2021
I N T E G R AT E D
A N N U A L R E P O R T
CONTENTS
01 GROUP OVERVIEW
About Minergy | 02 |
Highlights of the year | 02 |
Milestones and successes | 02 |
Understanding the role of coal | 03 |
Minergy business model and sales strategy | 04 |
Mine attributes, location and infrastructure | 06 |
Management of risk | 10 |
02 LEADERSHIP FEEDBACK
Chairman's report | 13 |
Chief Executive Officer's report | 15 |
Acting Chief Financial Officer's report | 18 |
03 RESOURCE INFORMATION
Mining licence | 22 |
Coal Resource and reserves | 22 |
04 APPROACH TO ENVIRONMENT,
SOCIAL AND GOVERNANCE ("ESG") TO SUPPORT SUSTAINABILITY
Carbon emissions | 25 |
Environment | 26 |
Social | 28 |
Corporate social investments | |
and community support | 32 |
Social and ethics committee report | 33 |
Stakeholder engagement | 34 |
Board of directors | 38 |
Corporate governance report | 40 |
Remuneration and nomination committee report | 45 |
Audit and risk committee report | 49 |
05 SHAREHOLDER INFORMATION
Interaction with shareholders | 51 |
Shareholders' diary | 51 |
Shareholder analysis | 52 |
06 GROUP ANNUAL
FINANCIAL STATEMENTS
Directors' responsibilities and approval | 53 |
Directors' report | 54 |
Independent auditors' report | 56 |
Statements of financial position | 58 |
Statements of comprehensive income | 58 |
Statements of changes in equity | 59 |
Statements of cash flows | 59 |
Notes to the annual financial statements | 60 |
07 NOTICE OF ANNUAL
GENERAL MEETING
Notice of annual general meeting | 82 |
Form of proxy | 85 |
Corporate and general information | 87 |
ABOUT THIS REPORT
Minergy Limited's 2021 Integrated Annual Report aims to provide a balanced, transparent, understandable and complete view of our business by reporting on the financial performance and non-financial aspects of the Group.
References to "Minergy" or "the Company" in this report are to Minergy Limited. References to "the Group" in this report are to Minergy and its subsidiaries Minergy Coal Pty Limited and Min Sales Pty Limited."
The 2021 Integrated Annual Report (referred to herein as the "report", "IAR", or Integrated Annual Report) covers a review of the Group as it pertains to the Masama Coal Mine and the status of saleable coal production, future developments, the management of risk, stakeholders and the way in which Minergy interacts with them, an extract from the Competent Persons Report ("CPR"), aspects pertaining to environment, social and governance ("ESG"), as well as the market into which Minergy's products are sold. It contains the consolidated annual financial statements of Minergy for the financial year ending 30 June 2021 and the notice of Annual General Meeting ("AGM").
This report further indicates, via this icon, where additional information is available on the Company's website.
THE REPORT IS GUIDED BY:
- The King Code of Governance Principles for South Africa ("King IV™")
the King IV™ application summary is contained on the Company's website: www.minergycoal.com
- The Botswana Companies Act, CAP 42:01, as amended ("the Companies Act")
- The Equity Listing Rules of the Botswana Stock Exchange ("BSE")
- Where applicable, the CPR, which reports the Group's Resources and Reserves, and which was independently prepared in accordance with The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves 2016 Edition ("SAMREC CODE")
- The annual financial statements are prepared and presented in accordance with International Financial Reporting Standards ("IFRS") and in accordance with the laws of Botswana.
BOARD RESPONSIBILITY STATEMENT
Minergy's board of directors ("the Board") confirms its responsibility for the integrity of the report, the content of which has been collectively assessed by the Directors, who believe that all material issues have been addressed. The annual financial statements have been audited by the independent external auditor, Grant Thornton Botswana, in accordance with the Companies Act, as indicated in their report, but no other information contained in the IAR has been independently assured apart from an extract from the CPR. The audited full year consolidated financial statements were prepared by the Acting Chief Financial Officer, Julius Ayo (Bachelor of Accounting ("BACC") and Association of Certified Chartered Accountants ("ACCA")), under the supervision of the Chief Executive Officer ("CEO"), Morné du Plessis CA(SA).
