REG - Arc Minerals Limited - Annual Report for Year Ended 31 December 2023
27/06/2024 07:00
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RNS Number : 0547U Arc Minerals Limited 27 June 2024
27 June 2024
Arc Minerals Ltd
('Arc Minerals' or the 'Company')
Financial Results for the twelve months ended 31 December 2023
Arc Minerals Limited announces its audited results for the year ended 31
December 2023 and confirms that its annual report and accounts for the period
("Annual Report") has 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) .
In accordance with shareholders' agreement ((i)) to receive information
electronically and in the absence of any requests submitted to the Company for
information in print, the Annual Report is deemed disclosed to Shareholders
through the publication on the Company's website. 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**
For further information, contact:
Arc Minerals
Ltd
c/o Benchmark Communications
Nick von Schirnding (Executive Chairman)
WH Ireland (Nominated Adviser & Joint Broker) Tel: +44 (0) 20 7220 1666
Harry Ansell/ Katy Mitchell
Shard Capital (Joint Broker) Tel: +44 (0) 20 7186 9952
Damon Heath
Benchmark Communications (Investor Relations) Tel: +44 (0) 7841 67 3210
Richard Kauffer
For more information, visit www.arcminerals.com (http://www.arcminerals.com) .
Chairman's Statement
2023 Overview
I'm pleased to report on Arc Minerals' 2023 year-end results; a testament to
our unwavering commitment and the hard work of our dedicated team.
Completion of Joint Venture with Anglo American
The financial year to 31 December 2023 was marked by a significant milestone -
the satisfaction of substantive regulatory conditions precedent and the
completion of our Joint Venture Agreement (JVA) with a subsidiary of Anglo
American plc. I believe this partnership represents a pivotal turning point
for Arc Minerals and our shareholders. I was delighted to announce that Anglo
American has acquired a 70% interest in the joint venture company, while our
67%-owned subsidiary, Unico Minerals Ltd, holds a 30% stake.
The commencement of the joint venture's drilling campaign, led by our esteemed
partners at Anglo American, is a source of great excitement. I extend my
sincere appreciation to the administration and various government agencies of
the Republic of Zambia for their tireless efforts in ensuring the necessary
regulatory approvals were obtained, paving the way for this exciting
collaboration.
Botswana Drilling Update
During the reporting period, we undertook our maiden scout drilling campaign
in Botswana, spanning both the PL 135/2017 and PL 162/2017 prospecting
licenses that make up the Virgo project, which was a resounding success. We
confirmed the presence of the prospective contact geology and encountered
anomalous mineralization in close proximity to the boundary of our licenses to
Khoemacau, boding well for our upcoming exploration campaign.
Post Year-End Fundraising
In the face of challenging market conditions, the Board deemed it necessary to
ensure the Company was adequately capitalised and able to take advantage of
any potential opportunities that may arise as a scramble for copper assets
kicks off worldwide. Consequently, in March 2024 we completed a placing and an
offer for subscription, raising approximately £4.14 million. The Board
believes this was a prudent and necessary decision to secure the cash
resources required for our ongoing operations and future growth.
Outlook
The period ahead promises to be an exciting time for exploration and growth
for Arc Minerals. With mobilisation for the exploration field season
commencing in Zambia following the end of the rainy season, we eagerly
anticipate the commencement of our joint venture core diamond drilling
programme, initially targeting two identified prospects. The comprehensive
2024 work programme, including LiDAR surveys, detailed geological mapping, and
further geophysical studies, will provide us with a deeper understanding of
the geological context and basin geometry, paving the way for potential future
discoveries.
In Botswana, the completion of the ground IP survey over copper targets in PL
135/2017 was completed in May and the results informed our first phase of a
2,000m reverse circulation drill programme, which commenced on 14 June 2024.
This drill campaign, spanning eight to ten holes, will be a significant
milestone in our exploration efforts within the highly prospective Central
Structural Corridor of the Kalahari Copper Belt.
Furthermore, with the acceptance by the Botswanan Department of Mines of our
applications to extend the licence terms of the PL135/2017 and PL162/2017
licenses, we expect to continue to explore and unlock the potential of the
Virgo Project licenses for an additional two years, until 2026.
As we forge ahead, our shareholders can expect regular updates on the progress
of our exploration activities, including the results of the geological
studies, geophysical surveys, and, most importantly, the drilling campaigns.
We remain committed to maintaining open and transparent communication, keeping
you informed every step of the way.
With our strong partnerships, strategic asset portfolio, and dedicated team,
we are well-positioned to navigate the challenges and capitalize on the
opportunities that lie ahead. We look forward to sharing our successes and
celebrating our achievements together as we continue our pursuit of
discovering and developing Tier 1 copper deposits.
Looking ahead, we remain steadfast in our determination to unlock value and
deliver on our strategic objectives. With the backing of our valued joint
venture partner, a strong portfolio of assets, and a talented team, I am
confident that we are well-positioned for continued success.
Acknowledgements
I would like to thank the management and employees of Arc who have worked
tirelessly on numerous challenges over the past years, including all manner of
attempts to block progress on delivering what I believe is one of the most
exciting JV transactions concluded with a major mining company. The challenges
in negotiating and concluding the joint venture required significant
commitment from the management team, including ensuring that all requisite
regulatory approvals were obtained - no mean feat. During this time over the
past three years no bonuses were awarded, no share option packages put in
place and the board and management sacrificed salaries being paid for over
half a year.
On behalf of the entire Arc Minerals team, I also extend our heartfelt
appreciation to our shareholders for their resilience and forbearance amidst a
challenging macroeconomic landscape. Your unwavering trust and understanding
have been a source of strength, enabling us to remain focused on our long-term
goals.
Nicholas von Schirnding
Executive Chairman
26 June 2024
Consolidated Statement of Comprehensive Income for the year ended 31 December
2023
31 December 31 December
2023 2022
Notes £ 000s £ 000s
Administrative expenses 3 (5,067) (3,500)
Operating loss from continuing operations (5,067) (3,500)
Loss on disposal of Zamsort 4 - (2,162)
Gain on disposal of Handa Group 14 10,933
Distribution from subsidiaries 6 1,918 -
Share of loss from associate 13 (691) -
Profit/(Loss) before income tax 7,093 (5,662)
Income tax expense 5 - -
Profit/ (Loss) for the year from continuing operations 7,093 (5,662)
Loss from discontinued operations 4 (24) (165)
Operating profit (loss) 7,069 (5,827)
Profit/ (Loss) for the year 7,069 (5,827)
Other comprehensive income:
Item that may be subsequently reclassified to profit or loss
Currency translation differences 45 1,959
Total comprehensive loss for the year, net of tax 7,114 (3,868)
Loss attributable to:
Equity holders of the parent 7,078 (7,342)
Non-controlling interest (9) 1,515
7,069 (5,827)
Total comprehensive loss attributable to:
Equity holders of the parent 7,111 (6,048)
Non-controlling interest 3 2,180
7,114 (3,868)
Earnings per share attributable to owners of the parent during the year
- Basic (pence per share) 8 0.58 (0.50)
- Diluted (pence per share) 8 0.03 -
- From continuing operations - Basic 8 0.58 (0.50)
- From continuing operations - Diluted 8 0.03 -
- From discontinued operations - Basic 8 - (0.01)
- From discontinued operations - Diluted 8 - -
Consolidated Statement of Financial Position as at 31 December 2023
31 December 31 December
2023 2022
Notes £ 000s £ 000s
ASSETS
Non-current assets
Intangible assets 10 1,699 5,233
Fixed assets 11 - 12
Investment in Associate 13 2,458 -
Long-term receivable 15 6,531 -
Total non-current assets 10,688 5,245
Current assets
Trade and other receivables 15 1,859 1,096
Short term investments 17 68 1,738
Cash and cash equivalents 281 616
Total current assets 2,208 3,450
TOTAL ASSETS 12,896 8,695
LIABILITIES
Current liabilities
Trade and other payables 19 (2,244) (2,733)
Total current liabilities (2,244) (2,733)
Non-current liabilities
Long term payables 9 (105) (117)
TOTAL LIABILITIES (2,349) (2,850)
NET ASSETS 10,547 5,845
Share Capital 20 - -
Share premium 22 64,464 64,272
Share based payment reserve 21 126 283
Warrant reserve 21 84 84
Foreign exchange reserve (61) 1,045
Retained earnings (54,063) (59,196)
Equity attributable to equity holders of the parent 10,550 6,488
Non-controlling interest (3) (643)
TOTAL EQUITY 10,547 5,845
Consolidated Statement of Cash Flows for the year ended 31 December 2023
31 December 31 December
2023 2022
Notes £ 000s £ 000s
Cash flows from operating activities
Profit/(Loss) before income tax and including discontinued operations 7,069 (5,827)
Share based payment and warrants issued 21 - 27
Gain and losses on investments 17 - 2,519
Gain through profit and loss on forgiven shareholder loans - (6,485)
Non-cash gains and losses related to Zamsort Ltd((i)) - 5,517
Loss arising on deconsolidation of Zamsort - 2,162
Non-cash gains and losses related to Handa (Anglo JV) 14 (10,933) -
Fair value loss on investments 17 1,673 -
Distribution from subsidiary 6 (1,918) -
Share of loss from associate 13 691 -
Gains and Losses on foreign exchange 3 476 (168)
Depreciation and amortisation 11 2 10
Net cash used in operating activities before changes in working capital (2,987) (2,245)
Increase in trade and other receivables ((iii)) 15 (20) (1,004)
(Decrease) Increase in trade and other payables 19 743 124
Net cash used in operating activities (2,217) (3,125)
Cash flows from investing activities
Purchase of intangible assets 10 (65) (675)
Proceeds from CASA disposal - 202
Proceeds from disposal of short term investments - 176
Proceeds from disposal of Handa (Anglo JV) 2,863 -
Distribution to minority shareholder following Handa disposal (945) -
Dividends received 6 -
Net cash generated from / (used in) investing activities 1,853 (297)
Cash flows from financing activities
Proceeds from issue of ordinary shares - net of share issue costs ((iv)) 22 29 2,253
Minority shareholder loans 9 - 50
Net cash from financing activities 29 2,303
Net decrease in cash and cash equivalents (335) (1,119)
Cash and cash equivalents at beginning of year 616 1,735
Cash and cash equivalents at end of the year 281 616
((i) Within cash flows from operating activities in 2022 is an
amount of £5.297m representing the net effect of the disposal (£6.485m
non-cash gain) and derecognition (£2,102m non-cash loss) of Zamsort and the
derecognition of the related foreign currency translation reserve (£914k
non-cash gain).)
