REG - Phoenix Copper Ltd - Interim Results
28/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230928:nRSb9056Na&default-theme=true
RNS Number : 9056N Phoenix Copper Limited 28 September 2023
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
28 September 2023
Phoenix Copper Limited
("Phoenix" or the "Company", together with subsidiaries the "Group")
Interim Results
Phoenix Copper Ltd (AIM: PXC, OTCQX ADR: PXCLY), the AIM-quoted USA-focused
base and precious metals emerging producer and exploration company, is pleased
to announce its unaudited interim results for the six months ended 30 June
2023 (the "Period").
Year-to-date Highlights
Corporate & Financial
- Investment in Empire Mine increased to $35.88 million (2022:
$29.73 million)
- Group reports loss of $0.63 million (2022: loss of $1.052 million)
- Period-end net assets of $37.39 million (2022: $38.22 million)
- Company reports a profit of $309,759 (2022: loss of $368,534)
- Company loans to operating subsidiaries increased to $29.63
million (2022: $25.23 million)
- Corporate copper bond documentation being finalised, prior to
listing on The International Stock Exchange in the Channel Islands, and
anticipated closing of an initial tranche of up to $80 million
- Inaugural Sustainability Report published and the Company scoring
an overall 'A' rating on Digbee ESG Platform
Operational
- Continuity of Empire Mine open pit mineralisation further
confirmed, including intercepts of up to 12.8% copper, 269.10 grammes per
tonne ("g/t") silver and 0.75 g/t gold
- Metallurgical test work to recover copper, gold and silver via
flotation plus leaching completed and now being optimised
- Further higher-grade base and precious metals mineralisation
encountered at Red Star silver-lead deposit
- 28 holes (3,300 metres) of drilling completed on 60-hole Navarre
Creek gold drilling programme
Chairman's Statement
As we approach the final quarter of 2023, we continue to make good operational
progress at our Empire project in Idaho, both in terms of the development of
the initial open-pit mine and the exploration of the surrounding mineralised
district. It remains our intention to fund construction of this first mine,
which will give us production and financial autonomy, with minimal additional
dilution to shareholders. With this objective in mind, we are currently
finalising the documentation to create a class of authorised bonds in a total
amount of $300 million, and to admit them to trading on The International
Stock Exchange ("TISE") in the Channel Islands, as a prelude to closing an
initial tranche to raise up to $80 million. We have been in discussion with a
number of interested parties for some time, and we are hopeful that we can
finally close the book in the near future. We share the frustration that this
apparent delay has caused, but we have to acknowledge that we are trying to
raise multiples of our current market capitalisation, and that the market
remains turbulent, to say the least. Although there can be no certainty until
the bonds have been issued and settled, we are confident that the issue will
close and that the Company will have access to the relevant construction
funding when required.
Since we last reported, we have made several advances with the Empire open-pit
project. These are described in detail in the CEO's report. With the success
of our metallurgical test work, first announced in June and updated at the
beginning of September, we have narrowed our focus to three process design
options that will produce the most economic value for shareholders while
considering current metal prices, reagent costs and capital expenditure
requirements. If, as the laboratory tests indicate, we can process copper,
gold and silver on a commercial scale using a flotation-based process, we will
be able to recover the metals without the use of cyanide, and may be able to
build the majority of our operations on patented (Company-owned) land, which
may simplify the permitting process. In addition to processing the oxide ore
from the open pit, the flotation-based plant may also enable us to process the
higher-grade sulphide ore below the open-pit, effectively giving us two plants
for the price of one. As we make the final adjustments to our economic model
and Plan of Operations, we look forward to updating you with the feasibility
study in Q4.
I would like to thank our Environmental, Social and Governance ("ESG") team
whose hard work enabled Phoenix to gain one of the highest marks awarded by
Digbee ESG, the specialist mining sector ratings agency, which is used by an
increasing number of investors to source ESG compliant investments. Phoenix
scored an overall "A." This has helped us as several funds considering
investing in our bonds regard this as a crucial part of the decision-making
process.
The other highlight of the summer was the commencement of drilling at Navarre
Creek, our 3,578 acre (14.48 sq km) gold exploration project, situated some 8
kilometres west-northwest of the Empire open-pit mine, which followed on from
our surface sampling and field magnetics surveys. We have drilled 28 holes to
date within a permitted 60-hole programme, and we look forward to sharing the
results when they are back from the assay laboratory.
As always, I would like to thank shareholders for their continued support and
patience, and look forward to updating you with further progress, both
operationally and corporately, in the 4(th) quarter and beyond.
Marcus Edwards-Jones
Chairman
Chief Executive Officer's Report
The Company started the year with fresh analytical data from the 2022
metallurgical core drilling program and with the contracting of RDI
Laboratories (now Forte Dynamics) in Colorado, USA to complete final
metallurgical test work and a final process design for recovering copper, gold
and silver at our Empire Open-Pit Mine. At the same time as we were
evaluating the 2022 drilling results, the last of which arrived in March 2023,
we were preparing for the summer arrival of a reverse-circulation drill rig to
begin subsurface exploration at our Navarre Creek gold claim block. Assay
results from the 2022 Red Star drilling campaign were also delivered and
reported in April 2023. The drilling results were consistent with previous
results and continued to indicate robust metal grades, in particular gold,
silver, and lead. The Company's ESG program continued strong forward momentum
after receiving an overall score of "A" on Digbee ESG, a disclosure platform
for the mining industry that simplifies peer reporting and rewards management
action, and the publication of the Company's inaugural Sustainability Report.
