REG - Arkle Resources PLC - Interim Statement
27/09/2024 07:00
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RNS Number : 8856F Arkle Resources PLC 27 September 2024
27th September 2024
Arkle Resources PLC
("Arkle" or the "Company")
Interim Statement for the period ended 30 June 2024
Chairman's Statement
Arkle Resources listed on the London Stock Exchange (AIM: ARK) is an active
explorer for lithium in Botswana, Ireland and Zimbabwe, zinc in Ireland and
gold in Ireland.
The Green Revolution is in full swing. By 2050 we are supposed to be carbon
neutral. Not for the first time I write about the inability of politicians,
bureaucrats and "the greens" to grasp the simple fact that the transition to
the green economy requires vast quantities of metals such as lithium, copper,
nickel etc. These must be mined. But where is the realisation that mineable
deposits must be discovered. That means exploration. But none of the EU or US
multi-billion Dollar / Euro programmes promoting the production of metals
critical to the green transition mention the need for greater exploration. No
exploration, no new mines, no supply. It is that simple.
In the last decade mineral exploration has declined. Once discovered it can
take 8 to 12 years to bring a discovery into production. Why has exploration
declined. Simple, few investors are willing to take the high risks associated
with grass roots exploration.
Junior stock exchanges, the AIM Market in London, TSX-V in Toronto and ASX in
Australia have seen the departure or demise of hundreds of junior explorers.
The cohort of exploration investors has been decimated and will continue to
decline.
Are there positives? Yes, if we can finance exploration there is a growing
range of prospective projects to pick from, metal prices are good and demand
strong.
Arkle is one of the very few active junior explorers in the British Isles. We
have ongoing drilling on our zinc licences in Ireland (Arkle 23.56%, Group
Eleven 73.44%), ongoing exploration on our two 100% owned salt pan licences in
Botswana, where we are looking for lithium, and we are prospecting for lithium
on our three hard rock licences in Zimbabwe.
Projects
Lithium in Botswana : Sampling to test the brines for lithium
In 2023 Arkle was awarded two licences covering 837sq km in the Makgadikgadi
Salt Pans in Botswana. Prospecting undertaken by the Company estimated the
presence of brines covering a depth of 30 feet over the licences. It is
important to explain brines to shareholders. Rivers or rains feed lakes which
evaporate over time leaving a hard crust of salt. Beneath the crust is a depth
of mushy salty liquid which may or may not contain lithium in solution. The
lithium obtained from salts is normally used in batteries since it has the
highest electrical output per unit of weight of any battery material. There
is a serious lithium shortage projected for the coming years.
Follow up exploration on the blocks is underway. This is a limited sampling
programme using augers, simple handheld drills, to obtain up to 50 litres of
brines. These will be shipped to the ALS laboratory in Brisbane where they
will be analysed for lithium.
Assuming the presence of lithium the next stage, already planned is a drill
programme on a grid to obtain sufficient samples to estimate the grade.
Zinc in Ireland : Drilling on our Stonepark licences
Arkle hold a 23.56% interest in seven licences in the Stonepark area of
Limerick. The ground is adjacent to the large Pallas Green zinc discovery, 45
million tonnes plus held by Glencore and also adjacent to the Group Eleven
zinc discoveries at Carrickittle and Ballywire.
Previous exploration by Arkle and partners on Stonepark discovered a JORC
inferred resource of 5.1 million tonnes of 11.3% combined lead and zinc.
Recent drilling discovered a major fault stretching across the southern part
of the block. It is thought that this fault could be related to the
Carrickittle zinc discoveries to the south on ground held by our partners
Group Eleven.
A drill programme of 4-5 holes totalling 1,700 metres is now underway focused
on the southern part of the block. It will be completed by end 2024.
Zinc is one of the most widely used metals in the world. The recent prices of
the metal, over $2,800 a tonne, is attractive for Irish zinc explorers.
Other Activities
Lithium in Ireland and Zimbabwe, gold in Ireland
In late 2023 Arkle was awarded 4 licences in the Aughrim area of Wicklow. The
target is lithium. The ground is contiguous to ground held by Ganfeng Lithium
Co of China. Based on earlier work, ten priority targets were identified for
sampling. Pegmatite and Spodumene were found in the sampling. In 26 of 59
samples lithium was discovered. The next step is geochemical exploration on
these discoveries.
In Zimbabwe, Arkle holds three licences in an area known to contain lithium in
lepidolite and spodumene. An initial survey of the ground has been completed.
Arkle has found gold on its ground in Wicklow and Donegal. A recent 4 hole
drilling programme in Donegal targeted a high grade vein discovered in
previous drilling. The vein was found in all 4 holes. All 4 contained low
grade gold.
