareholders. Given this fixed rate on borrowings, the Directors do not consider it necessary to hedge the Company's exposure to interest rate any further.
Currency risk
The Company has a small proportion of cash denominated in foreign currencies, whilst loans are in Namibian Dollars or underpinned by trading activities in an environment exposed to the influence of the Namibian Dollar. However, the impact of the foreign exchange is not pervasive and the majority of assets and liabilities are in US Dollars, therefore there is no additional hedging measures used by the Directors.
Exchange differences on translation of all Income Statement and Statement of Financial Position items are taken to the Income Statement.
Credit and counterparty risk
Throughout the period the Company holds a significant portion of its assets with a major bank, giving rise to a direct exposure should such an institution be unable or unwilling to repay capital and/or interest on funds provided to it. The Company's bank accounts and deposits are only held with counterparties which have credit ratings that the Directors consider to be adequate and the credit quality and financial position of such counterparties are monitored. The credit quality of these assets were satisfactory throughout the reporting period.
Given the nature of its investments into the GLCR Limited Group, which include credit advances, the Company is also exposed to counterparty risk to the extent that the investments are unable to meet contractual obligations for repayment. Such credit challenges would also have an impact on the fair value of investment into GLCR. In order to mitigate this risk, the Directors oversee the activities of the investments and seek to monitor the financial performance on a regular basis, as well as liaising with local managers.
Operational risk
Given that the Company has no day to day operations beyond managing its investments, it does not have a formal business interruption plan.
Commodity risk
Given the value of the investment in GLCR Limited is intrinsically linked to commodity values of the metals produced by the Rosh Pinah mine, and the impact of those prices on the profitability and viability of extraction. These values manifest themselves in the fair value of the investment in GLCR Limited for the Company.
Capital risk
The group’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns for shareholder and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the group consists of debt, which includes the current liabilities disclosed in the statement of financial position, cash and cash equivalents and equity as disclosed in the statement of financial position.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the company monitors capital on the basis of the gearing ratio.
This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non‐current borrowings’ as shown in the statement of financial position) less cash and cash equivalents. The total capital is calculated as ‘equity’ as shown in the statement of financial position plus net debt. At 31 December 2023 the gearing ratio is 32.8% which is in line with expectations.
There are no externally imposed capital requirements.
There have been no changes to what the entity manages as capital, the strategy for capital maintenance or externally imposed capital requirements from the previous year.
Exchange control risk
From time to time, countries similar in profile to the Namibian environment in which the company's investment operates or has interests have adopted measures to restrict the availability of the local currency or the repatriation of capital across borders. These measures are typically imposed by governments and/or central banks during times of local economic instability to prevent the removal of capital or the sudden devaluation of local currencies or to maintain in-country foreign currency reserves.
Namibia is part of the Common Monetary Area of Southern Africa ("CMA"). Exchange controls in the CMA require that dividends, loans, repayment of loans and payment of all invoices to parties outside the CMA by companies registered in the CMA receive prior approval. The controls, as they relate to Namibia, are applied by the Bank of Namibia. There can be no assurance that the Company's investments will obtain the requisite approvals in the future to repay loans or pay invoices to parties outside the CMA, including to this company. Thus, exchange controls may restrict the company from realising its returns.
As this is the Company's first financial period, its results are considered to be in line with expectations by the Directors. However, key to understanding is that fair value of the investment in GLCR Limited is considered to approximate to historic cost of the investment for this purpose, given the proximity of the year end to the acquisition date.
Given the straightforward nature of operations, the Company does not have a complex number of KPI's::
Net assets - $96,908,000, which is in line with the expectations of Directors for the financing and transaction costs incurred in the year.
In absence of trading activity in the Company beyond managing its investments, there are no non-financial KPI's which are monitored by the Directors.
Future developments
On 24 June 2024, the group restructured its financing by way of a loan novation.
$39.9m, representing a Namibian Dollar value of N$730.2m and included in investments in note 11, which was interest-free, unsecured, and owed by a subsidiary, has been novated to RP FC (Jersey) Limited ("RPFC"), a related party by virtue of common control. As part of the novation, the loan's currency denomination has been converted from NAD to USD at the exchange rate as of the novation date, resulting in a revaluation to $40.3m, and as a result the Company was then owed this amount from RPFC. The replacement loan carries interest at 8% per annum, is unsecured, and is repayable to the Company on demand.
Subsequent to this transaction, on the same day the Company entered into a deed of waiver which released RPFC from its obligation to pay the Company. This transaction created a deemed distribution under UK company law, which was subsequently identified to be contrary to the provisions of company law as the Company did not have sufficient realised retained profits to make this distribution.