The Company purchased and moved all of the laboratory assets from the former
AuRIC Metallurgical Laboratories in Salt Lake City to Mackay, Idaho, for use
in the future mine's onsite assay laboratory. As we move through the second
half of the year, the U.S. Department of Energy has announced that it is
upgrading copper to the "near critical" classification for clean energy
technologies.
This new classification, coupled with last year's US Defense Production Act
announcement providing for an increase in the domestic production of metals
for national defense, electric vehicle technologies, and electrical
transmission and storage, further sets the stage for long-term stability in
the global copper market.
2023 Metallurgical Testing Program
In 2022, 3,502 feet (1,067 metres) of core were drilled at the Empire copper
deposit for the purpose of collecting samples 3-dimensionally representative
of the oxide portion of the deposit for copper, gold and silver recovery
testing. Initially, the metallurgical work was intended to further develop a
commercial leaching design using only ammonium thiosulfate ("ATS") as the
primary reagent for recovering copper, gold and silver. Following the
initial test work, our metallurgists determined that adding a flotation step
upstream of the leaching circuit and generating a saleable concentrate stream
containing all of the metals could provide an immediate revenue stream with
less concern over reagent pricing and product supply, as well as reducing the
total volume of ore entering the downstream leaching circuit. If the
flotation-followed-by-leaching process proves to be commercially viable, it
has the potential of reducing overall capital and operating costs as well as
the potential of sizing down the operational footprint and allowing a greater
portion of the operation to reside on the Company's patented mining claims.
Another possible advantage of the flotation circuit design is in the flotation
milling equipment. Similar flotation technologies are widely used in the
processing of sulphide ores, similar to the deeper sulphide mineralization at
Empire, and at least part or all of the flotation circuit constructed for the
open-pit processing could be employed for processing sulphide material in the
future. The initial flotation and leaching results are shown in Table 1 below,
and are based on "open-cycle" testing.
Table 1: Flotation and Leaching Results
Process flowsheet option Cu Recovery Au Recovery Ag Recovery Gross Revenue (USD/metric tonne)
Flotation Only 37.3% 48.8% 44.6% 35.54
Flotation plus ATS Leach of Flot Tails 66.5% 92.7% 73.0% 64.42
Flotation plus Acid Leach of Flot Tails 87.8% 48.8% 44.6% 57.80
Note: Revenue based on $1,875 / oz gold, $4/lb copper, and $18.75 / oz silver
The test work completed to date is currently being optimized through
"locked-cycle" testing, which mimics the characteristics of an operating mill
by recirculating material and process fluids. It is not uncommon to see
recovery improvements resulting from locked cycle testing. Once fully
optimized, the final process design will be completed and capital and
operating costs, as well as the costs for mining and general construction,
will be finalized and an updated project economic model generated. This will
enable the Plan of Operations to be updated and submitted to the regulatory
authorities in order to complete the permitting process.
2023 Navarre Creek Drilling Program
Reverse-circulation drilling commenced on the Company's Navarre Creek gold
project in July. Up to 60 drill holes located at four primary target areas
within the 14.48 sq km (3,578 acres) property have been planned. The drilling
program plan was approved by the US Forest Service in August 2022 and allows
for holes to be drilled from 30 drill pads through July 2024. 28 holes have
been completed to date, totalling 10,830 feet (3,300 metres). Initial assay
results for the drilling are anticipated from late Q3 this year. Drill hole
targets at Navarre Creek were selected based on the results of the past
several years of surface geochemistry results as well as geophysical anomalies
identified from a total field magnetics survey and hyperspectral mineral
survey conducted in 2021.
While there is no guarantee that the Navarre Creek exploratory drilling
program will result in the discovery of a viable ore deposit, the geology,
mineralogy, and geochemistry of Navarre Creek fits all the criteria necessary
for a potentially significant gold bearing system. The geological
characteristics of the Navarre Creek rocks evident on the surface are also
evident in many of the drill cuttings logged since drilling commenced in July,
and the pending assays will be the determining factor of mineralization in the
four initial target areas.
Red Star Drilling Results
In 2022, 875 feet of reverse-circulation drilling was completed that tested
the magnetic anomalies identified during the ground magnetics survey. Assay
results from the 2022 drilling program were received in Q2 2023. The assay
values for copper, silver, lead, and zinc were consistent with previous
drilling programs. Of particular interest are the results from drill hole
RS22-02, which tested the western margin of a strong magnetic anomaly,
assaying 7.62 metres of 142.7 grammes/tonne ("g/t") silver, 2.94% lead, and
1.54% zinc. Additionally, drill hole RS22-04 assayed 9.15 metres of 1.56 g/t
gold and 0.62% copper, including 1.52 metres averaging 7.59 g/t gold and 0.58%
copper. While our primary focus is on the engineering and development of the
Empire Open-Pit Mine, a plan is being constructed for follow-up drilling at
Red Star in 2024.
Other Business
The Company purchased all of the laboratory assets from AuRIC Metallurgical
Laboratories following its closure this spring, including the analytical
equipment and supplies necessary for the onsite laboratory that will service
the Empire Mine once it is in operation. The purchase of these laboratory
assets will prove most cost effective, saving up to three times as much as the
purchase of new equipment, which is significant in light of the current
laboratory equipment market.
