REG - Arc Minerals Limited - Annual Report – December 2021
30/06/2022 15:30
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RNS Number : 8870Q Arc Minerals Limited 30 June 2022
30 June 2022
Arc Minerals Ltd
('Arc Minerals' or the 'Company')
Annual Report - December 2021
Arc Minerals Limited announces its audited results for the year ended 31
December 2021 (the "Annual Report") which is available to view at the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/8870Q_1-2022-6-30.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8870Q_1-2022-6-30.pdf) and
will be made available on the Company's website at
http://www.arcminerals.com/investors/document-library/default.aspx
(http://www.arcminerals.com/investors/document-library/default.aspx) . The
Chairman's Statement and primary financial statements are set out below. The
Annual Report will be sent today to any shareholders who have requested a
printed or electronic copy.
Notice of the Company's Annual General Meeting will be announced in due
course.
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
Forward-looking Statements
This news release contains forward-looking statements that are based on the
Company's current expectations and estimates. Forward-looking statements are
frequently characterised by words such as "plan", "expect", "project",
"intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other
similar words or statements that certain events or conditions "may" or "will"
occur. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause actual events or results to
differ materially from estimated or anticipated events or results implied or
expressed in such forward-looking statements. Such factors include, among
others: the actual results of current exploration activities; conclusions of
economic evaluations; changes in project parameters as plans continue to be
refined; possible variations in ore grade or recovery rates; accidents, labour
disputes and other risks of the mining industry; delays in obtaining
governmental approvals or financing; and fluctuations in metal prices. There
may be other factors that cause actions, events or results not to be as
anticipated, estimated or intended. Any forward-looking statement speaks only
as of the date on which it is made and, except as may be required by
applicable securities laws, the Company disclaims any intent or obligation to
update any forward-looking statement, whether as a result of new information,
future events or results or otherwise. Forward-looking statements are not
guarantees of future performance and accordingly undue reliance should not be
put on such statements due to the inherent uncertainty therein.
Shareholder consent to receive information electronically
At the Annual General Meeting of the Company held in September 2012,
Shareholders approved electronic communication and dissemination of
information via the Company's official website, including but not limited to
Notices of General Meetings, Forms of Proxy and Annual Reports and Accounts.
Shareholders are reminded that their right to request information in print
remains unaffected and that they can do so by contacting the Company giving no
less than 14 days' notice.
**ENDS**
Contacts
Arc Minerals Ltd +44 (0) 20 7917 2942
Nick von Schirnding (Executive Chairman)
SP Angel (Nominated Adviser & Joint Broker) +44 (0) 20 3470 0470
Ewan Leggat / Adam Cowl
WH Ireland Limited (Joint Broker) +44 (0) 20 7220 1666
Harry Ansell / Katy Mitchell
Chairman's Statement
2021 Overview
2021 was a solid year for the Company. Notable milestones included raising
gross proceeds of £2 million through a placement in January 2021, acquisition
of a 75% interest in the Virgo copper project in Botswana, continued
exploration activities in Zambia albeit at a slower pace as a result of the
COVID restrictions, continued discussions with strategic partners that
culminated in a Joint Venture Transaction with Anglo American plc ("Anglo
American") as a major partner for the Zambian copper and cobalt assets.
The period of uncertainty and volatility before and during the initial global
pandemic lockdown dissipated and was followed by a strong rebound in global
markets commencing at the end of the first lockdown in the UK and continuing
throughout 2021 and into 2022. Commodity prices performed strongly due to a
significant increase in demand, coupled with supply chain delays and staff
shortages due to the ongoing impacts of Covid-19.
At Arc Minerals, we moved quickly to ensure that business activities were
managed and conducted in a manner which continued to provide a safe working
environment and enable continuity of operations. Our health and safety
policies and procedures were all updated for covid management, including PPE
requirements, protocols for testing, isolating and medical treatment and
working from home requirements. Staff and contractors were provided with
appropriate training and all personal visiting and operating on our sites were
updated on the covid protocols as part of health and safety inductions.
Government imposed lockdowns and extensive travel restrictions resulted in
many businesses and government departments working at reduced capacity,
remotely or from home. The onset of Covid-19 impacted a number of our staff
and contractors and certain work was delayed due to travel restrictions.
Despite these challenges our team continued to make good progress on project
activities and discussions with potential strategic partners.
