REG - Arkle Resources PLC - Interim Statement for period ended 30 June 2021
30th September 2021
Arkle Resources PLC
("Arkle" or the "Company")
Interim Statement for the period ended 30 June 2021
Chairman's Statement
Arkle is an active gold and zinc explorer focused on Ireland (Exhibit 1) - http://www.rns-pdf.londonstockexchange.com/rns/4419N_1-2021-9-29.pdf
We believe the current high prices for gold and zinc are being overlooked by investors particularly in AIM shares. Gold at $1,740 per ounce, or over $55 US per gram, is very attractive to miners. Zinc is over $3,000 per ton. This is very profitable for existing zinc mining and is an incentive to explorers, against the economic turmoil of recent years which has significantly reduced exploration activities.
The economic risk/reward of investing in mineral exploration should be more attractive, but investors are attaching far higher risks to the potential reward.
Gold
The principal focus of activity is the Mine River project on the Wexford/Wicklow borders where ongoing drilling has produced some spectacular results and greatly extended the mineralised zones around the Tombreen area.
Arkle has been exploring the Wexford/Wicklow gold trend for some years. Narrow vein gold exploration is a painstaking business where veins pinch and swell and can disappear due to faulting and folding. Irish vein gold is often "nuggety" in nature which means exactly what is says, much of the gold is in nuggets. Drilling needs to find the gold bearing veins and then the geologists need to interpret the results. Very high grades usually means the drill hole hit a nugget or nuggets. Lower grades can mean the drill hole missed the nuggets by millimetres, but there may be gold there.
Repeated soil sampling, geophysical and drilling campaigns has identified a 15km trend along the Wicklow hills. We have narrowed the high grade areas down to a 3km stretch between two areas: Knocknalour and Tombreen. Refined soil sampling and trenching between 2018 and 2020 identified new mineralised zones particularly around Tombreen. This is the location of the current drilling programme which has been twice extended due to positive results. Tombreen West, some 900 metres west from the historic drilling at Tombreen Main returned gold mineralisation in three drill holes. Reviewing these results as well as drilling results from deeper drilling at Tombreen Main suggested further gold veins at depths below 100 metres in Tombreen West. Drilling to 200 metres is ongoing.
The rig moved to Tombreen Main where some excellent results were obtained including the spectacular hole 21-TB-11 which returned 0.5 metres at 51.6 g/t in a 2.5 metre zone averaging 12.13 g/t. Additional step out drilling is planned here.
While awaiting drilling results, the rig moved to drill Anomaly A, (Exhibit 2) - http://www.rns-pdf.londonstockexchange.com/rns/4419N_2-2021-9-29.pdf a recently discovered but never drilled anomaly, 300 metres Southwest of Tombreen Main. Visual inspection of the core from the first drill hole indicated mineralisation at a number of levels. Step out holes are underway.
The early results from Anomaly A have encouraged us to trench Anomalies B and C Southwest of Tombreen West (Exhibit 2) - http://www.rns-pdf.londonstockexchange.com/rns/4419N_2-2021-9-29.pdf. This drilling is planned for October 2021.
We will need to pause the drilling programme in the near future to analyse and evaluate what we have found but we are very encouraged by the results so far.
At Inishowen there had been a lull in exploration following the successful drilling campaign in 2017. Subsequent prospecting in the years that followed did not identify the extension of the veins at Meeneragh or find other significant new gold targets in the area. We then introduced new technology. The soil sampling technique that was born out of the Mine River project in 2019 which proved to be extremely successful was then deployed at Inishowen. The strategy was twofold: find the 'lost veins' and identify new areas for follow up. The approach paid off following a trenching programme at the end of 2020. Not only did we discover new areas for follow up but we found new gold bearing outcrops and the extension of the 'lost veins' with grades as high as 40.7g/t gold. This programme is deferred due to the focus on Wexford/Wicklow and while we wait for state approvals.
Zinc
Stonepark was for a long time the flagship project for Arkle. Over 180 holes were drilled discovering over 5 million tons grading over 11 per cent. zinc and lead. Among zinc discoveries worldwide, this is high grade. The mineralisation is in three separate zones and is adjacent to the large, 45 million ton plus, Pallas Green zinc discovery owned by Glencore.
Arkle is a minority partner (23.44%) in this project with Group Eleven, a Toronto listed zinc explorer, controlling the balance. Group Eleven, which is also the operator, believes that a geological trend containing zinc and lead runs Southeast to Northwest from Ballywire about 20km Southeast of Stonepark through to Stonepark and Pallas Green. Group Eleven controls the ground to the Southeast of the five Stonepark licences and have some very strong drilling results at Ballywire and at Carrickittle. In 2019 Group Eleven drilled Kilteely on the Stonepark licences close to the border with Carrickittle with positive results. The mineralisation discovered was deeper than that at Stonepark.
