REG - Arkle Resources PLC - Interim Statement
29/09/2022 07:01
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RNS Number : 0533B Arkle Resources PLC 29 September 2022
29 September 2022
Arkle Resources PLC
("Arkle" or the "Company")
Interim Statement for the period ended 30 June 2022
Chairman's Statement
The principal activities of Arkle in recent months have been on our Irish zinc
holdings, where drilling is ongoing and on our Wicklow / Wexford gold
licences. Action on our gold licences has been mainly focused on a review of
recent drilling results. After an extended delay the licence covering our main
gold prospect in Donegal was renewed.
The Environmental Targets for 2030 and 2050 cannot be reached without massive
and substantial investment in both mineral and hydrocarbon resources. That is
reality. Every EV, every windmill requires metals. In the case of windmills,
an offshore windmill needs 1,650 tons of metals. Every EV requires metals for
the body and scarce Battery Group Metals for propulsion. There are huge and
growing gaps on projected demand against supplies. Since most mines have short
lives finding new sources of metals is a condition precedent for Environmental
Targets. This means exploration. This in turn requires investors willing to
put up risk capital. Without discoveries there can be no new mines. That is a
blinding glimpse at the obvious but is not recognised. Private investors have
deserted explorers and institutions have backed off funding development.
Lithium, copper graphite and nickel are vital to the green economy, yet
exploration is hard to fund.
Gold, as you would expect in an uncertain world, remains in demand, but here
again there is a dearth of early-stage exploration funding.
The lack of London investor interest in Irish exploration assets led the board
to examine potential projects overseas. We focused on geographic areas where
we have experience, Africa, and on minerals where we have knowledge, gold,
base metals and, importantly, Battery Group Metals, in particular lithium. On
our board and in the wider shareholder group there is a substantial body of
knowledge relating to lithium. We made a tentative entrance into this area
with the acquisition of three small areas in Zimbabwe, one of the largest
lithium producers in the world. We continue to evaluate other opportunities.
Zinc
Recent months have seen the start of a six hole drilling programme on our
Stonepark licence block (owned 23.44% by Arkle and 76.56% by Group Eleven
Resources Corp.). A seventh, deeper hole has been added to the programme. The
northern most licence of the six blocks holding contains 5.1 million tonnes of
11.3% combined lead and zinc. Most of the block remains unexplored. The six
hole programme is designed to test new areas. The first three holes have been
completed. One G-11-2531-01 was a 642 metre hole which discovered a 150 metre
vertical displacement of the fault. Hole G-11-450-03, 3.7km away intersected a
thick package of extensive brecciation and pyrite. The results may point to a
large and compelling zinc target to the North of this hole. An additional hole
to test this target will be drilled following the completion of the current
three hole programme.
The third hole drilled to the West of the Stonepark discovery encountered a
number of low grade zinc intervals. Drilling has commenced on the remaining
three shallow holes which will test targets close to the existing discovery.
The six hole programme is paid for. The additional hole which could be as deep
as 1,100 metres will cost in excess of €120,000. Arkle has indicated that it
will participate in this hole.
Gold
Arkle holds five prospecting licences in Wicklow / Wexford and two in Donegal.
In 2021 extensive surveys were followed by a 12 hole drilling programme on our
Wicklow / Wexford ground. Some high grade results were found but the extreme
"nuggety" nature of the gold made detailed analyses difficult. The conclusion
was that the Tombreen target was larger than previously anticipated with
visible gold identified along a 1.5km strike and 7km width. It is likely that
this gold extends from the Tombeen licence into the adjacent Knocknalour
licence.
It was decided to do a full review and modelling exercise of all current and
historic data and drillcore on the five licences. The organisation due to
undertake this exercise has not been in a position to complete it due to
equipment issues.
Arkle holds two licences in Donegal. Significant gold indications have been
discovered on the Meeneragh licence. It was planned to begin a drilling
programme in summer 2022 but a long delay in renewing the licence meant that
the weather window had shortened and this is now deferred until 2023.
New Opportunities
Lack of investor interest in Irish zinc and gold exploration combined with a
growing anti-mining sentiment in certain parts of the Irish government led the
board to consider opportunities outside of Ireland.
We focused on minerals and areas where we have some competence in particular
gold, base metals and lithium in Africa. The search has been slow to gather
momentum but is now making progress.
We put our toe into the water with the acquisition of three licences
containing lithium type rocks in Zimbabwe. We have identified more ground but
we are moving slowly. A number of gold projects have been and are being
examined but as yet, we have seen none we deem worth pursuing. Base metals in
sub-Saharan Africa offer interesting possibilities but the main focus is
lithium, cobalt and platinum group minerals.