Empire Mineral Resources
Polymetallic Open Pit Mine
An updated NI 43-101 compliant resource was completed by Hardrock Consulting
in October 2020 and reported for the polymetallic Empire Mine open pit oxide
deposit. The updated resource showed a 51% increase in the Measured and
Indicated category from the previous year's resource. Including the Inferred
resources, the Empire open-pit oxide deposit now contains 129,641 tonnes of
copper, 58,440 tonnes of zinc, 10,133,772 ounces of silver and 355,523 ounces
of gold.
Table 2: Mineral Resource Statement for Empire Mine, after Hard Rock
Consulting October 2020
CLASS Tonnes Cu Equiv % Average Grade Metal Content
Cu Zn Ag Au Cu Zn Ag Au Cu Equiv
% % g/t g/t Tonnes tonnes Ozs ozs Tonnes
Measured 8,289,719 0.81 0.42 0.22 11.4 0.327 34,655 18,160 3,031,791 87,036 67,013
Indicated 14,619,340 0.72 0.36 0.18 9.7 0.322 52,888 25,711 4,563,407 151,370 105,899
M+I 22,909,059 0.75 0.38 0.19 10.3 0.324 87,543 43,871 7,595,198 238,406 172,912
Inferred 10,612,556 0.75 0.4 0.14 7.4 0.343 42,098 14,569 2,538,574 117,117 79,296
Red Star - High-grade Silver
Red Star is a high-angle silver-lead vein system hosted in andradite-magnetite
and located 330-metres north-northwest of the Empire oxide pit. Red Star was
identified from a 20-metre wide surface outcrop across a skarn structure. In
early May 2019, the Company announced a small maiden Inferred sulphide
resource of 103,500 tonnes, containing 577,000 ounces of silver, 3,988 tonnes
of lead, 957 tonnes of zinc, 338 tonnes of copper, and 2,800 ounces of gold.
Table 3: Maiden Inferred Resource Statement for Red Star, May 2019
Class Tons Ag Ag Au Au Pb Pb Zn Zn Cu Cu
(x1000) g/t oz g/t oz % lb % Lb % lb
(x1000) (x1000) (x1000) (x1000) (x1000) % (x1000)
Inferred 114.13 173.4 577.3 0.851 2.8 3.85 8,791.20 0.92 2,108.80 0.33 745
Outlook
Over the past six months, the copper price has been less volatile than in
2022, ranging between $3.50 and $4.00/pound. Gold and silver have followed
suit and settled in at $1,900 and $23/ounce, respectively. The cost of the
materials and supplies necessary for the construction and operation of our
Empire open pit project have also appeared to stabilize, although generally at
higher levels than in the days before Covid-19 and the war in Ukraine. While
the cost of lumber and concrete have been consistently decreasing, structural
steel and diesel fuel remain elevated. Diesel fuel in Idaho is over
$4.00/gallon, nearly twice the per gallon pre-Covid price. Labor costs have
also increased, as the current working generation demands more compensation
for hours worked. This is understandable as inflation has driven the cost of
living to all-time highs. As a result, it is our job to engineer the most
efficient mining and processing technologies available to ensure that our
operations can withstand the additional burdens on production.
In July of this year, the U.S. Department of Energy announced that it is
upgrading the criticality of copper for clean energy technologies as part of
the agency's Critical Materials Assessment. The purpose of the research and
conclusions in the assessment is to enable the Department of Energy to set
priorities for investment to secure domestic critical mineral and material
supply chains, support the clean energy transition, and promote sustainable
solutions to meet current and future needs. The assessment found that copper
is a material that serves a critical function in electrification as many
nations aim to reduce carbon emissions, with some setting goals to achieve net
zero by 2050. The report notes that these efforts will increase the demand for
clean energy technologies and the materials they rely on. Copper, a key metal
in electric vehicles, wind turbines, and other green technologies, is set to
move from a 'noncritical' classification in the short term to a 'near
critical' classification in the medium term. Between 2025 and 2030, copper is
expected to land on a level 3 out of 4 in terms of its importance to energy on
the agency's criticality matrix. As mentioned, this new classification,
coupled with last year's US Defense Production Act announcement, further sets
the stage for long-term stability in the global copper market.
Copper remains in the top three of the most consumed metals in the world,
trailing only behind iron and aluminum. The heavy focus on green energy metals
for power generation, transmission, and transportation will only increase the
demand. Clean energy initiatives in the United States, Canada, and Europe have
already begun to drive demand for copper, cobalt and lithium. As other
countries develop similar initiatives, demand will outweigh global supply.
Our Idaho projects host both EV metals and precious metals. Our current
metallurgical test work, which is focused on developing the most efficient and
economical methods of recovering copper, gold, and silver, will be designed to
deliver crucial metals to the numerous infrastructure and green energy
projects in the global pipeline at the lowest cost possible to the consumer
and the highest margin possible for us.
Our story becomes even stronger with the realization that these resources are
all located in known mining districts in the geopolitically stable, pro-mining
jurisdiction of Idaho, USA.
Conclusion
As the demand for metals increases globally, the Company is in an ideal
position to deliver copper, gold, and silver into a market with increasing
demands. Our team of highly-experienced engineers, metallurgists, and
geologists are continuing the work necessary to position ourselves as future
metal producers contributing to the global transportation, manufacturing and
energy sectors that are so vital to our livelihoods.