A recently issued update by Group Eleven improved the prospectively of the Kilteely ground. Magnetic surveys confirmed the Northwest trend running from Ballywire through Carrickittle and Kilteely and on to the discoveries at Stonepark and Pallas Green. Group Eleven expects to drill in the Carrickittle area in the coming weeks Group Eleven intend to drill on the Stonepark licences in Q1 2022. It is the current intention of Arkle to pay their share. It is important to point out that Arkle can agree to participate or dilute.
In 2020 a proposal to acquire and rapidly drill the Stonepark ground was received. The proposal was acceptable to Arkle but not to Group Eleven. Arkle has protection in this area in that it has a pre-emption right on any proposed buyout.
Future
The future looks bright. We are going to continue our investment in gold and zinc exploration. We have adequate funds to meet current and expected exploration expenditure.
John Teeling
Chairman
29th September 2021
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.
Enquiries:
Arkle Resources PLC
John Teeling, Chairman
+353 (0) 1 833 2833
Jim Finn, Finance Director
+353 (0) 1 833 2833
SP Angel Corporate Finance LLP
Nominated Adviser and Joint Broker
Matthew Johnson/Adam Cowl
+44 (0) 203 470 0470
First Equity Limited
Joint Broker
Jason Robertson
+44 (0) 207 374 2212
Blytheweigh
+44 (0) 207 138 3204
Megan Ray
Rachael Brooks
Teneo
Luke Hogg
+353 (0) 1 661 4055
Ciara Wylie
+353 (0) 1 661 4055
Arkle Resources plc
Financial Information (Unaudited)
Condensed Consolidated Statement of Comprehensive Income
Six Months Ended
Year Ended
30 June 21
30 June 20
31 Dec 20
unaudited
unaudited
audited
€'000
€'000
€'000
Administrative expenses
(148)
(226)
(324)
Impairment of exploration and evaluation assets
-
-
(330)
OPERATING LOSS
(148)
(226)
(654)
Gain/(Loss) due to fair value volatility of warrants
185
-
(442)
PROFIT/(LOSS) BEFORE TAXATION
37
(226)
(1,096)
Income tax expense
-
-
-
PROFIT//(LOSS) FOR THE PERIOD AND TOTAL COMPREHENSIVE INCOME
37
(226)
(1,096)
PROFIT/(LOSS) PER SHARE - basic and diluted
0.01c
(0.14c)
(0.50c)
Condensed Consolidated Balance Sheet
30 June 21
30 June 20
31 Dec 20
unaudited
unaudited
audited
€'000
€'000
€'000
NON-CURRENT ASSETS
Intangible Assets
3,514
3,607
3,373
CURRENT ASSETS
Other receivables
61
11
22
Cash and cash equivalents
571
252
685
632
263
707
TOTAL ASSETS
4,146
3,870
4,080
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
(294)
(180)
(177)
Warrants
(653)
(18)
(906)
NET CURRENT LIABILITIES
(315)
65
(376)
NET ASSETS
3,199
3,672
2,997
EQUITY
Share Capital - Deferred Shares
992
992
992
Share Capital - Ordinary Shares
765
540
742
Share Premium
6,680
6,557
6,606
Share based remuneration reserve
127
123
127
Retained deficit
(5,365)
(4,540)
(5,470)
TOTAL EQUITY
3,199
3,672
2,997
Condensed Consolidated Statement of Changes in Shareholders Equity
Called-up
Called-up
Share
Share
Share
Capital
Capital
Share
Based
Retained
Deferred
Ordinary
Premium
Reserves
Deficit
Total
€'000
€'000
€'000
€'000
€'000
€'000
As at 1 January 2020
-
1,323
6,209
45
(4,314)
3,263
Sub-division of shares
992
(992)
-
-
-
-
Share options granted
-
-
-
78
-
78
Issue of shares
-
209
348
-
-
557
Loss for the period
-
-
-
-
(226)
(226)
As at 30 June 2020
992
540
6,557
123
(4,540)
3,672
Share options granted
-
-
-
4
-
4
Issue of shares
-
202
49
-
-
251
Share issue expenses
-
-
-
-
(60)
(60)
Loss for the period
-
-
-
-
(870)
(870)
As at 31 December 2020
992
742
6,606
127
(5,470)
2,997
Issue of shares
-
23
74
-
-
97
Fair value of warrants exercised
-
-
-
-
68
68
Loss for the period
-
-
-
-
37
37
As at 30 June 2021
992
765
6,680
127
(5,365)
3,199
Condensed Consolidated Cash Flow
Six Months Ended
Year Ended
30 June 21
30 June 20
31 Dec 20
unaudited
unaudited
audited
€'000
€'000
€'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit/(Loss) for the year
37
(226)
(1,096)
Impairment of exploration and evaluation assets
0
0
330
Share based payments charge
0
35
42
Fair value movement of warrants
(185)
0
442
Foreign exchange
(27)
0
(5)
(175)
(191)
(287)
Movements in working capital
78
(36)
(49)
NET CASH USED IN OPERATING ACTIVITIES
(97)
(227)
(336)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation
(141)
(118)
(218)
NET CASH USED IN INVESTING ACTIVITIES
(141)
(118)
(218)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares
97
557
1,254
Share issue expenses
0
0
(60)
NET CASH FROM FINANCING ACTIVITIES
97
557
1,194
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
(141)
212
640
Cash and Cash Equivalents at beginning of the period
685
40
40
Effects of exchange rate changes on cash held in foreign currencies
27
0
5
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
571
252
685
Notes:
1. INFORMATION
The financial information for the six months ended 30 June 2021 and the comparative amounts for the six months ended 30 June 2020 are unaudited.