((ii) Within cash flows from operating activities is an amount of
£2.984m representing the net effect of the non-cash gain recognised on the
settlement of the Casa loan Note (£1.973m), the non-cash gain recognised on
the disposal of Casa Mining Ltd (£1.011m) and the non-cash loss attributable
to the settlement of the Casa loan note due to remeasuring the fair value of
the Tingo Inc (OTC:TMNA) stock received in settlement of the Casa loan note
(see Note 15).)
((iii) Within trade and other receivables in 2023 is an amount of
£7.275m representing the receivables from the Anglo JV deal (See Note 15)
which is a non cash movement.)
((iv) Within proceeds from issue of ordinary shares is the settlement of
a 163k loan through shares which is a non cash movement.)
Consolidated Statement of Changes in Equity as at 31 December 2023
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 2023 - 64,272 1,045 283 84 (59,196) 6,488 (643) 5,845
Profit for the year - - - - - 7,078 7,078 (9) 7,069
Other comprehensive income(loss) for the year - currency translation - - 33 - - - 33 12 45
differences
Total comprehensive income (loss) for the year - - 33 - - 7,078 7,111 3 7,114
Share capital issued - 192 - - - - 192 - 192
Share options expired during the year - - - (157) - 157 - - -
Share options expense during the year - - - - - - - - -
Effect of foreign exchange on opening balance - - - - - - - - -
Effect of Handa group disposal (see Note 4) - - (1,139) - - (2,102) (3,241) 637 (2,604)
Total transactions with owners, recognised directly in equity - 192 (1,139) (157) - (1,945) (3,049) 637 (2,412)
Balance as at 31 December 2023 - 64,464 (61) 126 84 (54,063) 10,550 (3) 10,547
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
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.
NOTES TO THE FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
a. General Information and Authorisation of Financial Statements
The Company is registered in the British Virgin Islands under the BVI Business
Companies Act 2004 with registered number 1396532 and is located at Craigmuir
Chambers, Road Town, Tortola. The Company's ordinary shares are traded on AIM,
a market of the London Stock Exchange.
The principal activity of the Company during the year was that of a holding
company for a group engaged in the identification, evaluation, acquisition and
development of natural resource projects.
The Financial Statements of Arc Minerals Limited for the year ended 31
December 2023 were authorised for issue by the Board on 26 June 2024.
b. Basis of Preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS
IC) as adopted by the European Union.
The consolidated financial statements have been prepared on the historical
convention, as modified by the measurement to fair value of financial assets
through profit and loss and held for sale assets and liabilities as described
in the accounting policies below.
The financial information is presented in Pounds Sterling (£) and all values
are rounded to the nearest thousand Pounds Sterling (£000's) unless otherwise
stated.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.
c. New and amended standards adopted by the Group
There were no new standards, amendments or interpretations effective for the first time for periods beginning on or after 1 January 2023 that had a material effect on the consolidated or company financial statements.
At the date of approval of these financial statements, there were no new standards or amendments to IAS which have not been applied in these financial statements which were in issue but not yet effective and are expected to have a material impact on the consolidated and company financial statements.
d. Basis of Consolidation
The Consolidated Financial Statements comprise
the financial statements of the Company and its subsidiaries made up to 31
December. Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee.
Generally, there is a presumption that a
majority of voting rights result in control. To support this presumption and
when the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
· The contractual arrangement with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control.
Subsidiaries
Subsidiaries are entities over which the Group has control. Subsidiaries are
fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the
date the Group gains control until the date the Group ceases to control the
subsidiary.
The consolidated financial statements consolidate the financial statements of
Arc Minerals Limited and the audited financial statements of its subsidiary
undertakings made up to 31 December 2023.
When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the Group's
accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
e. Associates
Associates are entities over which the Group has significant influence but not
control, generally accompanying a shareholding of between 20% and 50% of the
voting rights. Investments in associates are accounted for using the equity
method of accounting. Under the equity method, the investment is initially
recognised at cost and the carrying amount is increased or decreased to
recognise the investor's share of the profit or loss of the investee after the
date of acquisition. The Group's investment in associates includes any
goodwill identified on acquisition.
Where the ownership interest in an existing investment is increased whereby
significant influence is obtained, the Group re-measures the existing
investment immediately prior to obtaining significant influence with resulting
gains/losses recognised immediately in profit or loss. The fair value of the
existing investment added to the fair value of the consideration of the
additional investment is treated as the deemed cost and is continued to be
accounted for under the equity method.
If the ownership interest in an associate is reduced but significant influence
is retained, only a proportionate share of the amounts previously recognised
in other comprehensive income is reclassified to profit or loss where
appropriate.
The Group's share of post-acquisition profit or loss is recognised in the
statement of comprehensive income, and its share of post-acquisition movements
is recognised in the other comprehensive income section of the statement of
comprehensive income with a corresponding adjustment to the carrying amount of
the investment. When the Group's share of losses in an associate equals or
exceeds its interest in the associate, including any unsecured receivables,
the Group does not recognise further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective
evidence that the investment in the associate is impaired. If this is the
case, the Group calculates the amount of impairment as the difference between
the recoverable amounts of the associate and its carrying value and recognises
the amount adjacent to 'share of profit/loss of associate' in the group
statement of comprehensive income.
When the Group loses significant influence over an associate, it derecognises
that associate and recognises a profit or loss being the difference between
the sum of the proceeds received and any retained interest, and the carrying
amount of the investment in the associate at the date significant influence is
lost.
Gains and losses resulting from upstream and downstream transactions between
the Group and its associates are recognised in the Group's financial
statements only to the extent of unrelated investor's interests in the
associates. Unrealised losses are eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Impairment gains and losses arising in investments in associates are
recognised in the statement of comprehensive income.
When the Group gains control of an associate the fair value of the associate
undertaking is then assessed with any gain or loss arising being recognised
within the income statement.
f. Going Concern
The Directors have reviewed a forecast prepared for the next 18 months, by the
executive and have a reasonable expectation that the Group has sufficient
funds to continue in operation and satisfy liabilities for the foreseeable
future. The Directors therefore consider it appropriate for the Company to
continue to adopt the going concern basis in preparing the Annual Report and
Financial Statements.
g. Business combinations
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of the subsidiary is the
fair value of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at acquisition date.
The Group recognises any non-controlling interest in the acquiree on an
acquisition by acquisition basis; either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
the acquiree's identifiable net asset.
Acquisition related costs are expensed as incurred.
If a business combination is achieved in stages, the acquisition date carrying
value of the acquiree's previously held interest in the acquire is re-measured
to fair value at the acquisition date; any gain or loss arising from such a
re-measurement are recognised in profit or loss.
Goodwill is initially measured as the excess of the aggregate of the
consideration transferred and the fair value of non-controlling interest over
the identifiable net assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss in the Income
Statement.
Any interest of non-controlling interests in the acquiree is initially
measured at the minority's proportion of the net fair value of the assets,
liabilities and contingent liabilities recognised. There are no non-
controlling shareholders of subsidiaries.
h. Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Board, being the Group's chief operating
decision-maker ("CODM").
i. Foreign currencies
The Group presentational currency is pound sterling (GBP). Each entity in the
Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional
currency. At present the functional currency for the Zambian subsidiaries is
the Zambian Kwacha ("ZMW"). The functional currency of the Botswana subsidiary
is the Botswanan Pula (BWP). The functional currency for all other entities is
GBP.
The presentational currency (GBP) is used primarily because the Parent Company
Arc Minerals Limited is listed on the Alternative Investment Market (AIM) of
the London Stock Exchange and raises its funding in GBP.