I would like to thank all our professional staff, consultants and advisors,
all of whom continue to work tirelessly to accomplish our common goal of
putting the Empire Mine into production and exploring and developing our other
projects for inclusion in a pipeline of future producing mines. I look
forward to reporting further positive news as we continue our exploration and
development programs during the remainder of 2023.
Ryan McDermott
Chief Executive Officer
ESG & Sustainability Committee Chairman's Report
It is a great pleasure to provide an update on the ESG & Sustainability
("ESG&S") activities since our last report in May 2023.
Following the publication of our inaugural Sustainability Report in Q2 2023,
we continue to work with the KCAT (Konnex Community Advisory Team) to ensure
that our stakeholders remain informed about our progress as we continue
through the development and permitting stages. We are keen to continue sharing
our knowledge of the industry within the community in which we will be
operating, including at the elementary and middle school levels, as well as
providing general mining and Company operations updates for the immediate
community. Community involvement is a cornerstone of our ESG philosophy.
The tone of the national conversation about copper is changing. The USA is
looking at ways to become more mineral independent, and PXC is exploring
various ways to collaborate with Federal and State governments to assist in
this process. In particular, the ESG&S team has been exploring government
programmes and grants for mine exploration process development.
We are also currently exploring ways to reduce our operational footprint and
operate as much as possible on our existing patented (private) land.
Minimizing our footprint, without adversely affecting the mining process, is
the right decision both operationally and environmentally.
In addition, the ESG&S team is currently initiating discussions with
several other mining companies in order to formulate a dispute resolution
process ahead of hiring a large workforce. We are aiming to provide a clear
process for employees of the Company, as well as for our stakeholders.
We are excited to have identified a community education opportunity partner
who is willing to provide a highly practical eight-month mechanical training
course targeted predominantly at recent and future graduates in the local high
schools, and who is able to offer the course at 1/8(th) of the usual price. We
are very keen to publicise this locally. In the first place, it is a fantastic
opportunity for our youth, but also because when we move to production, we
will be hiring individuals with mechanical qualifications, and it will be an
absolute priority for us to hire locally whenever possible. All anecdotal
evidence and research shows that local hires tend to show greater loyalty, and
remain in employment for longer than out-of-area hires.
We currently have two openings in our KCAT team which we will publicise
shortly in order to find individuals with suitable experience who can assist
in acting as liaisons between the Company and the community.
In association with the KCAT, we are in the process of finalising a Konnex
Vendor Handbook, which sets out the requirements and expectations we have of
external contractors and suppliers who conduct business with, or wish to
conduct business with, the Company. We have also drafted a Konnex Employee
Handbook, which sets out the Company's core values and goals, as well as a
detailed set of requirements of employee expectations.
We are looking forward to updating you further in the future. In the meantime,
we would be delighted to receive feedback and suggestions at
esg@phoenixcopper.com.
Catherine Evans
Non-Executive Director
Financial Overview
The Group reports a loss for the Period of $0.63 million (2022: loss of $1.052
million). This includes a non-cash foreign exchange gain on sterling
denominated assets of $96,172 (2022: foreign exchange loss of $503,593), and a
charge of $18,992 (2022: $36,623) relating to non-cash share-based payments
attributable to warrants or options extended or granted during the Period, and
which amount is simultaneously credited back to the retained deficit. Net
assets at 30 June 2023 totalled $37.39 million (2022: $38.22 million),
including $35.88 million (2022: $29.73 million) relating to the Empire Mine,
and $2.75 million (2022: $9.05 million) in cash.
The Company reports a profit for the Period of $309,759 (2022: loss of
$368,534), and net assets of $41.81 million (2022: $40.88 million). During the
Period, the Company charged its operating subsidiaries $450,000 (2022:
$465,000) in respect of management services provided, and $837,108 (2022:
$610,653) in respect of interest at 6% per annum on its inter-company loans,
the latter eliminating on consolidation. At 30 June 2023, the Company's loan
to Konnex Resources Inc ("Konnex"), owner of the Empire Mine, stood at $27.03
million (2022: $22.95 million). This loan will be repaid from Konnex's
operating cash flow in due course and is intended, together with royalties
receivable from Konnex, to form a platform for a future proposed dividend
policy to return money to shareholders.
The Company has also advanced $2.60 million (2022: $nil) to KPX Holdings Inc
("KPX"), its Idaho registered intermediate holding company, into which the
Company's investment in Konnex, and investments in and related loans to Borah
Resources Inc, Lost River Resources Inc and Salmon Canyon Resources Inc,
totalling $4.42 million, were transferred on 31 December 2022 in return for
100% of the equity of KPX.
During the Period, the Company issued 50,000 ordinary shares of no par value
("Ordinary Shares") pursuant to the exercise of warrants. Since the Period-end
a further 2,250,000 Ordinary Shares have been issued pursuant to the exercise
of warrants. The outstanding share capital of the Company is currently
124,928,622 Ordinary Shares.
In September 2023 the board approved the creation of a class of corporate
copper bonds to a total authorised amount of $300 million, as a prelude to the
anticipated closing of an initial tranche to raise up to $80 million (before
expenses) for the development and construction of the Empire open pit mine,
plus operational working capital. The bonds will pay a floating rate coupon
subject to a minimum of 8.5% per annum and a maximum of 20%. The floating rate
coupon will be calculated as to the higher of a copper price coupon linked to
the copper price on the London Metal Exchange, or an interest rate coupon
linked to the US Federal Discount Rate. The bonds will be secured on the
Group's patented open pit mining claims, will be listed on The International
Stock Exchange in the Channel Islands, and will have a ten-year life with
bondholder option to request redemption at nominal value after six years and
the Company's option to offer redemption at a 10% premium to nominal value
after five years. M&G Trustee Company are acting as Security Trustee and
Escrow Agent, and The Bank of New York Mellon ("BNYM") as Custodian and
Transfer, Paying and Settlement Agent.
On 24 March 2023 the Company announced a short-term, unsecured $2,000,000 loan
facility (the "Loan Facility"), for which the initial three month term was
extended for a further three months on 23 June 2023, at a fixed 4% coupon. The
Company has extended the initial term of the Loan Facility for a further two
months until 22 November 2023 at a fixed 2% coupon. At the Company's option,
the Loan Facility may be extended to 22 March 2024, at an interest rate of 1%
per month.
The Company's shares are listed on AIM, operated by the London Stock Exchange
under the ticker PXC, and are also admitted to trading on New York's OTCQX
Market under the ticker PXCLF, and in the form of American Depositary Receipts
("ADRs") under the ticker PXCLY, with each ADR comprising 10 Ordinary Shares.
BNYM sponsored the ADR Program and act as ADR depositary, custodian and
registrar.
The Directors recognise the importance of sound corporate governance and have
applied the Quoted Companies Alliance's Corporate Governance Code 2018. The
Company's Corporate Governance Statement dated 24 May 2023, and the Company's
2022 Sustainability Report, can be viewed on the Company's website at
https://phoenixcopperlimited.com (https://phoenixcopperlimited.com) .
Richard Wilkins
Chief Financial Officer
Unaudited Unaudited
Condensed consolidated income statement
Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2023 2022 2022
Note $ $ $
Continuing operations
Revenue 3 - - -
Exploration and evaluation expenditure (28,839) - -
Gross loss (28,839) - -
Administrative expenses 4 (617,788) (1,057,717) (1,568,475)
Other operating expenses 9 - - (37,777)
Loss from operations (646,627) (1,057,717) (1,606,252)
Finance income 21,258 6,107 32,104
Loss before taxation (625,369) (1,051,610) (1,574,148)
Taxation - - -
Loss for the period (625,369) (1,051,610) (1,574,148)
Loss attributable to:
- Owners of the parent company (612,262) (1,038,033) (1,546,827)
- Non-controlling interests (13,107) (13,577) (27,321)
(625,369) (1,051,610) (1,574,148)
Basic and diluted loss per share - US cents 5 (0.50) (0.86) (1.27)
The revenue, expenditures and operating result for each period is derived from
acquired and continuing operations in North America and the United Kingdom.
Condensed consolidated statement of comprehensive income Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2023 2022 2022
$ $ $
Loss for the period and total comprehensive income for the period (625,369) (1,051,610) (1,574,148)
Total comprehensive income for the period attributable to:
Owners of the parent company (612,262) (1,038,033) (1,546,827)
Non-controlling interests (13,107) (13,577) (27,321)
(625,369) (1,051,610) (1,574,148)
Condensed consolidated statement of Unaudited Unaudited Audited
financial position
Note 30 June 30 June 31 December 2022
2023 2022
$ $ $
Non-current assets
Property, plant and equipment - mining property 6 35,876,914 29,731,139 33,104,230
Intangible assets 7 347,000 345,844 347,000
Total non-current assets 36,223,914 30,076,983 33,451,230
Current assets
Trade and other receivables 8 1,433,783 780,299 1,534,507
Finance assets 9 18,563 56,340 18,563
Cash and cash equivalents 2,749,407 9,045,669 4,664,233
Total current assets 4,201,753 9,882,308 6,217,303
Total assets 40,425,667 39,959,291 39,668,533
Current liabilities
Trade and other payables 10 35,321 478,302 572,470
Other liabilities 11 2,240,000 250,000 500,000
Total current liabilities 2,275,321 728,302 1,072,470
Non-current liabilities
Other liabilities 11 - 250,000 -
Provisions 12 757,702 757,702 757,702
Total non-current liabilities 757,702 1,007,702 757,702
Total liabilities 3,033,023 1,736,004 1,830,172
Net assets 37,392,644 38,223,287 37,838,361
Equity
Share capital 13 - - -
10
Share premium account 44,889,817 44,848,384 44,878,927
Retained deficit (7,529,980) (6,684,755) (7,086,480)
Translation reserve (18,588) (18,588) (18,588)
Capital and reserves attributable to the owners of the parent company 37,341,249 38,145,041 37,773,859
Non-controlling interests 51,395 78,246 64,502
Total equity 37,392,644 38,223,287 37,838,361
Condensed consolidated statement of changes in equity
Share premium Retained Translation reserve Total Non-controlling interests Total
deficit Equity
$ $ $ $ $ $
Balance at 1 January 2022 43,460,747 (5,751,359) (18,588) 37,690,800 91,823 37,782,623
Loss for the period - (1,038,033) - (1,038,033) (13,577) (1,051,610)
Total comprehensive income for the period - (1,038,033) - (1,038,033) (13,577) (1,051,610)
Shares issued in the period 1,387,637 - - 1,387,637 - 1,387,637
Share issue expenses - - - - - -
Share-based payments - 104,637 - 104,637 - 104,637
Total contribution by owners 1,387,637 104,637 - 1,492,274 - 1,492,274
Balance at 30 June 2022 44,848,384 (6,684,755) (18,588) 38,145,041 78,246 38,223,287
Loss for the period - (508,794) - (508,794) (13,744) (522,538)
Total comprehensive income for the period - (508,794) - (508,794) (13,744) (522,538)
Shares issued in the period 30,543 - - 30,543 - 30,543
Share-based payments - 107,069 - 107,069 - 107,069
Total contribution by owners 30,543 107,069 - 137,612 - 137,612
Balance at 31 December 2022 44,878,927 (7,086,480) (18,588) 37,773,859 64,502 37,838,361
Loss for the period - (612,262) - (612,262) (13,107) (625,369)
Total comprehensive income for the period - (612,262) - (612,262) (13,107) (625,369)
Shares issued in the period 10,890 - - 10,890 - 10,890
Share-based payments - 168,762 - 168,762 - 168,762
Total contribution by owners 10,890 168,762 - 179,652 - 179,652