BOARD APPROVAL
The Board acknowledges responsibility for ensuring the integrity of this Integrated Annual Report. Following collective assessment, the Audit and Risk Committee, responsible for oversight of the IAR, recommended approval of the report by the Board.
In the Board's opinion, the Integrated Annual Report provides a fair and balanced representation of the integrated performance of the Company and addresses all material issues and presents the performance of Minergy fairly. The Board accordingly approved the IAR on 20 October 2021.
Mokwena Morulane | Morné du Plessis |
Independent Non-executive Chairman | Chief Executive Officer |
Leutlwetse Tumelo | Claude de Bruin |
Non-executive Director | Non-executive Director |
Cross Kgosidiile | Leonard Makwinja |
Non-executive Director | Non-executive Director |
01
01
GROUP OVERVIEW
ABOUT MINERGY
HIGHLIGHTS OF THE YEAR
About Minergy | 02 |
Highlights of the year | 02 |
Milestones and successes | 02 |
Understanding the role of coal | 03 |
Minergy business model | |
and sales strategy | 04 |
Mine attributes, location | |
and infrastructure | 06 |
Management of risk | 10 |
Minergy is the holding company of the Minergy Group and the development and operation of the Masama Coal Mine represents the first step in the strategy of becoming a mid-tier southern African coal mining company.
Minergy is a Botswana registered company listed on the main board of the Botswana Stock Exchange ("BSE"), with a proposed listing on a second international stock exchange planned.
The Masama Coal Mine is located on the south-western edge of the Mmamabula Coalfield in southern Botswana, 60km northeast of Gaborone, and has access to a rail siding situated at Tshele Hills.
Additional information is available on the Company's website.
NAMEPLATE
CAPACITY IMMINENT
RECOVERING
COAL MARKET
COVID-19
LINGERING EFFECTS
OPERATIONAL
Mining and plant throughput volumes increased with 50% and 37% respectively
Coal sales increased by
110% to 416 185 tonnes
STABILISING
PRODUCTION
ENVIRONMENT
DELAYED
FUNDING
CONSEQUENCES
FINANCIAL
Revenue increased by 138% to P193 million (2020: P81 million)
Operating loss for the year improves to P86 million
MILESTONES AND SUCCESSES
2020
Additional off-takeagreement concluded
(2020: loss P100 million)
Net cash used in operating activities improves to P37 million (2020:
2017
- Completed exploration drilling
- Submitted Environmental Impact Assessment ("EIA")
2019
‣ Mine development completed |
‣ Commissioned stage 1 of the Coal |
Handling and Processing Plant ("CHPP") |
‣ First coal sales |
- Second and third tranche of debt raised
- Ramp-upoperations halted by COVID-19
- Rail siding completed
- Commissioned CHPP rigid screening section
Exported first coal via rail to cement producer in South Africa
Commissioning of CHPP rigid screening
Dewatering circuit section and filter press of CHPP commissioned with a resultant saving of 60% of water previously used per tonne of coal
P105 million used in operating activities)
Debt funding amounting to P125 million secured
Listed on main board of the Botswana Stock Exchange ("BSE")
2018
- EIA approved
- Mining licence awarded
- Commenced mine development
Additional equity raised
‣ Ramped-up operations |
‣ First tranche of debt raised |
3 year off-take agreement secured
2021
- Commissioned CHPP Dewatering System ("DWS") and filter press
- Ramp-upoperations close to nameplate capacity
- Additional off-take agreement concluded
Coal market recovery
HEALTH AND SAFETY
More than 1 000 days since mine inception with zero injuries
Mine recorded 60 positive COVID-19 cases with no loss of life
COVID-19 plan in place which has allowed for effective management
No reportable accidents,
injuries or fatalities
SOCIAL
95% of workforce is Batswana
Corporate social responsibility remains core to Minergy for communities in and around
the mining area
02
UNDERSTANDING THE ROLE OF COAL
COAL IS AND WILL REMAIN AN ESSENTIAL AND CRITICAL COMPONENT TO ECONOMIC DEVELOPMENT.