Accordingly, on 25 October 2024 the Company obtained approval from its shareholders of the reversal of this dividend via the obligations of those shareholders to return the shortfall in realised retained profits. This reversal of the dividend restored the Company's net assets and realised retained profits to the position in which these would have been had the waiver on 24 June 2024 not occurred.
At ANR RP Limited ("ANR"), the Directors act in a manner consistent with their duties under section 172 of the UK Companies Act 2006. In doing so, they promote the success of the Company for the benefit of its shareholders, taking into consideration the interests of all stakeholders including employees, customers, suppliers, the environment, and the wider community.
In this statement we outline the key aspects of our approach to Section 172 and how our Directors have fulfilled their duties throughout the year.
Although ANR was only incorporated during 2023, as a result of its acquisition of Rosh Pinah Zinc Corporation Limited ("RPZC") the trading activity of that company has seen significant change. The Directors believe that we have consistently acted in accordance with duties under Section 172 and imposed equivalent rules and mentalities on its subsidiaries since our acquisition, working to promote the success of the Company and safeguard the interests of shareholders, employees, and other stakeholders alike. We will continue to uphold these principles as we navigate the challenges and opportunities ahead, striving to create lasting value for all those connected to our business.
The Directors take the following into consideration in their decision-making process.
1. The likely consequences of any decision in the long term
We are committed to making strategic decisions that drive long-term growth and value creation for our shareholders. Within trading groups this includes investments in further exploration and securing potential mining licences, whilst within ANR further development and acquisition opportunities are considered where the Directors believe that additional value can be achieved.
2. The interests of the Company's employees
ANR itself has no employees other than the Directors.
The success of our trading businesses would not be possible without the dedication of our workforce. Those staff view health, safety, wellbeing, training, compensation, and career opportunities as being important, and we recognise the importance of attracting, retaining, and developing a talented workforce.
We are committed to providing a safe and inclusive working environment, and challenge local leadership groups to maintain the highest operational standards.
Our trading business RPZC has further invested in the development of both the Rosh Pinah town and living environment, and also in the healthcare facilities in the town which underpin the health of the employees of our mine.
3. The need to foster the Company's business relationships with suppliers, customers, and others
ANR itself has no key customers or suppliers, but instead focuses on maximising the value of its investments.
Within our trading businesses, we believe that maintaining strong relationships with our stakeholders is essential for long-term success. In particular, all zinc and lead concentrate sales are with a sole customer which places emphasis on maintaining a good relationship with that customer.
4. The impact of the Company's operations on the community and the environment
With no trading, ANR has no direct impact on the community or environment.
For the trading businesses, the Directors are aware that the Rosh Pinah site uniquely impacts the local community as it is one of two major employers in the region, which underpins the Rosh Pinah township's very existence. The Group has investments in ownership of the township.
Whilst mining has an unavoidable impact on the environment, the Directors seek strategic partnerships where possible to mitigate this impact. On 7 April 2021 the group entered into a 15 year renewable energy power purchase agreement with Emerging Markets Energy Services Company ("EMESCO") for the supply of solar power to the Rosh Pinah Mine.
5. The desirability of the Company maintaining a reputation for high standards of business conduct
Our Directors are committed to upholding the highest standards of ethical conduct and ensuring compliance with all relevant laws and regulations, both within ANR and its investments.
6. The need to act fairly between members of the Company
The Board aims to understand the views of its shareholders and always act in their best interest, whilst also balancing this with local decision-making requirements within trading investments.
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 December 2023.
The results for the period are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
On 24 June 2024, the group restructured its financing by way of a loan novation.
$39.9m, representing a Namibian Dollar value of N$730.2m and included in investments in note 11, which was interest-free, unsecured, and owed by a subsidiary, has been novated to RP FC (Jersey) Limited ("RPFC"), a related party by virtue of common control. As part of the novation, the loan's currency denomination has been converted from NAD to USD at the exchange rate as of the novation date, resulting in a revaluation to $40.3m, and as a result the Company was then owed this amount from RPFC. The replacement loan carries interest at 8% per annum, is unsecured, and is repayable to the Company on demand.
Subsequent to this transaction, on the same day the Company entered into a deed of waiver which released RPFC from its obligation to pay the Company. This transaction created a deemed distribution under UK company law, which was subsequently identified to be contrary to the provisions of company law as the Company did not have sufficient realised retained profits to make this distribution.
Accordingly, on 25 October 2024 the Company obtained approval from its shareholders of the reversal of this dividend via the obligations of those shareholders to return the shortfall in realised retained profits. This reversal of the dividend restored the Company's net assets and realised retained profits to the position in which these would have been had the waiver on 24 June 2024 not occurred.
Azets Audit Services Limited were appointed as auditor to the company on 26 March 2024 and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The company's UK emissions and energy consumption was less than 40,000 kWh of energy in the reporting period. As such the company qualifies as a low energy user and is exempt from reporting under SECR regulations.
