REG - Arc Minerals Limited - Annual Report – December 2022
03/07/2023 07:00
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RNS Number : 6570E Arc Minerals Limited 03 July 2023
3 July 2023
Arc Minerals Ltd
('Arc Minerals' or the 'Company')
Annual Report - December 2022
Arc Minerals Limited announces its audited results for the year ended 31
December 2022 (the "Annual Report") which is available to view at the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/6570E_1-2023-7-2.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6570E_1-2023-7-2.pdf) and
has also been 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.
In accordance with shareholders' consent((i)) to receive information
electronically and in the absence of any requests submitted to the Company for
information in print, the Annual Report has not been distributed to
shareholders in printed format.
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.
(i) 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
2022 Overview
The past year was dominated by the Company's ongoing negotiations with a
subsidiary of Anglo American plc ("Anglo American") to structure and finalise
a joint venture in respect of the Company's copper interests in North Western
Zambia.
In May 2022 the Company announced that it, together with its partners, had
entered into an agreement with Anglo American with the intention to form a
joint venture in respect of its Zambian copper interests. The key commercial
terms of the Joint Venture were that upon signing of a binding Joint Venture
(which was subsequently signed as announced on 20 April 2023 subject to
completing certain Conditions Precedent) Anglo American would have an initial
ownership interest of 70% with Arc and its partners the balance.
The terms of the Joint Venture agreement included Anglo American having the
right to retain an Ownership Interest of 51% (Phase 1), by funding exploration
expenditures equal to $24m on or before 180 days after the third anniversary
and making cash payments to Arc Minerals' subsidiary Unico of $3m upon signing
of the Joint Venture Agreement and satisfying the Conditions Precedent and $1m
per annum for the following three years with a final payment of $8m by the end
of Phase 1.
Following the completion of Phase I, Anglo American will have the right to
retain an additional ownership interest equal to 9% (for a total ownership
interest of 60%) by funding $20m of additional exploration expenditures within
2 years of the Phase I end date and following the completion of Phase II,
Anglo American will have the right to retain an additional ownership interest
equal to 10% (for a total ownership interest of 70%) by funding $30m within
2 years of the Phase II End Date.
At the date of this report the Company continues to work towards finalising
the Conditions Precedent referred to above.
Following the acquisition of Alvis-Crest (Propriety) Limited in late 2021, the
Company started initial exploration work on its licenses in Botswana. These
licenses lie within and adjacent to the highly prospective Central Structural
Corridor of the Kalahari Copper Belt ("KCB") and within 10km and 50km of
Khomecau's Zone 5 and Banana Zone copper projects respectively, known as the
two largest copper projects on the KCB.
These licenses already host two known copper-nickel anomalies, both 2-3km in
length overlying the favourable interpreted DKF-NPF contact that have yet to
be drill tested and now potentially may have further targets. As a result of
delays associated with the Covid pandemic the two licenses in Botswana (PL
135/2017 and PL 162/2017) were renewed for an additional two years until 30
September 2024.
On 29 April 2022 the Company announced an update on the progress of the
acquisition of a 73.5% interest in the Misisi gold project ("Misisi") by
Regency Mining Ltd ("Regency") from Golden Square Equity Partners Limited
("Golden Square"). Regency replaced Rackla Metals Inc. as the acquiror of
Misisi. The terms of the transaction saw Arc being paid US$250,000 with
Regency procuring the issuance to Arc of shares in a publicly listed company
in Canada with a value of US$1,250,000 ("Consideration Shares"). At the time
of writing the issuance of the shares in Canada were subject to finalisation
of an equity raise. The agreement also provides Arc with a royalty agreement
on the same terms as the previous Misisi royalty agreement announced on 5 May
2021.
In addition, Arc held a US$5m secured loan note dated 19 March 2020 issued by
Golden Square ("Loan Note"). The Loan Note has since been replaced by the
issuance to Arc of 3 million shares in a US listed company, Tingo Inc. (OTC:
TMNA) ("Security Shares"), a agri-fintech business in Africa, in full and
final settlement of the Loan Note.
Sustainability
From an ESG perspective, I am proud to report that the Company continued with
its local outreach programme in some of the communities where we operate in
North West Zambia.
Outlook
Notwithstanding the current economic headwinds of higher energy prices, the
war in Ukraine and elevated levels of inflation and interest rates the outlook
for copper remains strong. Global demand will require significant additional
copper supply over and above the current requirements. Prolonged
underinvestment in exploration and new mine development means the metal has a
future that is well supported by strong fundamentals.
President Hakainde Hichilema's government has prioritised additional foreign
investment into the mining sector and has made a number of significant policy
changes to support increased economic growth in Zambia.
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.