The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements have been prepared applying the accounting policies and methods of computation used in the preparation of the published consolidated financial statements for the year ended 31 December 2020.
The interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2020, which are available on the Company's website www.arkleresources.com
The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.
2. No dividend is proposed in respect of the period.
3. LOSS PER SHARE
30 June 21
30 June 20
31 Dec 20
€
€
€
Profit/(Loss) per share - Basic and Diluted
0.01c
(0.14c)
(0.50c)
Basic profit/(loss) per share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
€'000
€'000
€'000
Profit/(Loss) for the year attributable to equity holders of the parent
37
(226)
(1,096)
Weighted average number of ordinary shares for the purpose of basic earnings per share
305,051,947
166,401,091
220,039,097
Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.
4. INTANGIBLE ASSETS
30 June 21
30 June 20
31 Dec 20
Exploration and evaluation assets:
€'000
€'000
€'000
Cost at 1 January
3,373
3,446
3,446
Additions
141
161
258
Impairment
-
-
(330)
Closing Balance
3,514
3,607
3,373
In 2012 the Group entered into an agreement with Teck Ireland Limited ("Teck"), a subsidiary of Teck Resources Limited, which gave Teck the option of earning a 75% interest in licences held by the Group in Cavan/Meath by spending €1.35 million on the licences in order to earn the option to acquire 75% interest. As per the agreement the licences had been transferred into a new company, Oldcastle Zinc Limited. As at 31 December 2019 Teck had completed €1.35 million worth of expenditure to give them a total of 75% in the company.
On 10 November 2020, the Group and Teck Ireland Limited agreed to terminate the Oldcastle agreement and dissolve the joint venture. Accordingly, the directors have impaired in full all expenditure relating to the Oldcastle licences, resulting in an impairment charge of €330,000 in the prior year.
In 2007 the Group entered into an agreement with Teck Cominco which gave Teck Cominco the option to earn a 75% interest in a number of other licences held by the Group. Teck Cominco had to spend CAD$3m to earn the interest. During 2012 the relevant licences were transferred to a new company, TILZ Minerals Limited, which at 30 June 2021 was owned 23.44% (2020: 23.44%) by Limerick Zinc Limited (subsidiary of Arkle Resources plc) and 76.56% (2020: 76.56%) by Group Eleven Resources Corp (third party).
On 13 September 2017 the board of Arkle Resources plc were informed that Group Eleven Resources Corp. a private company, has acquired the 76.56% interest held by Teck Ireland in TILZ Minerals. Arkle Resources plc owns the remaining 23.44%.
The Group's share of expenditure on the licences continues to be capitalised as an exploration and evaluation asset. The Group is subject to cash calls from Group Eleven Resources Corp. in respect of the financing of the ongoing exploration and evaluation of these licences. In the event that the Group decides not to meet these cash calls its interest in TILZ Minerals Limited may be diluted accordingly.
The realisation of the intangible assets is dependent on the discovery and successful development of economic reserves which is subject to a number of risks as outlined below. Should this prove unsuccessful the carrying value included in the balance sheet would be written off to the statement of comprehensive income.
The group's activities are subject to a number of significant potential risks including;
- Uncertainties over development and operational risks;
- Compliance with licence obligations;
- Ability to raise finance to develop assets;
- Liquidity risks; and
- Going concern risks.
The directors are aware that by its nature there is an inherent uncertainty in such exploration and evaluation expenditure as to the value of the asset. Having reviewed the carrying value of exploration and evaluation of assets at 30 June 2021, the directors are satisfied that the value of the intangible asset is not less than carrying value.