As part of the regular budgeting and forecast process, the Directors have prepared cash flow forecasts covering a period in excess of 12 months from the date of approval of the financial statements and are satisfied that the company will have sufficient cash to meet its obligations as they fall due during this period.
The company has received a support letter from its shareholders, Appian Natural Resources Fund GP III and Appian Natural Resources (UST) Fund III LP, which confirms they will provide support to the company, including not recalling the borrowings of $50m which fall due on 8 December 2024, for at least twelve months from the date of signing of the financial statements.
On 24 June 2024, the group restructured its financing by way of a loan novation.
$39.9m, representing a Namibian Dollar value of N$730.2m and included in investments in note 11, which was interest-free, unsecured, and owed by a subsidiary, has been novated to RP FC (Jersey) Limited ("RPFC"), a related party. As part of the novation, the loan's currency denomination has been converted from NAD to USD at the exchange rate as of the novation date, resulting in a revaluation to $40.3m, and as a result the Company was then owed this amount from RPFC. The replacement loan carries interest at 8% per annum, is unsecured, and is repayable to the Company on demand.
Subsequent to this transaction additional changes were entered into, as disclosed in note 21.
Thus the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
We have audited the financial statements of ANR RP Limited for the period ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows, and the notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted International Financial Reporting Standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
the company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of director's remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias;
Performing audit work over the timing and recognition of revenue and in particular whether it has been recorded in the correct accounting period.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https:// www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to him in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
ANR RP Limited ("the company") is a private company limited by shares incorporated in England and Wales. The registered office is 100 Longwater Avenue, Green Park, Reading, RG2 6GP. The company's principal activities and nature of its operations are disclosed in the directors' report.
The company has selected 31 December as its year-end to align with other group companies. Therefore, these financial statements include a seven-month period and are hence not directly comparable to subsequent annual financial statements.
The financial statements are prepared in US dollars, which is the functional currency of the company,
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Financial assets are derecognised 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 to another entity.
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
The tax expense represents the sum of the tax currently payable and deferred tax.
The company's functional and presentation currency are the United States dollar.
Stamp duty denominated in British pounds has been translated into United States dollars at the spot rate for the transaction date of US$1=£0.7864.
Other transactions denominated in British pounds have been translated into United States dollars at the average rate for the year of US$1=£0.7975.
Monetary items denominated in British pounds at the year‐end have been translated at the closing rate at the last day of the reporting period of US$1=£0.7845.
Unrealised differences arising from the above and realised differences arising on settlement in the year are included in the appropriate income or expenditure category.
Transaction and balances
Transactions denominated in currencies other than the group’s functional currency, US dollar, are translated at the rate of exchange ruling at the transaction date. Monetary items denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Gains and losses arising on translation are credited to or charged to the statement of profit or loss and other comprehensive income.
Foreign currency hedges
Foreign currency hedges are dealt with in the financial instruments accounting policy.
Interest income
Interest income is recognised in the statement of comprehensive income using the effective interest method.
Finance costs
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
In the current period, the following new and revised Standards and Interpretations have been adopted by the company and have an effect on the current period or a prior period or may have an effect on future periods:
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Interests in subsidiaries, associates and jointly controlled entities are initially recorded at cost but subsequently measured at fair value on the grounds the investment held is as part of an investment portfolio. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
The inputs to the valuation model are broadly unobservable, although in all instances relate to an underlying asset-backed investment which has a readily determinable open market value in current condition and use, which itself is predominantly based on the underlying cashflows associated with the life-of-mine model. The valuation uses a discounted cashflow model with key uncertainties being around the remaining value and quality of ore reserves in the ground, the cost of extraction, the sale price of the mined goods (being driven by global commodity prices), and the discount rates applied to the cashflows.
The average monthly number of persons (including directors) employed by the company during the period was:
The charge for the period can be reconciled to the loss per the income statement as follows:
The corporation tax rate was 25% throughout the reporting period. All deferred tax balances are carried at 25%. As a result of the uncertainty of the timing of future taxable profits, tax losses carried forward and unrecognised total $1,127,000; if a deferred tax asset was recognised on this it would increase the net assets of the Company by $282,000.
On 23 June 2023, the Company acquired 100% of the issued share capital of GLCR Limited and its subsidiary undertakings, including the operating Rosh Pinah zinc mine, based in Namibia (as detailed in note 12) for a consideration of $145 million. The price paid for GLCR Limited was determined on an arm’s length basis from the previous owner, an unconnected third party, and accordingly the Directors have concluded that the value paid represents the fair value as at that date.
Given the short time period between the acquisition date, and the end of the company’s first reporting date, the Directors’ are of the opinion that there has been no significant change in the value of the investment.
