Keras Resources : 2023 Interims

Registered no. 07353748

KERAS RESOURCES PLC

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2023

KERAS RESOURCES PLC

CONTENTS

KERAS RESOURCES PLC

COMPANY INFORMATION

Canary Wharf

London E14 4HD

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KERAS RESOURCES PLC

CHAIRMAN'S REVIEW

FOR THE SIX MONTHS ENDED 30 JUNE 2023

I am pleased to provide an update on our progress since the last report and to set out our outlook for the business going forward.

2023 has been a transformative year for Keras with the unbundling of our investment interest in the Nayéga manganese mine in northern Togo and the focus on becoming the pre-eminent high grade organic phosphate producer in North America.

The Diamond Creek phosphate mine

The Diamond Creek phosphate mine, which is believed to be one of the highest grade organic rock phosphate deposits in the US, comprises an opencast operation located on an 840 acre Federal Lease located approximately 80km southeast of Salt Lake City, Utah. Our focus going forward is to build the operation into the premier high-grade organic phosphate producer in the US.

Our target market is the sustainable, organic agriculture sector and we are strong advocates for the benefits of enhancing soil health and reducing the impact that synthetic fertilisers have on water resources. Our organic phosphate fertilizer products help farmers realise better crop growth without sacrificing yields, and reduces the soil degradation seen when farmers use chemically manufactured fertilisers, while at the same time reducing the carbon footprint associated with growing their crops.

Sales for the first six months of 2023 were 2,192 tons sold, compared to the first six months of 2022 of 1,896 tons. Year to date sales total 3,467 tons. The lower than expected first half sales volume were a result of an extended Utah winter and flooding throughout the Central California Valley which impacted several key clients. High producer price inflation in the US also impacted on buying patterns of organic fertilizer feedstocks as aggregators and blenders preferred to preserve cash rather than build fertilizer stocks as cost pressures impacted their own operations.

Mining has commenced, later than initially planned as a result of both cash flow and inventory management which is a priority. Given our existing saleable inventory, mining for the 2023 season, between now and end-November will be between 2,500 and 4,000 tons dependent on offtake commitments from customers. Although sales for the first half of the year were below expectations, we are confident that these will pick up in the fourth quarter as seen during the same period in 2022. In addition to our own sales of dry crushed and milled product we have now seen a significant interest in organic fertiliser blenders who have now undertaken testwork on our high-grade phosphate rock to be incorporated in their blends. The results of this testwork have been positive and we look forward to updating shareholders once commercial terms have been agreed. As a company we believe that longer term offtakes with fertiliser blenders will form a significant proportion of our sales going forward.

Togo

In May 2023 the Company announced an agreement with the Republic of Togo (the "State") on a way forward for the Nayéga Manganese project ("Nayéga") in Northern Togo. Keras and the State agreed that Nayéga is a Togolese strategic asset and the exploitation permit will be awarded to Société Togolaise de Manganèse, a Togolese incorporated company 100% owned by the State ("STM") and Keras will no longer pursue the Nayéga exploitation permit.

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KERAS RESOURCES PLC

CHAIRMAN'S REVIEW

FOR THE SIX MONTHS ENDED 30 JUNE 2023

The State paid Keras a cash consideration of US$1.7m (one million seven hundred thousand United States dollars) on

17 July 2023 and thereafter:

• Keras will be paid an advisory fee of 1.5% (one and a half percent) of gross revenue generated from the Nayéga mine for the provision of advisory services for 3 (three) years; and
• Keras will be paid 6.0% (six percent) of gross revenue generated from the Nayéga mine for the provision of brokerage services for the lesser of 3.5 (three and a half) years or 900,000 (nine hundred thousand) tonnes of beneficiated manganese ore produced and sold from Nayéga.

Since the agreement was signed in May, the Company and State have had positive discussions regarding the development of Nayéga. This process continues and the Company believes that the continued constructive dialogue between the Company and the State will stand the project in good stead, and we look forward to updating shareholders on the way forward.

Financial review

The results for the 6 months ended 30 June 2023 show a loss of £255,000 compared to the six-month period ended 30 June 2022 of £467,000. The reduced loss was due to increased revenue of £397,00 (2022: £212,000) and a profit on sale of intellectual property of £184,000.

On 13 April 2023 Chris Grosso from Kershner Grosso & Co. ('Kershner Grosso'), a Saratoga Springs, New York State based Investment Advisor acquired First Uranium Resources Ltd's (CSE: URNM) (KMMIF:OTC) ('First Uranium') entire holding of 8,000,000 ordinary shares of 1 pence each in the Company ("Ordinary Shares") representing 10% of the Company's issued share capital. Subsequent to his initial investment he has increased his holding to 15.64%. The Keras Board is very pleased to have Kershner Grosso on board as a cornerstone shareholder. Kershner Grosso's investment philosophy is very much aligned with Keras's growth strategy in the US and the relationship is expected to provide access to new markets and opportunities throughout North America.

On 4 July 2023 the Company announced receipt of the US$1.7m cash consideration from the Republic of Togo and made cash payments of US$800,000, being part of the consideration for the acquisition of Falcon Isle Resources LLC Falcon Isle Holdings LLC ("Falcon Isle"), and US$240,000, being part of a severance payment to the former CEO of Falcon Isle which totalled US$340,000.

Outlook

Although it has been a tough first half of the year, the Company remains very positive about both the future of Diamond Creek and the fertiliser market macro-economic conditions that underpin its future. We are mining an essential resource that can create value, be part of the greener economy and contribute to a more sustainable future. As a mining company we remain ever conscious of our obligations and commitments in line with best environmental, social and governance ("ESG") practice and will continue to take the initiative within this area.

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