30 June 21
30 June 20
31 Dec 20
Segmental Analysis
€'000
€'000
€'000
Limerick
1,600
1,600
1,600
Oldcastle
-
330
-
Rest of Ireland
1,914
1,677
1,773
Closing Balance
3,514
3,607
3,373
5. SHARE CAPITAL AND SHARE PREMIUM
On 22 April 2020 the Company converted the 132,311,593 existing ordinary shares of 1c each into 132,311,593 ordinary shares of 0.25c each and 132,311,593 deferred shares of 0.75c each.
Number
Share Capital
€'000
Share Premium
€'000
Allotted, Called Up and Fully Paid:
Deferred Shares - nominal value of 0.75c
132,311,593 deferred shares of 0.75c each
132,311,593
992
-
Ordinary Shares - nominal value of 0.25c
Balance at 1 January 2020
132,311,593
1,323
6,209
Transfer to deferred shares
-
(992)
-
Issued during the period
83,733,333
209
348
Balance at 30 June 2020
216,044,926
540
6,557
Issued during the period
81,000,000
202
49
Balance at 31 December 2020
297,044,926
742
6,606
Issued during the period
8,937,500
23
74
Balance at 30 June 2021
305,982,426
765
6,680
Movement in shares
On 19 January 2021, a total of 3,000,000 shares were issued on the exercise of 3,000,000 warrants at a price of 0.5p per share to provide additional working capital and fund development costs.
On 19 January 2021, a total of 5,937,500 shares were issued on the exercise of 5,937,500 warrants at a price of 1.2p per share to provide additional working capital and fund development costs.
6. SHARE BASED PAYMENTS - OPTIONS
30 June 21
Weighted average exercise price in pence
30 June 20
Weighted average exercise price in pence
31 Dec 20
Weighted average exercise price in pence
'000
'000
'000
Outstanding at beginning of period
13,100
1.22
2,800
2.276
2,800
2.276
Granted during the period
-
9,000
0.95
10,300
0.93
Expired during the period
-
-
-
-
-
Outstanding at end of period
13,100
1.22
11,800
1.26
13,100
1.22
Exercisable at end of period
13,100
1.22
11,800
1.26
13,100
1.22
7. SHARE BASED PAYMENTS - WARRANTS
Fair Value
30 June 21
30 June 20
31 Dec 20
€'000
€'000
€'000
At 1 January
906
18
18
FV of warrants issued at grant date
-
-
446
Exercised
(68)
-
-
Movement in fair value
(185)
-
442
Closing Balance
653
18
906
Number
30 June 21
30 June 20
31 Dec 20
'000
'000
'000
Outstanding at beginning of period
119,400
46,203
46,203
Granted during the period
-
50,400
125,400
Exercised during the period
(8,937)
-
(6,000)
Expired during the period
-
(27,803)
(46,203)
Closing Balance
110,463
68,800
119,400
On 1 January 2021 a total of 44,400,000 warrants with an exercise price of 0.5p per warrant were outstanding. On 19 January 2021 a total of 3,000,000 warrants with a fair value of €27,665 were exercised. The fair value for the remaining 41,400,000 warrants as at 30 June 2021 was €299,988. The gain due to the movement in fair value of €68,387 was expensed to the Consolidated Statement of Comprehensive Income. The fair value was calculated using the Black-Scholes valuation model.
The inputs into the Black-Scholes valuation model as at 30 June 2021 were as follows:
Weighted average share price at 30 June 2021 (in pence)
1.00p
Weighted average exercise price (in pence)
0.50p
Expected volatility
125.93%
Expected life
0.81 years
Risk free rate
0.1%
Expected dividends
None
On 1 January 2021 a total of 75,000,000 warrants with an exercise price of 1.2p per warrant were outstanding. On 19 January 2021 a total of 5,937,500 warrants with a fair value of €40,345 were exercised. The fair value for the remaining 69,062,500 warrants as at 30 June 2021 was €353,199. The gain due to the movement in fair value of €116,614 was expensed to the Consolidated Statement of Comprehensive Income. The fair value was calculated using the Black-Scholes valuation model.
The inputs into the Black-Scholes valuation model were as follows:
Weighted average share price at 30 June 2021 (in pence)
1.00p
Weighted average exercise price (in pence)
1.2p
Expected volatility
119.42%
Expected life
1.19 years
Risk free rate
0.1%
Expected dividends
none
8. POST BALANCE SHEET EVENTS
There are no material post balance sheet events affecting the Company.
9. The Interim Report for the six months to 30 June 2021 was approved by the Directors on 29th September 2021.
10. The Interim Report will be available on Arkle Resources PLC's website www.arkleresources.com
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