In January 2021, the company secured Hargreave Hale Ltd as a significant
shareholder on its register following a successful £2 million placing which
was well supported by existing as well as new shareholders.
In May 2021, we engaged Rothschild & Co as a financial advisor in respect
of an anticipated transaction on our copper and cobalt assets. We also
continued to work on restructuring our Zambian entities to optimise the
corporate structure for an anticipated transaction.
During the year, the company carried out exploratory diamond drilling
activities at both the Fwiji and Cheyeza targets in Zambia. At Fwiji, drilling
tested a coninident magnetic and soil anomaly 2.5km southwest of the previous
years drilling, with the last hole drilled intersecting copper sulphide
mineralisation in quartz veins and associated wall rock alteration.
At Cheyeza East, further drilling was carried out 500m to the northwest of the
previous year's oxide drilling campaign. The programme was designed test an
anomalous structural feature, with one of the holes intersecting a zone of
massive and disseminated sulphide mineralisation.
In October, the Company flew a high resolution (50m line spacing) airborne
magnetic and radiometric survey away with c.5,000 line kilometres flown over
the Cheyeza, Muswema and Lumbeta target areas. The survey has resulted in a
new and simplified mineralisation model that opens over 20km of strike length
for focussed exploration in lower stratigraphy.
In November, Arc acquired a 75% interest in the Virgo copper project in
Namibia from Kopore Metals Limited. The Virgo project is located in a emerging
copper district in the Kalahari district in close proximity of some larger
discoveries. As Arc focuses on identifying early stage opportunities that
can become world-class operations, this acquisition is a very exciting
opportunity for the group and we are looking forward to reporting on the
developments on this exciting exploration asset.
Anglo American transaction
During the period, Arc continued to progress its joint venture discussions
with Anglo American plc in respect to its copper and cobalt projects. In May
2022, the Company announced that it has signed a Letter Agreement with Anglo
American whereby Anglo American will have the right to retain a 70% ownership
in the Joint Venture company for an aggregate investment by Anglo American of
up to USD 88.5 million including cash consideration of up to USD 14.5 million.
This transaction is subject to regulatory and shareholder approval but this
transaction is a major validation of our geological modelling and work to date
and now paves the way for the execution of a comprehensive exploration and
development programme which will unlock significant value for the group.
Casa transaction
In 2020, Arc entered into a sale and purchase agreement with Golden Square
Equity Partners Limited ("Golden Square") for the sale of its interest in Casa
Mining Limited ("Casa") which has a 73.84% stake in the Misisi gold claims in
the Democratic Republic of Congo ("DRC"). Despite Golden Square's best
efforts, they failed to raise the funds for the acquisition and were
subsequently replaced by Regency Mining Limited ("Regency"). As announced on
29 April 2022, Arc concluded a transaction for its interest in Casa and
accepted 3 million shares in Tingo Inc. (OTC:TMNA) in settlement of the USD 5
million loan note.
Governance
At a corporate level, we bolstered the board with the appointment of Mr
Valentine Chitalu. Mr Chitalu is a prominent entrepreneur in Zambia and
southern Africa specialising in private equity and local private sector
development. He is the co-founder and Chairman of Phatisa Group, a private
equity fund manager in Sub-Saharan Africa, and has previously worked for the
CDC Group in London and Lusaka. Mr Chitalu already brings invaluable insights
to the group and we look forward to his advise as the group grows.
In addition the company has continued to strengthen its technical team in
Zambia and Botswana and will continue to do so throughout 2022 as the company
progresses its exploration assets.
Sustainability
From an ESG perspective, I am proud to report that the Company continued with
its local outreach programme to support a number of communities in Zambia and
we will continue to increase our levels of community engagement as the copper
and cobalt assets develop in 2022 and beyond.
Outlook
At the time of writing this report, it appears that the worst of the global
pandemic is behind us, many of the major economies have committed to large
infrastructure development programmes focussed on decarbonisation and the
transition to renewable energy and electrification of transport.
The COP26 conference held in Glasgow in November 2021, again underlined the
importance of energy transition minerals as more and more countries aim to
achieve net zero by 2050. This enormous task will continue to add pressure on
the mining industry to deliver the critical minerals required for the build
out of renewable energy generation and distribution infrastructure.