The results and financial position of all the Group entities that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
· monetary assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
· income and expenses are translated at average exchange rates during
the accounting year; 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 cumulative exchange differences are subsequently
reclassified in the income statement as part of the gain or loss on sale.
j. Taxation
Tax is recognised in the consolidated Statement of Comprehensive Income,
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill; 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.
In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred 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 tax assets and liabilities relate to taxes levied by the
same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled. Deferred tax
assets and liabilities are not discounted.
There has been no tax credit or expense for the year relating to current or
deferred tax.
k. Intangible assets
Exploration and evaluation assets
Exploration and development costs are carried forward in respect of areas of
interest where the consolidated entity's rights to tenure are current and
where these costs are expected to be recouped through successful development
and exploration, or by sale. Alternatively, these costs are carried forward
while active and significant operations are continuing in relation to the
areas of interest and it is too early to make reasonable assessment of the
existence or otherwise of economically recoverable reserves. When the area of
interest is abandoned, exploration and evaluation costs previously capitalised
are impaired.
Costs incurred by the Company on behalf of its subsidiaries and associated
with mining development and investment are capitalised on a project-by-project
basis pending determination of the feasibility of the project. Costs incurred
include appropriate technical and administrative expenses but not general
overheads. If a mining development project is successful, the related
expenditures will be written-off over the estimated life (useful economic
life) of the commercial ore reserves on a unit of production basis. Impairment
reviews are carried out regularly by the Directors of the Company. Where a
project is abandoned or is considered to be of no further commercial value,
the related costs will be written off to the Statement of Comprehensive
Income.
The recoverability of these costs is dependent upon the discovery of
economically recoverable reserves, the ability of the Group to obtain
necessary financing to complete the development of reserves and future
profitable production or proceeds from the disposal of recoverable reserves.
l. Significant accounting judgements, estimates and assumptions
Critical Accounting Estimates and Judgements
The preparation of financial statements using accounting policies consistent
with IFRS requires the Directors to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of income and expenses. The
preparation of financial statements also requires the Directors to exercise
judgement in the process of applying the accounting policies. Changes in
estimates, assumptions and judgements can have a significant impact on the
financial statements.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised prospectively from the period
in which the estimates are revised. The following are the key estimate and
assumption uncertainties that have a significant risk of resulting in a
material adjustment within the next financial year:
(i) Valuation of exploration, evaluation and development
expenditure
The value of the Group's exploration, evaluation and development expenditure
is dependent upon the success of the Group in discovering economic and
recoverable mineral resources, especially in countries of operation where
political, economic, legal, regulatory and social uncertainties are potential
risk factors.
The future revenue flows relating to these assets are uncertain and will also
be affected by competition, relative exchange rates and potential new
legislation and related environmental requirements.
The Group is currently in the process of renewing its licences which expire in
September 2024 and the Directors are not aware of any reason why any renewals
or applications would not be granted.
The Group's ability to continue its exploration programmes and develop its
projects is dependent on future fundraising, as well as the successful renewal
of appropriate licensing, the outcome of which is uncertain but the directors
are confident that the licences will be renewed. The ability of the Group to
continue operating within its jurisdiction is dependent on a stable political
environment which is uncertain. This may also impact the Group's legal title
to assets held which would affect the valuation of their assets.
The Group therefore makes estimates in relation to the valuation of these
assets with consideration of these factors.
There have been no changes to any past valuations.
(ii) Valuation of Casa Royalty
There are a number of key factors which affect the valuation of the Casa
Royalty which has a face value of US$ 45m (GBP 40m). These include (a)
development and construction timeframe; (b) appropriate discount factor; (c)
availability of construction financing; (d) political stability (e) gold price
and (f) ability to control timing of receipt.
Given these uncertainties the Company has elected to assign nil value to the
Royalty. The Company will reassess this carrying value in future as the Misisi
Project progresses along the development curve.
Further information can be found in Note 4 (d)(ii)
(iii) Sturec Resource Royalty
As disclosed in Note 16, Sturec was sold in February 2020. As part of the
transaction if before November 2024, the Šturec JORC Indicated and Measured
Resource exceeds 1.5 million ounces gold at a grade greater than 2.5g/t
(inclusive of recoverable Ag equivalent), MetalsTech will pay Arc a further
A$2 royalty per additional ounce of gold. This royalty is capped at 7 million
ounces of gold or Australian dollars 11M. Because of the general uncertainty
about the size of the Sturec resource and the difficulties of operating in
Slovakia the Company has not recorded the royalty in the accounts.
(iv) Recoverability of the US$ 5 million receivable in respect
of the Casa Sale, first reported at 31 March 2021
The Casa asset was sold during the year ended 31 March 2020 with the
consideration being a mixture of cash and royalty as above. The cash element
was due for payment on 19 March 2021. As reported in Note 16, the terms of the
original loan note were amended. As announced on 29 April 2022, the loan note
was satisfied in full.
(v) Valuation of short term investments
Short term investments comprise shares held in Asiamet Resources Ltd (AIM:ARS)
and Tingo Inc (OTC:TMNA). Short term investments are measure initially, and
subsequently revalued at reporting dates, at fair value through profit or
loss. Similarly, changes in fair value are recognised through profit and loss.
Additional information is contained in Note 17.
(vi) Investment in associate
The investment in associate arises as a result of the partial disposal of
Handa Resources Limited (Handa) as a subsidiary. The investment shareholding
decreased from 66% (a subsidiary) to 30% (an associate). Unico lost control in
a series of five contractual arrangements that were entered into for the
purposes of the Joint Venture (JV) agreement with Anglo American BV.
Consequently, single transaction accounting was applied in accounting for the
transaction. See Note 14 for details of this agreement). The remaining
investment, after the partial disposal of Handa, was fair valued as at the
date of the disposal (See Note 13) and is subsequently measured using the
equity method at year end.
During 2023, the Group submitted three mining license applications as part of
preparing for completion of the JV with a subsidiary of Anglo American, being
33402-HQ-LML, 33403-HQ-LML and 33404-HQ-LML over the exploration licenses
23004-HQ-LEL and 19906-HQ-LEL. All of the mining licence applications were
approved and validated by the Mining Cadastre Department and, following
submission of the subsequent requisite documentation, the Mines Advisory
Committee (MAC) was expected to meet to review the finalised LML applications
prior to issuance of the Mining Licenses.
As announced on 17 June 2024, the Mining Cadastre Department published the
results of the MAC meeting pursuant to which these applications and were
rejected and Zaco Investments Limited's application with respect to
23004-HQ-LEL was marked as deferred pending an information request. As the
applications were validly submitted and validated by the Zambian Mining
Cadastre, the Company has been advised that Handa and Zaco will be appealing
the decision of the Mining Licence Committee to reject the Mining Licence
Applications and are engaging with the Mining Cadastre to have the appeal
heard as soon as possible so that the applications can be reinstated and/or
considered positively in accordance with the law.
(vii) Regency recoverability (whilst outstanding for some time,
management believes, having made reasonable enquiries, that this remains
recoverable).
m. Equity
Equity comprises the following:
· "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.
n. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
o. Trade and other receivables
Receivables are recognised initially at amortised cost, being their initial
fair value. These are classified as loans and receivables, and so are
subsequently carried at amortised cost using the effective interest method.
The Directors are of the view that such items are collectible and that no
provisions are required.
p. Financial instruments
(i) Classification
The Group classifies its financial assets at amortised cost and at fair value
through the profit or loss or OCI. The classification depends on the purpose
for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition
(ii) Recognition and measurement
Amortised cost
Regular purchases and sales of financial assets are recognised on the trade
date at cost - the date on which the Group commits to purchasing or selling
the asset. Financial assets are derecognized when the rights to receive cash
flows from the assets have expired or have been transferred, and the Group has
transferred substantially all of the risks and rewards of ownership.
Fair value through the profit or loss
Financial assets that do not meet the criteria for being measured at amortised
cost or FVTOCI are measured at FVTPL.
Financial assets at FTVPL, are measured at fair value at the end of each
reporting period, with any fair value gains or losses recognised in profit or
loss. Fair value is determined by using market observable inputs and data as
far as possible. Inputs used in determining fair value measurements are
categorised into different levels based on how observable the inputs used in
the valuation technique utilised are (the 'fair value hierarchy'):
- Level 1: Quoted prices in active markets for identical items (unadjusted)
- Level 2: Observable direct or indirect inputs other than Level 1 inputs
- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest
level of the inputs used that has a significant effect on the fair value
measurement of the item. Transfers of items between levels are recognised in
the period they occur.
Listed investments are valued at closing bid price on 31 December 2023. For
measurement purposes, financial investments are designated at fair value
through the income statement. Gains and losses on the realisation of
investments are recognised in the income statement for the period. The
difference between the market value of financial instruments and book value to
the Company is shown as a gain or loss in the income statement for the period.
(iii) 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
("EIR"). 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.
(iv) 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 FVTPL.
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 and loans.
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 taking into account 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 statement of profit or loss
and other 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.
