Katoro Gold : Annual Report & Financial Statements for the year ended 31 December 2020

KATORO GOLD PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31 DECEMBER 2020

KATORO GOLD PLC	ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
CONTENTS
CORPORATE DIRECTORY		1
CHAIRMAN'S REPORT		3
STRATEGIC REPORT		5
CORPORATE GOVERNANCE REPORT	10
DIRECTORS' REPORT		13
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS	21
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	26
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	27
COMPANY STATEMENT OF FINANCIAL POSITION	28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	29
COMPANY STATEMENT OF CHANGES IN EQUITY	30
CONSOLIDATED STATEMENT OF CASH FLOWS	31
COMPANY STATEMENT OF CASH FLOWS	32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	33
NOTES TO THE ANNUAL FINANCIAL STATEMENTS	41

KATORO GOLD PLC	ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
CORPORATE DIRECTORY
BOARD OF DIRECTORS:		Louis Coetzee	Chairman (Executive)
		Louis Scheepers	Non-executive director
		Myles Campion	Non-executive director
		Paul Dudley	Non-executive director
		Lukas Maree	Non-executive director
COMPANY SECRETARY:		Ben Harber
		Shakespeare Martineau LLP
		6th Floor
		60 Gracechurch Street
		London
		EC3V OHR
REGISTERED OFFICE:		6th Floor
		60 Gracechurch Street
		London
		EC4V OHR
BUSINESS ADDRESS - UK:		6th Floor
		60 Gracechurch Street
		London
		EC4V OHR
BUSINESS ADDRESS - CYPRUS:	Kolonakiou 57
		Ag. Athanasios
		4103, Limassol
		Cyprus
BUSINESS ADDRESS - TANZANIA:	Peugeot House,
		Plot No. 36,
		Bibi Titi Mohamed Road,
		Dar es Salaam, Tanzania
AUDITORS:		Crowe U.K. LLP
		55 Ludgate Hill
		London
		EC4M 7JW
STOCK EXCHANGE LISTING:	London Stock Exchange: AIM (Share code: KAT)
SHARE REGISTRARS:		Link Market Services
		The Registry
		34 Beckenham Road
		Beckenham
		Kent
		BR3 4TU
PRINCIPAL BANKERS:		Barclays Bank Plc
		Priory Place
		Level 3 New London Road
		Chelmsford
		Essex
		CM2 0PP
BROKER:		SI Capital Ltd
		46 Bridge Street
		Godalming
		GU71HL

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KATORO GOLD PLC	ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
CORPORATE DIRECTORY
SOLICITORS:	Druces LLP
	Salisbury House
	London Wall
	London
	EC2M 5PS
NOMINATED ADVISER:	RFC Ambrian Limited
	Octagon Point
	5 Cheapside
	London
	EC2V 6AA
WEBSITE:	www.katorogold.com
DATE OF INCORPORATION:	11 November 2014
COMPANY NUMBER:	09306219

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KATORO GOLD PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

CHAIRMAN'S REPORT

2020 was a year like no other. The worldwide COVID-19 pandemic turned many lives up-side down, whether from a financial, business or indeed personal perspective. Katoro, however, is grateful to look back on a year of many achievements. As Chairman I would like to take this moment to thank Katoro's Directors, Management, business partners and shareholders alike for their dedication and commitment shown during this challenging period.

2020 Overview

2020 was a year in which Katoro consolidated its strategy and made great strides in its quest to first production.

In Tanzania, the Company advanced the Haneti Polymetallic Project and announced at the year-end that drilling had commenced. The drill programme was designed to provide enhanced information of the subsurface shape and orientation of the ultramafic rock bodies being targeted and allowing for the optimisation of a planned follow-on diamond drill programme.

Furthermore, the Company completed technical work related to the upgrade and restatement of the Blyvoor Gold Tailings Project resource statement. Significant progress was made towards securing the necessary funding, sufficient to fund the construction and commissioning of a Beneficiation Plant and auxiliary operations.

The Company also finalised the disposal of the Imweru project by executing the sales transaction with Lake Victoria Gold. Following assessment of the recoverability of the remaining consideration receivable from the counterparty, management thought it prudent to raise a provision for impairment, and resultantly the Group impaired its financial asset receivable and investment in subsidiaries in the amount of £652,815 and £1,023,706 respectively as at December 2020.

The Company further strengthened its balance sheet with financing of approximately £3m during the period, including a capital placing raise toward the end of the year of £960k that was conditional to and received shareholder approval at a General Meeting ('GM') that was held on 15 January 2021. We would like to thank the shareholders for their continued support.

The Haneti Polymetallic Project

The Haneti Project comprises prospecting license portfolio for nickel, PGMs and gold in central Tanzania forming a near contiguous project block. Intensive historic field and study work was done on the principal target zone, an 80km long ultra-mafic belt with grades of up to 13.6% nickel and 2.33g/t combined PGM's. During the period the licence for the Haneti nickel deposit expired and the group submitted the application for the renewal of the licence and paid the relevant fee, all within the allowed timelines. Management considers that the issuance of the renewed license is an administrative delay.

During the reporting period, Katoro developed and implemented plans to drill a two-stage programme at Haneti, focusing on nickel sulphide and PGM targets at Mihanza Hill and Mwaka Hill, the two priority targets. The first of these two stages, a 2000m Rotary Air Blast ("RAB") maiden drill programme was implemented during late December 2020 and completed six weeks later. The second stage, depending on the results of the RAB programme would be to follow up with a limited diamond drill programme. As the RAB programme still collected material from the weathered zone, the purpose of the second phase would be to collect fresh rock material at depth, in order to further refine planning for an intense diamond drilling campaign.

The Haneti Joint Venture was further strengthened in August, with Power Metal Resources plc (LON:POW) acquiring a further 10% taking their holding to 35% with Katoro retaining 65%.

Katoro continued to receive approaches with a view to earn-in, joint venture or other similar structures in respect of the project, with a primary focus on the nickel sulphide potential. Discussions with our joint venture partner Power Metal Resources continued with regard to these approaches.

The Blyvoor Gold Tailings Project

In early 2020 the Company entered into a strategic gold production opportunity in South Africa, focused on the reprocessing of an existing 1.34 million ounce of gold JORC compliant tailings resource. Katoro entered into a binding conditional agreement to form a 50/50 unincorporated joint venture.

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