Nicholas von Schirnding
Executive Chairman
2 July 2023
Consolidated Statement of Comprehensive Income for the year ended 31 December
2022
31 December 31 December
2022 2021
Notes £ 000s £ 000s
Administrative expenses 3 (3,665) (5,447)
Operating loss (3,665) (5,447)
Loss on disposal of Zamsort 4 (2,162) -
Loss for the year before tax (5,827) (5,447)
Income tax expense 5 - -
Loss for the year (5,827) (5,447)
Other comprehensive income:
Item that may be subsequently reclassified to profit or loss
Currency translation differences 1,959 597
Total comprehensive loss for the year, net of tax (3,868) (4,850)
Loss attributable to:
Equity holders of the parent (7,342) (5,359)
Non-controlling interest 1,515 (88)
(5,827) (5,447)
Total comprehensive loss attributable to:
Equity holders of the parent (6,048) (5,142)
Non-controlling interest 2,180 292
(3,868) (4,850)
Earnings per share attributable to owners of the parent during the year
- Basic (pence per share) 8 (0.50) (0.50)
- From continuing operations - Basic 8 (0.50) (0.50)
Consolidated Statement of Financial Position as at 31 December 2022
31 December 31 December
2022 2021
Notes £ 000s £ 000s
ASSETS
Non-current assets
Intangible assets 10 5,233 4,490
Fixed assets 11 12 22
Total non-current assets 5,245 4,512
Current assets
Trade and other receivables 14 1,096 3,971
Assets held for sale 4 - 3,592
Short term investments 16 1,738 439
Cash and cash equivalents 616 1,735
Total current assets 3,450 9,737
TOTAL ASSETS 8,695 14,249
LIABILITIES
Current liabilities
Trade and other payables 18 (2,733) (1,338)
Total current liabilities (2,733) (1,338)
Non-current liabilities
Long term payables 9 (117) (4,735)
TOTAL LIABILITIES (2,850) (6,067)
NET ASSETS 5,845 8,182
Share Capital 19 - -
Share premium 21 64,272 62,019
Share based payment reserve 20 283 273
Warrant reserve 20 84 84
Foreign exchange reserve 1,045 (1,885)
Retained earnings (59,196) (53,385)
Equity attributable to equity holders of the parent 6,488 7,106
Non-controlling interest (643) 1,076
TOTAL EQUITY 5,845 8,182
These financial statements were approved by the Board of Directors on 2 July
2023 and signed on its behalf by:
Nicholas von Schirnding
Executive Chairman
Consolidated Statement of Cash Flows for the period ended 31 December 2022
31 December 31 December
2022 2021
Notes £ 000s £ 000s
Cash flows from operating activities
Loss before income tax and including discontinued operations (5,827) (5,447)
Share based payment and warrants issued 20 27 23
Gain and losses on investments 16 2,519 -
Gain through profit and loss on forgiven shareholder loans 3 (6,485) -
Loss through profit and loss on disposal of Zamsort 3 5,517 -
Loss arising on deconsolidation of Zamsort 4 2,162 -
Gains and Losses on foreign exchange 3 (168) 114
Depreciation and amortisation 10 31
Net cash used in operating activities before changes in working capital (2,245) (5,279)
Decrease in inventories - 15
Decrease (Increase) in trade and other receivables 14 (1,004) (431)
Increase in trade and other payables 18 124 2,116
Net cash used in operating activities (880) 1,700
Cash flows from investing activities
Purchase of intangible assets 10 (675) (367)
Proceeds from Casa disposal 202 -
Proceeds on disposal of short term investments 16 176 -
Net cash used in investing activities (297) (367)
Cash flows from financing activities
Proceeds from issue of ordinary shares - net of share issue costs 21 2,253 3,564
Proceeds from exercise of share based payments - 1,199
Minority shareholder loans 50 292
Net cash from financing activities 2,303 5,055
Net (decrease) increase in cash and cash equivalents (1,119) 1,035
Cash and cash equivalents at beginning of year 1,735 700
Cash and cash equivalents at end of the year 616 1,735
Consolidated Statement of Changes in Equity as at 31 December 2022
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 January 2022 - 62,019 (1,885) 273 84 (53,385) 7,106 1,076 8,182
Loss for the year - - - - - (5,827) (5,827) 1,515 (4,312)
Other comprehensive income(loss) for the year - currency translation - - 1,294 - - - 1,294 665 1,959
differences
Total comprehensive income (loss) for the year - - 1,294 - - (5,827) (4,533) 2,180 (2,353)
Share capital issued - 2,253 - - - - 2,253 - 2,253
Share options expired during the year - - - (16) - 16 - - -
Share options expense during the year - - - 27 - - 27 - 27
Effect of foreign exchange on opening balance - - 2,550 (1) - - 2,549 (2,631) (82)
Disposal of Zamsort - - (914) - - - (914) (1,268) (2,182)
Total transactions with owners, recognised directly in equity - 2,253 1,636 10 - 16 3,915 (3,899) 16
Balance as at 31 December 2022 - 64,272 1,045 283 84 (59,196) 6,488 (643) 5,845
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 January 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 year - - - 23 - - 23 - 23
Surrendered during the year - - - (1,118) - 1,118 - - -
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
Share capital represents the nominal value of the ordinary shares.
Share Premium represents consideration less nominal value of issued shares and
costs directly attributable to the issue of new shares.
Share based payment reserve represents stock options awarded by the group.
Warrant reserve represents warrants granted by the group.
Foreign exchange reserve represents the translation differences arising from
translating the financial statement items from functional currency to
presentational currency and foreign exchange differences arising on the
elimination of intercompany loans forming part of the investment of
subsidiaries.
Retained earnings represents retained losses.
Non-controlling interest represents the interests of minority shareholders in
the assets and liabilities of the Group.
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