Company Announcements

Neo Energy Metals plc / LSE: NEO, A2X: NEO / Market: Main Market of the London Stock Exchange

28 June 2024

Neo Energy Metals plc

('Neo Energy' or 'the Company') 

Interim Consolidated Results for the Six-Month Period Ended 31 March 2024 (the Period)

Neo Energy Metals plc ('Neo' or the 'Company'), the near term, low-cost uranium developer, is pleased to announce the publication of its half year unaudited financial accounts.

The Directors present their report on the consolidated entity consisting of Neo Energy Metals Plc and the entities it controlled (the 'Group') at the end of, or during, the half-year ended 31 March 2024 (the 'Period').

On 1 November 2023 the at a General Meeting of the Company, resolutions were passed approving the Reverse Take Over of the Company by Neo Energy Metals, as outlined in the FCA approved Prospectus issued on the 5 October 2024.  As part of this transaction the Company raised GBP4.9 million, with certain subscriptions being paid in agreed instalments, gross of fees and costs through a Subscription for Shares and a Placing of Shares at 1.25 pence per Ordinary Share. Subsequently, on 10 November 2023, the company raised a further £500,000 via a placing at 1.25p per share.  The Company was readmitted to trading on the 9 November 2023.

The largest proportion of the funds (£3.5 million) was provided by Q Global Commodities Ltd (QGC) via its affiliate AUO Commercial Brokerage LLC (AUO). QGC, headed up by Quinton van der Burgh, is one of South Africa's largest privately owned mining houses, that has established more than 45 mines throughout Sub-Saharan Africa from greenfield status through to production and exports of materials to the global commodity markets. QGC is actively expanding its metal mining interests throughout Southern and East Africa through direct equity investments and partnership and co-development agreements with several emerging mining and exploration companies including Neo Energy.

Neo Energy is a Uranium developer and mining company listed on the main market of the London Stock Exchange (LSE: NEO). The company holds up to a 70% stake in the Henkries Uranium Mine, an advanced, low-cost shallow resource located in South Africa's Northern Cape Province. It has been estimated by some that the historical investment in the project was over US$30 million in exploration and feasibility studies, Neo Energy aims to increase the project's mineral resources and complete an updated feasibility study ahead of a determination of the development schedule at the end of 2024 to bring Henkries into production.

Directors' Report

The following comprises the Board changes during the Period:

In addition to the above, a regional management team at the project site were engaged and local community interaction has been significantly advanced during the period.  At site over 2000 surface samples from Henkries North were collated and prepared for transport and have been moved to Johannesburg in preparation for analysis once the new drilling program commences, these samples have the potential to increase the resource base of Henkries by over 1 million lbs of U3O8.

The Company received its updated National Nuclear Regulator COR license for the site and radiometric training of several employees to comply with the ongoing compliance requirements. year.

Erudite Strategies were engaged at the end of March 2024 to update the Capital and Operating Cost estimates of the 1979 AOL Feasibility Study, the results of which were released in May.  The report confirms that Henkries is a low capital and operating cost project that will yield significant returns in the buoyant uranium market.

Moving into the second half of the year, Neo will kick off the exploration drilling program of at least 6500m, with the aim of:

·    Confirming the CPR indications that Henkries has at least 7 million pounds of U3O8 in the resource base

·    Define the measured resource for the first years of operation

·    Upgrading the total resource base by at least another 3 million pounds of U3O8 to the target case of 10 million lbs

In addition, the Company will start the environmental impact assessment (EIA), progress the engineering design of the project and apply for the Mining Rights.

During the Period, the Company advanced discussions with AUO in respect to a restructuring of the tranches of payment due from AUO under its subscription agreement. This will result in an acceleration of the payments, with the last tranche of funds being received six (6) months earlier than stated in the Listing Prospectus, enabling the Company to fast track the engagement of the contracts required to develop the project.  The Directors continued to increase their shareholding in the Company with both on market and off market purchases of shares and introduced an option scheme for Directors to further support the Company with share purchases, no options were exercised in the period.

In line with the broader strategy of increasing the Company's uranium resource base, there have been significant negotiations around future acquisitions, which are now at an advanced stage.

Outlook

The increasing global demand for electricity and the global shift towards low carbon energy sources will require a significant increase in nuclear power generation and uranium demand. At COP 28 in November the 21 nuclear power generating nations pledged to triple their installed capacity by 2050, and many nations have already announced new reactor projects, all of which will drive the demand for uranium well above the already robust levels outlined in the WNA forecast of September 2023.  We have already seen the spot U3O8 price increase from US$65/lb in 2023 to the current US$90/lb, with market experts predicting significant rises above this level in the coming years. Offtake discussions have continued with several parties in the backdrop of the strongly appreciating uranium spot market, alongside project funding discussions.

Financial Review

The main feature of these interim condensed consolidated financial statements is the first-time consolidation of the two subsidiaries of Neo Energy Metals PLC, being an initial 50.1% interest in Desert Star Trading 130 Proprietary Limited ("Desert Star") and Neo Uranium South Africa Proprietary Limited ("NURSA"). The overall consolidated loss of £3.15million is made up primarily of administrative expenses of £1.041 million incurred on the run up to and during the RTO process together with the actual costs of the takeover of £3.378m. These costs are partly offset by the write back to Profit and loss of the gain on the settlement of the bonds of £1.401 million. The interest costs in the Profit and loss relate to the final interest payments on the bonds. As these are now fully settled and the debenture charge over the company's assets is now fully satisfied. The ongoing running costs of the company will now normalise and will be primarily administrative and costs in connection with the development and preparation of the Henkries Uranium resource and mine together with the exploration costs in connection with enhancing the company's resource at Henkries.

Risks and uncertainties

The Company has only a brief operating history, and therefore, investors have a limited basis on which to evaluate the Company's operations to date. Nevertheless, it has met all the targets it set out in the published prospectus by the half year end reported herewith and discussed above in the Executive Chairmans Report.

Going Concern

The interim condensed consolidated financial statements have been prepared on a going concern basis. The Group's assets are not currently generating revenues and therefore an operating loss has been reported, comprising largely ongoing administrative expenses and expenses of the Reverse Takeover, together with a gain on the settlement of the bond.  An operating loss is expected in the 12 months after the date of these financial statements. As a result, the Group will raise equity funding, which has already been provided for in the published prospectus and as detailed above and will not provide further dilution beyond that already disclosed, to provide additional working capital within the next 12 months. The ability of the Group to meet its projected expenditure is dependent on these further equity injections and / or the raising of cash through bank loans or other debt instruments.

Responsibility Statement

The Directors confirm that the condensed interim financial information has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely: an indication of important events that have occurred during the first twelve months and their impact on the condensed interim financial information, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and material related-party transactions in the first twelve months and any material changes in the related-party transactions described in the last Annual Report.

Cautionary statement

This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

Sean Heathcote

Director

28 June 2024

NEO ENERGY METALS PLC

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

NEO ENERGY METALS PLC

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION