REG - Alien Metals Limited - Financial Results for Year Ended 31 December 2022
30/06/2023 15:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230630:nRSd6069Ea&default-theme=true
RNS Number : 6069E Alien Metals Limited 30 June 2023
Trading Symbols
AIM: UFO
FWB: I3A1
30 June 2023
Alien Metals Ltd
("Alien" or "the Company")
Financial Results for the Year Ended 31 December 2022
Alien Metals Ltd (LSE AIM:UFO), a global minerals exploration and development
company, today announces the release of its audited, financial results for the
year ended 31 December 2022.
The Company's full Annual Report is being sent to shareholders, and is
available on the Company's website, www.alienmetals.uk.
The entirety of the Annual Report is set out below.
Chairmans Report
Dear Shareholders,
I am pleased to present the Chairman's statement for Alien Metals Ltd (the
'Company' or 'Alien Metals') for the year ended 31 December 2022. This year
has been a pivotal one for the Company, marked by significant progress in our
exploration and development projects, and strategic acquisitions that have
strengthened our portfolio.
Operational Highlights
During the year, we made significant progress in our exploration and
development projects in Australia. Our flagship project, the Hancock Iron Ore
Project in Western Australia, has continued to demonstrate strong potential
for high-grade direct ship iron ore, and we remain well-positioned to
capitalise on the growing demand for iron ore in China.
Acquisitions
We have been active in pursuing strategic acquisitions that complement our
existing portfolio and strengthen our long-term growth prospects.
In March 2022 the Company completed the acquisition of a 100% interest in the
Munni Munni Platinum Group Metals and Gold Project in the West Pilbara,
Western Australia containing palladium and Platinum Group Elements ('PGE')
plus significant quantities of other strategic metals including rhodium,
nickel and copper.
In June 2022, we completed the acquisition of the Elizabeth Hill Silver
Project in Western Australia, which has a historical production record of over
2.7 million ounces of silver and the Vivash Gorge Iron Ore Project. These
acquisitions expand our footprint in Western Australia and provides us with
new high-grade silver and base metal projects.
In December 2022, we completed the acquisition of the potential high-grade
iron ore project, Brockman West, in Western Australia. This project is located
in the heart of the Pilbara region, one of the world's premier iron ore
producing regions, and has the potential to deliver significant value for our
shareholders.
Project updates
Hancock Iron Ore Project: Alien Metals continued to progress its Hancock Iron
Ore Project in Western Australia, which covers a large area prospective for
iron ore. The Company conducted exploration activities, including drilling,
detailed mapping, sampling, and geophysical surveys. Initial findings have led
to a maiden mineral reserve and mining inventory along with improving the
overall resource potential of continued high-grade iron ore ridges. The
Company plans further drilling to identify additional resources throughout the
licence area. The Company is continuing work on multiple fronts towards
putting the Hancock Project into production and to this end there is a key
Native Title meeting scheduled in July following which the Company will have a
clearer idea on the timing for production commencing. Furthermore, work
continues to define an updated MRE on the Sirius Extension and this is now
expected to be published in Q3 this year.
Elizabeth Hill Silver Project: Alien Metals continued its exploration efforts
at the Elizabeth Hill Silver Project in Western Australia. The Company carried
out detailed geological and structural studies, coupled with geophysical
surveys, to delineate high-priority drill targets. These targets were
subsequently drilled with excellent results confirming the presence
of broader high grade silver mineralisation around the old mine. Further
drilling programmes are planned to expand the resource base and assess the
project's overall potential. In addition, the Company completed the
installation of equipment on site to facilitate re-entry to the old mine
workings, such as headframes, winders and an overall refurbishment of the
shaft entrance and local mining licence.
Munni Munni: Alien Metals continued to compile and assimilate all historical
data for the Munni Munni intrusion. The project area contains a historic JORC
2004 compliant resource of 24 million tonnes @ 2.9 grams per tonne ('g/t') PGM
and gold for 1.14 million ounces ('moz') palladium ('Pd'), 0.83 moz Pt
('platinum'), 152 thousand ounces ('koz') Au ('gold') and 76 koz Rh
('rhodium'). The Company completed its long term strategy of consolidating the
entire northern Munni Munni licences into a single coherent tenement, under
100% ownership. Potential exists for a much larger, high value,
multi-commodity resource, many of which appear on critical mineral lists.
Munni Munni represents one of the largest undeveloped primary PGM Resources in
Australia.
Donovan 2 Copper-Gold Project: Alien Metals continued exploration activities
at Donovan 2 during the year, including exploratory drilling. This programme
yielded encouraging, anomalous, copper and gold results and improved Alien
Metals' understanding of the projects prospectively. However, substandard core
recovery over key intervals has led to the evaluation of strategic
alternatives for this project, including continued exploration, or divestment.
Financial Results
As an exploration and development Group which has no revenue, Alien reported a
loss for the twelve months ended 31 December 2022 of $2,375,000 (31 December
2021: loss of $2,258,000).
Outlook
Looking ahead, we remain focused on delivering long-term value for our
shareholders by continuing to advance our exploration and development
projects. The acquisitions we have made during the year strengthen our
portfolio and provide us with additional growth opportunities.
We will continue to prioritise safety, sustainability, and good governance in
all our operations, as we work to create value for all our stakeholders.
Conclusion
In conclusion, I would like to thank our employees, contractors, and
shareholders for their continued support during the year. We are pleased with
the progress we have made, and we look forward to updating you on our
achievements in the coming year.
Yours sincerely,
Guy Robertson
Executive Chairman
30 June 2023
Directors Report
The Directors present their Report, together with the Consolidated Financial
Statements and Independent Auditor's Report, for the year ended 31 December
2022.
Principal Activities
The principal activity of the Group is to create and develop a multi-commodity
portfolio of exploration and mining projects in jurisdictions with established
mining communities, stable political backgrounds, and where strong operational
controls can be assured.
In addition to the Group's growing activities in the premier Pilbara region of
Western Australia, Alien Metals also operates in Zacatecas, Mexico, where
long-term relationships with local government, communities, and key
stakeholders have been built up over the last ten years.
Business Review
Alien Metals geological team continue to assess and identify projects that fit
with the Group's strategic objectives. Wherever possible, the projects are
acquired on a low-cost option basis whilst preliminary exploration is
undertaken to assess the merits of further work and with clear value drivers
for shareholders and stakeholders alike.
Where preliminary studies show evidence of sufficient mineralisation,
increasingly comprehensive studies and development will be undertaken with a
view to delineating a compliant mineral resource estimate in readiness for
mine development or of the potential sale of the asset to a producing mining
company, at which time a significant premium over its acquisition and
development cost may be justified.
A detailed review of the business of the Group during the year and an
indication of likely future developments may be found in the Chairman's Report
on pages 3 and 4.
Principal risks and uncertainties are discussed on pages 6 to 11.
Results and Dividends
The loss of the Group for the year ended 31 December 2022 amounts to
$2,375,000 (31 December 2021: loss of $2,258,000).
The Directors do not recommend the payment of a dividend for the year (31
December 2021: $nil).
Directors & Directors' Interests
The Directors who served during the year ended 31 December 2022 had the
following beneficial interests in the shares of the Company at year end.
Director 31 December 2022 31 December 2021
Ordinary Shares Options Ordinary Shares Options
D J Smith 4,517,715 57,342,509 - 12,342,509
B Brodie Good*** - - 1,500,000 55,000,000
M C Culbert 6,666,666 7,500,000 5,000,000 7,500,000
J L Battershill**** - 50,000,000 - 35,000,000
R McIllree** 137,404,762 230,000,000 - -
G Robertson* - - - -
* Appointed 26 April 2023
** Appointed 7 September 2022
*** Resigned 28 July 2022
**** Resigned 26 April 2023
Further details on options can be found in Note 17 to the Financial
Statements. Directors' remuneration is disclosed in Note 20.
Substantial shareholders
The substantial shareholders with more than a 3% shareholding at 29 June 2023
are shown below
Percentage
Windfield Metals Limited 7.07%
Bennelong Limited 6.34%
Gilmore Capital Limited 4.85%
Key Performance Indicators ("KPIs")
The Board monitors the activities and performance of the Group on a regular
basis. The Board uses financial indicators based on budget versus actual to
assess the performance of the Group. The indicators set out below will be used
by the Board to assess performance over the period.
The three main KPIs for the Group are as follows. These allow the Board to
monitor costs and plan future exploration and development activities:
2022 2021
Cash and cash equivalents 2,177,000 6,431,000
Administrative expenses as a percentage of total assets 13% 17%
Exploration costs capitalised 3,029,000 2,432,000
Principal Risks and Uncertainties
Risks are formally reviewed by the Board, and appropriate processes are put in
place to monitor and mitigate them. If more than one event occurs, it is
possible that the overall effect of such events would compound the possible
adverse effects on the Group.
The financing, exploration, development and mining of any of the Company's
properties is subject to a number of factors including the price of copper,
silver, gold, lead, iron ore and zinc, laws and regulations, political
conditions, currency fluctuations, environmental regulations, hiring and
retaining qualified people and obtaining necessary services in jurisdictions
where the Company operates.
The Board periodically carries out robust assessments of the emerging and
principal risks facing the Company including those that would threaten its
business model, future performance, solvency or liquidity. The assessment
includes a review of all material controls including those which are related
to finance, operations and compliance.
The Audit Committee is responsible for monitoring the effectiveness of the
Company's risk management and internal control systems, and reports to the
Board as required.
Alien Metals operates with a small team of key personnel and with open lines
of internal communication. Where new risks are identified, these are reported
to the Company Secretary or the Executive Director. Where practicable, a
method of mitigation is determined, and the risk together with any form of
mitigation is presented to the Board for discussion.
The following is a brief discussion of those distinctive or special
characteristics of the Company's operations and industry which may have a
material impact or constitute risk factors in respect of the Company's future
financial performance.
Principal risks and uncertainties
Key risks Description of risk Mitigating factors
Strategic risks
Exploration and development and future acquisitions The Group's operations are subject to all of the hazards and risks incidental Our mineral concessions are evaluated carefully by qualified geologists and
to exploration, development and the production of minerals, including damage independent advisors are engaged as and when appropriate.
to life or property, environmental damage and legal liability for damage,
which could have a material adverse impact on the business and its financial
performance.
The management team has significant experience operating in Australia.
The Group may acquire additional mining concessions in Australia or elsewhere
in the world.
The Group may be unable to obtain suitable mining concessions at competitive
prices.
Any exploration programme entails risks relating to the location of economic
ore bodies, the development of appropriate metallurgical processes, the
receipt of necessary governmental permits and the construction of mining and
processing facilities.
In the event that the Group's portfolio of mining concessions is deemed by
management not to warrant further exploration and the Group is unsuccessful in
acquiring suitable new projects, the Group will have no exploration or
development projects to pursue.
No reserves or resources The Group announced its maiden mining reserve and associated mining inventory The Group received an independent assessment of the reserve resource potential
during the period. of the Hancock project and believes that there is good potential to delineate
additional mineral resources in accordance with JORC.
No assurance can be given that any future exploration programme will result in
any new resources and or discoveries.
Key risks Description of risk Mitigating factors
Strategic risks
Mineral concessions and titles risks In relation to exploration and mining concessions over which the Group holds The Group's mineral concessions have been registered in the name of CMEP and
legal rights, if the Group fails to fulfil the specific terms of any of its no contest or objection was received.
concessions or operates in the concession areas in a manner that violates
Mexican or Australian mining law, regulators may impose fines, suspend or
revoke the concessions, any of which could have a material adverse effect on
the Group's operations and proposed operations. The Group is aware of necessary minimum expenditure and annual rental
obligations for all its exploration and mining permits and maintains the
necessary payments and expenditure obligations to negate any risk from this
aspect.
Ownership of the mineral concessions in Mexico has been transferred from the
Group's former operating subsidiary Alien Metals de Mexico SA de CV ("ASM") to
its new operating subsidiary, Compañía Minera Estrella de Plata SA de CV
("CMEP"). Whilst the Group has previously received legal opinions in respect Prior to entering into agreements relating to mineral concessions, formal
of title of ASM to its properties there is no guarantee that the title to such searches and reviews of legal documentation are conducted to provide evidence
properties will not be challenged or impugned by third parties. The Group's of the legal owner, including outsourcing of legal and/or tenement due
concessions could be subject to prior unregistered agreements, transfers or diligence to legal practitioners.
other claims and title could be affected by unidentified or unknown defects or
government actions. A formal legal opinion has not been obtained as to the
legal title of CMEP to the mineral concessions.
Key risks Description of risk Mitigating factors
Financial risks
Requirement of additional financing Failure to obtain sufficient financing for any projects would result in a The Group has an experienced board and management team with significant
delay or indefinite postponement of exploration, development or production on experience in financing mining activities.
properties covered by the Group's concessions or even the loss of a
concession.
The Group has been successful in raising funds in the past and it is our
intention to raise additional funds in future to support the ongoing
Additional financing might not be available when needed, or if available, the development of the business.
terms of such financing might not be favourable to the Group and could involve
substantial dilution to shareholders. In the absence of adequate funding or
cost reductions, the Group may not be able to continue as a going concern.
Liquidity risk The Group's approach to managing liquidity risk is to ensure that it will have The Group ensures sufficient funds will be available to allow it to meet its
sufficient liquidity to meet liabilities when due. The Group's accounts liabilities as they fall due. To achieve this cash balances and cash flow
payable have contractual maturities of less than 30 days and are subject to projections are reviewed by the Board on a regular basis. The Board will not
normal trade terms. In the short-term, liabilities will be funded by cash. commit to material expenditures prior to being satisfied that sufficient
funding is available.
Capital management risk The Group's objective when managing capital is to safeguard the Group's In order to maintain or adjust the capital structure, the Group may issue new
ability to continue as a going concern and have access to adequate funding for shares, acquire debt, or sell assets. Management regularly reviews cash flow
its exploration and development projects so that it can provide returns for forecasts to determine whether the Group has sufficient cash reserves to meet
shareholders and benefits for other stakeholders. The Group manages the future working capital requirements and to take advantage of business
capital structure and makes adjustments in the light of the changes in opportunities.
economic conditions and risk characteristics of the underlying assets.
Price risk The price risk is the risk that the fair value or future cash flows of a The Group does not currently have any financial instruments in issue other
financial instrument will fluctuate because of changes in market prices, than share options and warrants.
whether those changes are caused by factors specific to the individual
financial instrument or its issuer, or factors affecting all similar financial
instruments in the market.
The Group does not hedge its exposure to price risk.
Foreign currency risk The Group's exploration expenditure is made in Mexican pesos, Australian The Group does not currently hedge foreign exchange risk.
dollars or US dollars and head office expenses are predominantly made in the
UK in pounds sterling. The Group is therefore exposed to the movement in
exchange rates for these currencies.
There is not considered to be any material exposure in respect of other
monetary assets and liabilities of the Group.
At the year end the majority of the Group's cash resources were held in GBP.
The Group therefore also has downside exposure to any weakening of pound
sterling against the US dollar as this would increase expenses in US dollar
terms and accelerate the depletion of the Group's cash resources. Any
strengthening of pound sterling, Australian dollars or the Mexican peso
against the US dollar would, however, result in a reduction in expenses in US
dollar terms and preserve the Group's cash resources.
In addition, any movements in pounds sterling, Australian dollars or Mexican
peso would affect the presentation of the consolidated statement of financial
position when the net assets of the Mexican subsidiary and parent company in
the UK are translated from their functional currencies into US dollars.
Credit risk The Group's credit risk is primarily attributable to cash and the financial The Group invests its cash in deposits with well-capitalised financial
stability of the institutions holding it. institutions with strong credit ratings.
The Group's maximum exposure to credit risk is attributable to cash. The
credit risk on cash is limited because the Group invests its cash in deposits
with well capitalised financial institutions with strong credit ratings.
Investment risk The Group may from time to time hold shares in other mining companies. There The Group has previously been successful in realising value from investments.
is not always a liquid market for the shares in companies and it may not
always be possible to sell such shares at the optimum time or price.
Key risks Description of risk Mitigating factors
External risks
Metals prices The Group's ability to obtain further financing will depend in part on the It is an accepted risk that the Group's performance will be impacted by the
price of commodity prices, including copper, silver, lead, iron ore and zinc, price of metals.
and the industry's perception of its future price. The Group's resources and
financial results of operations will also be affected by fluctuations in metal
prices over which the Group has no control. A reduction in the metal prices
could prevent the Group's properties from being economically mined or result The Board and management believe the price of precious metals in particular
in curtailment of existing production activities or result in the impairment will increase in the long term.
and write-off of assets.
The Group does not hedge its exposure to metals prices.
The price of commodities, which is affected by numerous factors including
inflation levels, fluctuations in the US dollar and other currencies, supply
and demand and political and economic conditions, could have a significant
influence on the market price of the Company's common shares.
Key risks Description of risk Mitigating factors
Operational risks
Reliance on contractors The Group relies on contractors to implement exploration and development The Group has operated in Zacatecas in Mexico, for several years and has
programmes. The failure of a contractor or key service provider to properly well-established and trusted relationships with various contractors. The Group
perform its services to the Group could delay or inconvenience the Group's also has considerable experience operating in Australia.
operations and have a materially adverse effect on the Group.
Certain of the Group's directors have significant and recent experience
operating in other global jurisdictions, which may help identify reliable
contractors.
Key personnel The Group's business is dependent on retaining the services of a small number The Board has established a Nomination & Remuneration Committee which is
of key personnel of the appropriate calibre as the business develops. The responsible for considering succession planning and ensuring remuneration is
Group has entered into employment agreements with certain key managers. The sufficient to attract and retain staff of the necessary calibre.
success of the Group is and will continue to be to a significant extent,
dependent on the expertise and experience of the directors and senior
management. The loss of one or more of these individuals could have a
materially adverse effect on the Group. The Group does not currently have any
insurance in place with respect to key personnel.
Environmental factors The Group's operations are subject to environmental regulation in the The Group has an experienced board and management team with an awareness and
jurisdictions in which it operates. Such regulation covers a wide variety of knowledge of these types of risk.
matters including, without limitation, prevention of waste, pollution and
protection of the environment, labour regulations and health and safety. The
Group might also be subject under such regulations to clean-up costs and
liability for toxic or hazardous substances, which might exist on or under any Concessions are evaluated carefully prior to their acquisition for
of the properties covered by its concessions, or which might be produced as a environmental risks and consultants are engaged to advise on specific risks
result of its operations. when appropriate.
If the Group does not comply with environmental regulations or does not file The Group has an excellent track record on environmental matters.
environmental impact statements in relation to each of its concessions, it
might be subject to penalties, its operations might be suspended, closed
and/or its concessions may be revoked.
Environmental legislation and permit requirements are likely to evolve in a
manner which will require stricter standards and enforcement, increased fines
and penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and
their directors and employees.
The Group's activities could be subject to prolonged disruptions due to
weather conditions depending on the location of operations in which the Group
has interests.
Political risk The Group is conducting its exploration activities in the Zacatecas region of The Directors believe the governments of Mexico and Australia support the
Mexico, and in Western Australia. The Group may be adversely affected by development of natural resources by foreign operators.
changes in economic, political, judicial, administrative or other regulatory
factors such as taxation in these jurisdictions, where the Group operates and
holds its major assets. Mexico may have a more volatile political environment
and/or more challenging trading conditions than in some other parts of the
world. There is no assurance that future political and economic conditions in
Mexico will not result in the government of Mexico adopting different policies
in respect of foreign development and ownership of mineral resources. Any such
changes in policy may result in changes in laws affecting ownership of assets,
taxation, rates of exchange, environmental protection, labour relations, and
repatriation of income and return of capital. These changes may affect both
the Group's ability to undertake exploration and development activities in
respect of future properties in the manner currently contemplated, as well as
its ability to continue to explore and develop those properties, in respect of
which it has obtained exploration and development rights to date.
Payment obligations Under the mineral property concessions and certain other contractual The Directors have in place a system of internal controls to ensure any
agreements to which a member of the Group is, or may in the future become, a payment obligations are complied with.
party, any such company is, or may become, subject to payment and other
obligations. If such obligations are not complied with when due, in addition
to any other remedies which may be available to other parties, this could
result in dilution or forfeiture of interests held by such companies.
Regulatory approvals The operations of the Group require approvals, licenses and permits from The Group has significant experience in operating in Mexico and Australia and
various regulatory authorities, governmental and otherwise. There can be no believes that the Group holds or will obtain all necessary approvals, licenses
guarantee that the Group will be able to obtain or maintain all necessary and permits under applicable laws and regulations in respect of its current
approvals, licenses and permits that may be required to explore and develop projects.
its various projects and/or commence construction or operation of mining
facilities that economically justify the cost.
Competition The Group competes with numerous other companies and individuals in the search The Group and its management team have significant experience in mining
for and acquisition of mineral claims, leases and other mineral interests, as operations in Mexico. Through its experience and relationships in Mexico,
well as for the recruitment and retention of qualified employees. There is counterparties may consider the Group to have lower transaction risk than its
significant competition for the silver and other precious metals opportunities competitors.
available and, as a result, the Group may be unable to acquire further mineral
concessions on terms it considers acceptable.
Conflicts of interest Certain directors and officers of the Group also serve as directors and/or The Group's Articles of Association have been adopted by shareholders and any
officers of other companies involved in mineral exploration and development conflicts of interest are dealt with in accordance with the rules set out
and consequently there is the potential for conflicts of interest. The Group therein.
expects that any such director or officer shall disclose such interest in
accordance with its articles of association or his contractual obligations to
the Group and any decision made by any of such directors and officers
involving the Group will be made in accordance with their duties and In the event of a conflict of interests, the conflicted director shall not
obligations to deal fairly and in good faith with a view to the best interests vote on the relevant matter.
of the Group and its shareholders.
Health and Safety Alien Metals operates in an environment with work related hazards and risk The Group has established and published robust corporate health, safety,
of injuries and accidents. A comprehensive health and safety programme is the environmental and community relations policies, and at the operations level
primary means for delivering best practices in health and safety management. have put into place clear safe operating procedures covering a variety of the
This programme is regularly required to be updated to incorporate employee Group's activities. The active participation of all staff in the development,
suggestions, lessons learned from past incidents and new guidelines related to implementation and further development of these procedures is actively
new projects with the aim of identifying areas for further improvement of encouraged.
health and safety management. This requires continuous improvement of the
health and safety programme. Employee involvement is recognised as fundamental
in recognising and reporting unsafe conditions and avoiding events that may
result in injuries and accidents.
Internal Controls
The Board recognises the importance of both financial and non-financial
controls and has reviewed the Group's control environment and any related
shortfalls during the year. Since the Group was established, the Directors are
satisfied that, given the current size and activities of the Group, adequate
internal controls have been implemented. Whilst they are aware that no system
can provide absolute assurance against material misstatement or loss, in light
of the current activity and proposed future development of the Group,
continuing reviews of internal controls will be undertaken to ensure that they
are adequate and effective.
Going Concern
These financial statements have been prepared on a going concern basis, as set
out in Note 2.4.
The Directors have prepared cash flow forecasts for the period ending 30 June
2024, which take into account the cost and operational structure of the Group
and Parent Company, planned exploration and evaluation expenditure, licence
commitments and working capital requirements. These forecasts indicate that
the Group and parent Company's cash resources are not sufficient to cover the
projected expenditure for the period of 12 months from the date of approval of
these financial statements. These forecasts indicate that the Group and Parent
Company, in order to meet their operational objectives, and expected
liabilities as they fall due, will be required to raise additional funds
within the next 12 months.
Whilst the Directors are confident that they will be able to secure the
necessary funding, the current conditions do indicate the existence of a
material uncertainty that may cast doubt regarding the applicability of the
going concern assumption and the auditors have made reference to this in their
audit report. The Directors are confident in the Company's ability to raise
additional funds as required, from existing and/or new investors, within the
next 12 months. Thus, they continue to adopt the going concern basis of
accounting in preparing these financial statements. The auditors make
reference to going concern by way of a material uncertainty over the ability
of the Company and the Group to fund the forecasted expenditure.
Directors' and Officers' Indemnity Insurance
During the financial year, the Company maintained insurance cover for its
Directors and Officers under a Directors' and Officers' liability insurance
policy. The Company has not provided any qualifying indemnity cover for the
Directors.
Provision of Information to Auditor
So far as each of the Directors is aware at the time this report is approved:
· there is no relevant audit information of which the Company's auditor
is unaware; and
· the Directors have taken all steps that they ought to have taken to
make themselves aware of any relevant audit information and to establish that
the auditor is aware of that information.
Auditor
PKF Littlejohn LLP was appointed in the current year and and signified its
willingness to be reappointed in office as auditor.
This report was approved by the Board on 30 June 2023 and signed on its
behalf.
Guy Robertson
Executive Chairman
Statement of Directors Responsibilities
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with the applicable law and regulations
including the AIM Rules for Companies.
The Directors are required to prepare Financial Statements for each financial
year. The Directors have elected to prepare the Group's Financial Statements
in accordance with UK-adopted International Accounting Standards. The
Directors must not approve the Financial Statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and
of the profit or loss of the Group for that period. In preparing these
Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and accounting estimates that are reasonable and
prudent;
· state whether applicable UK-adopted International Accounting Standards
have been followed, subject to any material departures disclosed and
explained in the Financial Statements;
· prepare the Financial Statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group. They are
also responsible for safeguarding the assets of the Group, and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group's website,
https://www.alienmetals.uk. The Group is compliant with AIM Rule 26 regarding
the Group's website.
The Directors confirm that they have complied with the above requirements in
preparing these Financial Statements.
Corporate Governance Report
The Board recognises the value and importance of maintaining the highest
standards of corporate governance and is committed to the principles and best
practice of good corporate governance. In this regard the Directors have
elected to comply with the 2018 UK Corporate Governance Code ("the Code")
though there are a number of provisions which the Group have not complied with
due to it not being practical to do so, having regard to the size and stage of
development of the Group. The Directors remuneration is disclosed in Note 20.
Although the Code contains a set of five Principles that emphasise the value
of good corporate governance to long term sustainable success and focuses on
the application of such Principles, it does not set out a rigid set of rules
but instead offers flexibility through the application of Principles and
through "comply or explain" Provisions and supporting guidance.
The Company is small with a modest resource base. The Company has a clear
mandate to optimise the allocation of limited resources to support its
development plans. As such, the Company strives to maintain a balance between
conservation of limited resources and maintaining robust corporate governance
practices. As the Company evolves, the Board is committed to enhancing the
Company's corporate governance policies and practices deemed appropriate for
the size and maturity of the organisation.
During the year the Board consisted of four Directors: an Non-Executive
Chairman, an Executive Director and two Non-Executive Directors ("NED"s). The
Board considers that appropriate oversight of the Group's provided by the
currently constituted Board. The sections below set out the way in which the
Group applies the Principles.
Principle 1: Board Leadership and Company Purpose
Alien Metals' objective is to create a multi-commodity portfolio of
exploration and mining projects in established mining jurisdictions, stable
political backgrounds and where strong operational controls can be assured.
The Company routinely evaluates mining projects in a wide array of world-class
mining jurisdictions including Mexico and Australia.
Where preliminary studies evidence sufficient mineralisation, increasingly
comprehensive studies will be undertaken with a view to delineating a
compliant mineral resource estimate in readiness for the potential sale of the
asset to a producing mining company, at which time a significant premium over
its acquisition and development cost may be justified.
The Executive Director is responsible for overseeing the long term success and
strategic direction of the Company in accordance with the schedule of matters
reserved for board decision and is responsible for monitoring the activities
of the executive management.
The Board usually meets a minimum of four times a year but may meet more
frequently on ad-hoc basis as and when required. The Chairman is ultimately
responsible for ensuring that each board decision is taken having sufficient
information on and with all due discussion as is relevant to such decision.
The Company has effective procedures in place to monitor and deal with
conflicts of interest. The Board is aware of the other commitments and
interests of its Directors and changes to these commitments and interests are
reported to, and, where appropriate, agreed with the rest of the Board.
The Company has also adopted an Anti-Corruption and Bribery Policy to ensure
compliance with the relevant laws governing anti-corruption and anti-bribery
as well as a Share Dealing Code for Directors and applicable employees to
ensure compliance with AIM Rule 21 and the provisions of the Market Abuse
Regulations relating to dealings in the Group's securities.
Provision 5 of the Code recommends that the Board appoints a Director from the
workforce, creates a formal workforce advisory panel or appoints a designated
Non-Executive Director to engage with the workforce. However, due to the Group
currently having a small number of employees, the Board does not consider this
to be appropriate but at such time as the size of the workforce increases, it
will review the position and make any such appointments or take other actions
it considers appropriate.
Principle 2: Division of Responsibilities
The Group has a schedule of matters reserved for its own decision and two
committees comprised entirely of Non-Executive Directors: the Audit Committee
and the Nomination and Remuneration Committee, each with formally delegated
duties and responsibilities set out in respective Terms of Reference.
The division of responsibilities between the Chairman and the Chief Executive
Officer is clearly defined in writing. However, they work closely together to
ensure effective decision making and the successful delivery of the Group's
strategy.
Each Director has a Letter of Appointment or a Services Agreement in place to
ensure that they clearly understand the requirements of the role. All
Directors are required to allocate sufficient time to the Company to discharge
their responsibilities effectively.
Due to the size of the Board, the nomination of any one particular director to
act as a Senior Independent Director, as recommended by Code Provision 12, is
not currently considered to be appropriate or improve the effective operation
of the Board. However, the matter is kept under review.
Provision 11 of the Code requires at least half the Board, excluding the
Chairman, to be Non-Executive Directors whom the board considers to be
independent. During the year the Alien Metals Board consisted of three
Non-Executive Directors - Daniel Smith, Mark Culbert and Jonathan Battershill
- of which Mark Culbert is deemed to be independent by virtue of not having
been granted Options in the most recent award of Options to Directors and
Executives. Daniel Smith and Jonathan Battershill are not considered to be
independent by virtue of each having been granted Options in the most recent
award and as each are recompensed for the provision of material consultancy
services to the Company outside of their respective standard remuneration as
Directors.
The intention is that an additional Independent Non-Executive Director will be
appointed in the foreseeable future.
Principle 3: Composition, Succession and Evaluation
During the year, the Board comprised of one Executive Directors and three
Non-Executive Directors.
The Board has established a Nomination and Remuneration Committee ("the
N&R Committee") and an Audit and Risk Committee ("the ARC"), each with
formally delegated duties and responsibilities set out in respective Terms of
Reference, to assist with oversight and governance.
The Board and its advisers have significant experience in the mining sector
and from that, a strong network of individuals working in the sector. The
N&R Committee leads the process for Board appointments and is responsible
for review of the Board size, structure and composition (both executive and
non-executive) including any potential new applicants to ensure the Board
contains the right balance of skills, knowledge and experience to manage and
grow the business. The N&R Committee will make recommendations to the
Board on any proposed or suggested changes to the Board with a view on the
leadership needs of the business including succession planning.
The Board does not carry out a formal annual evaluation of its performance,
its committees, the Chairman and individual Directors, which is contrary to
the recommendation of Code Provision 21.
However, the Chairman continuously considers the performance of the Board, its
committees and of individual directors and provides feedback when appropriate.
Similarly, the Chairman invites feedback in the same manner from the
Non-Executive Directors and the Company Secretary.
The Board considers the time and cost involved in carrying out a formal
process, especially one that is externally facilitated, cannot be justified
for the Company at this stage in its development. Nonetheless, the Board
acknowledges the merits in carrying out formal board evaluations and will
monitor the continuing suitability of this stance as the Company grows in
size.
Principle 4: Audit, Risk and Internal Control
The Audit and Risk Committee ("the ARC") is comprised of Daniel Smith, who
chairs the committee and Mark Culbert, both of whom are Non-Executive
Directors of the Company. However, other individuals such as the Company's CEO
may be invited to attend all or any part of any meeting when deemed
appropriate. The Company's external auditors are invited to attend meetings of
the Committee on a regular basis
The ARC has responsibility for, among other things, the monitoring of the
integrity of the financial statements of the Company and its Group and the
involvement of the Group's auditors in that process. It focuses in particular
on compliance with accounting policies and ensuring that an effective system
of external audit and financial control is maintained, including considering
the scope of the annual audit and the extent of the non-audit work undertaken
by external auditors and advising on the appointment of external auditors. The
ultimate responsibility for reviewing and approving the annual report and
accounts and the half-yearly reports remains with the Board. The Audit
Committee will meet at least three times a year at the appropriate times in
the financial reporting and audit cycle. The committee also review the
emerging and principal risks of the business, refer to Principal Risks and
Uncertainties on page 6.
Independence of the external auditor
The independence of the auditor is considered by the Audit Committee each
year. In assessing the auditor's independence, the Audit Committee considers:
· Ratio of audit fees to non-audit fees
· Length of tenure
· Whether there are any known material relationships between the
Company, its directors and senior executives, and the audit firm, its
partners, and the audit team
· Application of constructive challenge and professional scepticism
Audit and non-audit fees are disclosed in the financial statements.
The Audit Committee considers the nature and value (in the context of the
audit fee) of any non-audit services on the auditor's independence and is
required to give its prior approval of any such non-audit services.
Effectiveness of the external audit process
In considering the effectiveness of the external audit process, the Audit
Committee consider:
· Effectiveness of the audit plan, its delivery and execution
· Knowledge and experience of the audit team
· Robustness of the audit
The Group's external auditor is PKF Littlejohn LLP for the audit of the 31
December 2022 accounts. Prior to this, the audit was conducted by Jeffreys
Henry LLP.
Having assessed the performance, objectivity and independence of the auditor,
the Committee will be recommending the reappointment of PKF Littlejohn LLP as
auditor to the Company at the 2023 Annual General Meeting.
During the year to 31 December 2022, the Audit Committee considered the
following key issues in relation to the Financial Statements:
Issue Action
· Accounting policies The Committee reviewed and discussed the significant accounting policies with
management and the external auditor and reached the conclusion that each
policy was appropriate to the Group.
· Carrying value of intangibles The Committee reviewed the impairment assessment report prepared by management
and agreed that given the reasonable expectation that the Group will achieve
its milestone targets in the near future that no impairment to the value of
the intangibles was required as at 31 December 2022.
· Going concern review The Committee considered the ability of the Group to operate as a Going
Concern considering cash flow forecasts for the next 12 months. It was
determined by the Committee that the forecasts indicate that the Group and
parent Company's cash resources are not sufficient to cover the projected
expenditure for the period of 12 months. Notwithstanding, the Directors are
confident in the Company's ability to raise additional funds as required, from
existing and/or new investors, within the next 12 months. Thus, they continue
to adopt the going concern basis of accounting preparing these financial
statements. Refer to page 11 and 31 for further information on going concern.
· Review of audit and non-audit services and fees The external auditor is not engaged by the Group to carry out any non-audit
work in respect of which it might, in the future, be required to express an
audit opinion.
The Committee reviewed the fees charged for the provision of audit and
non-audit services and determined that they were in line with fees charged to
companies of similar size and stage of development.
The Committee considered and was satisfied the external auditor's assessment
of its own independence.
Internal audit function
The Audit Committee considers annually whether there is a need for an internal
audit function and makes a recommendation to the Board if a change is
considered to be appropriate. The Company's operations are small in scale, the
organisational structure is flat, and the cost of an internal audit function
is not considered to be justified at present.
Principle 5: Remuneration
During the year, the Nomination and Remuneration Committee ("the N&R
Committee") Committee was comprised entirely of Non-Executive Directors, with
Daniel Smith as Chairman and Mark Culbert and Jonathan Battershill as
additional members.
The N&R Committee recognises that an effective board comprises a range and
balance of skills, experience, knowledge, genders and independence, with
individuals that are prepared to challenge each other whilst working as a
team, which requires a range of personal attributes, including character,
intellect, sound judgement, honesty and courage.
In addition, the N&R Committee is responsible for establishing a formal
and transparent procedure for developing policy on executive remuneration and
to set the remuneration packages of individual Directors. This includes
agreeing with the Board the framework for remuneration of the CEO and such
other members of the executive management of the Company as it is designated
to consider. It is furthermore responsible for determining the total
individual remuneration packages of each Director including, where
appropriate, bonuses, incentive payments and share options.
Provision 34 of the Code specifies that the remuneration of non-executive
directors should not include share options or other performance-related
elements. However, although all Non-Executive Directors have been granted
Options, the Board considers the quantum of Options granted to each
Non-executive Director is such that it does not impair or compromise their
impartiality or objectivity in decision making. The independence of
Non-Executive Directors is reviewed and will continue to be reviewed by the
Board on a regular basis.
The scale and structure of the remuneration and compensation packages for the
Directors is set taking into account time commitment, comparatives, and risks
and responsibilities, to ensure that the amount of compensation adequately
reflects the individual's previous performance, achievements, experience,
responsibilities and the risks of the office or position held, and in the
context of the Company's risk profile, to ensure they do not encourage
excessive risk taking.
Remuneration policy
The Company's remuneration policy is intended to support the Company's
long-term strategy and sustainable success in a manner consistent with the
Company's purpose and values, attracting and retaining the highest quality of
directors and senior executives. The pay policy aligns with Provision 40 of
the code and is as follows:
· remuneration of Directors is disclosed in annual accounts for
clarity and to ensure transparency.
· remuneration structures are limited to salaries and options to
avoid complexity and are clearly communicated by the board to ensure
predictability.
· align the interests of the Board and senior executives with
shareholders'.
· align the interests of the workforce (including the Board and
senior executives) with the Company's purpose and values.
· avoid incentivising excessive risk taking by the Board and senior
executives.
· be proportionate to the contribution of the individuals
concerned, and;
· be sensitive to pay and employment conditions elsewhere in the
group.
The remuneration policy does not require post-employment shareholding
requirements. Share options ordinarily lapse upon the resignation of the
option holder, unless the Board determines otherwise.
The scale and structure of the remuneration and compensation packages of
Directors is set taking into account time commitment, comparatives, risks and
responsibilities, to ensure that the amount of compensation adequately
reflects the individual's previous performance, achievements, experience,
responsibilities and risks of the office or position held, and in the context
of the Company's risk profile, to ensure they do not encourage excessive risk
taking on the part of the recipient of such compensation.
As the Company is at an early stage of development, the use of traditional
performance standards, such as corporate profitability, is not considered by
the N&R Committee to be appropriate in the evaluation of corporate or
directors' performance. Discretionary bonuses may be paid to aid staff
retention and reward performance.
The Board considers that the remuneration policy has operated as intended in
terms of company performance and quantum.
The Company provides executive directors with base salaries which represent
their minimum compensation for services rendered during the financial year.
The base salaries of Directors and senior executives depend on the scope of
their experience, responsibilities, and performance. A description of the
material terms of each director's contract is provided under "Terms of
Directors' Employment, Termination and Change of Control Benefits" below.
The N&R Committee has considered the risk implications of the Company's
compensation policies and practices and has concluded that there is no
appreciable risk associated with such policies and practices since such
policies and practices do not have the potential of encouraging an executive
officer or other applicable individual to take on any undue risk or to
otherwise expose the Company to inappropriate or excessive risks. Furthermore,
although the Company does not have in place any specific prohibitions
preventing executives from purchasing financial instruments, including prepaid
variable forward contracts, equity swaps, collars, or units of exchange funds
that are designed to hedge or offset a decrease in market value of options or
other equity securities of the Company granted in compensation or held
directly or indirectly, by the director, the Company is unaware of the
purchase of any such financial instruments by any director.
The Chair and the CEO welcome major shareholders to discuss the Company's
strategy and governance, including, on the appointment of key board
appointments. The Chair reports to the Board as a whole, on the views of major
shareholders.
The Company does not anticipate making any significant changes to its
compensation policies and practices during 2023.
Culture and employees
At the Company's present stage of development, it has less than 10 employees
and its culture therefore exists principally in the boardroom and amongst any
contractors. In the UK, all contractors report directly to the CEO. Overseas,
all contractors report directly to the country manager, who in turn reports to
the CEO. It is considered that the board is well positioned to ensure that
policy, practices and behaviour throughout the business is aligned with the
Company's purpose, values and strategy. In the event that the Board had any
concerns, it would require the CEO or country manager to take remedial action.
The Board recognises the importance of the remuneration structure supporting
its strategy and reinforcing the culture of the organisation.
Board assessments
The Chair continuously considers the performance of the Board, its committees
and of individual directors, and provides feedback when appropriate.
Similarly, the Chair invites feedback in the same manner from the
Non-Executive Directors and the Company Secretary. The N&R Committee
considers the time and cost involved in carrying out a formal process,
especially one that is externally facilitated, cannot be justified for the
Company at this stage in its development.
The N&R Committee acknowledges the merits in carrying out formal board
evaluations and will monitor the continuing suitability of this stance as the
Company grows in size.
Relations with stakeholders
The Company is committed to a continuous dialogue with shareholders as it
believes that this is essential to ensure a greater understanding of and
confidence amongst its shareholders in the medium and longer term strategy of
the Group and in the Board's ability to oversee its implementation. It is the
responsibility of the Board as a whole to ensure that a satisfactory dialogue
takes place.
Whilst the Company is a BVI registered company, the UK Corporate Governance
code references Section 172 of the Companies Act 2006 which requires Directors
to take into consideration the interests of stakeholders in their decision
making. The Board is committed to understanding and engaging with all key
stakeholder groups of the Company in order to maximise value and promote
long-term Company success in line with our strategic objectives. The Board
recognises how the Company's activities and decisions will impact employees,
those with which it has a business relationship, the community and environment
and its reputation for high standards of business conduct. In weighing all of
the relevant factors, the Board, acting in good faith and fairly between
members, makes decisions and takes actions that it considers will best lead to
the long-term success of the Company.
During the year, the Board assessed its current activities between the Board
and its stakeholders, which demonstrated that the Board actively engages with
its stakeholders and takes their various objectives into consideration when
making decisions. Specifically, actions the Board has taken to engage with its
stakeholders in 2022 include:
• Attended the 2022 AGM and prepared to answer any questions
raised by shareholders;
• Made presentations at conferences and published recordings and
slide decks on the Company's exploration activities;
• Evaluated the relationships with the Company's various
collaborators through management and identified ways to strengthen
relationships and arrangements with key collaborations; and
• Monitored company culture and engaged with employees on efforts to
continuously improve company culture and morale.
The Board believes that appropriate steps and considerations have been taken
during the year so that each Director has an understanding of the various key
stakeholders of the Company. The Board recognises its responsibility to
contemplate all such stakeholder needs and concerns as part of its
discussions, decision-making, and in the course of taking actions, and will
continue to make stakeholder engagement a top priority in the coming years.
The Chairman, the CEO and other Directors, as appropriate, make themselves
available for contact with major shareholders and other stakeholders in order
to understand their issues and concerns.
The Company plans to use the AGM as an opportunity to communicate with its
shareholders. To ensure compliance with the Governance Code, the Board
proposes separate resolutions for each issue, and proxy forms allow
shareholders who are unable to attend the AGM to vote for or against or to
withhold their vote on each resolution. The results of all proxy voting will
be published on the Group's website after the AGM. Shareholders who attend the
AGM will have the opportunity to ask questions.
The Group's website is the primary source of information on the Group. The
website includes an overview of the activities of the Group and all recent
Group announcements.
Going Concern
The Directors have prepared cash flow forecasts for the period ending 30 June
2024, which indicate that the Group and parent Company's cash resources are
not sufficient to cover the projected expenditure for the period of 12 months
from the date of approval of these financial statements. The Directors are
confident in the Company's ability to raise additional funds as required, from
existing and/or new investors, within the next 12 months. Thus, they continue
to adopt the going concern basis of accounting preparing these financial
statements
Provisions not applied
The Company is small with a modest resource base. The Company has a clear
mandate to optimise the allocation of limited resources to support its
development plans. To ensure the appropriate corporate governance is applied
to the size and maturity of the Company, there are certain provisions the
group specifically does not comply with, given the size of the Group, as noted
below:
Employee Engagement
Due to the Company only having a small number of employees, the Board has not
appointed a director from the workforce, created a formal workforce advisory
panel or designated a Non-Executive Director to engage with the workforce.
This is contrary to Code provision 5 and is explained in the section headed
"Culture and employees". At such time as the size of the workforce increases,
the Board will review the position and make any such appointments or take
other actions it considers appropriate.
Senior Independent Director
The Board has not appointed a Senior Independent Director. This is contrary to
Code provision 12. The role of a Senior Independent Director is to provide a
sounding board for the Chair and serve as an intermediary for the other
directors and shareholders. In addition, a senior independent director would
be expected to meet the other non-executive directors without the Chair
present, to appraise his performance.
The Company Secretary, as well as each of the non-executive directors, is
available as a sounding board to the Chair and to serve as an intermediary for
shareholders. The Company Secretary is also available to serve as an
intermediary for any of the directors when required. Due to the size of the
Board, the nomination of any one particular director to act as a Senior
Independent Director is not currently considered to be appropriate and would
not improve its effective operation. However, the matter is kept under review.
Open advertising
The Board does not always use open advertising and/or an external search
consultancy for the appointment of the chair and non-executive directors. This
is Contrary to Code Provision 20. Given the size of the Company and skills
required by the board it is not always possible to run an open advertising
process.
Annual evaluation of the performance of the Board
The Board does not carry out a formal annual evaluation of its performance,
its committees, the Chair and individual directors. This is contrary to Code
provision 21 and is explained in the section headed "Board assessments".
Board Committees
Currently, the Company has insufficient independent non-executive directors to
enable it to meet the criteria for the composition of its committees, contrary
to Code provision 24 and Code provision 32. The Nomination and Remuneration
Committee, in conjunction with the Board, regularly reviews the composition of
the Board and its committees and will look to appoint new independent
non-executive directors in due course.
Performance related pay
Non-executive directors participate in the Company's share option plan. This
is contrary to Code provision 34. The Company's non-executive directors
participate in the Unapproved Plan because the Board considers that the
holding of options helps align the interests of the non-executive directors
with shareholders by incentivising their decision making with a view to
providing growth in the Company's share price. The Company's long-term success
will be dependent upon raising additional finance in future; aligning the
interests of all directors and senior executives with shareholders
incentivises all concerned to achieve the best possible price for such
placings and to minimise undue dilution of interests.
Summary
In accordance with the UK Corporate Governance Code published in July 2018,
the Directors have assessed the prospects of the Group and concluded that it
is appropriate to adopt the going concern basis of accounting based on the
amount of cash on hand at the end of the year and alternative funding options
available at the time of publication of this report. The assessment of going
concern is disclosed in Note 2.4.
The Board's assessment of the Group's current position and principal risks are
disclosed in the Directors' Report on page 5.
The Group has not produced a detailed viability statement given the size and
resources of the Group. This is contrary to Code provision 31.
The Directors consider that the Annual Report and the Financial Statements,
taken as a whole, are fair, balanced, and understandable and provide the
information necessary for the shareholders to assess the Company's position
and performance, business model and strategy. Refer to the Statement of
Directors Resposibilities on page 13.
Daniel Smith
Non-Executive Director
30 June 2023
Independent Auditor's Report to the Members of Alien Metals Ltd
Opinion
We have audited the financial statements of Alien Metals Ltd (the 'Group') for
the year ended 31 December 2022 which comprise the Consolidated Statement of
Financial Position, the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Changes in Equity, the Consolidated Statement of
Cash Flows and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted International Accounting
Standards.
In our opinion, the financial statements:
· give a true and fair view of the state of the Group's affairs as
at 31 December 2022 and of its loss for the year then ended; and
· have been properly prepared in accordance with UK-adopted
International Accounting Standards
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2.4 in the financial statements, which indicates
that the Group incurred a loss of $2,375,000 in the year ended 31 December
2022 and that the Group will be required to raise further finance, equity
and/or debt, in order to fund its forecasted expenditure over the next twelve
months. As stated in note 2.4, these events or conditions, along with the
other matters as set forth in note 2.4, indicate that a material uncertainty
exists that may cast significant doubt on the Group's ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the Group's ability to continue to adopt the going concern basis
of accounting included reviewing and challenging cashflow forecasts prepared
by management covering the 12 months from the approval of these financial
statements and the related key assumptions, ascertaining the Group's current
financial position and cash reserves and discussing their strategies regarding
future fund raises.
In relation to the Group's reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in
relation to:
· the directors' statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern
basis of accounting; and
· the directors' identification in the financial statements of the
material uncertainty related to the entity's ability to continue as a going
concern over a period of at least twelve months from the date of approval of
the financial statements
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The
quantitative and qualitative thresholds for materiality determine the scope of
our audit and the nature, timing and extent of our audit procedures.
Materiality for the consolidated financial statements was set at $274,000
based upon 1.5% of gross assets. Materiality has been based upon gross assets
due to the significant asset balances in the Consolidated Statement of
Financial Position and the number of identified risks in relation to the
Consolidated Statement of Financial Position balances relative to the
Consolidated Statement of Comprehensive Income balances.
For each component in the scope of our Group audit, we allocated a materiality
that is less than our overall Group materiality. The range of materiality
allocated across components was between $185,000 and $130,000.
Performance materiality and the triviality threshold for the financial
statements was set at $137,000 and $13,700 respectively due to the number of
significant risks identified and this being our first year of engagement. We
also agreed to report to the Board of Directors any other differences below
that threshold that we believe warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of
material misstatement in the financial statements. In particular we looked at
areas involving significant accounting estimates and judgements by the
directors and considered future events that are inherently uncertain, such as
the carrying value of Intangible Assets and the fair value assigned to
warrants/ options issued in the year. We also addressed the risk of management
override of internal controls, including among other matters consideration of
whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
A full scope audit was performed on the complete financial information of four
of the components of the Group and a limited scope review was performed on the
remaining three as they were assessed as insignificant.
Of the seven reporting components of the Group, one is located in the British
Virgin Islands, one is located in Mexico, two are located in the United
Kingdom and three are located in Australia. PKF Littlejohn LLP audited the
ultimate parent company, situated in the British Virgin Islands, and all other
reporting components. The Engagement Partner conducted audit work in the
United Kingdom but interacted regularly with the management team in the
Australia during all stages of the audit and was responsible for the scope and
direction of the audit process. This, in conjunction with additional
procedures performed, gave us appropriate evidence for our opinion on the
Group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section we have
determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How our scope addressed this matter
Carrying value of intangible assets (Note 9 & 10)
Our work in this area included but was not limited to:
As at 31 December 2022, the carrying value of intangible assets was
$15,639,000.
· For an appropriate sample of additions in the year, vouching to
supporting documentation and ensuring it has been appropriately capitalised in
accordance with IFRS 6;
This intangible asset arises from exploration and evaluation expenditure
capitalised under IFRS 6 and the acquisition of interests in exploration and
evaluation projects which do not meet the definition of a business per IFRS 3.
· Obtaining the directors' impairment assessment and supporting
workings. Reviewing and discussing with the directors; challenging the key
inputs and assumptions.
Given the value of the balance as at 31 December 2022, the fact that the Group
have yet to enter into production and the judgements and estimations required
to be made by Management when assessing for impairment, there is a risk that
this assets may be overstated in the balance sheet. · Obtaining all exploration licences held and ensuring they are
valid and any conditions within have been adhered to; and
· Obtaining proof of ownership of all subsidiaries.
The directors' assessments that none of the impairment indicators per IFRS 6
were met in respect of any of the projects and that the recoverable value of
the Hancock project exceeds its carrying value were found to be reasonable
though note that this is contingent on further fund raises being completed and
necessary mining licences being secured.
Accounting for asset acquisitions (Note 8)
The Group acquired an interest in a number of projects in the year, namely the Our work in this area included but was not limited to:
Munni Munni, Vivash Gorge and Hancock & Brockman projects, that they
deemed to be outside the scope of IFRS 3 and the assessed fair value of the
assets acquired were capitalised as intangible assets accordingly. Such
acquisitions in the year totalled $7,688,000 · For each acquisition, we obtained and reviewed the underlying
acquisition agreements to ascertain the key terms;
Given the value of the amounts capitalised in the year and the judgements and
estimations required to be made by Management when determining how to classify · Obtaining management's paper outlining the justification for the
the acquisition and the fair value of the assets acquired, there is a risk classification of each acquisition. We reviewed and discussed with management
that intangible assets may be materially misstated as a result of the asset in order to conclude if the acquisitions are correctly classified in
acquisitions being incorrectly classified and/or valued. accordance with IFRS 6 and IFRS 3;
· Obtaining management's paper outlining the justification for the
fair values assigned to the assets acquired. We reviewed in order to conclude
if the assets acquired and the consideration have been correctly valued in
accordance with IFRS 6 and IFRS 13; and
· For any consideration settled in the year, vouching payments to
bank and the issue of shares to supporting documentation.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
We have reviewed the directors' statement in relation to going concern and
that part of the Corporate Governance Statement relating to the company's
compliance with the provisions of the UK Corporate Governance Code specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge obtained during the
audit:
· Directors' statement with regards the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 18 and 19;
· Directors' explanation as to their assessment of the group's
prospects, the period this assessment covers and why the period is appropriate
set out on page 18 and 19;
· Directors' statement on whether they have a reasonable
expectation that the group will be able to continue in operation and meets its
liabilities set out on page 18 and 19;
· Directors' statement that they consider the annual report and the
financial statements, taken as a whole, to be fair, balanced and
understandable set out on page 20;
· Board's confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 15;
· The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out on page
15; and
· The section describing the work of the audit committee set out on
page 15.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the Group and the sector in which
it operates to identify laws and regulations that could reasonably be expected
to have a direct effect on the financial statements. We obtained our
understanding in this regard through discussion with management and
independent research.
· We determined the principal laws and regulations relevant to the
Group in this regard to be those arising from the BVI Business Companies Act,
AIM Rules, local tax legislation and local environmental, employment and
health and safety laws.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the Group
with those laws and regulations. These procedures included, but were not
limited to:
o Discussions with management regarding compliance with laws and regulations
by the Group;
o Reviewing board minutes; and
o Review of regulatory news announcements made.
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that there was potential for management bias in relation to the
carrying value of intangible assets and the accounting for asset acquisitions.
We addressed these risks by challenging the assumptions and judgements made by
management when auditing these significant accounting estimates (see the Key
audit matters section of our report).
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with our engagement letter dated 28 March 2023. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
Dominic Roberts (Engagement Partner)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
Consolidated Statement of Comprehensive Income
Year ended 31 December 2022
Group
Note Year ended 31 December 2022 Year ended 31 December 2021
$ $
Continuing Operations
Administration expenses 6 (2,352,000) (2,255,000)
Other losses (30,000) -
Operating loss (2,382,000) (2,255,000)
Finance costs 18 - (3,000)
Finance income 18 7,000 -
Loss for the year before taxation (2,375,000) (2,258,000)
Income tax 7 - -
Loss for the year (2,375,000) (2,258,000)
Loss attributable to:
- owners of the Parent (2,375,000) (2,258,000)
(2,375,000) (2,258,000)
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Exchange differences recognised directly in equity (1,531,000) (24,000)
Total Comprehensive Income (1,531,000) (24,000)
Attributable to:
- owners of the Parent (1,531,000) (24,000)
Total Comprehensive Income (1,531,000) (24,000)
- Total comprehensive income attributable to continuing operations
Total comprehensive loss for the year attributable to equity shareholders of (3,906,000) (2,282,000)
the parent
Earnings per share (pence) from continuing operations attributable to owners 21 (0.050) (0.065)
of the Parent - Basic & Diluted
The Notes on pages 30 to 53 form part of these Financial Statements.