A loan of $3.1m to Rosh Pinah Zinc Corporation (Proprietary) Limited also formed part of the transaction and is included in receivables below in note 14.
On acquisition of the GLCR Limited investment, the cashflows on acquisition represent the amounts paid, less a $6.00 million deposit paid by the controlling party prior to the incorporation of the Company (as detailed in note 25, plus transaction costs of $0.53 million.
The loans represent amounts advanced to Wilru Investments One Hundred and Thirty Four (Proprietary) Limited ("Wilru"), where the loan is interest-free with no fixed repayment terms. The underlying loan is denominated in Namibian Dollars and represents NAD$730.2m.
On 24 June 2024 the Company novated the entire loan owed from Wilru to a related party, which represented a partial settlement of the borrowings in note 16. Details of this are given in note 21.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Details of the company's joint ventures at 31 December 2023 are as follows:
Interest charged on the amounts owed from subsidiary companies is charged at a rate of 1.0% above the Scotiabank rate, on a compounding basis. The loan is repayable on 28 October 2032, or on an earlier date if demanded by the Company at an earlier date. As it is repayable on demand it is included in current assets even though no such demand is currently expected to be issued.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
Expected credit losses
No significant receivable balances are impaired at the reporting end date.
The Company has no trade receivables as a result of its status as an investment entity, and accordingly applies the simplified model to determine expected credit losses. As its receivables represent trading balances from subsidiaries and investment loans to subsidiaries, the expected losses on these are inherently linked with the assessment of the fair value of the investment in those subsidiaries (as detailed in note 11).
At the period end the Company has determined that cost approximates to fair value. It therefore follows that the loans remain recoverable on the same basis as when the Company first acquired beneficial ownership of those loans from a third party. It therefore follows that expected credit losses are not considered significant by the Directors.
Borrowings represent funds advanced to the company from shareholders Appian Natural Resources Fund III LP and Appian Natural Resources (UST) Fund III LP, in order to fund the acquisition of GLCR Limited. The loans are repayable on demand by the lender, or if not demanded by no later than 23 December 2024. Interest is payable on the borrowings at a rate of 5% per annum, compounding on the basis of a 360 day year. The Company may prepay any part of the loan at any time. The capital outstanding is $50,000,000. The loan is unsecured.
The carrying amounts of financial liabilities which expose the company to cash flow interest rate risk are as follows:
The Company's borrowings are on a 5% fixed basis until December 2024, as disclosed in note 16. Such borrowings are with related parties of the Company.
The value of the investment into GLCR Limited and its subsidiary which operates the Rosh Pinah mine is subject to a number of assumptions and macro-economic influences, meaning that determination of its value is predominantly based on the underlying cashflows associated with the life-of-mine model at Rosh Pinah and how the cashflows may derive from this. The life-of-mine model uses a discounted cashflow model with key uncertainties being around the remaining value and quality of ore reserves in the ground, the cost of extraction, the sale price of the mined goods (being driven by global commodity prices), and the discount rates applied to the cashflows. In particular, the price of commodity is an unknown input and is entirely outside the control of the Company, and therefore the Company's investment values carry significant exposure to these risks.
Foreign exchange risk
The Company is exposed to foreign exchange movements, predominantly on its investment loans to Wilru Investments One Hundred and Thirty Four (Proprietary) Limited ("Wilru"), which are shown in note 11. These loans are denominated in Namibian Dollars.
Had the Namibian Dollar depreciated against the US Dollar by 5%, this would have resulted in a loss of approximately US$1.996m (appreciated by 5% - a gain of US$1.996m).
Included within accruals is $1,438,000 of accrued but unpaid interest which is payable on the borrowings as detailed in note 16.
On incorporation, 10,000 ordinary shares of $0.01 were issued at par value. On 20 June 2023 a further 9,856,604,000 ordinary shares of $0.01 were issued at par value.
The Company has not paid remuneration to any key management personnel, including directors, during the year, as defined in IAS 24 Related Party Disclosures. However, the Company has paid Centralis UK Limited for commercial management of the Company's activities which includes provision of Adam Hewitson and Amy Lister as directors, for which fees of $40,000 have been expensed to the Income Statement.
Loan interest of $1,624,000 was paid to shareholders Appian Natural Resources Fund III LP and Appian Natural Resources (UST) Fund III LP and is included in the interest note.
The following amounts were outstanding and owed from related parties as at the period end date:
The following amounts were outstanding and owed from related parties as at the period end date:
Subsequent to the year end the loan from Wilru has been novated and subsequently waived, as explained in note 21.
Major non-cash transaction
Prior to incorporation of the Company, a deposit of $6,000,000 was paid by the controlling party, on behalf of the company, in respect of the acquisition. This was netted off the acquisition cashflows and recognised as a loan to the controlling party on the Statement of Financial Position. This was repaid by the company prior to the year end.