Financial liabilities included in trade and other payables are recognised
initially at fair value and subsequently at amortised cost.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value
measurements. IFRS 13 does not change when an entity is required to use fair
value, but rather provides guidance on how to measure fair value under IFRS
when fair value is require or permitted. The resulting calculations under IFRS
13 affected the principles that the Company uses to assess the fair value, but
the assessment of fair value under IFRS 13 has not materially changed the fair
values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the
Company. It requires specific disclosures about fair value measurements and
disclosures of fair values, some of which replace existing disclosure
requirements in other standards.
q. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and any accumulated impairment losses.
Depreciation is provided on all property, plant and equipment to write off the
cost less estimated residual value of each asset at 25% on a straight-line
basis.
All assets are subject to annual impairment reviews.
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
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.
An asset's carrying value is written down to its recoverable amount if the
asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the proceeds with the
carrying amount and are recognised within the Statement of Comprehensive
Income.
r. Impairment of assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of
the asset's recoverable amount.
An asset's recoverable amount is the higher of its fair value less costs to
sell and its value in use. This is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets, and the asset's value in use cannot be
estimated to be close to its fair value. In such cases, the asset is tested
for impairment as part of the cash-generating unit to which it belongs. When
the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, it is considered impaired and is written down to its
recoverable amount.
In assessing value in use, estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset, unless
the asset is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset's recoverable
amount since the last impairment loss was recognised. If that is the case,
the carrying amount of the asset is increased to its recoverable amount.
That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in the Statement of
Comprehensive Income unless the asset is carried at revalued amount, in which
case the reversal is treated as a revaluation increase. After such a
reversal, the depreciation charge is adjusted in future periods to allocate
the asset's revised carrying amount, less any residual value, on a systematic
basis over its remaining useful life.
s. Share-based payments
The Group provides benefits to senior personnel, consultants and advisors of
the Group in the form of share-based payments, whereby such parties render
services in exchange for shares or rights over shares (equity-settled
transactions).
The cost of these equity-settled transactions with such parties is measured by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by using a Black-Scholes
model.
In valuing equity-settled transactions, no account is taken of any performance
conditions, other than conditions linked to the price of the shares of Arc
Minerals Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled, ending on the date on which the
relevant party become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each
reporting date until vesting date reflects:
(i) the extent to which the vesting period has expired, and;
(ii) the Group's best estimate of the number of equity instruments that
will ultimately vest.
No adjustment is made for the likelihood of market performance conditions
being met, as the effect of these conditions is included in the determination
of fair value at grant date. The charge to the Income Statement for a period
represents the movement in cumulative expense recognised as at the beginning
and end of that period.
No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is only conditional upon a market condition.
Upon expiry, the associated portion of the share option reserve is
derecognised and recorded against retained losses.
The dilutive effect, if any, of outstanding options is reflected as additional
share dilution in the computation of earnings/ (loss) per share.
t. Earnings per share
Basic EPS is calculated as profit attributable to equity holders of the parent
for the period, adjusted to exclude any costs of servicing equity (other than
dividends), divided by the weighted average number of ordinary shares,
adjusted for any bonus element. Fully-diluted EPS adjusts Basic EPS to reflect
the impact if all share purchase warrants and options were exercised.
u. Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings,
using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or
all of the facility will be drawn down. To the extent that there is no
evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services, and
amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the group has an
unconditional right to defer settlement of the liability for at least 12
months after the end of the reporting period.
2. Segmental analysis
Segment information has been determined based on the information reviewed by
the Board for the purposes of allocating resources and assessing
performance. No revenue is currently being generated.
Head office activities are administrative in nature whilst the activities in
Zambia and Botswana relate to exploration and development work.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocate on a reasonable basis.
31 December 2023 BVI Zambia Botswana Total
£ 000's £ 000's £ 000's £ 000's
Result
Gain / (loss) from continuing operations 4,395 2,735 (37) 7,093
Gain / (loss) before Income Tax 4,395 2,735 (37) 7,093
Other information
Non-controlling interest - - 3 3
- - 3 3
Assets
Non-current Assets - 8,989 1,699 10,688
Investments at fair value through profit and loss 68 - - 68
Current assets excluding cash and cash equivalents 1,858 - 1 1,859
Cash and equivalents 279 - 2 281
Consolidated total assets 2,205 8,989 1,702 12,896
- - - -
Liabilities
Non-current liabilities - - (105) (105)
Current liabilities (2,241) - (3) (2,244)
Consolidated total liabilities (2,241) - (108) (2,349)
31 December 2022 BVI Zambia Botswana Total
£ 000's £ 000's £ 000's £ 000's
Result
Loss / (Gain) from continuing operations 10,218 (4,564) 8 5,662
Loss before Income Tax 10,218 (4,564) 8 5,662
Other information
Non-controlling interest - 577 66 643
- 577 66 643
Assets - - - -
Non-current Assets 302 3,275 1,669 5,245
Investments at fair value through profit and loss
1,738 - - 1,738
Current assets excluding cash and cash equivalents 1,064 8 24 1,096
Cash and equivalents 593 6 17 616
Consolidated total assets 3,697 3,289 1,710 8,696
- - - -
Liabilities
Non-current liabilities - - 117 117
Current liabilities 1,442 1,279 12 2,733
Consolidated total liabilities 1,442 1,279 129 2,850
3. Expenses by nature
31 Dec 31 Dec
2023 2022
Note £ 000's £ 000's
Directors' fees 7 1,538 685
Office expenses 121 114
Travel and subsistence expenses 46 25
Professional fees - legal, consulting, exploration 1,006 787
AIM related costs including Public Relations 204 151
Auditor's remuneration - audit 50 117
Stock option expense - 27
Fair value loss on investments 17 1,673 2,519
Loss on disposal of Zamsort - 5,517
Zamsort gain on forgiven shareholder loan - (6,485)
Other expenses (82) 201
Zamsort administration costs - 3
Alvis-Crest administration costs 37 7
Gains and losses on foreign exchange 474 (168)
Total operating expenses 5,067 3,500
Auditors Remuneration
During the year, the Group obtained the following services from the Company's
auditor:
31 Dec 31 Dec
2023 2022
£ 000's £ 000's
Fees payable to the auditor for the audit of the consolidated financial 60
statements - current financial year
50
Fees payable to the auditor for the audit of the consolidated financial 54
statements - prior financial year (not accrued in prior year)
-
Fees payable to the auditor for the audit of subsidiaries for component audits 3
- current year)
-
Total 50 117
Employee information
The average number of persons employed in the Group through payroll was nil
(2022 - nil) at a cost of nil (2022 - nil). See note 7 for details of key
management remuneration.
4. Disposals of held for sale assets and Zamsort subsidiary
Handa Disposal as part of Anglo Joint Venture
On 12 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
Agreement ("JV Agreement"), Anglo American would have an initial ownership
interest of 70% with Arc and its partners holding the balance via Unico
Minerals Ltd ("Unico") in which Arc will have a 67% interest with the balance
held by its partners. On 20 April 2023, the JV Agreement was signed subject to
completing certain conditions precedent including a restructuring of the
Group's assets, obtaining approvals from relevant government and regulatory
authorities and other customary conditions. On 10 November 2023 (the Effective
Date), the Company satisfied the Conditions Precedent (see Note 14).
The related financial information is set out below:
a) Results of disposal group prior to disposal
Nov Dec
2023 2022
Handa Group Handa Group
£ 000's £ 000's
Administrative Expenses (24) (165)
Loss before income tax (24) (165)
Income tax - -
Loss after tax (24) (165)
Loss from discontinued operations (24) (165)
Other comprehensive income from discontinued operations - -
b) Cash flows of disposal group prior to disposal
Nov Nov
2023 2023
Handa Group Total
£ 000's £ 000's
Operating activities (177) (177)
Investing activities - -
Financing activities 172 172
Cash used (5) (5)
( )
c) Assets and liabilities of disposal group ((i))
Nov 2023 Nov 2023
Handa Group Total
£ 000's £ 000's
Intangible assets 2,406 2,406
Investment in subsidiary 219 219
Fixed assets 4 4
Trade and other receivables 401 401
Long-term payables (223) (223)
Total 2,807 2,807
d) Disposal group on 10 November 2023
Nov 2023 Nov 2023
Handa Group Total
£ 000's £ 000's
Assets 3,030 3,030
Liabilities (223) (223)
Net Asset Value on 10 November 2023 2,807 2,807
Zamsort Settlement
As announced in February 2022, the Company announced that the parties to the
legal cases in Zambia and in the UK have come to an agreement to settle
various disputed matters and for all legal proceedings to be permanently
dropped (the "Settlement Agreement"). The Settlement Agreement was submitted
to Zambian courts to effect a Consent Judgement which has the force of law.
In return for the claimant parties, being Terra Metals Limited, Zambia Mineral
Exchange Corporation Limited and their related parties (Mumena Mushinge, Brian
Chisala and Katambi Bulawayo), relinquishing all claims against Zamsort or any
other company in the Arc Minerals Ltd Group, present or contingent, and in
full and final settlement of all claims in formal conclusion of all matters,
the Group agreed to transfer to the claimant parties, for nil consideration,
100% of the issued share capital of Zamsort Ltd (the "Zamsort Transfer"),
which owns the pilot plant. The Group also agreed to consent to the claimant
parties applying for the 8 square kilometre small mining and small exploration
license areas that were previously in existence at Zamsort prior to Arc's
involvement (the "Original Zamsort License Area").