Balance at 30 June 2023 44,889,817 (7,529,980) (18,588) 37,341,249 51,395 37,392,644
Condensed consolidated statement of cash flows Unaudited Unaudited Audited
6 months to 6 months to 12 months to 31 December 2022
30 June 30 June
2023 2022
$ $ $
Loss before taxation (625,369) (1,051,610) (1,574,148)
Adjustments for:
Depreciation
Share-based payments 18,992 36,623 67,818
Fair value adjustment to financial asset - - 37,777
(606,377) (1,014,987) (1,468,553)
Changes in working capital
Decrease/(increase) in trade and other receivables 172,175 49,896 (58,563)
(Decrease) in trade and other payables (537,149) (404,894) (310,726)
Cash (used in)/generated from operating activities (971,351) (1,369,985) (1,837,842)
Investing activities
Purchase of intangible assets - (15,000) (16,156)
Purchase of property, plant and (2,622,914) (3,539,095) (6,836,312)
equipment
Net cash outflow from investing activities (2,622,914) (3,554,095) (6,852,468)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares 10,890 1,387,637 1,418,180
Preliminary bond-issue expenses (71,451) (464,417) (1,110,166)
Proceeds from new short-term loans 2,000,000 - -
Repayment of deferred consideration (260,000) - -
Net cash inflow from financing activities 1,679,439 923,220 308,014
Net (decrease)/increase in cash and cash equivalents (1,914,826) (4,000,860) (8,382,296)
Cash and cash equivalents at the beginning of the period 4,664,233 13,046,529 13,046,529
Cash and cash equivalents at the end of the period 2,749,407 9,045,669 4,664,233
An amount of $149,770, (30 June 2022: $68,014, 31 December 2022: $143,888) in
respect of the charge for share-based payments was capitalised into mining
property.
1. Basis of preparation and principal accounting policies
This condensed consolidated interim financial information was approved for
issue by the Board on 27 September 2023.
This condensed consolidated interim financial information has not been audited
and does not include all of the information required for full annual financial
statements. While the financial figures included within this interim report
have been computed in accordance with IFRS applicable to interim periods, this
report does not contain sufficient information to constitute an interim
financial report as set out in International Accounting Standard 34: Interim
Financial Reporting.
Basis of consolidation
Principles of consolidation
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated on the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases.
The acquisition method of accounting is used to account for business
combinations by the Group.
Intercompany transactions, balances and unrealised gains of transactions
between Group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment to the transferred
asset.
Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown
separately in the consolidated income statement, consolidated statement of
comprehensive income, statement of changes in equity and consolidated
statement of financial position respectively.
2. Information on the Group
Phoenix Copper Limited (the "Company") and its subsidiary undertakings (the
"Group") are engaged in exploration and mining activities, primarily precious
and base metals, primarily in North America. The Company is domiciled and
incorporated in the British Virgin Islands on 19 September 2013 (registered
number 1791533). The address of its registered office is OMC Chambers,
Wickhams Cay 1, Road Town, Tortola VG1110, British Virgin Islands. The Company
is quoted on London's AIM (ticker: PXC) and trades on New York's OTCQX Market
(ticker: PXCLF; ADR ticker PXCLY).
3. Revenue
The Group is not yet producing revenues from its mineral exploration and
mining activities. During the period the Company charged its subsidiary
entities $450,000 (30 June 2022: $465,000; 31 December 2022: $930,000) in
respect of management services provided.
4. Administrative expenses
Administrative expenses include $96,172 of foreign exchange gains (30 June
2022: foreign exchange losses of $503,593; 31 December 2022: foreign exchange
losses of $564,353).
Administrative expenses also include share-based payments of $18,992 (30 June
2022: $36,623; 31 December 2022: $67,818). The related credits to equity are
taken to the retained deficit.
5. Loss per share Unaudited Unaudited Audited
6 months to 6 months to 12 months to 31 December 2022
30 June 30 June
2023 2022
$ $ $
Loss for the period attributable to equity holders of the parent company (612,262) (1,038,033) (1,546,827)
Number Number Number
Weighted average number of ordinary shares for the purposes of basic and 121,794,101
diluted loss per share
122,668,401 121,105,350
Loss per share - basic and diluted (US cents) (0.50) (0.86) (1.27)
Non-current assets
6. Property, plant and equipment - mining property
Mining Property
$
Cost or valuation
At 1 January 2022 26,124,030
Additions 3,607,109
At 30 June 2022 29,731,139
Additions 3,373,091
At 31 December 2022 33,104,230
Additions 2,772,684
At 30 June 2023 35,876,914
Depreciation
At 30 June 2022, 31 December 2022 and 30 June 2023 -
Net book value:
30 June 2022 29,731,139
31 December 2022 33,104,230
30 June 2023 35,876,914
Mining property assets relate to the past producing Empire Mine copper - gold
- silver - zinc project in Idaho, USA. The Empire Mine has not yet recommenced
production and no depreciation has been charged in the statement of
comprehensive income. There has been no impairment charged in any period due
to the early stage in the Group's project to reactivate the mine.
