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REG - Argos Resources Ltd - 2022 Interim Financial Results

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RNS Number : 9319V  Argos Resources Ltd  15 August 2022

15 August 2022

 

ARGOS RESOURCES LIMITED

("Argos" or "the Company")

 

2022 Interim Financial Results

 

Argos Resources Limited (AIM: ARG.L), the Falkland Islands based company
focused on the North Falkland Basin, is pleased to announce its interim
financial results for the six months ended 30 June 2022.

 

Highlights

·    US$105 thousand loss for the period (H1 2021: loss of US$200
thousand);

·    US$132 thousand cash reserves at 30 June 2022 (YE 2021: US$304
thousand);

·    The current Second Phase of the Licence was extended until December
2022;

·    A loan provided by the Chairman in June 2022 provides additional
working capital and the Company plans to raise additional capital to support a
further extension of the Licence beyond its current expiry date of 31 December
2022; and

·    Ownership changes in the adjacent Sea Lion oilfield and surging oil
prices enhance outlook for the Company.

 

 

For further information:

 

Argos Resources Limited (+500
22685)                           Cenkos Securities
plc (Nomad & Broker)

www.argosresources.com (http://www.argosresources.com)
 
Derrick Lee (+44 131 220 9100)

Ian Thomson,
Chairman
Neil McDonald (+44 131 220 6939)

John Hogan, Managing Director

Chairman's statement and Managing Director's review

The Company's PL001 Licence currently expires on 31 December 2022. The Company
has submitted a formal application to extend the Licence by a further 2 years
beyond this date to 31 December 2024 to undertake new technical work and to
market the results of that work to potential industry partners.  The
technical work planned involves special reprocessing of some of the 3D seismic
data on Licence PL001. The results of a pilot study undertaken in 2021 to
determine the effectiveness of the special processing technique have been
positive and sufficiently encouraging that the Company intends to extend that
work across the main prospects identified in the eastern half of Licence
PL001. The Company believes this additional work should further de-risk those
prospects and enhance the farmout potential of the Licence.

 

Financial overview

The Group loss for the six months to 30 June 2022 was US$105 thousand (2021:
loss of US$200 thousand) giving an undiluted loss per share of 0.04 cents
(2021: 0.09 cents loss per share).

 

Administrative expenses were US$90 thousand compared to US$205 thousand for
the same period in 2021.

 

Net assets of US$29.3 million is a decrease of US$105 thousand since December
2021 as a result of the loss for the period.

 

Financial outlook

In June 2022 Argos' Chairman agreed to fund a drawdown loan facility of
£110,000 to provide short-term financial support to the Company. Any offer of
a licence extension is likely to be conditional on the Company demonstrating
that it has sufficient funding to carry out a work programme and cover
administration costs during the Licence term.  The granting of an extension
is therefore likely to be dependent on the Company raising significant further
funds in Q3/Q4 2022.

 

In order to continue as a going concern the Company will need to raise further
finance and the going concern comments in Note 1 contain further information.

 

 

 

 

                Ian Thomson OBE

                Chairman

Consolidated statement of comprehensive income

Period ended 30 June 2022

                                                              Note  6 months    6 months    Year

ended
ended
ended

30 June
30 June
31 December

2022
2021
2021

unaudited
unaudited
audited

$'000
$'000
$'000

 Administrative expenses                                            (90)        (205)       (355)
 Foreign exchange gains/(losses)                                    (15)        5           (1)

 (Loss) from operations attributable to owners of the parent        (105)       (200)       (356)

 Total comprehensive loss for the period
 attributable to owners of the parent                               (105)       (200)       (356)

 (Loss) per share (cents):
 Basic and diluted                                            2     (0.04)      (0.09)      (0.15)

 

Consolidated statement of financial position

As at 30 June 2022

                                       Note  As at       As at       As at

30 June
31 December
                                             30 June
2021
2021

2022
unaudited
audited

unaudited
$'000
$'000

$'000
 Assets
 Non-current assets
 Capitalised exploration expenditure         29,174      28,903      29,135
 Current assets
 Other receivables                           59          83          43
 Cash and cash equivalents                   132         641         304