Consolidated Statement of Financial Position
as at 31 December 2022
Group
Note 2022 2021
$ $
Non-Current Assets
Intangible assets 8, 9 15,639,000 5,939,000
Assets under construction 10 455,000 291,000
Right of use asset 11 17,000 131,000
Total Non-current assets 16,111,000 6,361,000
Current Assets
Trade and other receivables 12 318,000 265,000
Cash and cash equivalents 13 2,177,000 6,431,000
Total current assets 2,495,000 6,696,000
Total Assets 18,606,000 13,057,000
Current Liabilities
Trade and other payables 14 446,000 655,000
Lease liability 11 17,000 112,000
Total Current Liabilities 463,000 767,000
Non-Current Liabilities
Lease liability 11 - 19,000
Total Non-Current Liabilities - 19,000
Total Liabilities 463,000 786,000
Net Assets 18,143,000 12,271,000
Equity attributable to owners of the Parent
Share capital 15 79,586,000 70,422,000
Warrant reserve 16, 17 739,000 865,000
Share-based payment reserve 16, 17, 23 771,000 1,179,000
Foreign exchange translation reserve 16 694,000 2,225,000
Equity investment reserve - -
Accumulated losses 23 (63,647,000) (62,420,000)
Total Equity 18,143,000 12,271,000
The Financial Statements were approved and authorised for issue by the Board
of Directors on 30 June 2023 and were signed on its behalf by:
Guy Robertson
Director
The Notes on pages 30 to 53 form part of these Financial Statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share Capital Warrant reserve Share based payment reserve Foreign exchange translation reserve Retained losses Total equity
$ $ $ Equity investment reserve $ $ $
$
As at 1 January 2021 65,181,000 872,000 1,033,000 (232,000) 2,249,000 (59,957,000) 9,146,000
Loss for the year - - - - - (2,258,000) (2,258,000)
Other comprehensive income
Exchange differences recognised directly in equity - - - - (24,000) - (24,000)
Total comprehensive income for the year - - - - (24,000) (2,258,000) (2,282,000)
Disposal of equity investment FVTOCI-movement in reserves - - - 232,000 - (232,000) -
Transactions with owners
Issue of ordinary shares 5,503,000 - - - - - 5,503,000
Share issue costs (303,000) - - - - - (303,000)
Issue of share options - - 166,000 - - - 166,000
Exercise of share options 17,000 - (20,000) - - 20,000 17,000
Project acquisitions 1,000 - - - - - 1,000
Exercise of warrants 23,000 (7,000) - - - 7,000 23,000
Total transactions with owners 5,241,000 (7,000) 146,000 - - 27,000 5,407,000
As at 31 December 2021 70,422,000 865,000 1,179,000 - 2,225,000 (62,420,000) 12,271,000
Loss for the year - - - - - (2,375,000) (2,375,000)
Other comprehensive income -
Exchange differences recognised directly in equity - - - - (1,531,000) - (1,531,000)
Total comprehensive income for the year - - - - (1,531,000) (2,375,000) (3,906,000)
Transactions with owners - - - - - - -
Issue of ordinary shares 9,365,000 - - - - - 9,365,000
Cost of capital (141,000) - - - - - (141,000)
Share based payment charge (60,000) 422,000 192,000 - - - 554,000
Exercise of options & warrants - (437,000) (17,000) - - 454,000 -
Expiry of warrants & options - (111,000) (8,000) - - 119,000 -
Expiry of options in prior year - - (575,000) - - 575,000 -
Total transactions with owners 9,164,000 (126,000) (408,000) - - 1,148,000 9,778,000
As at 31 December 2022 79,586,000 739,000 771,000 - 694,000 (63,647,000) 18,143,000
The Notes on pages 30 to 53 form part of these Financial Statements
Consolidated Cash Flow Statement
For the year ended 31 December 2022
Group
Note 2022 2021
$ $
Cash flows from operating activities
Loss before taxation from continuing operations (2,375,000) (2,258,000)
Adjustments for:
Issue of share options 17 192,000 166,000
Exchange difference (42,000) 174,000
Finance charges (7,000) 3,000
Depreciation and amortisation 6 102,000 -
(Increase) in trade and other receivables (53,000) (129,000)
(Decrease)/Increase in trade and other payables (209,000) 351,000
Net cash used in operating activities (2,392,000) (1,692,000)
Cash flows from investing activities
Net interest expense - (3,000)
Acquisition of intangibles 9 (432,000) -
Additions of intangibles 8 (3,029,000) (2,432,000)
Expenditure on assets under construction 10 (164,000) (291,000)
Proceeds from sale of financial assets - 40,000
Net cash used in investing activities (3,625,000) (2,686,000)
Cash flows from financing activities
Proceeds from issue of shares 15 2,452,000 5,503,000
Cost of share issue 15 (141,000) (303,000)
Lease payments 11 (102,000) -
Exercise of options and warrants - 40,000
Net cash generated from financing activities 2,209,000 5,240,000
Net Increase/(decrease) in cash and cash equivalents (3,808,000) 862,000
Cash and cash equivalents at beginning of year 6,431,000 5,627,000
Effect of exchange rate fluctuations on translation (446,000) (59,000)
Cash and cash equivalents at end of year 13 2,177,000 6,431,000
( )
Major non-cash transactions
On 23 February 2022, 50,000,000 Ordinary Shares of no par value were issued
for 0.78 pence each as part of the consideration due to Windfield Metals Pty
Ltd for total consideration of $468,000
On 22 March 2022, 138,703,396 Ordinary Shares of no par value were issued at
0.7935 pence per share as part of the consideration for the acquisition of
Munni Munni for total consideration of $1,383,000
On 22 March 2022, 358,617,818 Ordinary Shares of no par value were issued for
0.699 pence per share as part of the consideration for the acquisition of
Munni Munni for total consideration of $3,576,000
On 20 June 2022, 7,827,883 Ordinary Shares of no par value were issued for for
0.73 pence per share as part of the consideration for the acquisition of
Vivash Gorge for total consideration of $68,000
On 20 December 2022, 260,000,000 Ordinary Shares of no par value were issued
for 0.7935 pence per Ordinary Share as part of the consideration for the
acquisition of Hancock and Brockman for total consideration of $1,414,000
On 20 December 2022, 100,000,000 Warrants were issued exercisable at 1 pence
on or before 31 December 2025 for the acquisition of Hancock and Brockman
valued at $347,000 USD
Notes To The Financial Statements
For the year ended 31 December 2022
ACCOUNTING POLICIES
1. General Information
The principal activity of Alien Metals Limited ("the Company") and its
subsidiaries (together "the Group") is the acquisition and development of
mineral resource assets.
The Company's shares are traded on AIM, a market operated by the London Stock
Exchange. The Company is incorporated in the British Virgin Islands and
domiciled in the United Kingdom.
The address of its registered office is Craigmuir Chambers, PO Box 71, Road
Town, Tortola, BVI.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these
Financial Statements are set out below. These policies have been consistently
applied to all the periods presented, unless otherwise stated.
2.1 Basis of Preparation of Financial Statements
The Group and Company Financial Statements have been prepared in accordance
with UK-adopted international accounting standards, IFRS Interpretations
Committee (IFRS IC) interpretations as adopted by the United Kingdom
applicable to companies under IFRS. The Group and Company Financial Statements
have also been prepared under the historical cost convention, except as
modified for assets and liabilities recognised at fair value on an asset
acquisition.
The Financial Statements are presented in US dollars rounded to the nearest
thousand.
The preparation of Financial Statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Accounting Policies. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Group and Company Financial
Statements are disclosed in Note 4.
2.2 Changes in Accounting Policy and Disclosures
(a) New and amended standards adopted by the Group and Company
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. The amendments and revisions applicable for the period ended
31 December 2022 did not result in any material changes to the financial
statements of the Group.
b) New standards, amendments and interpretations in issue but not yet
effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have
not been early adopted are as follows:
Standard Impact on initial application Effective date
IFRS 17 (Amendments) Insurance contracts 1 January 2023
IAS 1 (Amendments) and IFRS Practice Statement 2 Disclosure of Accounting Policies 1 January 2023
IAS 8 (Amendments) Definition of Accounting Estimate 1 January 2023
IAS 12 Income Taxes (Amendments) Deferred Tax Related to Assets and Liabilities Arising from a Single 1 January 2023
Transaction
IAS 1 (Amendments) Classification of liabilities as current or non-current 1 January 2024
IFRS 16 (Amendments) Lease Liability in a Sale and Leaseback 1 January 2024
None are expected to have a material effect on the Group Financial Statements.
2.3 Basis of Consolidation
The Group Financial Statements consolidate the Financial Statements of Alien
Metals Limited and the Financial Statements of all of its subsidiary
undertakings made up to 31 December 2022.
Subsidiaries are 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 over the entity. Where an entity does not have
returns, the Group's power over the investee is assessed as to whether control
is held. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
Below is a summary of subsidiaries of the Group:
Name of subsidiary Place of business Parent company Share capital held Principal activities
Compañía Minera Estrella de Plata S.A. de C.V. Mexico Alien Metals Ltd 100% Exploration
Arian Silver Corporation (UK) Ltd England and Wales Alien Metals Ltd 100% Holding
Arian Silver (Holdings) Limited England and Wales Alien Metals Ltd 100% Holding
A.C.N. 643 478 371 Pty Ltd Australia Alien Metals Ltd 100% Exploration
Iron Ore Company of Australia Pty Ltd Australia Alien Metals Ltd 100% Exploration
Alien Metals Australia Pty Ltd Australia Alien Metals Ltd 100% Exploration
Inter-company transactions, balances, income and expenses on transactions
between group companies are eliminated on consolidation. Profits and losses
resulting from intercompany transactions that are recognised in assets are
also eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
2.4 Going Concern
These financial statements have been prepared on the going concern basis. The
Group's business activities, together with the factors likely to affect its
future development, performance and position are set out in the Chairman's
Statement and the Strategic Report.
As at 31 December 2022, the Group had cash and cash equivalents of $2,177,000.
The Directors have prepared cash flow forecasts to 30 June 2024 which take
account of the cost and operational structure of the Group and Parent Company,
planned exploration and evaluation expenditure, licence commitments and
working capital requirements. These forecasts indicate that the Group and
Parent Company's cash resources are not sufficient to cover the projected
expenditure for the period for a period of 12 months from the date of approval
of these financial statements.
In common with many exploration and evaluation entities, the Company will need
to raise further funds within the next 12 months in order to meet its expected
liabilities as they fall due and progress the Group into construction and
eventual production of revenues. The Directors are confident in the Company's
ability to raise additional funds as required, from existing and/or new
investors, within the next 12 months.
Given the Group and Parent Company's current cash position and its
demonstrated ability to raise capital, the Directors have a reasonable
expectation that the Group and Parent Company has adequate resources to
continue in operational existence for the foreseeable future.
Notwithstanding the above, these circumstances indicate that a material
uncertainty exists that may cast significant doubt on the Group and Parent
Company's ability to continue as a going concern and, therefore, that the
Group and Parent Company may be unable to realise their assets or settle their
liabilities in the ordinary course of business. As a result of their review,
and despite the aforementioned material uncertainty, the Directors have
confidence in the Group and Parent Company's forecasts and have a reasonable
expectation that the Group and Parent Company will continue in operational
existence for the going concern assessment period and have therefore used the
going concern basis in preparing these consolidated financial statements. The
auditors make reference to going concern by way of a material uncertainty in
their report.
2.5 Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors that makes strategic decisions.
Segment results, include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. The Board of Directors
considers there to be only one operating segment during the year, the
exploration, development and exploitation of mineral resources, and three
geographical segments, being Mexico, Australia and United Kingdom.
2.6 Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the 'functional currency'). The functional currency of the
Company is Pounds Sterling, the functional currency of the Australian
subsidiaries is Australian Dollars and Mexican subsidiary Mexican pesos. The
Financial Statements are presented in US dollar, rounded to the nearest
thousand.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where such items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the Consolidated Statement of
Comprehensive Income.
(c) Group companies
The results and financial position of all the Group's entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
· assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that statement of
financial position;
· income and expenses for each statement of comprehensive income
presented are translated at average exchange rates (unless this average is not
a reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
· all resulting exchange differences are recognised in other
comprehensive income where material.
On consolidation, exchange differences arising from the translation of the net
investment in foreign entities, and of monetary items receivable from foreign
subsidiaries for which settlement is neither planned nor likely to occur in
the foreseeable future, are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised in the
income statement as part of the gain or loss on sale.
2.7 Intangible Assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it
determines that those assets will be successful in finding specific mineral
resources. Expenditure included in the initial measurement of exploration and
evaluation assets and which are classified as intangible assets relate to the
acquisition of rights to explore, topographical, geological, geochemical and
geophysical studies, exploratory drilling, trenching, sampling and activities
to evaluate the technical feasibility and commercial viability of extracting a
mineral resource. Capitalisation of pre-production expenditure ceases when the
mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost
Exploration and evaluation assets are not subject to amortisation but are
assessed annually for impairment. The assessment is carried out by allocating
exploration and evaluation assets to cash generating units ("CGU's"), which
are based on specific projects or geographical areas. The CGU's are then
assessed for impairment using a variety of methods including those specified
in IFRS 6.
Whenever the exploration for and evaluation of mineral resources in cash
generating units does not lead to the discovery of commercially viable
quantities of mineral resources and the Group has decided to discontinue such
activities of that unit, the associated expenditures are written off to the
Consolidated Statement of Comprehensive Income.
Exploration and evaluation assets recorded at fair-value on acquisition
Exploration assets which are acquired are recognised at fair value. When an
acquisition of an entity whose only significant assets are its exploration
asset and/or rights to explore, the Directors consider that the fair value of
the exploration assets is equal to the consideration. Any excess of the
consideration over the capitalised exploration asset is attributed to the fair
value of the exploration asset.
During the year, the Company made several acquisitions of which the Directors
have treated as asset acquisitions as explained in Note 9 to these financial
statements. Per IFRS 3, an entity shall determine whether a transaction or
other event is a business combination by applying the definition in this
IFRS, which requires that the assets acquired and liabilities assumed
constitute a business. If the assets acquired are not a business, the
reporting entity shall account for the transaction or other event as an asset
acquisition. As the acquisitions were not considered to meet the definition of
a business combination under IFRS 3, the Group Financial Statements are
prepared as though the group has acquired an asset. The fair value of the
assets were determined by management and the assets were classified as
intangible assets given that they represent exploration and evaluation assets.
2.8 Investment in Subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value
of the consideration paid, less any impairment provision.
2.9 Assets Under Construction
Assets under construction are stated at historical cost less accumulated
depreciation and any accumulated impairment losses. Assets under construction
are not depreciated until they are completed and brought into use.
All assets are subject to annual impairment reviews. An asset's carrying
amount is written down immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated recoverable amount.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replacement
part is derecognised. All other repairs and maintenance are charged to the
Consolidated Statement of Comprehensive Income during the financial period in
which they are incurred.
The asset's residual value and useful economic lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposal are determined by comparing the proceeds with the
carrying amount and are recognised within 'Other net gains / (losses)' in the
Consolidated Statement of Comprehensive Income.
2.10 Right of Use Assets and Leases
The Group leases certain property, plant and equipment.
The lease liability is initially measured at the present value of the lease
payments that are not paid. Lease payments generally include fixed payments
less any lease incentives receivable. The lease liability is discounted using
the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. The Group estimates the
incremental borrowing rate based on the lease term, collateral assumptions,
and the economic environment in which the lease is denominated. The lease
liability is subsequently measured at amortized cost using the effective
interest method. The lease liability is remeasured when the expected lease
payments change as a result of new assessments of contractual options and
residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at
the commencement date of the lease less any incentives received from the
lessor. Added to the right-of-use asset are initial direct costs, payments
made before the commencement date, and estimated restoration costs. The
right-of-use asset is subsequently depreciated on a straight-line basis from
the commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
Each lease payment is allocated between the liability and finance charges. The
corresponding rental obligations, net of finance charges, are included in
lease liabilities, split between current and non-current depending on when the
liabilities are due. The interest element of the finance cost is charged to
the Statement of Profit and Loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. Assets obtained under finance leases are depreciated over
their useful lives. The lease liabilities are shown in Note 11.
Exemptions are applied for short life leases and low value assets, with
payment made under operating leases charged to the Consolidated Statement of
Comprehensive Income on a straight-line basis of the period of the lease.
2.11 Impairment of Non-Financial Assets
Assets that have an indefinite useful life, for example, intangible assets not
ready to use, are not subject to amortisation and are tested annually for
impairment. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset's fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash generating
units).
Non-financial assets that suffered impairment (except goodwill) are reviewed
for possible reversal of the impairment at each reporting date.
2.12 Financial Assets
(a) Classification
The Group classifies its financial assets in the following categories: at
amortised cost including trade receivables and other financial assets at
amortised cost, at fair value through other comprehensive income and at fair
value through profit or loss, loans and receivables, and available-for-sale.
The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets
at initial recognition.
(b) Recognition and measurement
Amortised cost
Trade and other receivables are recognised initially at the amount of
consideration that is unconditional, unless they contain significant financing
components, in which case they are recognised at fair value. The group holds
the trade and other receivables with the objective of collecting the
contractual cash flows, and so it measures them subsequently at amortised cost
using the effective interest method.