The pilot plant, related equipment and intangible assets that relate to the
Original Zamsort License Area have remained in Zamsort and all other assets
and liabilities of Zamsort immediately preceding the date of the Zamsort
Transfer (the "Assets and Liabilities transferred to Handa subsidiary") were
transferred to Handa Resources Ltd. The total loss on the transfer of Zamsort
was £4.67m.
All of the Group's representative directors who served on the board of
directors of Zamsort resigned effective 1 April 2022.
The related financial information is set out below:
a) Results of disposal group prior to disposal
Dec Dec
2022 2022
Zamsort Total
£ 000's £ 000's
Administrative Expenses 2,519 2,519
Loss before income tax 2,519 2,519
Income tax - -
Loss after tax 2,519 2,519
Loss from discontinued operations - -
Other comprehensive income from discontinued operations - -
b) Cash flows of disposal Group prior to disposal
Dec Dec
2022 2022
Zamsort Total
£ 000's £ 000's
Operating activities 2,768 2,768
Investing activities - -
Financing activities - -
Cash used 2,768 2,768
( )
c) Assets and liabilities of disposal Group ((i))
Assets classified as held for sale (2022)
Dec 2022 Dec
2022
Zamsort Total
£ 000's £ 000's
Intangible assets - -
Property, plant and equipment - -
Inventory - -
Total - -
d) Zamsort subsidiary disposal on 31 March 2022
Mar Mar
2022 2022
Zamsort Consolidated
£ 000's £ 000's
Zamsort Assets 3,404 3,404
Zamsort Liabilities (3) (3)
Zamsort Net Asset Value 3,401 3,401
Derecognised on disposal of Zamsort subsidiary (3,300) (3,300)
Net Asset Value on 31 March 2022 (transferred to Handa) 101 101
5. Taxation
31 Dec 31 Dec
2023 2022
£'000 £'000
Current income tax charge - -
Deferred tax charge/ (credit) - -
Total taxation charge/ (credit) - -
Taxation reconciliation
The charge for the year can be reconciled to the loss per the consolidated
statement of comprehensive income:
31 Dec 31 Dec
2023 2022
£'000 £'000
(Income)/Loss before income tax (7,093) 5,827
Tax on (income)/ loss at the weighted average Corporate tax rate of 25.20% (697) 101
(Dec 2022: 0.96%)
Effects of:
- -
Permanent differences
- -
Tax losses carried forward
697 (101)
Losses not subject to corporation tax
Total income tax expense - -
The weighted average applicable tax rate of 25.20% (2022: 0.96%) used is a
combination of the 0% corporation tax in the BVI (2022:0%), 30% corporation
tax in Zambia (2022: 30%) and 22% corporation tax in Botswana (2022: 22%).
A deferred tax asset has not been provided for in accordance with IAS 12 due
to uncertainty as to when profits will be generated against which to relieve
any such asset. The Group does not have a material deferred tax liability at
the year end.
The tax rate used is the weighted average rate of the British Virgin Islands,
the Republic of Botswana and the Republic of Zambia (up to the date of the
disposal of the Zambian subsidiaries). Unused tax losses available in Botswana
approximate BWP 761k at 31 December 2023 (31 December 2022 - BWP 127k), being
approximately GBP 45k (31 December 2022 - £8k).
6. Dividends
Unico declared dividends of £2,863k of which 67% (£1,918) was distributed to
the Company on 10 November 2023 (31 December 2022: nil). The net difference of
£945k was the distribution to the minority shareholders.
7. Key management remuneration
31 Dec 31 Dec
2023 2022
£ 000's £ 000's
Key management remuneration 1,501 848
31 December 2023 Short term benefits Bonus paid((iv)) Share based payments Total
£ 000's £ 000's £ 000's £ 000's
Executive Directors
Nicholas von Schirnding 309 225 - 534
Rémy Welschinger 194 171 - 365
(1 Jan 2023 to 31 Oct 2023)
Non-Executive Directors
Brian McMaster 48 24 - 72
Valentine Chitalu 48 24 - 72
Rémy Welschinger 39 - - 39
(1 Nov 2023 to 31 Dec 2023)((i))
Caleb Mulenga 12 - - 12
(1 Jan 2023 to 27 Mar 2023)((ii))
Key Management Personnel
Ian Lynch (CFO) 22 101 - 123
(1 Nov 2023 to 31 Dec 2023)((iii))
Vassilios Carellas (COO) 164 120 - 284
836 665 - 1,501
( )
((i) Includes £30k paid in lieu of contractual notice with respect to R
Welschinger's former office as Finance Director.)
((ii) C Mulenga resigned effective 27 March 2023.)
((iii) I Lynch was appointed to the office of Chief Financial Officer in
November 2023.)
((iv) This represents 50% of bonuses declared during the year. The remaining
50% was declared on a deferred basis and will be payable in 2024 in cash or in
shares at the discretion of Management.)
31 December 2022 Short term benefits Bonus paid Share based payments Total
£ 000's £ 000's £ 000's £ 000's
Executive Directors
Nicholas von Schirnding 308 - - 308
Rémy Welschinger 233 - - 233
Non-Executive Directors
Brian McMaster 48 - - 48
Caleb Mulenga 48 - - 48
Valentine Chitalu 48 - - 48
Key Management Personnel
Vassilios Carellas (COO) 163 - - 163
848 - - 848
8. Earnings per share
The calculation of Earnings per share is based on the loss attributable to
equity holders divided by the weighted average number of shares in issue
during the year.
31 Dec 31 Dec
2023 2022
£ 000's £ 000's
Gain/(Loss) Gain 7,069 (5,827)
Weighted average number of ordinary shares (000s) 1,226,801 1,173,115
Potential diluted weighted average number of shares (000s) 21,975 198 -
Basic earnings per share (expressed in pence) 0.58 (0.50)
Net Profit (loss) per share continuing operations - Basic 0.58 (0.50)
Net Profit (loss) per share continuing operations - Basic 0.58 (0.50)
Net Profit (loss) per share continuing operations - Diluted((i)) 0.03 -
Net Profit (loss) per share discontinued operations - Basic - (0.01)
Net Profit (loss) per share discontinued operations - Diluted((i)) - -
((i) Due to the loss in 2022, the effect of options and warrants in calculating a diluted loss per share would be anti-dilutive and was therefore not calculated.)
9. Long term payables
31 Dec 31 Dec
2023 2022
£ 000's £ 000's
Minority shareholder loans 105 117
105 117
(i) The minority shareholder loans are payable to the
minority shareholder Alvis-Crest (Proprietary) Limited in the amount of USD
134k, as at 31 December 2023 (31 December 2022: USD 141k ). The loans are
unsecured and loan holders have agreed to roll forward the loans until a
liquidity event occurs.
(ii) The minority shareholder loans rank equally with
Arc's working capital loan to Alvis-Crest of USD 897k (31 December 2022: USD
861k), which is eliminated on consolidation. The loans are unsecured and loan
holders have agreed to roll forward the loans until a liquidity event occurs.
10. Intangible assets
Deferred Exploration Prospecting and exploration rights Other Intangible Total
Assets
Zaco Handa Alvis-Crest
£ 000's £ 000's £ 000's £ 000's £ 000's
At 1 Jan 2023 1,103 2,162 1,312 656 5,233
Additions 9 - - 56 65
Transfer of intangibles - - - - -
Disposal of Handa Group (729) (1,683) - (301) (2,713)
Currency gain/(loss) (383) (479) - (24) (886)
Net book value as at 31 Dec 2023 - - 1,312 387 1,699
Deferred Exploration Prospecting and exploration rights Other Intangible Assets Other Intangible Assets Total
Alvis-Crest
Zaco Handa
£ 000's £ 000's £ 000's £ 000's £ 000's £ 000's
Cost
At 1 Jan 2022 955 - 2,035 1,312 188 4,490
Additions 123 - - - 552 675
Transfer of intangibles - 1,960 (1,960) - - -
Zamsort derecognition - - (852) - - (852)
Currency gain/(loss) 25 202 777 - (84) 920
Net book value as at 31 Dec 2022 1,103 2,162 - 1,312 656 5,233
The Group's Intangible assets are comprised of evaluation and exploration
expenditures in respect of the licences in Zambia and Botswana. Other
Intangible Assets include exploration expenditures incurred and assets
disposed by the Group in relation to Zambia and Botswana.
Exploration projects in Zambia and Botswana are at an early stage of
development and there are no JORC (Joint Ore Reserves Committee) or non-JORC
compliant resource estimates available to enable value in use calculations to
be prepared.
The Group is currently in the process of renewing its licences which expire in
September 2024 and the Directors are not aware of any reason why any renewals
or applications would not be granted.
The Directors have undertaken a review to assess whether circumstances exist
which could indicate the existence of impairment as follows:
• The Group no longer has title to mineral leases.
• A decision has been taken by the Board to discontinue exploration
due to the absence of a commercial level of reserves.
• Sufficient data exists to indicate that the costs incurred will
not be fully recovered from future development and participation.