Future
Ireland has been the sole focus of Arkle activities. For two generations the
Irish structure for exploration has been the envy of the world, certainty of
title, a clear and quick path to obtaining and renewing of licences, fair
taxation, no state equity involvement and good infrastructure. However, there
is concern that changing Irish State attitudes will hamper and dampen the
efforts of a small and declining group of explorers in Ireland.
What is absolutely certain is a growing shortage of critical metals. This can
only mean higher prices. Investors willing to take the risks involved may be
handsomely rewarded if prospects can be turned into mines.
John Teeling
Chairman
28 September 2022
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 Advisor & Joint Broker
Matthew Johnson/Adam Cowl +44 (0) 203 470 0470
First Equity Limited
Joint Broker
Jason Robertson +44 (0) 207 374 2212
BlytheRay +44 (0) 207 138 3204
Megan Ray
Rachael Brooks
Teneo
Luke Hogg +353 (0) 1 661 4055
Arkle Resources plc
Financial Information (Unaudited)
Six Months Ended Year Ended
30 Jun 22 30 Jun 21 31 Dec 21
unaudited unaudited audited
Condensed Consolidated Statement of Comprehensive Income €'000 €'000 €'000
Administrative expenses (139) (148) (320)
- - -
OPERATING LOSS (139) (148) (320)
Profit/(Loss) due to fair value volatility of warrants 160 185 746
PROFIT BEFORE TAXATION 21 37 426
Income tax expense - - -
PROFIT FOR THE PERIOD AND TOTAL COMPREHENSIVE INCOME 21 37 426
PROFIT PER SHARE - basic and diluted 0.01c 0.01c 0.14c
Condensed Consolidated Statement of Financial Position
30 Jun 22 30 Jun 21 31 Dec 21
unaudited unaudited audited
€'000 €'000 €'000
NON-CURRENT ASSETS
Intangible Assets 3,949 3,514 3,831
CURRENT ASSETS
Other receivables 24 61 32
Cash and cash equivalents 120 571 80
144 632 112
TOTAL ASSETS 4,093 4,146 3,943
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (287) (294) (234)
Warrants - (653) (160)
(287) (947) (394)
NET CURRENT LIABILITIES (143) (315) (282)
NET ASSETS 3,806 3,199 3,549
EQUITY
Share Capital - Deferred Shares 992 992 992
Share Capital - Ordinary Shares 864 765 765
Share Premium 6,817 6,680 6,680
Share based payments reserve 156 127 156
Retained deficit (5,023) (5,365) (5,044)
TOTAL EQUITY 3,806 3,199 3,549
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 2021 992 742 6,606 127 (5,470) 2,997
Shares issued - 23 74 - - 97
Fair value of warrants exercised - - - - 68 68
Profit for the period - - - - 37 37
As at 30 June 2021 992 765 6,680 127 (5,365) 3,199
Share options granted - - - 29 - 29
Profit for the period - - - - 321 321
As at 31 December 2021 992 765 6,680 156 (5,044) 3,549
Shares issued - 99 137 - - 236
Profit for the period - - - - 21 21
As at 30 June 2022 992 864 6,817 156 (5,023) 3,806
Condensed Consolidated Cash Flow Six Months Ended Year Ended
30 Jun 22 30 Jun 21 31 Dec 21
unaudited unaudited audited
€'000 €'000 €'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year 21 37 426
Share based payments charge - - 29
Fair value movement of warrants (160) (185) (746)
Foreign exchange 7 (27) (25)
(132) (175) (316)
Movements in working capital 61 78 47
NET CASH USED IN OPERATING ACTIVITIES (71) (97) (269)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation (118) (141) (458)
NET CASH USED IN INVESTING ACTIVITIES (118) (141) (458)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares 236 97 97
NET CASH FROM FINANCING ACTIVITIES 236 97 97
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 47 (141) (630)
Cash and Cash Equivalents at beginning of the period 80 685 685
Effects of exchange rate changes on cash held in foreign currencies (7) 27 25
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 120 571 80
Notes:
1. INFORMATION
The financial information for the six months ended 30 June 2022 and the
comparative amounts for the six months ended 30 June 2021 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 2021.
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 2021, which are available on the Company's
website www.arkleresources.com (http://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. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the profit after taxation for
the year attributable to ordinary shareholders by the weighted average number
of ordinary shares in issue and ranking for dividend during the year. Diluted
earnings per share is computed by dividing the profit after taxation for the
year by the weighted average number of ordinary shares in issue, adjusted for
the effect of all dilutive potential ordinary shares that were outstanding
during the year.