The group classifies its financial assets as at amortised cost only if both of
the following criteria are met:
· the asset is held within a business model whose objective is to
collect the contractual cash flows; and
· the contractual terms give rise to cash flows that are solely
payments of principle and interest.
(c) Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has
not been a significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other
receivables due in less than 12 months, the Group applies the simplified
approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group
does not track changes in credit risk, but instead, recognises a loss
allowance based on the financial asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are
90 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually occurs when
past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at
amortised cost are credit impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
(d)Derecognition
The Group derecognises a financial asset only when the contractual rights to
the cash flows from the asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of ownership of the asset to
another entity.
On derecognition of a financial asset measured at amortised cost, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss. This is
the same treatment for a financial asset measured at fair value through profit
and loss.
2.13 Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The Group's financial liabilities include trade and other payables. Financial
liabilities measured at amortised cost include current borrowings and trade
and other payables that are short term in nature. Financial liabilities are
derecognised if the Group's obligations specified in the contract expire or
are discharged or cancelled.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as
described below:
Trade and other payables
After initial recognition, trade and other payables are subsequently measured
at amortised cost using the effective interest rate ('EIR method'). Gains and
losses are recognised in the statement of profit or loss and other
comprehensive income when the liabilities are derecognised, as well as through
the EIR amortisation process.
Amortised cost is calculated by considering any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the Consolidated Statement of
Comprehensive Income.
Derecognition
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
profit or loss and other comprehensive income.
Fair value
All assets and liabilities for which fair value is measured or disclosed in
the consolidated Financial Statements are categorised within the fair value
hierarchy. The fair value hierarchy prioritises the inputs to valuation
techniques used to measure fair value. The Group uses the following hierarchy
for determining and disclosing the fair value of financial instruments and
other assets and liabilities for which the fair value was used:
- level 1: quoted prices in active markets for identical assets or
liabilities;
- level 2: inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices); and
- level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
2.14 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.15 Taxation
Tax for the period comprises current and deferred tax. Tax is recognised in
the income statement, except to the extent that it relates to items recognised
directly in equity. In this case the tax is also recognised directly in
other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the Company's subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on
the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated Financial Statements. However, the
deferred tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that, at
the time of the transaction, affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted, or substantially enacted, by the end of the reporting period and
are expected to apply when the related deferred income tax asset is realised,
or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences
arising from investments in subsidiaries, associates and joint arrangements,
except for deferred income tax liability where the timing of the reversal of
the temporary difference is controlled by the group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Generally, the group is unable to control the reversal of the temporary
difference for associates. Only where there is an agreement in place that
gives the group the ability to control the reversal of the temporary
difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries, associates and joint arrangements
only to the extent that it is probable the temporary difference will reverse
in the future and there is sufficient taxable profit available against which
the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax
liabilities, and when the deferred income tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the taxable
entity or different taxable entities where there is an intention to settle the
balances on a net basis.
There has been no tax credit or expense for the period relating to current or
deferred tax.
2.16 Share Capital, and other reserves
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity, as a
deduction, net of tax, from the proceeds provided
Other reserves consist of the share option reserve and the foreign exchange
translation reserve. See Note 16 for further detail.
2.17 Share Based Payments
The Group operates a number of equity-settled share-based schemes, under which
the entity receives services from employees or third-party suppliers as
consideration for equity instruments (shares, options and warrants) of the
Group. The Group may also issue warrants to share subscribers as part of a
share placing. The fair value of the equity-settled share based payments is
recognised as an expense in the Consolidated Statement of Comprehensive Income
or charged to equity depending on the nature of the service provided or
instrument issued. The total amount to be expensed or charged in the case of
options is determined by reference to the fair value of the options or
warrants granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability or sales growth targets, or
remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save).
In the case of shares and warrants the amount charged is determined by
reference to the fair value of the services received if available. If the fair
value of the services received is not determinable the shares are valued by
reference to the market price and the warrants are valued by reference to the
fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of
options or warrants that are expected to vest. The total expense or charge is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each
reporting period, the directors revise their estimates of the number of
options that are expected to vest based on the non-market vesting conditions.
It recognises the impact of the revision to original estimates, if any, in the
Consolidated Statement of Comprehensive Income or equity as appropriate, with
a corresponding adjustment to the share based payment reserve or warrant
reserve in equity.
When the warrants or options are exercised, the Company issues new shares. The
proceeds received, net of any directly attributable transaction costs, are
credited to share capital (nominal value) when the warrants or options are
exercised.
2.18 Finance Income and Cost
Finance income and finance costs are recognised using the effective interest
rate method.
3. Financial Risk Management
3.1 Financial Risk Factors
The Group's activities expose it to a variety of financial risks being market
risk (including, interest rate risk, currency risk and price risk), credit
risk and liquidity risk. The Group's overall risk management programme focuses
on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group's financial performance.
Market Risk
Market risk is the risk that the Group's future earnings will be adversely
impacted by changes in market prices. Market risk for Alien Metals comprises
two types of risk: foreign currency risk and price risk.
(a) Foreign currency risks
The Group's operational expenditure is made in Mexico in Mexican pesos, in
Australia in Australian dollars, and head office expenses are predominantly
made in the UK in pounds sterling, and United States dollars. The Group is
therefore exposed to the movement in exchange rates for these currencies. The
Group does not currently hedge foreign exchange risk.
At the year end the majority of the Group's cash resources were held in pounds
sterling. The Group therefore also has downside exposure to any strengthening
of United States dollar, Australian dollar, or the Mexican peso against pounds
sterling as this would increase expenses in pounds sterling terms and
accelerate the depletion of the Group's cash resources. Any weakening of
United States dollar, Australian dollar or the Mexican peso against pounds
sterling would, however, result in a reduction in expenses in pounds sterling
terms and preserve the Group's cash resources.
The carrying amounts of the Group's foreign currency denominated financial
assets and monetary liabilities at the reporting date are as follows:
Liabilities Assets
2022 2021 2022 2021
Pounds sterling 148,000 542,000 2,256,000 6,436,000
United States dollars 37,000 - 2,000 20,000
Australian dollars 246,000 102,000 166,000 96,000
Canadian dollars - - - 1,000
Mexican pesos 15,000 11,000 70,000 3,000
Sensitivity Analysis
The Group holds cash in pounds sterling to settle accounts payable balances
derived in that currency. The main risk is through foreign exchange
fluctuations in companies where the cash balances are held in a currency that
is different to the functional currency.
Exposure to foreign currency risk sensitivity analysis:
Against Sterling
US$
15% strengthening in the United States dollar (280,000)
15% weakening in the United States dollar 280,000
A 15% variation is considered an appropriate level of sensitivity given recent
levels of foreign exchange volatility.
(b) Price risk
The price risk is the risk that the Group's future earnings will be adversely
impacted by changes in the market prices of commodities. Given the Group has
yet to enter production it is not possible to quantify this impact at this
stage.
(c) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or
cash flows associated with the instrument will fluctuate due to changes in
market interest rates. Interest rate risk arises from interest bearing
financial assets and liabilities that the Group uses. Treasury activities take
place under procedures and policies approved and monitored by the Board to
minimise the financial risk faced by the Group. Interest bearing assets
comprise cash and cash equivalents which are considered to be short-term
liquid assets. No sensitivity analysis has been disclosed as management does
not consider any reasonable fluctuation in interest rates to be sufficiently
material to disclose as there are no interest bearing loans and interest
income is only from cash held with banks.
Credit Risk
Credit risk arises from cash and cash equivalents as well as outstanding
receivables. Management does not expect any losses from non-performance of
these receivables.
The amount of exposure to any individual counter party is subject to a limit,
which is assessed by the Board. No credit limits were exceeded during the
reporting period, and management does not expect any losses from
non-performance by these counterparties.
The Group considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk.
Liquidity Risk
The Company's approach to managing liquidity risk is to ensure that it will
have sufficient liquidity to meet liabilities when due. The directors
regularly review cash flow forecasts to determine whether the Group has
sufficient cash reserves to meet future working capital requirements and
discretionary business development opportunities including exploration
activities.
As at 31 December 2022, the Company had cash of $2.1m to settle accounts
payable and lease liabilities of $500k. The Company's accounts payable have
contractual maturities of less than 30 days and are subject to normal trade
terms. In the short-term, liabilities will be funded by cash.
The Group's assets are at an early stage and in order to meet financing
requirements for their development the Company has raised funds by way of
several share placements, which is a common practice for junior mineral
exploration companies.
Although the Company has been successful in the past in raising equity
finance, there can be no assurance that the funding required by the Group will
be made available to it when needed or, if such funding were to be available,
that it would be offered on reasonable terms. The terms of such financing
might not be favourable to the Group and might involve substantial dilution to
existing shareholders.
3.2 Capital Risk Management
The Group's objective when managing capital is to safeguard the Group's
ability to continue as a going concern and have access to adequate funding for
its exploration and development projects, so that it can provide returns for
shareholders and benefits for other stakeholders. The Group manages the
capital structure and makes adjustments in the light of changes in economic
conditions and risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure the Group may issue new shares,
acquire debt, or sell assets. Management regularly reviews cash flow forecasts
to determine whether the Group has sufficient cash reserves to meet future
working capital requirements and to take advantage of business opportunities.
4. Critical Accounting Estimates and Judgements
The preparation of the Group Financial Statements in conformity with IFRSs
requires Management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the Financial Statements and the reported amount of
expenses during the year. Actual results may vary from the estimates used to
produce these Financial Statements.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Significant items subject to such estimates and assumptions include, but are
not limited to:
Recognition and Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December 2022 of
$15,639,000 (2021: $5,939,000): refer to Note 8 for more information. During
the year asset acquisitions with a carrying value of $7,688,000 were
recognised, refer to Note 9 for more information. The Group has a right to
renew exploration permits and the asset is only depreciated once extraction of
the resource commences. Management tests annually whether exploration projects
have future economic value in accordance with the accounting policy stated in
Note 2.7. Each exploration project is subject to an annual review by either a
consultant or senior company geologist to determine if the exploration results
returned during the year warrant further exploration expenditure and have the
potential to result in an economic discovery. This review takes into
consideration the expected costs of extraction, long term metal prices,
anticipated resource volumes and supply and demand outlook. In the event that
a project does not represent an economic exploration target and results
indicate there is no additional upside, a decision will be made to discontinue
exploration.
Fair value of assets acquired
During the year the group acquired a number of interests in different projects
and these acquisitions did not fall within the scope of IFRS 3 but rather IFRS
6. As a result, these assets acquired were required to initially be recognised
as fair value. The Directors assessed the fair value of all project interests
acquired as being equal to the fair value of the consideration to acquire said
interests in projects. See note 9 for further details
Share based payment transactions
The Group has made awards of options and warrants over its unissued share
capital to certain Directors and employees as part of their remuneration
package. Certain warrants have also been issued to shareholders as part of
their subscription for shares and to suppliers for various services received.
The valuation of these options and warrants involves making a number of
critical estimates relating to price volatility, future dividend yields,
expected life of the options and forfeiture rates. These assumptions have
been described in more detail in Note 17.
5. Segmental Information
As at 31 December 2022, the Group operates in three geographical areas, the
UK, Mexico and Australia. The Company operates in one geographical area, the
UK. Activities in the UK are mainly administrative in nature whilst activities
in Australia and Mexico relate to exploration and evaluation work. The reports
used by the chief operating decision maker are based on these geographical
segments.
The Group generated no revenue during the year ended 31 December 2022 (2021:
$Nil).
2022 Australia Mexico UK Total
$ $ $
Administrative expenses (171,000) (98,000) (2,083,000) (2,352,000)
Other gains/(losses) - - (30,000) (30,000)
Finance income - - 7,000 7,000
Operating loss from continued operations per reportable segment (171,000) (98,000) (2,106,000) (2,375,000)
Reportable segment assets 15,660,000 783,000 2,163,000 18,606,000
Reportable segment liabilities (291,000) (15,000) (157,000) (463,000)
Reportable segment net assets 15,369,000 768,000 2,006,000 18,143,000
Segment assets and liabilities are allocated based on geographical location.
2021 Australia Mexico UK Total
$ $ $ $
Administrative expenses (95,000) (107,000) (2,053,000) (2,255,000)
Operating loss (95,000) (107,000) (2,053,000) (2,255,000)
Net finance charges - - (3,000) (3,000)
Loss for the year attributable to equity shareholders of the parent (95,000) (107,000) (2,056,000) (2,258,000)
Reportable segment assets 3,650,000 71,000 9,336,000 13,057,000
Reportable segment liabilities (102,000) (11,000) (673,000) (786,000)
Reportable segment net assets 3,548,000 60,000 8,663,000 12,271,000
6. Expenses by Nature
2022 2021
$ $
Directors' fees (Note 20) 438,000 382,000
Employee wages and salaries 307,000 261,000
Fees payable to the Company's auditors for the audit of the consolidated 59,000 35,000
financial statements
Professional, legal and consulting fees 962,000 922,000
Insurance 82,000 52,000
Office and administrative expenses 90,000 90,000
Depreciation 102,000 -
Travel and subsistence 133,000 14,000
Share option expense 192,000 166,000
Other expenses 42,000 159,000
Foreign exchange movement (55,000) 174,000
Total administrative expenses 2,352,000 2,255,000
7. Taxation
Group
2022 2021
$ $
Loss before tax from continued operations (2,375,000) (2,258,000)
Income tax using the weighted corporation tax rate 18.6% (2021: 19%) (442,000) (429,000)
Expenditure not deductible for tax purposes 57,000 -
Effect of differing tax rates across jurisdictions - 122,000
Net tax effect of losses carried forward on which no deferred tax asset is 385,000 307,000
recognised
Income tax for the year - -
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 18.6% (2021: 19%) used is a
combination of the 19% standard rate of corporation tax in the UK, 25%
Australian corporation tax and 30% Mexican tax rate. The Group has accumulated
tax losses of approximately $30,459,000 (2021: $28,389,000) available to carry
forward against future taxable profits.
Under IFRS, a net deferred tax asset has not been recognised due to the
uncertainty as to the amount that can be utilised. No adjustments are required
in respect of the subsidiaries.
8. Intangible Assets
Exploration & Evaluation Assets at Cost and Net Book Value 2022 2021
$ $
Balance as at 1 January 5,939,000 3,641,000
Additions 3,029,000 2,432,000
Asset acquisitions (Note 9) 7,688,000 -
Foreign exchange differences (1,017,000) (134,000)
As at 31 December 15,639,000 5,939,000
Deferred exploration costs relate to the initial acquisition of the licences
and subsequent exploration expenditure incurred in evaluating the projects.