Copper is expected to be a major beneficiary of these policies as the energy
transition will require significant additional copper supply over and above
the current baseload requirements. This anticipated uplift in demand comes at
a time when supply is likely to be constrained due to prolonged
underinvestment in exploration and new mine development. Most market analysts
suggest the gap between supply and demand is widening and are expecting a
prolonged period of strong prices.
Existing copper producers will inevitability need to replace or replenish
dwindling reserves and the level of exploration and M&A activity in the
sector is expected to increase to meet this objective. With its portfolio of
copper assets, Arc Minerals is well positioned to benefit from a sustained
strong outlook for copper.
Also during period, Zambia elected President Hakainde Hichilema whose new
government has made the commitment to become Africa's largest copper producer
by 2025. To date his new government has attracted significant investment into
the mining sector and is expected to continue to do so in the coming years.
Acknowledgements
I would like to extend my gratitude to our shareholders for their continued
support over the past year and look forward to reporting further on our
progress during 2022.
As a final note, I would like to thank our employees, consultants and
contractors for their continued hard work and express my sincere thanks to all
our stakeholders in Zambia, Botswana and internationally for their support
throughout the year. It is much appreciated.
Nicholas von Schirnding
Executive Chairman
30 June 2022
Consolidated Statement of Comprehensive Income for the year ended 31 December
2021
31 December 31 December
2021 2020
£ 000s £ 000s
Administrative expenses (5,447) (1,529)
Interest and finance costs - (163)
Loss on change of ownership status - -
Operating loss (5,447) (1,692)
Gain on disposal of held for sale investments - 52
Loss for the year before tax (5,447) (1,640)
Income tax expense - -
Loss for the year (5,447) (1,640)
Other comprehensive income:
Item that may be subsequently reclassified to profit or loss
Currency translation differences 597 (3,020)
Total comprehensive loss for the year, net of tax (4,850) (4,660)
Loss attributable to:
Equity holders of the parent (5,359) (1,525)
Non-controlling interest (88) (115)
(5,447) (1,640)
Total comprehensive loss attributable to:
Equity holders of the parent (5,142) (4,545)
Non-controlling interest 292 (115)
(4,850) (4,660)
Earnings per share attributable to owners of the parent during the year
- Basic (pence per share) (0.50) (0.49)
- Diluted (pence per share) (0.40) (0.40)
- From continuing operations - Basic (0.50) (0.49)
- From continuing operations - Diluted (0.40) (0.40)
Consolidated Statement of Financial Position as at 31 December 2021
31 December 2021 31 December 2020
£ 000s £ 000s
ASSETS
Non-current assets
Intangible assets 4,490 2,440
Fixed assets 22 2,118
Total non-current assets 4,512 4,558
Current assets
Inventory - 15
Trade and other receivables 4,410 3,932
Assets held for sale 3,592 -
Cash and cash equivalents 1,735 700
Total current assets 9,737 4,647
TOTAL ASSETS 14,249 9,205
LIABILITIES
Current liabilities
Trade and other payables (1,338) (351)
Total current liabilities (1,338) (351)
Non-current liabilities
Long term payables (4,735) (3,308)
TOTAL LIABILITIES (6,067) (3,659)
NET ASSETS 8,182 5,546
Share Capital - -
Share premium 62,019 55,755
Share based payment reserve 273 1,368
Warrant reserve 84 84
Foreign exchange reserve (1,885) (3,111)
Retained earnings (53,385) (49,056)
Equity attributable to equity holders of the parent 7,106 5,040
Non-controlling interest 1,076 506
TOTAL EQUITY 8,182 5,546
These financial statements were approved by the Board of Directors on 30 June
2022 and signed on its behalf by:
Nicholas von Schirnding
Executive Chairman
Consolidated Statement of Cash Flows for the period ended
31 December 2021
Period to Year to
31 December 31 December
2021 2020
£ 000s £ 000s
Cash flows from operating activities
Loss before income tax and including discontinued operations (5,447) (1,529)
Interest Expense - (163)
Share based payment and warrants issued 23 390
Gain on disposal of held for sale investments - 52
Foreign exchange 114 122
Depreciation and amortisation 31 53
Net cash used in operating activities before changes in working capital (5,279) (1,075)
Decrease in inventories 15 -