The following table sets out the computation for basic and diluted earnings
per share (EPS):
30 June 22 30 June 21 31 Dec 21
€ € €
Profit per share - Basic and Diluted 0.01c 0.01c 0.14c
Basic profit 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 for the year attributable to equity holders 21 37 426
Denominator Number Number Number
For basic and diluted EPS 330,296,947 305,051,947 220,039,097
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 22 30 June 21 31 Dec 21
Exploration and evaluation assets: €'000 €'000 €'000
Cost at 1 January 3,831 3,373 3,373
Additions 118 141 458
Closing Balance 3,949 3,514 3,831
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 2022 was owned 23.44% (2021: 23.44%) by Limerick
Zinc Limited (subsidiary of Arkle Resources plc) and 76.56% (2021: 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.
On 23 June 2022 the Company announced that they been granted three licences
covering 163 hectres to prospect for Lithium in the Insiza District of the
Matabeleland South Province of Zimbabwe. The directors believe that these
licences, which cover a small area, represent a low-cost entry into one of the
largest lithium producing countries in the world.
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 2022, the directors are satisfied that the value of the intangible
asset is not less than carrying value.
30 June 22 30 June 21 31 Dec 21
Segmental Analysis €'000 €'000 €'000
Limerick 1,698 1,600 1,600
Rest of Ireland 2,243 1,914 2,231
Zimbabwe 8 - -
Closing Balance 3,949 3,514 3,831
5. SHARE CAPITAL AND SHARE PREMIUM
2022 2021
€'000 €'000
Authorised
1,000,000,000 Ordinary shares of 0.25c each 2,500 2,500
500,000,000 Deferred shares of 0.75c each 3,750 3,750
6,250 6,250
Share Capital Share Premium
€'000 €'000
Number
Deferred Shares - nominal value of 0.75c 132,311,593 992 -
Share Capital Share Premium
Ordinary Shares - nominal value of 0.25c €'000 €'000
Number
Allotted, Called Up and Fully Paid:
Balance at 1 January 2021 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
Issued during the period - - -
Balance at 31 December 2021 305,982,426 765 6,680
Issued during the period 39,400,000 99 137
Balance at 30 June 2022 345,382,426 864 6,817
Movement in shares
On 19 January 2021 a total of 8,937,500 shares were issued on the exercise of
8,937,500 warrants at a price of 0.5p and 1.2p per share to provide additional
working capital and fund development costs.
On 22 February 2022 a total of 30,080,000 shares were issued on the exercise
of 30,080,000 warrants at a price of 0.5p per share to provide additional
working capital and fund development costs.
On 28 April 2022 a total of 9,320,000 shares were issued on the exercise of
9,320,000 warrants at a price of 0.5p per share to provide additional working
capital and fund development costs.
6. SHARE BASED PAYMENTS - OPTIONS
Equity-settled share-based payments are measured at fair value at the date of
grant.
The Group plan provides for a grant price equal to the average quoted market
price of the ordinary shares on the date of grant.
30 Jun 22 Weighted average exercise price in pence 30 Jun21 Weighted average exercise price in pence 31 Dec 21 Weighted average exercise price in pence
'000 '000 '000
Outstanding at beginning of period 16,100 1.32 13,100 1.22 13,100 1.22
Granted during the period - - - 3,000 1.80
Expired during the period - - - - -
Outstanding at end of period 16,100 1.32 13,100 1.22 16,100 1.32
Exercisable at end of period 16,100 1.32 13,100 1.22 16,100 1.32
7. SHARE BASED PAYMENTS - WARRANTS
Fair Value
30 June 22 30 June 21 31 Dec 21
€'000 €'000 €'000
At 1 January 160 906 906
Expired (4) - -
Exercised (72) (68) (68)
Movement in fair value (84) (185) (678)
Closing Balance - 653 160
Number
30 June 22 30 June 21 31 Dec 21
'000 '000 '000
Outstanding at beginning of period 110,463 119,400 119,400
Granted during the period - - -
Exercised during the period (39,400) (8,937) (8,937)
Expired during the period (2,000) - -
Closing Balance 69,063 110,463 110,463
On 1 January 2022 a total of 41,400,000 warrants with an exercise price of
0.5p per warrant were outstanding. During the period a total of 39,400,000
warrants with a fair value of €72,193 were exercised. The balance of the
2,000,000 warrants with a fair value of €3,664 expired in April 2022. The
movement in fair value of €75,857 was expensed to the Consolidated Statement
of Comprehensive Income.
On 1 January 2022 a total of 69,062,500 warrants with an exercise price of
1.2p per warrant and a fair value of €83,814 were outstanding. These
warrants have an expiry date of 7 September 2022. The movement in fair value
of €83,814 was expensed to the Consolidated Statement of Comprehensive
Income.
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 2022 was approved by
the Directors on 28 September 2022.
10. The Interim Report will be available on Arkle Resources PLC's website
www.arkleresources.com (http://www.arkleresources.com)
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