"The world still needs coal - not only is coal the affordable choice for energy in many markets, but it remains the only viable choice for critical industries. Coal is critical to our world, through its use in providing much-needed affordable electricity and also in building our societies through its use in steel and cement. 37% of the world's electricity and over 70% of the world's steel is produced using coal."
World Coal Association ("WCA")
Coals remains the world's largest single source of electricity, with the WCA estimating that by 2040 coal will still account for 22% of the world's electricity generation.
In the developing world, which Africa is a part of, coal remains the principal input for affordable electricity generation. Yet, as reported by Engineering News in an article published on 27 July 2021, "24 of Africa's 54 countries have electricity access rates of below 50%" meaning that 600 million of Africa's people lack access to electricity". Countless studies prove that access to affordable electricity directly supports a better quality of life and promotes economic development and prosperity, because education, health and productivity are improved.
In 2010, the World Economic Forum defined energy poverty as "the lack of access to sustainable modern energy services and products." According to Rose M. Mutiso, Research Director at the Energy for Growth Hub, "Energy poverty, or the lack of access to electricity and other basic energy services, affects nearly two-thirds of Sub-Saharan Africa. As the region's population continues to increase, so will the need to build a new energy system to grow with it."
In Minergy's opinion, coal will remain an essential component for years to come, not only for base load electricity generation, but more importantly, for the prosperity that this base load power creates. In developing nations, notwithstanding the desire to switch to greener options, it is in no way affordable. We believe that the solution lies in a responsible and just energy transition that takes technology into account and which supports clean coal and a structured move towards a balance between renewable energy and the cheaper coal alternatives.
WHY BOTSWANA CAN PARTICIPATE
IN THE REGIONAL SUPPLY OF COAL
>200bn
TONNES OF ESTIMATED COAL RESERVES
High quality
AND HIGHLY ECONOMICAL RESERVES
LOW ASH/SULPHUR
(I.E. LOWER STRIP-RATIOS AND LOW CONTAMINANTS)
Provides
DIVERSITY FROM TRADITIONAL INCOME SOURCES
SUCH AS TOURISM AND DIAMONDS
Stable
GEOPOLITICAL ENVIRONMENT AND POLITICAL SUPPORT FOR COAL INDUSTRY DEVELOPMENT
Coal and renewables are not enemies Coal has and will provide the affordable baseload which enables renewables. Any unjust transition has significant economic implications especially in developing continents such as Asia and Africa.
It has recently emerged that Botswana is planning to develop six new coal mines, importantly with rail links to support the export of coal through South Africa via the Richard's Bay Coal Terminal. The Botswana government is prepared to investment money into these projects alongside investors from China, to provide the impetus the sector needs.
- Make no mistake, we all subscribe to a cleaner world," Lefoko Moagi, Botswana's minerals minister, told a local newspaper last year. "But we believe that we just can't leave an abundance of a God-given resource like that."
Extract from Moneyweb article published on 12 July 2021
- If this energy transition is to take place, especially in southern Africa and everyone gets together, with the right intentions, partnerships can be formed and great things achieved."
Morné du Plessis, Minergy CEO
Minergy is supportive of a just energy transition, but for reasons mentioned earlier in this section, it believes that for the developing southern African region, this is going to take a long time. Furthermore, this transition cannot take place to the detriment
of economic development, especially for those who live in energy poverty, because to stimulate economic growth and human prosperity, access to affordable energy is vital.
A just energy transition impacts not just the mining and power generation industry. Peripheral industries such as cement, boiler operations amongst others are also impacted and not considered.
Minergy is committed to adopting the necessary technology and evaluating greening options and supports the deployment of cleaner coal technologies.
We believe that technology is key to cleaner coal to support and meet environmental goals, but that coal will continue to be
a critical component to economic development for the foreseeable future, particularly in Africa.
03
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Minergy Ltd. published this content on 25 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2021 06:25:06 UTC.