Independent auditors have identified prolonged development delays at Karo Mining Holdings Plc’s flagship platinum project as a key audit matter, while issuing an unmodified audit opinion on the group’s consolidated and separate financial statements for the year ended 30 September 2025 .

In their report, auditors BDO Limited noted that development of the Karo Platinum Project was extended during the financial year due to delays in concluding project funding arrangements. As a result, management identified indicators of impairment and conducted impairment testing on mine development assets and related investments, which together represent the most significant portion of the group’s balance sheet .

As at 30 September 2025, property, plant and equipment amounted to US$174.2 million, largely comprising mine development costs of US$170.0 million associated with the Karo Platinum Project. In the company’s separate financial statements, investments in Karo Zimbabwe Holdings and its subsidiaries, including debt and equity instruments, carried a total value of US$187.1 million .

The auditors reported that impairment assessments were performed using discounted cash flow models based on value-in-use calculations. These assessments incorporated assumptions relating to future commodity prices, production volumes, capital and operating costs, discount rates and the timing of project funding. BDO stated that it evaluated these assumptions, tested the mathematical accuracy of the models and assessed the group’s ability to secure the required funding.

"Property, plant and equipment primarily comprise mine development assets, which include costs incurred for the development. of the Karo Platinum Project (the 'Karo mine') in the total carrying amount of USS 169 972 260 at 30 September 2025. The Karo mine is held through the Company's investments in Karo Zimbabwe Holdings (Private) Limited and its subsidiaries," the auditors noted.

"During the year ended 30 September 2025, the development of the Karo mine was prolonged due to the funding process not being concluded, with negotiations at an advanced stage to secure the required project funds.

"As a result of the prolonged development of the Karo mine, an impairment indicator was identified by management and the carrying values of property, plant and equipment and the investments in Karo Zimbabwe Holdings (Private) Limited and its subsidiaries were tested for impairment in the consolidated and separate financial statements of the Company, respectively, based on the estimated recoverable amount of the Karo mine at 30 September 2025 which was determined on the basis of value in use calculations using a discounted cash flow forecast model, and a number of Inputs and assumptions determined with the assistance of experts."

Despite the significance of these judgements, the auditors concluded that the consolidated and separate financial statements present a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and Cyprus Companies Law .

Financially, the group recorded a loss after tax of US$2.2 million for the year ended 30 September 2025, compared with a loss of US$2.5 million in the prior year. Operating losses widened to US$3.0 million, reflecting ongoing project development costs, while finance income increased to US$815,000 .

Total assets increased to US$182.0 million from US$156.6 million, driven mainly by continued capital expenditure on mine development. Equity attributable to shareholders rose to US$137.1 million following additional capital injections, while total borrowings stood at US$37.9 million at year-end .

The auditors also reviewed the group’s going-concern assessment, which is based on continued financial support from its parent company, Tharisa Plc, access to existing funding facilities, and ongoing efforts to secure additional project finance. No material uncertainty related to going concern was identified at the date of approval of the financial statements .

Meanwhile, Spanish engineering firm EPSA has won the contract to develop Tharisa’s Karo Platinum Mine in Zimbabwe and will be on site this month, marking its first project in the country. The project had been delayed by weak platinum prices, but a 45% market recovery in 2025 has improved the mine’s fundability and debt capacity. Mining operations are now expected to begin in 2027.

Karo reports progress on critical infrastructure, including water and power supply, with mills already installed on site. The company says key fiscal provisions are being finalised with strategic partners and the Government of Zimbabwe to ensure the project’s bankability and secure long-term funding.