Decrease in trade and other receivables (431) 83
Increase (Decrease) in trade and other payables 2,116 (1,466)
Net cash used in operating activities 1,700 (2,458)
Cash flows from investing activities
Purchase of intangible assets (367) (290)
Purchase of fixed assets - (33)
Proceeds on disposal of held for sale investments - 178
Net cash used in investing activities (367) (145)
Cash flows from financing activities
Proceeds from issue of ordinary shares - net of share issue costs 3,564 2,258
Proceeds from exercise of share based payments 1,199 474
Minority shareholder loans 292 402
Net cash from financing activities 5,055 3,134
Net increase in cash and cash equivalents 1,035 531
Cash and cash equivalents at beginning of year 700 169
Cash and cash equivalents at end of the year 1,735 700
In 2020, the major non-cash transactions were shares issued in lieu of payment
under the drill for equity programme
Consolidated Statement of Changes in Equity as at 31 December 2021
Attributable to equity holders of the Company
Share capital Share premium Foreign exchange reserve Share based payment reserve Warrant reserve Retained earnings Total Non-controlling interest Total equity
£ 000s £ 000s £ 000s £ 000s £ 000s £ 000s £ 000s £ 000s £ 000s
Balance as at 1 Jan 2021 - 55,755 (3,111) 1,368 84 (49,056) 5,040 506 5,546
Loss for the year - - - - - (5,447) (5,447) - (5,447)
Other comprehensive income(loss) for the year - currency translation - - 597 - - - 597 - 593
differences
Total comprehensive income (loss) for the year - - 597 - - (5,447) (4,850) - (4,854)
Share capital issued - 6,264 - - - - 6,264 - 6,264
Granted during the period - - - 23 - - 23 - 23
Surrendered during the period - - - (1,118) - 1,118 - - -
Share options expired during the period - - - - - - - - -
Effect of foreign exchange on opening balance - - 629 - - - 629 145 774
Investment by NCI in the year - - - - - - - 425 425
Total transactions with owners, recognised directly in equity - 6,264 629 (1,095) - 118 5,916 570 7,486
Balance as at 31 December 2021 - 62,019 (1,885) 273 84 (53,385) 7,106 1,076 8,182
Attributable to equity holders of the Company
Share capital Share premium Foreign exchange reserve Share based payment reserve Warrant reserve Retained earnings Total Non-controlling interest Total equity
£ 000s £ 000s £ 000s £ 000s £ 000s £ 000s £ 000s £ 000s £ 000s
Balance as at 1 April 2020 - 51,231 (91) 998 84 (47,436) 4,786 896 5,682
Loss for the period - - - - - (1,640) (1,640) - (1,640)
Other comprehensive (loss) for the year - currency translation differences - - (3,020) - - - (3,020) - (3,020)
Total comprehensive loss for the year - - (3,020) - - (1,640) (4,660) - (4,660)
Share capital issued - 4,524 - - - - 4,524 - 4,524
Granted during the period - - - 390 - - 390 - 390
Expired during the period - - - (20) - 20 - - -
Share options expired during the period - - - - - - - - -
Effect of foreign exchange on opening balance - - - - - - - (168) (168)
Investment by NCI in the period - - - - - - - (222) (222)
Total transactions with owners, recognised directly in equity - 4,524 - 370 - 20 4,914 (390) 4,524
Balance as at 31 December 2020 - 55,755 (3,111) 1,368 84 (49,056) 5,040 506 5,546
Share capital: This represents the nominal value of equity shares in issue and
is nil as the shares have a nil par value.
Share premium: This represents the premium paid above the nominal value of
shares in issue.
Foreign exchange reserve: This reserve represents exchange differences
arising from the translation of the financial statements of foreign
subsidiaries and the retranslation of monetary items forming part of the net
investment in those subsidiaries.
Share-based payments reserve: This represents the value of share-based
payments provided to employees and Directors as part of their remuneration and
provided to consultants and advisors hired from time to time as part of the
consideration paid. The reserve represents the fair value of options and
performance share rights recognised as an expense. Upon exercise of options
or performance share rights, any proceeds received are credited to share
capital and share premium.
Retained earnings: This represents the accumulated profits and losses since
inception of the business and adjustments relating to options and warrants.
Non-Controlling Interest: This represents the Non-Controlling Interest element
of Zamsort Limited and Zaco Investments Limited.
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