Future
I am by nature an optimist, otherwise I would not be an explorer. I see a
bright future in mining. The picture is clouded by well-meaning but often
uninformed commentators who want all mining stopped. Do they understand almost
everything they touch has been produced or affected by natural resource
extraction either hydrocarbon or mineral? Do they understand that 3 billion
people are likely to enter the middle class in the coming decades? All wanting
the type of life followed by those of us living in the West.
The trend towards carbon neutral is underway but it cannot happen without the
active participation of the mining industry. Lithium, copper and zinc in
growing quantities are needed. In an uncertain world people buy gold. They
have done so for 4,000 years and they are doing it again. Gold prices are
testing all time highs.
The future is good
John Teeling
Chairman
26th September 2024
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
Megan Ray +44 (0) 207 138 3204
Teneo
Luke Hogg +353 (0) 1 661 4055
Alan Tyrrell
Arkle Resources plc
Financial Information (Unaudited)
Six Months Ended Year End
30 June 24 30 June 23 31 Dec 23
unaudited unaudited audited
Condensed Consolidated Statement of Comprehensive Income €'000 €'000 €'000
Administrative expenses (175) (150) (277)
OPERATING LOSS (175) (150) (277)
Profit/(Loss) due to fair value volatility of warrants 17 117 (20)
LOSS BEFORE TAXATION (158) (33) (297)
Income tax expense - - -
LOSS FOR THE PERIOD AND TOTAL COMPREHENSIVE INCOME (158) (33) (297)
LOSS PER SHARE - basic and diluted (0.03) c (0.01) c (0.07) c
Condensed Consolidated Statement of Financial Position 30 June 24 30 June 23 31 Dec 23
unaudited unaudited audited
€'000 €'000 €'000
NON-CURRENT ASSETS
Intangible Assets 4,199 4,026 4,090
CURRENT ASSETS
Other receivables 4 16 -
Cash and cash equivalents 169 63 91
173 79 91
TOTAL ASSETS 4,372 4,105 4,181
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (387) (383) (340)
Warrants (159) (39) (176)
(546) (422) (516)
NET CURRENT LIABILITIES (373) (343) (425)
NET ASSETS 3,826 3,683 3,665
EQUITY
Share Capital - Deferred Shares 992 992 992
Share Capital - Ordinary Shares 1,412 988 1,142
Share Premium 7,064 6,923 7,015
Share based payments reserve 156 156 156
Retained deficit (5,798) (5,376) (5,640)
TOTAL EQUITY 3,826 3,683 3,665
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 2023 992 988 6,923 156 (5,343) 3,716
Loss for the period - - - - (33) (33)
As at 30 June 2023 992 988 6,923 156 (5,376) 3,683
Shares issued - 154 92 - 246
Loss for the period - - - - (264) (264)
As at 31 December 2023 992 1,142 7,015 156 (5,640) 3,665
Shares issued - 270 49 - 319
Loss for the period - - - - (158) (158)
As at 30 June 2024 992 1,412 7,064 156 (5,798) 3,826
Six Months Ended Year Ended
30 June 24 30 June 23 31 Dec 23
Condensed Consolidated Cash Flow unaudited unaudited audited
€'000 €'000 €'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year (158) (33) (297)
Fair value movement of warrants (17) (117) 20
Foreign exchange 0 (4) (3)
(175) (154) (280)
Movements in working capital 43 48 21
NET CASH USED IN OPERATING ACTIVITIES (132) (106) (259)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation (109) (35) (99)
NET CASH USED IN INVESTING ACTIVITIES (109) (35) (99)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares 319 0 246
NET CASH FROM FINANCING ACTIVITIES 319 0 246
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 78 (141) (112)
Cash and Cash Equivalents at beginning of the period 91 200 200
Effects of exchange rate changes on cash held in foreign currencies - 4 3
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 169 63 91
Notes:
1. INFORMATION
The financial information for the six months ended 30 June 2024 and the
comparative amounts for the six months ended 30 June 2023 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 2023.
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 2023, 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 24 30 June 23 31 Dec 23
Profit/(loss) per share - Basic and Diluted (0.03) c (0.01) c (0.07) c
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:
Numerator €'000 €'000 €'000
Loss after taxation (158) (33) (297)
Denominator Number Number Number
Weighted average number of ordinary shares 487,583,600 395,382,426 402,955,811
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 23 30 June 23 31 Dec 23
Exploration and evaluation assets: €'000 €'000 €'000
Cost at 1 January 4,090 3,991 3,991
Additions 109 35 99
Closing Balance 4,199 4,026 4,090
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 2024 was owned 23.44% (2023: 23.44%) by Limerick
Zinc Limited (subsidiary of Arkle Resources plc) and 76.56% (2023: 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 had been granted licences 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.