Following their assessment, the Directors concluded that no impairment
indicators exist which would require a formal impairment assessment and
therefore that no impairment has been recognised.
11. Fixed Assets
Processing Plant Mining Equipment Motor Vehicles Furniture & Fittings Total
£ 000's £ 000's £ 000's £ 000's £ 000's
Cost
At 1 Jan 2022 - - 86 33 119
Zamsort derecognition - - (40) (31) (71)
Disposals - - - - -
Additions - - - - -
Foreign exchange - - (11) - (11)
At 31 Dec 2022 - - 37 2 39
At 1 Jan 2023 - - 37 2 39
Disposals - - (25) (2) (27)
Additions - - - - -
Foreign exchange - - - - -
At 31 Dec 2023 - - 12 - 12
Accumulated Depreciation
At 1 Jan 2022 - - (66) (31) (97)
Disposals - - - - -
Zamsort transfer - - 40 30 70
Depreciation - - (9) - (9)
Reclassification of fixed assets to held for sale assets - - - - -
Foreign exchange - - 9 - 9
At 31 Dec 2022 - - (26) (1) (27)
At 1 Jan 2023 - - (26) (1) (27)
Disposals - - 16 1 17
Zamsort transfer - - - - -
Depreciation - - (2) - (2)
Reclassification of fixed assets to held for sale assets - - - - -
Foreign exchange - - - - -
At 31 Dec 2023 - - (12) - (12)
Net book value - 31 Dec 2022 - - 11 1 12
Net book value - 31 Dec 2023 - - - - -
12. Investment in subsidiary and associate companies
At 31 December 2023, the Company held interests in the share capital of the
following subsidiary and associate companies.
Company Place of Business Ownership Direct/ Indirect Nature of business
Held (%) Ownership
Alvis-Crest (Proprietary) Limited Republic of Botswana 75% Direct Mineral Exploration
Unico Minerals Limited British Virgin Islands 67% Direct Holding Company
Handa Resources Limited Republic of Zambia 30% Indirect Mineral Exploration
(Unico Minerals Limited registered office at Berkley Square House, Berkley
Square, London,) (W1J 6BD, United Kingdom.)
(Handa Resources Limited registered office at Plot No. 1266, Haile Selassie
Avenue, Longacres, Lusaka, Zambia - Handa was a subsidiary of the Company
until it was disposed as part of the joint venture agreement to Anglo American
Exploration BV - see Note 14.)
(Alvis Crest (Proprietary) Limited is registered at Desert Secretarial
Services (Pty) Limited, Plot 64518, Deloitte House, Fairground, PO Box 211008,
Bontleng, Gaborone, Botswana.)
The non-controlling interest shown within the primary statement arises as a
result of the Group owning less than 100% of a subsidiary company.
13. Investment in Associate
Handa Group
£ 000's
At acquisition fair value of associate at 10 Nov 2023 (Note 14) 3,149
Share of profits and losses (691)
At 31 Dec 2023 2,458
The Investment in Associate comprises of the investment in Handa Resources
Limited (Group), being the vehicle for the joint venture with Anglo American
BV ("Anglo"), which was acquired on 10 November 2023 following satisfaction of
all conditions precedent. Details of the joint venture are set out in Note 14.
Anglo's accounting policy requires exploration expenditure to be expensed
through profit and loss. As such, the share of losses includes the Group's
share of exploration expenditure incurred during the period 11 November 2023
to 31 December 2023.
During 2023, the Group submitted three mining license applications as part of
preparing for completion of the JV with a subsidiary of Anglo American, being
33402-HQ-LML, 33403-HQ-LML and 33404-HQ-LML over the exploration licenses
23004-HQ-LEL and 19906-HQ-LEL. All of the mining licence applications were
approved and validated by the Mining Cadastre Department and, following
submission of the subsequent requisite documentation, the Mines Advisory
Committee (MAC) was expected to meet to review the finalised LML applications
prior to issuance of the Mining Licenses.
As announced on 17 June 2024, the Mining Cadastre Department published the
results of the MAC meeting pursuant to which these applications and were
rejected and Zaco Investments Limited's application with respect to
23004-HQ-LEL was marked as deferred pending an information request. As the
applications were validly submitted and validated by the Zambian Mining
Cadastre, the Company has been advised that Handa and Zaco will be appealing
the decision of the Mining Licence Committee to reject the Mining Licence
Applications and are engaging with the Mining Cadastre to have the appeal
heard as soon as possible so that the applications can be reinstated and/or
considered positively in accordance with the law.
With the exception of the licence mentioned above, none of the Company's other
licences were affected by the recent Mining Licence Committee Meeting review
and Anglo continued to mobilise for the planned exploration activities.
14. Joint Venture Agreement with Anglo American
On 12 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
Agreement ("JV Agreement"), Anglo American would have an initial ownership
interest of 70% with Arc and its partners holding the balance via Unico
Minerals Ltd ("Unico") in which Arc will have a 67% interest. On 20 April
2023, the JV Agreement was signed subject to completing certain conditions
precedent including a restructuring of the Group's assets, obtaining approvals
from relevant government and regulatory authorities and other customary
conditions. On 10 November 2023 (the "Effective Date"), the Company announced
that it had satisfied the conditions precedent. The key commercial terms of
the Joint Venture are as follows:
Handa Resources Limited - the Joint Venture vehicle - was reconstituted to
reflect the initial ownership interests of Anglo American and Unico of 70% and
30%, respectively ("Initial Ownership Interests");
· Anglo American has the right to retain an Ownership Interest of 51%,
by:
funding exploration expenditures equal to USD 24,000,000 on or before the date
that is 180 days after the third anniversary of the Effective Date ("Phase I
End Date"); and making cash payments to Unico totalling up to USD 14,500,000,
as follows:
· USD 3,500,000, which was received on 13 November 2023;
· The balance receivable of USD 11M becomes due as follows:
· USD 1,000,000 on the first anniversary of the Effective Date;
· USD 1,000,000 on the second anniversary of the Effective Date;
· USD 1,000,000 on the third anniversary of the Effective Date; and
· USD 8,000,000 by the Phase I End Date.
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 USD 20,000,000 of additional exploration
expenditures within 2 years of the Phase I End Date ("Phase II End Date")
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 USD 30,000,000 within 2 years of the Phase II End
Date ("Phase III End Date").
During the period up to the Phase III End Date, 30% of the total funds
contributed by Anglo will be deemed to have been contributed by Unico Minerals
Limited ("Deemed Contribution"). The Deemed Contribution has not yet been
recognised in the accounts of Handa Resources Limited at 31 December 2023.
Anglo American, for as long as it holds the largest interest in the Joint
Venture, shall have the right to nominate three directors and Unico shall have
the right to nominate two directors. Joint Venture board decisions shall be
adopted by simple majority vote.
Details of the group's gain on disposal of the Zaco and Handa subsidiaries is
as follows:
Group
31 Dec 2023
£ 000's
Total Proceeds 10,497
Net Asset Value of Zaco
Retained Earnings 225
Share Capital (219)
Share Premium (990)
Profit for the year 34
(951)
Unico's 72.5% share of the Net Asset Value (690)
Net Asset Value of Handa
Retained Earnings 132
Share Capital (172)
Share Premium (1,818)
Profit for the year 0
Consideration (1,858)
Arc's 66% share of the Net Asset Value (1,226)
Fair value uplift on recognition of the Handa JV 2,352
Group gain on disposal of subsidiaries 10,933
Following the transaction with Anglo, the group's interest in Handa reduced to
30% and as part of the disposal accounting, the directors assessed that their
interest in Handa would be accounted for an investment in associate and the
value of the investment amounted to £3.149m that they have deemed on
recognition.
15. Receivables
Long-term receivables Group Group
31 Dec 31 Dec
2023 2022
£ 000's £ 000's
Receivable - Anglo JV (USD 8.33M) 6,531 -
Total 6,531 -
Trade and other receivables Group Group
31 Dec 31 Dec
2023 2022
£ 000's £ 000's
Receivable - Anglo JV (USD 948k) 744 63
Receivable - Casa Sale (USD 1.25M) 982 1,033
Other Receivables 121 -
Prepayments 12 -
Total 1,859 1,096
Receivable - Anglo JV
The £744k is due in November 2024, being the sterling equivalent of the net
present value of USD 1M receivable upon the first anniversary of the Effective
Date of the Anglo JV. A long-term receivable component of £6.531M has been
recognised, representing the net present value of the remaining USD 10M
proceeds arising from the Anglo JV agreement by the Phase I End Date. The
total proceeds had a nominal value of USD 14.5M and was discounted at a rate
of 5.5% and a USD/GBP exchange rate of £ 0.81. See Note 14 for details of
amounts receivable pursuant to the joint venture agreement with Anglo
American.
Receivable - Casa Sale
Included in receivables at 31 December 2023 is £982k (USD 1.25M) (2022:
£1.033M (USD1.25M)) to reflect the overdue Consideration Shares due to Arc in
relation to the disposal of Casa Mining Limited:
As announced on 29 April 2022, Regency Mining Ltd ("Regency") acquired a 73.5%
interest in the Misisi gold project ("Misisi Project") from Golden Square
Equity Partners Limited ("Golden Square"), replacing Rackla Metals Inc. as the
acquiror of Misisi. The terms of the transaction were that Arc would be paid
USD 250,000 in cash and the equivalent of USD 1,250,000 in shares in a
publicly listed company in Canada ("Consideration Shares"). The agreement also
provided Arc with a royalty agreement on the same terms as the previous
royalty agreement announced on 5 May 2021.