 Total current assets                        191         724         347

 Total assets                                29,365      29,627      29,482

 Liabilities
 Total and current liabilities
 Other payables                              (42)        (43)        (54)

 Total net assets                            29,323      29,584      29,428

 Capital and reserves attributable to
 equity holders of the company

 Share capital                         3     7,095       7,096       7,095
 Share premium                               30,222      30,221      30,222
 Retained losses                             (7,994)     (7,733)     (7,889)

 Total shareholders' equity                  29,323      29,584      29,428

 

 

Consolidated statement of cash flows

Period ended 30 June 2022

                                                        6 months    6 months    Year

ended
ended
ended

30 June
30 June
31 December

2022
2021
2021

unaudited
unaudited
audited

$'000
$'000
                                                        $'000
 Cash flows from operating activities
 (Loss) for period                                      (105)       (200)       (356)
 Adjustments for:
 Foreign exchange losses/(gains)                        15          (5)         1

 Net cash (outflow) from operating activities
 before changes in working capital                      (90)        (205)       (355)

 (Increase) in other receivables                        (2)         (4)         (3)
 (Decrease) in other payables                           (13)        (16)        (5)

 Net cash (outflow) from operating activities           (105)       (225)       (363)

 Investing activities
 Exploration and development expenditure                (52)        (127)       (320)

 Net cash used in investing activities                  (52)        (127)       (320)

 Financing activities
 Issue of ordinary shares                               -           550         550

 Net cash from financing activities                     -           550         550

 Net (decrease) /increase in cash and cash equivalents  (157)       198         (133)
 Cash and cash equivalents at beginning of period       304         438         438
 Exchange (losses)/gains on cash and cash equivalents   (15)        5           (1)

 Cash and cash equivalents at end of period             132         641         304

 

Consolidated statement of changes in equity - unaudited

Period ended 30 June 2022

                                                                Share     Share premium  Retained        Total

capital
$'000
earnings/
equity

$'000
(deficit)
$'000

$'000
 At 1 January 2021                                              6,696     30,071                 (7,533)       29,234
 Total comprehensive income for period to 30 June 2021          -                                (200)         (200)

                                                                          -
 Shares issued during                                           400                              -             550

period to 30 June 2021

                                                                          150

 At 30 June 2021                                                7,096     30,221                 (7,733)       29,584

 Total comprehensive income for period to 31 December 2021      -                                (156)

                                                                          -                                    (156)
 Adjustment due to rounding                                     (1)       1                      -             -

 At 31 December 2021                                            7,095     30,222                 (7,889)       29,428

 Total comprehensive income for period to 30 June 2022          -                                (105)         (105)

                                                                          -

 At 30 June 2022                                                7,095     30,222                 (7,994)       29,323

 

Notes to the interim report - unaudited

Period ended 30 June 2022

 

1      Accounting policies

 

General information

Argos Resources Limited is a limited liability company incorporated and
domiciled in the Falkland Islands under registration number 10605.  The
address of its registered office is Argos House, H Jones Road, Stanley,
Falkland Islands.

 

This consolidated interim report was approved for issue by the directors on 12
August 2022.

 

Basis of preparation

The financial information included within this interim report has not been
reviewed nor audited and is based on the consolidated financial statements of
Argos Resources Limited and its subsidiary Argos Exploration Limited ("the
Group").  The consolidated financial statements are prepared in compliance
with the recognition and measurement requirements of International Financial
Reporting Standards as adopted by the European Union (IFRSs) and
interpretations of those standards as issued by the International Accounting
Standards Board (IASB).  They do not include all disclosures that would
otherwise be required in a complete set of financial statements and should be
read in conjunction with the 2021 annual report.  These accounts have been
prepared in accordance with the accounting policies that are expected to be
applied in the report and accounts of Argos Resources Limited for the year
ending 31 December 2022.