On 25 October 2023 the Company announced it has been granted a new lithium
exploration block north of its Mine River Block in Wicklow/Wexford in Ireland.
The new block consists of four prospecting licences for lithium, rare earth
elements and other minerals, including gold and platinum. The ground is
contiguous with the International Lithium Corp - Gangfeng Lithium Co. Ltd
joint venture to the west, where a large zone of lithium bearing pegmatites
has been discovered associated with the Leinster Granite Pegmatite Belt. The
Directors believe this new ground is fertile for lithium deposits.
On 15 December 2023 the Company announced that it has been awarded two
exploration licences in the Makgadikgadi Salt Pans in North-Eastern Botswana.
The licences, PL 075/2023 and PL 0148/2023, cover 312 and 525 sq kilometres
respectively in size. The licences are awarded to prospect for lithium in
the Salt Pans.
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 2024, the directors are satisfied that the value of the intangible
asset is not less than carrying value.
30 June 24 30 June 23 31 Dec 23
Segmental Analysis €'000 €'000 €'000
Limerick 1,720 1,705 1,705
Rest of Ireland 2,418 2,297 2,356
Zimbabwe 29 24 29
Botswana 32 - -
4,199 4,026 4,090
5. SHARE CAPITAL AND SHARE PREMIUM
2024 2023
€'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 2023 395,382,426 988 6,923
Issued during the period - - -
Balance at 30 June 2023 395,382,426 988 6,923
Issued during the period 61,428,571 154 92
Balance at 31 December 2023 456,810,997 1,142 7,015
Issued during the period 108,000,000 270 49
Balance at 30 June 2024 564,810,997 1,412 7,064
Movement in shares
On 9 May 2024, a total of 108,000,000 shares were issued at a price of 0.25p
per share to provide additional working capital and fund development costs.
For each share subscribed for, the investors also received one warrant to
subscribe for an additional ordinary share at a price of 0.35p per share for a
period of two years.
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 24 Weighted average exercise price in pence 30 Jun23 Weighted average exercise price in pence 31 Dec 23 Weighted average exercise price in pence
'000 '000 '000
Outstanding at beginning of period 16,100 1.32 16,100 1.32 16,100 1.32
Granted during the period - - - - -
Expired during the period - - - - -
Outstanding at end of period 16,100 1.32 16,100 1.32 16,100 1.32
Exercisable at end of period 16,100 1.32 16,100 1.32 16,100 1.32
7. SHARE BASED PAYMENTS - WARRANTS
Number
30 June 24 30 June 23 31 Dec 23
'000 '000 '000
Outstanding at beginning of period 111,429 50,000 50,000
Granted during the period 108,000 - 61,429
Exercised during the period - - -
Closing Balance 219,429 50,000 111,429
Fair Value
30 June 24 30 June 23 31 Dec 23
€'000 €'000 €'000
At beginning of period 176 156 156
Issued during the period 106 - 117
Movement in fair value (123) (117) (97)
Closing Balance 159 39 176
30 June 24 30 June 23 31 Dec 23
€'000 €'000 €'000
Profit/(Loss) due to Fair Value Volatility of Warrants
Fair Value movement on warrants b/fwd 123 117 97
Fair value of warrants exercised - - -
Fair value of new warrants granted (106) - (117)
Movement for the period 17 117 (20)
1 January 2024 a total of 50,000,000 warrants with an exercise price of 0.5p
per warrant and 61,428,571 warrants with an exercise price of 0.35p per
warrant were outstanding. The movement in fair value for these warrants for
the period to 30 June 2024 of €123,316 was expensed to the Consolidated
Statement of Comprehensive Income. The fair value was calculated using the
Black-Scholes valuation model.
On 9 May 2024 a total of 108,000,000 warrants with an exercise price of 0.35p
per warrant and a fair value of €106,640 were granted. These warrants have
an expiry date of 9 May 2026. The fair value for the period to 30 June 2024 of
€106,640 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:
Grant 9 May 2024
Weighted average share price at date of grant (in pence) 0.215p
Weighted average exercise price (in pence) 0.35p
Expected volatility 93.19%
Expected life 2 years
Risk free rate 4.5%
Expected dividends none
Expected volatility was determined by management based on their cumulative
experience of the movement in share prices. The terms of the warrants do not
contain any market conditions within the meaning of IFRS 2.
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 2024 was approved by
the Directors on 26th September 2024.
10. The Interim Report will be available on Arkle Resources PLC's website
www.arkleresources.com (http://www.arkleresources.com) .
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