On 30 June, the Company received the first cash payment of USD 125,000 towards
the USD 1,500,000 receivable from the disposal of its Casa interests. On 12
September, the Company received the second cash payment of USD 125,000,
bringing the aggregate cash payments received by the Company to date to USD
250,000. The balance of USD 1,250,000 is to be settled by the issuance of
listed stock which has been delayed due to corresponding delays in the listing
process of the underlying entity. Management continues to follow up on
progress and the directors consider the balance recoverable.
The carrying amounts of the Group's trade and other receivables are
denominated in the following currencies:
Group Group
31 Dec 31 Dec
2023 2022
Current trade and other receivables £ 000's £ 000's
UK Pounds 132 31
US Dollars 1,726 1,033
Zambian Kwacha - 8
Botswana Pula 1 24
Total 1,859 1,096
16. Royalties
Net Smelter Royalty - Casa Mining Ltd
On 18 March 2020 the Company announced the sale of its shareholding in Casa
Mining Limited in return for a USD 5,000,000 interest-free note originally
payable on 19 March 2021 and a 3% Royalty calculated on net smelter production
capped at USD 45,000,000. The USD 5m loan note was subsequently extended and,
as announced in the RNS dated 29 April 2022, satisfied in full.
There were a number of key factors which affect the valuation of the Casa
Royalty which has a face value of USD 45,000,000. These include (a)
development and construction timeframe; (b) appropriate discount factor; (c)
availability of construction financing; (d) political stability and (e) gold
price.
Given these uncertainties the Company has elected to assign nil value to the
Royalty. The Company will reassess this carrying value in future as the Misisi
Project progresses along the development curve.
Resource Royalty - Sturec
On 18 March 2020 the Company announced the sale of its shareholding in Casa
Mining Limited in return for a USD 5,000,000 interest-free note originally
payable on 19 March 2021 and a 3% Royalty calculated on net smelter production
capped at USD 45,000,000. The USD 5m loan note was subsequently extended and,
as announced in the RNS dated 29 April 2022, satisfied in full.
Sturec was sold in February 2020. As part of the transaction if before
November 2024, the Šturec JORC Indicated and Measured Resource exceeds 1.5
million ounces gold at a grade greater than 2.5g/t (inclusive of recoverable
Ag equivalent), MetalsTech will pay Arc a further AUD 2 royalty per additional
ounce of gold. This royalty is capped at 7 million ounces of gold or AUD 11M.
Because of the general uncertainty about the size of the Sturec resource and
the difficulties of operating in Slovakia the Company has not recorded the
royalty in the accounts.
17. Short-term Investments Held at Fair Value Through Profit and Loss
The Group's investments held at fair value through profit and loss consist of
investments publicly traded on the London Stock Exchange and the
Over-The-Counter (OTC) market. These investments are valued at the mid-price
as at year end.
Level 1 Level 2 Level 3 Total
£ 000's £ 000's £ 000's £ 000's
At 1 January 2023 1,738 - - 1,738
Additions - - - -
Fair value loss (1,509) - - (1,509)
Impairment of TMNA shares (164) - - (164)
Foreign exchange 3 - - 3
At 31 December 2023 68 - - 68
Level 1 Level 2 Level 3 Total
£ 000's £ 000's £ 000's £ 000's
Losses on short-term investments held at fair value through profit and loss
Fair value loss on investments (1,509) - - (1,509)
Realised loss on impairment of investments (164) - - (164)
At 31 December 2023 (1,673) - - (1,673)
The fair value Agri-Fintech Holdings Inc. (TMNA), formerly Tingo Inc.,
declined significantly in 2023. The fair value losses recognised represent the
decline in value. Amid widely publicised FBI and SEC investigations, TMNA
announced its intention to liquidate in the fourth quarter of 2023. Following
this announcement, the investment was impaired in full. The Company continues
to monitor developments.
Level 1 Level 2 Level 3 Total
£ 000's £ 000's £ 000's £ 000's
At 1 January 2022 - - - -
Additions 6,406 - - 6,406
Fair value changes (4,685) - - (4,685)
Gain/ (Loss) on disposals (25) - - (25)
Disposals (176) (176)
Foreign exchange 218 - - 218
At 31 December 2022 1,738 - - 1,738
Level 1 Level 2 Level 3 Total
£ 000's £ 000's £ 000's £ 000's
Losses on short-term investments held at fair value through profit and loss
Fair value loss on investments (4,685) - - (4,685)
Realised loss on disposal of investments (25) - - (25)
At 31 December 2022 (4,710) - - (4,710)
18. Zamsort/Handa Restructuring
Zamsort Settlement (background)
The Company announced in February 2022 that the parties to the legal cases in
Zambia and in the UK have come to an agreement to settle various disputed
matters and for all legal proceedings to be permanently dropped (the
"Settlement Agreement"). The Settlement Agreement was submitted to Zambian
courts to effect a Consent Judgement which has the force of law.
In return for the claimant parties, being Terra Metals Limited, Zambia Mineral
Exchange Corporation Limited and their related parties (Mumena Mushinge, Brian
Chisala and Katambi Bulawayo), relinquishing all claims against Zamsort or any
other company in the Arc Minerals Ltd Group, present or contingent, and in
full and final settlement of all claims in formal conclusion of all matters,
the Group agreed to transfer to the claimant parties, for nil consideration,
100% of the issued share capital of Zamsort Ltd (the "Zamsort Transfer"),
which owns the pilot plant. The Group also agreed to consent to the claimant
parties applying for the 8 square kilometre small mining and small exploration
license areas that were previously in existence at Zamsort prior to Arc's
involvement (the "Original Zamsort License Area").
As announced on 31 March 2022, the Company issued 3,000,000 options in
relation to the Zamsort Settlement with an exercise price of 5 pence each and
an expiry date of 31 March 2024. Following the grant of these options there
were 20,133,334 share options outstanding.
All of the Group's representative directors who served on the board of
directors of Zamsort resigned effective 1 April 2022 ("Resignation Date").
Transfer of assets and liabilities from Zamsort to Handa
The pilot plant, related equipment and intangible assets that relate to the
Original Zamsort License Area which remained in Zamsort ("Zamsort Retained
Assets") was treated as available for sale assets at 31 December 2021. All
assets and liabilities, other than the Zamsort Retained Assets, immediately
preceding the date of the Zamsort Transfer (the "Transferred Assets &
Liabilities") were transferred to Handa Resources Ltd ("Zamsort/Handa
Restructuring"). The Zamsort/Handa Restructuring has been recorded on 31 March
2022, being the date immediately preceding the Resignation Date and resulted
in a c.£6.8m expense in the year to 31 December 2023. Handa was subsequently
sold to Anglo American Exploration BV as part of the joint venture agreement -
refer to Note 14.
19. Trade and other payables
Included in trade and other payables are the following:
Group Group
31 Dec 31 Dec
2023 2022
Current trade and other payables £ 000's £ 000's
Surrendered share options payable 1,181 1,181
Minority shareholder loans 47 1,271
Trade payables, other payables and accruals 1,016 281
2,244 2,733
20. Share capital
Authorised £ 000's
Unlimited ordinary shares of no par value -
Number Nominal Average price per share Gross Consideration value
of shares value (pence) GBP'000
Called up, allotted, issued and fully paid
As at 1 January 2022 1,150,519,886 6,499
Issued to creditors in lieu of payment 1,200,000 - 3.30 40
Issued pursuant to warrant exercises 74,024,896 - 2.25-3.00 2,213
As at 31 December 2022 1,225,744,782 8,752
As at 1 January 2023 1,225,744,782 8,752
Issued to creditors in lieu of payment 5,593,099 - 2.932 164
Issued pursuant to warrant exercises 980,584 - 2.9 28
As at 31 December 2023 1,232,318,465 8,944
Share issue costs in the amount of £nil (31 December 2022 - £nil) were
incurred in the year and set off against the share premium account.
21. Share based payments and Warrants
Share Options
During the year the following share options were issued and valued using the
Black Scholes method:
Weighted Number Exercise Share price at grant Weighted Avg Value
Avg Price Price (pence) Term (000s)
(pence) (pence) (years) **
1 January 2022 3.69 17,833,334 1.83 273
Expired (700,000) - - - (17)
Prior year adjustments - - - - -
Exercised during the year - - - - -
Granted 3,000,000 5.00 3.60 1.25 27
31 December 2022 3.85 20,133,334 0.95 283
1 January 2023 3.85 20,133,334 1.83 283
Expired (11,200,000) - - - (157)
Prior year adjustments - - - - -
Exercised during the year - - - - -
Granted - - - - -
31 December 2023 4.56 8,933,334 - - 0.52 126
No options are/were subject to vesting conditions.
Options can be settled in cash and are typically granted for a term between
three and five years at the discretion of the Board of Directors upon
recommendation by the Remuneration Committee.