 

The comparative financial information for the year ended 31 December 2021 has
been derived from the full statutory financial statements for that period
which were prepared in compliance with IFRSs.  The Independent Auditors'
Report on the annual report and financial statements for 2021 was unqualified
but did draw attention to note 1 of these financial statements which explains
that the Group and Parent Company's ability to continue as a going concern is
dependent on securing an offer of a licence extension and raising sufficient
funds to meet the conditions of such an offer.  As stated in note 1, these
conditions indicate the existence of a material uncertainty which may cast
significant doubt over the Group's and Parent Company's ability to continue as
a going concern. The audit opinion was not however modified in respect of this
matter.

 

The IASB has issued some new and revised standards, amendments and interpretations to existing standards, which are effective for the financial year ending 31 December 2022.  The directors have made an assessment of the impact of these standards and they are not expected to have a material impact on the financial statements.

 

Going concern

The interim report has been prepared on the going concern basis as, in the
opinion of the directors, there is a reasonable expectation that the Group and
the Company will continue in operational existence for the foreseeable future.

 

The Group and Parent Company's ability to continue in operational existence
is, however, subject to the following uncertainties:

 

Notes to the interim report - unaudited

Period ended 30 June 2022

 

1      Accounting policies (continued)

 

The Company's PL001 Licence currently expires on 31 December 2022. The Company
has submitted a formal application to extend the Licence by a further two
years beyond this date to undertake new technical work and to market the
results of that work to potential industry partners.

 

Any offer of such an extension is likely to be conditional on the Company
demonstrating that it has sufficient funding to carry out a work programme and
cover administration costs during the Licence term.  The granting of an
extension is therefore likely to be dependent on the Company raising
significant further funds in Q3/Q4 2022.

 

Failure to secure an offer of a licence extension or to raise sufficient funds
to meet the conditions of such an offer will result in the Company being
unable to continue as a going concern in the near term.

 

If a licence extension and funding are secured, then the Group's ability to
achieve its long-term strategy of developing its exploration projects remains
dependent on finding an exploration partner and the Group continues to seek
partners to participate in drilling on its Licence.  As at the date of sign
off on these financial statements the oil and gas markets continue to be in a
state of considerable turmoil with very high prevailing prices.  The Company
does not anticipate making progress on finding a partner until the oil and gas
sector shows signs of greater stability but is hopeful that the drivers behind
the current situation will improve the chances of achieving a successful
farm-down.

 

If the Group is unable to find an exploration partner, raise funds or obtain
further licence extensions then it may be unable to realise its assets and
discharge its liabilities in the normal course of business.

 

All the above factors indicate the existence of material uncertainties which
cast significant doubt over the Group and Parent Company's ability to continue
as a going concern, some of which may crystalise before the end of 2022.  The
financial statements do not include the adjustments that would result if the
Group was unable to continue as a going concern.

 

Significant accounting judgements, estimates and assumptions
The Group makes certain estimates and assumptions regarding the future in relation to intangible assets and impairment of these assets.  Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.  The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed as follows:

 

 

Notes to the interim report - unaudited

Period ended 30 June 2022

 

1.     Accounting policies (continued)

 

Intangible assets - capitalised exploration expenditure, impairment and
royalty interests

Evaluation and exploration (E&E) expenditure

The Group believes that the most appropriate method of accounting for E&E
expenditure is to capitalise any costs incurred, including appropriate
technical and administrative expenses but not general overheads, as intangible
assets pending determination of feasibility of the project, as permitted under
IFRS 6.

 

If an exploration project is successful, the related expenditures are
transferred to tangible assets and amortised over the estimated life of the
commercial reserves.  Where a licence is relinquished, a project is
abandoned, or is considered to be of no further value to the Group, the
related costs are written off.

 

Impairment

E&E assets are assessed for impairment when facts and circumstances
suggest that the carrying amount may exceed the recoverable amount.