The additions in the year relate to the following license/project
acquisitions:
· Acquisition of 100% of Munni Munni Platinum Group Metals and Gold
Project in the West Pilbara, Western Australia
· Acquisition of 100% of the Vivash Gorge Iron Ore Project in the
Pilbara region of Western Australia from ASX-listed Zenith Minerals Ltd
· Acquisition 90% of the Hancock and Brockman iron ore projects in
the Pilbara region of Western Australia from Windfield Metals Pty Ltd
In accordance with IFRS 6, the Directors undertook an assessment of the
following areas and circumstances which could indicate the existence of
impairment:
• The Group's right to explore in an area has expired or will expire
in the near future without renewal.
• No further exploration or evaluation is planned or budgeted for.
• A decision has been taken by the Board to discontinue exploration
and evaluation in an area due to the absence of a commercial level of
reserves.
• Sufficient data exists to indicate that the book value may not be
fully recovered from future development and production.
The Directors do not consider the assets to be impaired.
9. Acquisition of Exploration and Evaluation Assets
During the year, the Company acquired the following projects (together the
"Projects"):
· Munni Munni Platinum Group Metals and Gold Project
· Vivash Gorge Iron Ore Project
· Hancock and Brockman iron ore projects
The Directors have treated the Projects as asset acquisitions. As the
acquisitions were not considered to meet the definition of a business
combination under IFRS 3 and therefore they judged the fair value of the
assets acquired to be equal to the fair value of the consideration.
In accordance with IFRS 3, "Business Combinations," a business combination is
defined as a transaction or event where an acquirer obtains control over one
or more businesses. Control is typically achieved through the acquisition of
shares or other forms of ownership interest. On the other hand, an asset
acquisition refers to a transaction where the acquirer obtains control over a
set of identifiable assets and liabilities that do not constitute a business.
As per the above it is deemed that the Projects are all asset acquisitions due
to the following reasons:
· These acquisitions were of exploration licenses rather than
businesses.
· There were no processes in place to generate outputs
independently.
· There was no workforce acquired as part of the acquisitions.
· There was no market relationships or presence as these are
license tenements.
· The fair value of the assets is deemed to be the value paid by
Alien Metals which was done at arms length
Munni Munni
On 22 March 2022, the Company announced that it had entered into an
acquisition agreement to acquire 100% of Munni Munni Platinum Group Metals and
Gold Project in the West Pilbara, Western Australia. The total consideration
of $5,318,000 was satisfied as follows:
· by the issue of 138,703,396 new Ordinary Shares to the sellers at
a price of 0.7935 pence per Ordinary Share for a total of USD $1,383,000.
· by the issue of 358,617,818 new Ordinary Shares to the sellers at
a price of 0.699 pence per Ordinary Share for a total of USD $3,576,000.
· $500,000 AUD in cash consideration (USD $359,000)
The consideration was based on an agreed price between the Company and vendor.
The fair value assigned to the intangible assets is equal to the fair value of
the consideration being $5,318,000
Vivash Gorge
On 20 June 2022, the Company announced that it had entered into an acquisition
agreement to acquire 100% of the Vivash Gorge Iron Ore Project in the Pilbara
region of Western Australia from ASX-listed Zenith Minerals Ltd. The total
consideration of $68,000 USD was satisfied by the issue of 7,827,883 Ordinary
Shares of no par value were issued for 0.7272 pence per share.
The Directors conclusion was that the transaction was an asset acquisition.
The fair value assigned to the intangible assets is equal to the fair value of
the consideration being $68,000.
In addition, Zenith Minerals Ltd is entitled to performance shares contingent
on certain milestones, and a royalty of US$1.00/dwt (Dry Weigth Tonnes) of the
quantity of shipped ore derived from the area within the boundaries of the
Vivash Gorge license area. The milestones are as follows:
· that number of Shares equal to the value of A$50,000 at a deemed
price equal to the VWAP of Shares in the 10 trading days prior to the release
of an announcement on the London Stock Exchange (LSE) confirming an initial,
economic direct shipping ore (DSO) resource being defined at the area covered
by the Licence, reported in accordance with the JORC Code and estimated (or
based on documentation prepared) by a Competent Person as defined by the JORC
Code.
· that number of Shares equal to the value of A$100,000 at a deemed
price equal to the VWAP of the Shares in the 10 trading days prior to the
release of an announcement on the LSE confirming the conversion of the Licence
from an exploration licence to a mining licence; and
· that number of Shares equal to the value of A$200,000 at a deemed
price equal to the VWAP of the Shares in the 10 trading days prior to the
release of an announcement on the LSE confirming an economic, > 10Mt DSO
resource, reported in accordance with the JORC Code and estimated (or based on
documentation prepared) by a Competent Person as defined by the JORC Code.
Hancock and Brockman
On 20 December 2022, the Company announced that it had entered into an
acquisition agreement to acquire 90% of the Hancock and Brockman iron ore
projects in the Pilbara region of Western Australia from Windfield Metals Pty
Ltd. The total consideration of $1,834,000 USD was satisfied as follows:
· by the issue of 260,000,000 new Ordinary Shares to the sellers at a
price of 0.7935 pence per Ordinary Share for a total of USD $1,414,000
· by the issue of 100,000,000 Warrants exercisable at 1 pence on or
before 31 December 2025 valued at $347,000 USD
· £60,000 GBP in cash consideration (USD $73,000)
The consideration was based on an agreed price between the Company and vendor.
The fair value assigned to the intangible assets is equal to the fair value of
the consideration being $1,834,000.
Prior to the above, on 18 February 2022, the Company was required to issue
certain securities to Windfield as agreed on 26 February 2020 as part of the
consideration for the acquisition of a 51% interest in the Hamersley Project
from Windfield. The agreed consideration includes the issuance of 100,000,000
performance shares to be issued at a Deemed Issue Price of 0.11p per share in
two equal tranches convertible on a 1-for-1 basis into ordinary shares of the
Company upon achievement of the following performance hurdles:
· 10,000,000 tonne JORC inferred resource at greater than 54% Iron
"Fe" ("Hurdle 1"); and
· 20,000,000 JORC inferred resource at greater than 54% Iron "Fe"
("Hurdle 2").
The first hurdle was achieved in September 2021, Windfield has requested
conversion of 50,000,000 performance shares into Ordinary Shares for a total
value of $468,000 USD. The directors did not consider the second performance
hurdle to be satisfied as a 20,000,000 JORC resource has not yet been
confirmed.
Further, as part of the acquisition agreement, a contingent performance
payment will be payable on certain conditions being met as follows:
· In the event of a Tenement Sale: 50% of the value uplift
attributable to the project;
· In the event of an IPO/Spin-out event on a recognised stock
exchange: 50% of the value uplift attributable to the project; or
· In the event a decision to mine is made: 50% of the project
valuation uplift attributable to the projects.
In each case, the uplift payments are reduced by 50% of the incurred project
expenditure.
10. Assets under Construction
2022 2021
$ $
Balance as at 1 January 291,000 -
Additions 164,000 291,000
As at 31 December 455,000 291,000
Mining plant equipment, recertification costs and the related transport costs
capitalised as a Mining asset in A.C.N 643 478 371 Pty Ltd in relation to the
headframe and associated equipment for the Elizabeth Hill Silver mine.
11. Right of use assets and lease liability
At the reporting date, the Group had their London offices under lease
agreement. The agreement was signed on 21 April 2021 and covers office rent
for the period from 1 May 2021 until 28 Feb 2023, with monthly payments of
£6,916 (US$9,514) and a deposit of £20,748 (US$28,542). The Group recognised
the following right of use asset and related lease liability in respect of
this lease agreement:
Right of use asset
2022 2021
$ $
Balance as at 1 January 131,000 -
Additions - 209,000
Depreciation (102,000) (76,000)
Foreign exchange differences (12,000) (2,000)
As at 31 December 17,000 131,000
The depreciation charge of $102,000 (2021: $76,000) is recognised under
Administration Expenses.
Lease liability
2022 2021
$ $
Balance as at 1 January 131,000 -
Additions - 209,000
Rental payments in the reporting period (102,000) (76,000)
Foreign exchange differences (12,000) (2,000)
As at 31 December 17,000 131,000
A maturity analysis of the undiscounted minimum lease payments due are as
follows:
$
No later than one year 17,000
As at 31 December 17,000
12. Trade and Other Receivables
2022 2021
$ $
VAT receivable 133,000 -
Prepayments 95,000 80,000
Other receivables 90,000 185,000
As at 31 December 318,000 265,000
Trade and other receivables are all due within one year. The fair value of all
receivables is the same as their carrying values stated above. These assets,
excluding prepayments, are the only form of financial asset within the Group,
together with cash and cash equivalents.
The carrying amounts of the Group's trade and other receivables are
denominated in the following currencies:
2022 2021
$ $
UK Pounds 173,000 167,000
US Dollars - -
Australian Dollars 75,000 61,000
Mexican Peso 70,000 37,000
As at 31 December 318,000 265,000
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivable mentioned above. The Group does not hold any
collateral as security. All trade and other receivables are considered fully
recoverable and performing.
13. Cash and Cash Equivalents
2022 2021
$ $
Cash at bank and in hand 2,177,000 6,431,000
14. Trade and Other Payables
2022 2021
$ $
Trade payables 272,000 451,000
Other payables 69,000 -
Accrued expenses 105,000 204,000
As at 31 December 446,000 655,000
The carrying amounts of the Group's trade and other payables are denominated
in the following currencies:
2022 2021
$ $
UK Pounds 148,000 542,000
US Dollars 37,000 -
Mexican Peso 15,000 11,000
Australian Dollars 246,000 102,000
As at 31 December 446,000 655,000
15. Share Capital and Share Premium
The Company is authorised to issue an unlimited number of common shares of no
par value.
Issued share capital
Group Number of shares Total
$
At 1 January 2021 3,420,791,048 65,181,000
Issue of Ordinary Shares on exercise of warrants - 15 January 2021 2,000,000 8,000
Issue of Ordinary Shares on project acquisition - 10 February 2021 100,000 1,000
Issue of Ordinary Shares on exercise of warrants - 23 March 2021 2,222,222 9,000
Issue of Ordinary Shares on exercise of warrants - 13 May 2021 4,200 -
Issue of Ordinary Shares on exercise of warrants - 20 August 2021 35,332 -
Issue of Ordinary Shares on exercise of options - 10 September 2021 5,000,000 17,000
Issue of Ordinary Shares on exercise of warrants - 20 September 2021 40,600 1,000
Issue of Ordinary Shares on exercise of warrants - 19 November 2021 1,400,000 5,000
Issue of Ordinary Shares for cash - 22 November 2021 470,588,223 5,502,000
Issue Costs - 22 November 2021 - (302,000)
At 31 December 2021 3,902,181,625 70,422,000
Share issue costs - 1 January 2022 - (60,000)
Issue of Ordinary Shares on exercise of warrants - 21 January 2022 202,247,000 367,000
Issue of Ordinary Shares on exercise of options - 21 January 2022 1,100,000 4,000
Issue of Ordinary Shares on exercise of warrants - 10 February 2022 1,111,111 5,000
Issue of Ordinary Shares on exercise of warrants - 10 February 2022 816,666 3,000
Issue of Ordinary Shares as consideration for asset acquisition - 23 February 50,000,000 467,000
2022 (Note 9)
Issue of Ordinary Shares on exercise of warrants - 14 March 2022 3,333,333 12,000
Issue of Ordinary Shares as consideration for asset acquisition - 22 March 138,703,396 1,384,000
2022 (Note 9)
Issue of Ordinary Shares as consideration for asset acquisition - 22 March 358,617,818 3,577,000
2022 (Note 9)
Issue of Ordinary Shares on exercise of warrants - 22 March 2022 66,666,666 153,000
Issue of Ordinary Shares on exercise of warrants - 22 March 2022 26,610,661 73,000
Issue of Ordinary Shares on exercise of warrants - 13 April 2022 14,000 1,000
Issue of Ordinary Shares on exercise of warrants - 13 April 2022 122,267 1,000
Issue of Ordinary Shares on exercise of warrants - 13 April 2022 984,375 3,000
Issue of Ordinary Shares on exercise of options - 26 April 2022 2,000,000 7,000
Issue of Ordinary Shares as consideration for asset acquisition - 20 June 2022 7,827,883 69,000
(Note 9)
Share issue costs - 7 September 2022 - (12,000)
Issue of Ordinary Shares for cash - 8 September 2022 300,000,000 1,814,000
Share issue costs - 28 September 2022 - (29,000)
Share issue costs - 28 September 2022 - (99,000)
Issue of Ordinary Shares on exercise of options - 1 December 2022 2,500,000 8,000
Issue of Ordinary Shares as consideration for asset acquisition - 20 December 260,000,000 1,416,000
2022 (Note 9)
At 31 December 2022 5,324,836,801 79,586,000
On 21 January 2022, 202,247,000 Ordinary Shares of no par value were issued
for cash at 0.15 pence each for the exercise of warrants. The share price at
the time of exercise was 0.68 pence per share.
On 21 January 2022, 1,100,000 Ordinary Shares of no par value were issued for
0.25 pence each for the exercise of options. The share price at the time of
exercise was 0.68 pence per share.
On 10 February 2022, 1,111,111 Ordinary Shares of no par value were issued for
0.30 pence each for the exercise of warrants. The share price at the time of
exercise was 0.97 pence per share.
On 10 February 2022, 816,666 Ordinary Shares of no par value were issued for
0.25 pence each for the exercise of warrants. The share price at the time of
exercise was 0.97 pence per share.
On 23 February 2022, 50,000,000 Ordinary Shares of no par value were issued
for 0.78 pence each as part of the consideration due to Winfield Metals Pty
Ltd.
On 14 March 2022, 3,333,333 Ordinary Shares of no par value were issued for
for 0.3 pence per share for the exercise of warrants. The share price at the
time of exercise was 0.82 pence per share.
On 22 March 2022, 138,703,396 Ordinary Shares of no par value were issued at
0.7935 pence per share as part of the consideration for the acquisition of
Munni Munni
On 22 March 2022, 358,617,818 Ordinary Shares of no par value were issued for
0.699 pence per share as part of the consideration for the acquisition of
Munni Munni
On 22 March 2022, 66,666,666 Ordinary Shares of no par value were issued at
0.19 pence per share for the exercise of warrants. The share price at the time
of exercise was 0.82 pence per share.
On 22 March 2022, 26,610,661 Ordinary Shares of no par value were issued for
0.25 pence per share for the exercise of warrants. The share price at the time
of exercise was 0.82 pence per share.
On 13 April 2022, 14,000 Ordinary Shares of no par value were issued for 0.25
pence each for the exercise of warrants. The share price at the time of
exercise was 0.80 pence per share.