The weighted average exercise price of the options outstanding at 31 December
2023 is 4.56 pence (31 December 2022 - 3.85 pence).
In the Black-Scholes model the key inputs for the options granted in 2022 were
Volatility as 64.6%, the Risk Free Interest Rate as 0% and the dividend yield
as 0%.
** Under IFRS 2 "Share-based Payments", the Company determines the fair value
of options issued to Directors, Employees and other parties as remuneration
and recognises the amount as an expense in the Statement of Comprehensive
Income with a corresponding increase in equity.
During the year 11 200 000 share options expired unexercised. The value of
these expired share options was calculated based on a pro-rata allocation of
the opening balance.
The charge incurred during the year in relation to share based payments was
£nil (31 December 2022 - £27,000).
Warrants
Grant Number Exercise Term Share Price at grant
date Price (years) pence
(pence)
1 January 2023 12,795,647
Exercised during the year 980,584
Expired during the year -
TOTAL 31 December 2023 11,815,063
Weighted Average 4.41 0.5 ((i))
(i) Remaining term as at 31 December 2023
The charge incurred during the year in relation to warrants was nil.
Grant Number Exercise Term Share Price at grant
date Price (years) pence
(pence)
1 Jan 2022 165,859,668
Exercised during the year (74,024,896)
Expired during the year (79,039,125)
TOTAL 31 December 2022 12,795,647
Weighted Average 4.29 1.36 ((i))
(i) Remaining term as at 31 December 2022
The charge incurred during the year in relation to warrants was nil.
22. Share premium
31 Dec 31 Dec
2023 2022
£ 000s £ 000s
Opening Balance 64,272 62,019
Total Additions 192 2,253
Share issue costs - -
As at 31 December 64,464 64,272
See Note 20 for a breakdown of share issues during the year.
23. Financial instruments and capital risk management
Categories of financial instruments
The categories of financial assets and liabilities included in the statement
of financial position are as follows:
2023 2022
£000 £000
Financial assets at amortised cost:
Long-term receivable 6,531 -
Trade and other receivables 1,859 1,096
Assets held for sale - -
Cash and cash equivalents 281 616
Financial assets at fair value through profit or loss:
Short term investments 68 1,738
Financial assets at carrying value using equity method
Investment in associate 2,458 -
11,197 3,450
2023 2022
£000 £000
Financial liabilities at amortised cost:
Trade and other payables 2,244 2,733
Long-term payables 105 117
2,349 2,850
Financial Risk Management
Financial Risk Factors
The Group's activities expose it to a variety of financial risks: market risk
(including foreign 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.
Risk management is carried out by the Board of Directors under policies
approved at Board meetings. The Board frequently discusses principles for
overall risk management including policies for specific areas such as foreign
exchange.
a) Market Risk
i) Foreign Exchange Risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the pound
sterling, US dollar ("USD"), Zambian kwacha ("ZMW") and Botswanan pula
("BWP"). Foreign exchange risk arises from recognised monetary assets and
liabilities, where they may be denominated in a currency that is not the
Group's functional currency.
The Zambian kwacha depreciated by approximately 51% (appreciated by 2.5% in
2022), although it has shown to be a volatile currency. The kwacha risk is
mitigated by the fact that the Group's Zambian entities were disposed of
during the year - See Note 14.
The Botswanan pula depreciated by approximately 11% (appreciated 0.14% in
2022), Whilst less volatile than the ZMW, the pula risk is similarly mitigated
to that of the kwacha by the fact that the Group's Botswanan entity would only
have one month's cash requirement on hand at any one time.
On the assumption that all other variables were held constant, and in respect
of the Group and the Company's expenses the potential impact of a 20%
increase/decrease in the GBP:ZMW foreign exchange rate on the Group's loss for
the year and on equity is as follows:
Potential impact on Zambian kwacha and Botswanan Pula expenses: 2022
Group (BWP) Group (ZMW)
Increase/(decrease) in exchange rates £ 000's £ 000's
20% (2) (9)
-20% 2 9
Potential impact on Zambian kwacha and Botswanan pula expenses: 2023
Increase/(decrease) in exchange rates
20% 6 6
-20% (8) (9)
b) Credit Risk
Credit risk arises from cash and cash equivalents.
The Group considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk. The Group will only keep its
holdings of cash and cash equivalents with reputable institutions.
The Group considers that it is not exposed to major concentrations of credit
risk.
The Group holds cash as a liquid resource to fund its obligations. The
Group's cash balances are held primarily in USD. The Group's strategy for
managing cash is to assess opportunity for interest income whilst ensuring
cash is available to match the profile of the Group's expenditure. This is
achieved by regular monitoring of interest rates and monthly review of
expenditure forecasts. Short term interest rates on deposits remained very
unattractive during the fiscal year and management employed short-term
investment strategies to protect working capital reserves.
The Group has a policy of not hedging and therefore takes market rates in
respect of foreign exchange risk; however, it does review its currency
exposures on an ad hoc basis. Currency exposures relating to monetary assets
held by foreign operations are included within the foreign exchange reserve in
the Group Balance Sheet.
The currency profile of the Group's cash and cash equivalent is as follows:
Dec Dec
2023 2022
Cash and cash equivalents £ 000's £ 000's
Sterling 49 593
US Dollars 230 3
Zambian Kwacha (ZMK) - 3
Botswana Pula (BWP) 2 17
At end of year 281 616
On the assumption that all other variables were held constant, and in respect
of the Group's cash position, the potential impact of a 20% increase in the
GBP:USD foreign exchange rate would not have a material impact on the Group's
cash position and as such is not disclosed.
c) Liquidity Risk
To date the Group has relied upon equity funding to finance operations. The
Directors are confident that adequate funding will be forthcoming with which
to finance operations. Controls over expenditure are carefully managed.
The Group ensures that its liquidity is maintained by a management process
which includes projecting cash flows and considering the level of liquid
assets in relation thereto, monitoring Balance Sheet liquidity and maintaining
funding sources and back-up facilities.
Listed securities
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets.
Level 2: other techniques for which all inputs that have a significant effect
on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques that use inputs that have a significant effect on the
recorded fair value that are not based on observable market such as industry
knowledge and experience of the Directors.
Risk arises from uncertainty about the future valuations of financial
instruments held in accordance with the Company's investment objectives. These
future valuations are determined by many factors but include the operational
and financial performance of the underlying investee companies, as well as
market perceptions of the future of the economy and its impact upon the
economic environment in which these companies operate.
The Company holds investments in companies that are listed on stock markets.
The value at the balance sheet date is 68k (2022: £1.738M). If there were to
be a 10% decrease in overall share prices of these financial investments, the
impact on the comprehensive income and net assets would be a decrease of
approximately £7k (2022: £174k). There would be a similar increase in the
event there was a 10% increase in overall share prices.
Capital Risk Management
The Group's objectives when managing capital are to safeguard the Group's
ability to position as a going concern and to continue its exploration and
evaluation activities. The Group has capital, defined as the total equity and
reserves of the Group, of £10,547,000 (December 2022: £5,845,000).
The Group monitors its level of cash resources available against future
planned exploration and evaluation activities and issues new shares in order
to raise further funds from time to time.
24. Commitments
Alvis-Crest committed exploration expenditure
Until a decision to mine is reached, the Group is committed to spending,
during any consecutive three year period, not less than USD 200,000 per year,
on average, on the Virgo Project. The licences were renewed in 2022 for 2
years to 2024. Alvis Crest has lodged renewal applications for both the
PL135/2017 and PL162/2017 licenses. This is an administrative process and the
Directors see no reason why the licences will not be automatically renewed in
accordance with their terms. The renewals will extend the period by which
the Company can continue exploring the Virgo Project licenses for a further
two years, expiring in 2026. As such, under the current licence term, the
Group is committed to spending at least USD 200,000 in the next 12 months and
an additional USD 200,000 per year for the following year.
Exploration commitments
Ongoing exploration expenditure is required to maintain title to the Group's
mineral exploration permits. No provision has been made in the Group financial
statements for these amounts as the expenditure is expected to be fulfilled in
the normal course of the operations of the Group.
25. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. There were no other transactions with related parties during the
reporting year, except as disclosed below:
Remuneration of Key Management Personnel
The remuneration of the Directors and PDMRs is set out in Note 7.
Of the amounts set out in Note 7:
£284 000 (2022 - £163,143) was paid to VC Resources Ltd, a PSC owned by
Vassilios Carellas.
£123 000 (2022 - £163,143) was paid to HFS Consulting Ltd, a company owned
by Ian Lynch.
A relative of Rémy Welschinger made a loan to the Company which was unsecured
and converted into equity in November 2023.
26. Ultimate controlling party
There is no ultimate controlling party in the opinion of the Board.
27. Events after the reporting date
Fundraising
On 12 March 2024 the Company announced it has raised approximately £4.14
million through the issue of shares. The proceeds of the fundraising will be
used to progress the Company's Botswana exploration programme; to assess
potential new licence areas in Zambia, and, if a target licence area is
identified, to fund the associated due diligence, costs of acquiring the
licence and any initial work programmes; and for working capital purposes.
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