 

In accordance with IFRS 6 the Group firstly considers the following facts and
circumstances in their assessment of whether the Group's exploration and
evaluation assets may be impaired:

 

·    whether the period for which the Group has the right to explore in a
specific area has expired during the period or will expire in the near future,
and is not expected to be renewed;

·    whether substantive expenditure on further exploration for and
evaluation of mineral resources in a specific area is neither budgeted nor
planned;

·    whether exploration for and evaluation of hydrocarbons in a specific
area have not led to the discovery of commercially viable quantities of
hydrocarbons and the Group has decided to discontinue such activities in the
specific area; and,

·    whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying amount of
the exploration and evaluation assets is unlikely to be recovered in full from
successful development or by sale

 

If any such facts or circumstances are noted the Group must perform an
impairment test in accordance with the provisions of IAS 36, assessing the
recoverable amount of the E&E assets together with all development and
production assets, as a single cash generating unit (CGU).  The aggregate
carrying value is compared against the expected recoverable amount of the
CGU.  The recoverable amount is the higher of value in use and the fair value
less costs to sell.

 

Any E&E impairment loss would be recognised in the income statement and
separately disclosed.

Notes to the interim report - unaudited

Period ended 30 June 2022

 

2.     (Loss) per share

                                        6 months      6 months      Year

ended
ended
ended

30 June
30 June
31 December

2022
2021
2021

unaudited
unaudited
audited

Number
Number
Number

 Shares in issue brought forward

 (2 pence shares)                       235,141,206   220,713,205   220,713,205

 Shares issued in period                -             14,428,001    14,428,001

 Shares in issue carried forward

 (2 pence shares)                       235,141,206   235,141,206   235,141,206

 Weighted average number of ordinary
 shares in issue during the period      235,141,206   225,177,116   230,279,167

 Options not exercised brought forward  6,705,818     6,705,818     6,705,818

 Options not exercised carried forward  6,705,818     6,705,818     6,705,818

                                        6 months      6 months      Year

ended
ended
ended

30 June
30 June
31 December

2022
2021
2021

unaudited
unaudited
audited

 (Loss) for the period ($'000)          (105)         (200)         (356)

 Weighted average number of ordinary
 shares in issue during the period      235,141,206   225,177,116   230,279,167

 (Loss) per ordinary share (cents)
 Basic and diluted                      (0.04)        (0.09)        (0.15)

 

Basic loss per share has been computed by dividing the loss by the weighted
average number of shares in issue during the period.

 

In accordance with IAS 33 as the Group is reporting a loss for this period,
the preceding interim period and the year to 31 December 2021 the share
options are not considered dilutive because the exercise of share options
would have the effect of reducing the loss per share.

 

Notes to the interim report - unaudited

Period ended 30 June 2022

 

3.      Share Capital

 

 Authorised:                                      $'000
 500,000,000 ordinary shares of 2 pence each
 At 1 January 2020, 31 December 2020 and

 30 June 2022                                     14,960

 

 

 Allotted, issued and fully paid:                                  Number
 Ordinary shares of 2 pence each
 At 1 January 2021                                                 220,713,205
 Issued during the six months ended 30 June 2021                   14,428,001

 At 30 June 2021, 31 December 2021

and 30 June 2022

                                                                   235,141,206

 

 

 Allotted, issued and fully paid:                                  $'000
 Ordinary shares of 2 pence each
 At 1 January 2021                                                 6,696
 Issued during the six months ended 30 June 2021                   400

 At 30 June 2021                                                   7,096
 Adjustment due to rounding                                        (1)

 At 31 December 2021 and 30 June 2022                              7,095

 

 

4       Events after the reporting date

 

Publication of Results

As a result of the Company's extended discussions regarding its funding
position, and the associated impact on the timing for the FY21 Accounts, the
Company was not in a position to publish its 2021 Financial Statements by the
deadline of 30 June 2022. Consequently, the Company's shares were temporarily
suspended from trading on AIM on 1 July 2022, pending publication of the FY21
Accounts.

 

The FY21 results were subsequently published via RNS on 25 July 2022, and a
full copy of the accounts were made available for download from the website.
 The Company's securities resumed trading on AIM on 25 July 2022.

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