7. Intangible assets
Exploration and evaluation expenditure
$
Cost or valuation
At 1 January 2022 330,844
Additions 15,000
At 30 June 2022 345,844
Additions 1,156
At 31 December 2022 347,000
Additions -
At 30 June 2023 347,000
Net book value:
30 June 2022 345,844
31 December 2022 347,000
30 June 2023 347,000
Exploration and evaluation expenditure relates to the Bighorn and Redcastle
properties on the Idaho Cobalt Belt in Idaho, USA. The Bighorn property is
owned by Salmon Canyon Resources Inc. The Redcastle property is owned by Borah
Resources Inc. Both companies are wholly owned subsidiaries of KPX Holdings
Inc, a wholly owned subsidiary of the parent entity, and each of which are
registered and domiciled in Idaho. The Redcastle property is subject to an
Earn-In Agreement with First Cobalt Idaho, a wholly owned subsidiary of
Electra Battery Materials Corporation of Toronto, Canada.
8. Trade and other receivables Unaudited Unaudited Audited
30 June 30 June 31 December 2022
2023 2022
$ $ $
Other receivables 193,952 206,918 181,072
Preliminary bond issue expenses 1,181,617 464,417 1,110,166
Prepaid expenses 58,214 108,964 243,269
1,433,783 780,299 1,534,507
The preliminary bond issue expenses relate to the Company's corporate copper
bonds. These expenses will be deducted from the proceeds of the bonds when
issued and amortised over the expected life of the bonds.
9. Financial assets Unaudited Unaudited Audited
6 months to 6 months to 12 months to 31 December
30 June 30 June 2022
2023 2022
$ $ $
Quoted investments 18,563 56,340 18,563
In May 2021 the Group entered into an earn-in agreement with First Cobalt
Idaho, a wholly-owned subsidiary of Toronto-based Electra Battery Materials
Corporation ("Electra"), in respect of the Group's Redcastle cobalt property
on the Idaho Cobalt Belt. The Group received consideration of $50,000 and
11,111 shares (as consolidated) in Electra valued at $56,340, a total initial
consideration of $106,340.
The shares were valued at market price as at 31 December 2022 and a fair value
adjustment of $37,777 has been charged to other operating expenses as at 31
December 2022.
10. Trade and other payables Unaudited Unaudited Audited
30 June 30 June 31 December 2022
2023 2022
$ $ $
Trade payables 19,175 478,302 569,864
Other payables 16,146 - 2,606
Need
35,321 478,302 572,470
11. Other liabilities Unaudited Unaudited Audited
30 June 30 June 31 December 2022
2023 2022
$ $ $
Current liabilities
Short-term loan 2,000,000 - -
Deferred consideration 240,000 250,000 500,000
2,240,000 250,000 500,000
Non-current liabilities
Deferred consideration - 250,000 -
In April 2021, the Group entered into an agreement with Mackay LLC to acquire
1% of the 2.5% net smelter royalty payable on mining leases on the Empire Mine
in Idaho, USA. Total consideration payable to Mackay LLC is $800,000, of which
$560,000 has been paid. Deferred consideration comprises one further payment
of $240,000 due on 31 December 2023.
The $2,000,000 short-term loan facility is unsecured, carries an effective
interest rate of 12% per annum, and is repayable on or before 22 November
2023, unless extended at the Company's option to 22 March 2024.
12. Provisions Unaudited Unaudited Audited
30 June 30 June 31 December 2022
2023 2022
$ $ $
Decommissioning provision 100,000 100,000 100,000
Royalties payable 657,702 657,702 657,702
757,702 757,702 757,702
There has been no change to provisions in the period ended 30 June 2023 and
the year ended 31 December 2022.
The provision of $100,000 for decommissioning the Empire Mine is based on the
directors' estimate after taking into account appropriate professional advice,
and is included within mining property.
The other provision of $657,702 arises from a business combination in 2017 and
comprises potential royalties payable in respect of future production at the
Empire Mine. This liability will only be payable if the Empire Mine is
successfully restored to production and will be deducted from the royalties
payable.
13. Share capital Unaudited Unaudited Audited
30 June 30 June 31 December 2022
2023 2022
Number Number Number
Allotted and issued
Ordinary shares with no par value 122,678,622 122,471,622 122,628,622
The Ordinary Shares rank pari passu.
During the period the Company issued 50,000 Ordinary Shares pursuant to the
exercise of warrants raising $10,890 with an average issue cost of 21.8 US
cents.
Since the period end a further 2,250,000 Ordinary Shares have been issued
pursuant to the exercise of warrants raising $500,400 with an average issue
cost of 22.2 US cents.