On 13 April 2022, 122,267 Ordinary Shares of no par value were issued for 0.25
pence each for the exercise of warrants. The share price at the time of
exercise was 0.80 pence per share.
On 13 April 2022, 984,375 Ordinary Shares of no par value were issued for 0.25
pence each for the exercise of warrants. The share price at the time of
exercise was 0.80 pence per share.
On 26 April 2022, 2,000,000 Ordinary Shares of no par value were issued for
0.25 pence each for the exercise of options. The share price at the time of
exercise was 0.77 pence per share.
On 20 June 2022, 7,827,883 Ordinary Shares of no par value were issued for for
0.73 pence per share as part of the consideration for the acquisition of
Vivash Gorge.
On 8 September 2022, 300,000,000 Ordinary Shares of no par value were issued
for 0.5 pence per share for cash.
On 1 December 2022, 2,500,000 Ordinary Shares of no par value were issued for
0.25 pence each for the exercise of options The share price at the time of
exercise was 0.52 pence per share.
On 20 December 2022, 260,000,000 Ordinary Shares of no par value were issued
for 0.7935 pence per Ordinary Share as part of the consideration for the
acquisition of Hancock and Brockman.
16. Other reserves
2022 2021
$ $
Foreign currency translation reserve 694,000 2,225,000
Share based payment reserve 771,000 1.179,000
Warrant reserve 739,000 865,000
Foreign currency translation reserve - the foreign currency translation
reserve represents the effect of changes in exchange rates arising from
translating the Financial Statements of subsidiary undertakings into the
Company's presentational currency.
The share-based payment reserve arises on the grant of share options to
directors, employees and other eligible persons under the share option plan.
Refer to Note 17 for more information.
The warrants reserve arises on the issue of warrants. Refer to Note 17 for
further information.
17. Share Based Payments
Share options outstanding at 31 December 2022 have the following expiry dates
and exercise prices:
Number
Grant date Expiry date Exercise price in £ per share 2022 2021
2017 09-Feb-22 0.0100 - 1,250,000
2018 14-May-23 0.0025 10,642,373 15,142,373
2019 28-Mar-24 0.0025 - 1,100,000
2019 28-Mar-24 0.0025 12,342,509 12,342,509
2019 28-Mar-24 0.0022 3,000,000 3,000,000
2019 28-Mar-24 0.0030 3,000,000 3,000,000
2019 28-Mar-24 0.0045 4,000,000 4,000,000
2020 30-Aug-23 0.0045 18,750,000 18,750,000
2020 30-Aug-23 0.0050 18,750,000 18,750,000
2020 30-Aug-23 0.0055 22,500,000 22,500,000
2021 21-Oct-24 0.0100 10,000,000 10,000,000
2021 21-Oct-24 0.0115 10,000,000 10,000,000
2021 21-Oct-24 0.0145 15,000,000 15,000,000
2022 26-Sep-26 0.008 - 0.014 345,000,000 -
Total 472,984,882 134,834,882
Warrants outstanding at 31 December 2022 have the following expiry dates and
exercise prices:
Number
Grant date Expiry date Exercise price in £ per share 2022 2021
2019 31-Jan-22 0.0015 - 202,247,000
2020 10-Mar-22 0.003 - 37,444,444
2020 10-Mar-22 0.0015 - 3,333,333
2020 18-May-23 0.0012 2,625,000 2,625,000
2020 10-Sep-23 0.006 12,000,000 12,000,000
2020 18-May-23 0.015 11,208,125 11,208,125
2020 10-Mar-22 0.0025 - 40,495,680
2020 19-Mar-22 0.0019 - 66,666,666
2020 30-Nov-23 0.013 13,600,000 13,600,000
2021 17-Nov-24 0.085 23,529,401 -
2022 14-Sept-25 0.0025 7,200,000 -
2022 31-Dec-25 0.0025 100,000,000 -
Total 170,162,526 389,620,428
The estimate of the fair value of the share options and warrants is measured
based on the Black-Scholes model. The parameters used for options and warrants
granted in the year ended 31 December 2022 are detailed
below:
2022 Options 2022 Options 2022 Warrants
Granted on: 26/9/2022 26/9/2022 19/12/2022
Life (years) 3 years 3 years 3 years
Exercise price (pence per share) 8p 10p 2.5p
Risk free rate 1.7% 1.7% 3.49%
Expected volatility 12.8% 12.8% 69%
Expected dividend yield - - -
Marketability discount 20% 20% 20%
Total fair value (£000) 5 1 329
2022 Options 2022 Options
Granted on: 26/9/2022 26/9/2022
Life (years) 3 years 3 years
Exercise price (pence per share) 12p 14p
Risk free rate 1.7% 1.7%
Expected volatility 12.8% 12.8%
Expected dividend yield - -
Marketability discount 20% 20%
Total fair value (£000) 1 1
The expected volatility is based on the historical share prices over the prior
6 month period of the Company share price.
The movement of share options for the year to 31 December 2022 is shown below:
2022 2021
Number Weighted average exercise price (£) Number Weighted average exercise price (£)
As at 1 January 134,834,882 0.0100 104,834,882 0.0041
Granted (not yet vested) 345,000,000 0.0100 35,000,000 0.0124
Exercised (5,600,000) 0.0100 (5,000,000) 0.0025
Expired (1,250,000) 0.0100 - -
Outstanding as at 31 December 472,984,882 0.0100 134,834,882 0.0100
Exercisable at 31 December 127,984,882 0.0100 104,834,882 0.0100
The movement of warrants for the year to 31 December 2022 is shown below:
2022 2021
Number Weighted average exercise price (£) Number Weighted average exercise price (£)
As at 1 January 389,620,248 0.0024 395,322,602 0.0024
Granted 130,729,411 0.0025 - -
Exercised (301,906,079) 0.0024 (5,702,354) 0.0025
Expired (48,281,064) 0.0024 - -
Outstanding as at 31 December 170,162,516 0.004 389,620,248 0.0024
Exercisable at 31 December 170,162,516 0.004 389,620,248 0.0024
The weighted price and life for warrants and options for the year end 31
December 2022 is as follows:
2022
Range of exercise prices ($) Weighted average exercise price ($) Number of shares Weighted average remaining life expected (years) Weighted average remaining life contracted (years)
0.04-0.6 0.0083 643,174,418 2.29 2.29
The total fair value charged to the statement of comprehensive income for the
year ended 31 December 2022 and included in administrative expenses was
$192,000 (2021: $166,000).
Options and warrants exercised in 2022 resulted in 307,506,073 shares being
issued (2021: 10,702,000) at a weighted average price of £0.0025 each (2021:
£0.0025).
During the year 178,000,000 incentive options were conditionally granted to
certain directors and management and are to be awarded on the basis of certain
milestones being met as follows:
· IOCA Offtake
· IOCA Finance Term Sheet
· Mining Licence Approval
· First Ore Mined
· 4 500,000 Fe Tonnes Exported
· 1,000,000 Fe Tonnes Exported
Performance Conditions one through to five have a 24-month vesting period and
Performance Condition six has a 36-month vesting period with an exercise price
yet to be determined. The estimate of the fair value of the incentive
options is measured based on the Black-Scholes model. The parameters used are
detailed below:
2022 Options
Granted on: 14/11/2022
Life (years) 2 years
Exercise price (pence per share) 4.5p
Risk free rate 1.7%
Expected volatility 16.5%
Expected dividend yield -
Marketability discount -
Total fair value (£000) 46
Based on the probability of the milestones being reached in 2022 and the fair
value derived, the charge for 2022 is deemed to be immaterial and therefore
not recognised for the year ended 31 December 2022.
18. Net finance charges
Group
2022 2021
$ $
Finance charges - (4,000)
Interest income 7,000 1,000
7,000 (3,000)
19. Employees
Group
Staff costs (excluding Directors) 2022 2021
$ $
Salaries and wages 256,000 243,000
Social security costs 13,000 11,000
Pensions 38,000 7,000
307,000 261,000
The average monthly number of employees during the year was 6 (2021: 5).
20. Directors' Remuneration
Short Term Employment benefits Share based payment Total
2022 $ $ $
Executive Directors
B Brodie Good 210,000 - 210,000
R McIllree 27,000 - 27,000
Non-executive Directors
D J Smith 74,000 - 74,000
J L Battershill 63,000 192,000 255,000
M C Culbert 32,000 - 32,000
406,000 192,000 598,000
Employers tax contributions of $31,000 have not been included in the above.
During the year, Jonathan Battershill was issued 35,000,000 options with fair
value charged to the statement of comprehensive income for $192,000.
Short Term Employment benefits Share based payment Total
2021 $ $ $
Executive Directors
B Brodie Good 254,000 22,000 276,000
Non-executive Directors
D J Smith 67,000 - 67,000
J L Battershill 38,000 136,000 174,000
M C Culbert 23,000 4,000 27,000
382,000 162,000 544,000
21. Loss per Share
The calculation of the total basic losses per share of 0.050 cents (2021: loss
0.065 cents) is based on the losses attributable to equity owners of the group
of $2,375,000 (2021: $2,258,000) and on the weighted average number of
ordinary shares of 4,712,310,829 (2021: 3,476,524,868) in issue during the
period.
In accordance with IAS 33, basic and diluted earnings per share are identical
as the effect of the exercise of share options or warrants would be to
decrease the loss per share.
22. Commitments
(a) Work programme commitment
As at 31 December 2022, Alien Metals owned 16 mineral exploration licenses in
Australia and 9 mineral exploration licenses in Mexico. These licences include
commitments to pay annual licence fees and minimum spend requirements as
follows:
License fees Minimum spend requirements $ Total
$ $
Less than 1 year 152,000 609,000 761,000
1 to 5 years 758,000 3,257,000 4,015,000
Total 910,000 3,866,000 4,776,000
(b) Lease agreements
The Group has their London offices under lease agreement. The agreement was
signed on 21 April 2021 and covers office rent for the period from 1 May 2021
until 28 Feb 2023, with monthly payments of £6,916 (US$9,514) and a deposit
of £20,748 (US$28,542). The lease payments have been treated in line with
IFRS 16. As at 31 December 2022, $19,028 remained payable in respect of this
lease.
23. Related Party Transactions
Transactions with key management personnel
During the year ended 31 December 2022 the Company entered into the following
transactions involving key management personnel:
During the year Orwellian Investments, a company in which Daniel Smith is a
director, charged the Company a total of $52,000 (2021: $49,524) for
directors' fees. There was $3,000 outstanding balance at 31 December 2022
(2021: $5,404).
During the year iLaw, a company in which Mark Culbert is a partner, charged
the Company a total of $4,320 (2021: $17,498) for legal fees. There was a
balance of no outstanding at 31 December 2022 (2021: $4,451).
During the year JJB Advisory, a company in which Jonathan Battershill is a
director, charged the Company a total of $33,000 (2021: $28,889) for corporate
advisory fees. There was no outstanding balance at 31 December 2022 (2021:
nil).
Daniel Smith and Guy Robertson are directors of Artemis Resources Ltd. During
the year, Alien acquired of 70% of the Munni Munni project from Artemis
Resources Ltd.
24. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
25. Events after the Reporting Date
On 12 January 2023, following the receipt of an Exercise Notice, the Company
issued 2,500,000 ordinary shares of no par value in the capital of the Company
at an issue price of 0.25 pence per share.
On 26 April 2023, the Company reported its JORC Mineral Resource Estimate for
the Hancock Project of 9.1Mt at 60.3% Fe and JORC Probable Ore Reserve 1.9Mt
at 60.2% Fe.
On 5 May 2023, the Company's wholly owned subsidiary, Iron Ore Company of
Australia Pty Ltd, acquired Mallina Exploration Pty Ltd for a total
consideration of $30,000 AUD payable with $10,000 AUD upon the Execution date
of the agreement and $20,000 AUD within 15 days of a Mining licence being
granted. At this stage the directors consider the acqusition to be outside the
scope of IFRS3, as Mallina Exploration Pty Ltd is not deemed to be a business
under IFRS3 and therefore will be classified as an Asset Acqusition.
On 17 May 2023, following the receipt of an Exercise Notice, the Company
issued 8,142,373 ordinary shares of no par value in the capital of the Company
at an issue price of 0.25 pence per share
For further information please visit the Company's website
at www.alienmetals.uk, or contact:
Beaumont Cornish Limited (Nomad)
James Biddle / Roland Cornish Tel: +44 (0) 207 628 3396
WH Ireland Ltd (Joint Broker)
Harry Ansell / Katy Mitchell Tel +44 (0) 207 220 1666
BlytheRay (Financial PR)
Tim Blythe / Megan Ray / Said Izagaren Tel: +44 (0) 20 7138 3204
Notes to Editors:
Alien Metals Ltd is a mining exploration and development Company listed on the
AIM market of the London Stock Exchange (LSE: UFO). The Company's focus is on
delivering a profitable, long life direct shipping iron ore operation based
out of the Pilbara in Western Australia. In 2019, the Company acquired 51% of
the Brockman and Hancock Ranges high-grade (Direct Shipping Ore) iron ore
projects and in December 2022 moved to 90% legal and beneficial ownership. The
Company also acquired 100% of the Vivash Gorge Iron Ore project in the west
Pilbara in July 2022.
The Company acquired 100% of the Elizabeth Hill Silver Project, which consists
of the Elizabeth Hill Historic Mining Lease and the 115km(2) exploration
tenement around the mine.
In March 2022 the Company acquired 100% of the former joint venture interest
in the Munni Munni Platinum Group Metals and Gold Project in the West Pilbara,
Western Australia, one of Australia's major underexplored PGE and base metals
projects. Munni Munni holds a historic deposit containing 2.2Moz 4E PGM:
Palladium, Platinum, Gold, Rhodium.
In May 2023, the Company acquired 100% of Mallina Exploration Pty Ltd and with
it, the Western Hancock Tenement. The new tenement adjoins the Company's
existing Hancock tenement, giving the entire Hancock project direct access to
the Great Northern Highway.
The Company also holds silver, copper and base metal projects in various
locations around the world however is currently looking at the best way to
divest these for the benefit of shareholders.
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 FR FMMJTMTAJBBJRecent news on Alien Metals
See all newsREG - Alien Metals Limited - Independent Review at Pinderi Hills
AnnouncementREG - Alien Metals Limited - FY23 Results Ended 31 December 2023
AnnouncementREG - Alien Metals Limited - Appointment of Mine Developer for Hancock Project
AnnouncementREG - Alien Metals Limited - A$4m Farm-Out JV for Lithium Rights at Pinderi
AnnouncementREG - Alien Metals Limited - Mining Lease Granted – Hancock Project
Announcement