14. Events after the reporting date
In September 2023 the board approved the creation of a class of corporate
copper bonds to a total authorised amount of $300 million, as a prelude to the
anticipated closing of an initial tranche to raise up to $80 million (before
expenses) for the development and construction of the Empire open pit mine,
plus operational working capital. The bonds will pay a floating rate coupon
subject to a minimum of 8.5% per annum and a maximum of 20%. The floating rate
coupon will be calculated as to the higher of a copper price coupon linked to
the copper price on the London Metal Exchange, or an interest rate coupon
linked to the US Federal Discount Rate. The bonds will be secured on the
Group's patented open pit mining claims, will be listed on The International
Stock Exchange in the Channel Islands, and will have a ten-year life with
bondholder option to request redemption at nominal value after six years and
the Company's option to offer redemption at a 10% premium to nominal value
after five years. M&G Trustee Company are acting as Security Trustee and
Escrow Agent, and The Bank of New York Mellon ("BNYM") as Custodian and
Transfer, Paying and Settlement Agent.
Market Abuse Regulation (MAR) Disclosure
The Company deems the information contained within this announcement to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014, which has been incorporated into UK law by the European
Union (Withdrawal) Act 2018. Upon the publication of this announcement via
Regulatory Information Service, this inside information is now considered to
be in the public domain.
Contacts
For further information please visit www.phoenixcopperlimited.com or contact:
Phoenix Copper Limited Ryan McDermott Tel: +1 208 954 7039
Brittany Lock Tel: +1 208 794 8033
Richard Wilkins Tel: +44 7590 216 657
SP Angel Corporate Finance LLP (Nominated Adviser) David Hignell / Kasia Brzozowska Tel: +44 20 3470 0470
Tavira Financial Limited (Joint Broker) Jonathan Evans / Oliver Stansfield Tel: +44 20 7100 5100
WH Ireland (Joint Broker) Harry Ansell / Katy Mitchell Tel: +44 207 2201666
Panmure Gordon (UK) Limited (Joint Broker) John Prior / Hugh Rich / Ailsa Macmaster Tel: +44 20 7886 2500
EAS Advisors (US Corporate Adviser) Matt Bonner / Rogier de la Rambelje Tel: +1 (646) 495-2225
BlytheRay Tim Blythe / Megan Ray Tel: +44 20 7138 3204
(Financial PR)
Notes
Phoenix Copper Limited is a USA focused, base and precious metals emerging
producer and exploration company, initially targeting copper, gold and silver
production from an open pit mine.
Phoenix's primary operations are focused near Mackay, Idaho in the Alder
Creek mining district, at the 80% owned Empire Mine property, which
historically produced copper at grades of up to 8%, as well as gold, silver,
zinc and tungsten, from an underground mine.
Since 2017, Phoenix has carried out extensive drill programmes which have
defined a NI 43-101 completed PEA (preliminary economic assessment) for an
open pit heap leach solvent extraction and electrowinning ("SX-EW") mine,
which was updated in October 2020. From the 2020 PEA, the measured and
indicated resource is: 22,909,059 tonnes at an average grade of 0.38% copper,
0.324 grammes per tonne ("g/t") gold, 10.3 g/t silver, and 0.19% zinc. The
contained metal for the measured and indicated resource is 87,543 tonnes of
copper, 238,406 ounces of gold, 7,595,198 ounces of silver and 43,871 tonnes
of zinc.
In addition to Empire, the district includes the historic Horseshoe, White
Knob and Blue Bird Mines, past producers of copper, gold, silver, zinc, lead
and tungsten from underground mines. A new discovery at Red Star, 330 metres
northwest of the Empire Mine proposed open pit, has revealed high grade
silver / lead sulphide ore, and from three shallow exploration drill holes a
maiden inferred resource of 103,000 tonnes containing 173.4 g/t silver, 0.85
g/t gold and 3.85% lead (1.6 million ounces silver equivalent) was reported in
an NI 43-101 technical report published in May 2019. Additionally, the
district includes Navarre Creek, a volcanic-hosted precious metals target in
a 14.48 sq km area. The Company's total land package at Empire comprises 8,034
acres (32.51 sq kms).
At Empire, it is estimated that less than 1% of the potential ore system has
been explored to date and, accordingly, there is significant opportunity to
increase the resource through phased exploration. The stated aim of the
Company is to fund this phased exploration through free cashflow generated by
its initial mine. A Plan of Operations in respect of the initial open pit mine
was filed with the relevant regulatory authorities in June 2021.
Phoenix also has two wholly owned cobalt properties on the Idaho Cobalt Belt
to the north of Empire. An Earn-In Agreement has been signed with Electra
Battery Materials, Toronto, in respect of one of those properties.
Phoenix is listed on London's AIM (PXC), and trades on New York's OTCQX
Market (PXCLF and PXCLY (ADRs)). More details on the Company, its assets and
its objectives can be found on PXC's website
at https://phoenixcopperlimited.com/ (https://phoenixcopperlimited.com/)
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FLFVDARIDFIVRecent news on Phoenix Copper
See all newsREG - Phoenix Copper Ltd - Navarre Creek Drilling Intercepts Consistent Gold
AnnouncementREG - Phoenix Copper Ltd - Final results for the year ended 31 December 2023
AnnouncementREG - Phoenix Copper Ltd - Conditional Subscription for $80m of Copper Bonds
AnnouncementREG - Phoenix Copper Ltd - Empire Open-Pit Mine Mineral Reserve Statement
AnnouncementREG - Phoenix Copper Ltd - Block Listing Six Monthly Return
Announcement