Bradda Head Lithium - Unaudited Interim Results
01/11/2022 07:00
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RNS Number : 8205E Bradda Head Lithium Ltd 01 November 2022
1 November 2022
Bradda Head Lithium Ltd
("Bradda Head", "Bradda", or the "Company")
Unaudited Interim Results for the six-month period ending 31 August 2022
Bradda Head Lithium Ltd (AIM: BHL), the North America-focused lithium
development group, is pleased to announce its unaudited interim results for
the six-month period ending 31 August 2022. A copy of these Interim Results
is available on the Company's website www.braddaheadltd.com
(http://www.braddaheadltd.com) .
Financial and operational highlights
· Completed an oversubscribed secondary fundraise during April 2022
for total gross proceeds of US$ 12,304,100, issuing 73,195,560 new ordinary
shares and warrants on a 1:1 basis.
· Updated Mineral Resource Estimated at the Basin East Project
in Arizona, resulting in a 65% increase in contained lithium carbonate
equivalent tonnes, and the identification a 1Mt to 6Mt LCE Exploration
Target within the Basin Project district.
· Commenced drilling at our San Domingo pegmatite project, with the
30-hole diamond core drill programme expected to be completed during Q4 2022.
· Cash balances and total assets stood at US$ 13,312,892 and US$
20,808,040 respectively.
Ian Stalker, Chairman of Bradda Head, commented:
"The first half of the financial year has been both busy and rewarding for the
Company. Following the completion of an oversubscribed secondary fundraise
during April 2022, the Company continued to push ahead with work, developing
its key projects, most notably with the commencement of drilling at our San
Domingo lithium bearing pegmatite project. The Company also updated its
Mineral Resource Estimate at Basin East and highlighted the significant
exploration potential that remains within this large, mineralised location.
The pace of development will continue through the second half of the financial
year, and we look forward to updating our shareholders as we receive the
exploration results."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 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.
For further information please visit the Company's website:
www.braddaheadltd.com (http://www.braddaheadltd.com)
For further information, please contact:
Bradda Head Lithium Limited +44 (0) 1624 639 396
Charlie FitzRoy, CEO
Denham Eke, Finance Director
Beaumont Cornish (Nomad) +44 20 7220 1666
James Biddle/Roland Cornish
Peterhouse (Joint Broker) +44 207 469 0930
Charles Goodfellow
Duncan Vasey
Lucy Williams
Shard Capital (Joint Broker) +44 207 186 9927
Damon Heath
Isabella Pierre
Red Cloud (North American Broker) +1 416 803 3562
Joe Fars
Tavistock (PR) + 44 20 7920 3150
Nick Elwes braddahead@tavistock.co.uk
Adam Baynes
About Bradda Head Lithium Ltd.
Bradda Head Lithium Ltd. is a North America-focused lithium development group.
The Company currently has interests in a variety of projects, the most
advanced of which are in Central and Western Arizona: The Basin Project (Basin
East Project, and the Basin West Project) and the Wikieup Project.
The Basin East Project has an Indicated Mineral Resource of 17.6Mt at an
average grade of 912ppm Li and 3.4%K for a total of 86kt LCE and an Inferred
Mineral Resource of 57.6Mt at an average grade of 717ppm Li and 3.3%K for a
total of 220kt LCE. In the rest of the Basin Project SRK has estimated an
Exploration Target of between 300 and 1,300Mt of material grading between 600
and 850ppm Li which is equivalent to a range of between 1 and 6Mt LCE.
The Group intends to continue to develop its three phase one projects in
Arizona, whilst endeavouring to unlock value at its other prospective
pegmatite and brine assets in Arizona, Nevada, and Pennsylvania. All of Bradda
Head's licences are held on a 100% equity basis and are in close proximity to
the required infrastructure.
Bradda Head is quoted on the AIM of the London Stock Exchange with the ticker
of BHL and on the US OTCQB market with a ticker of BHLIF.
Chairman's statement
Introduction
I am pleased to present the unaudited Interim Results for Bradda Head Lithium
Limited (the "Company" or "Bradda Head") for the six-month period ended 31
August 2022.
Operational review
The six-month period to 31 August 2022 has been both exciting and extremely
busy for the Company, focussing on our key project locations. Most notably,
during March 2022, the Company released an updated Basin East Mineral Resource
Estimate and Exploration Target ("MRE") for our Arizona projects, compiled
by SRK Consulting (UK) Ltd in accordance with the terminology and definitions
given in the JORC Code (2012). This update has led to a) a 65% increase in
contained lithium carbonate equivalent ("LCE") tonnes, b) the identification
of a continuous higher grade internal layer with a grade of c. 1,300ppm Li in
the upper part of the deposit, and c) the identification of a 1Mt to 6Mt LCE
Exploration Target within the Basin Project district we hold.
The key points following the updated MRE are:
- an Indicated Mineral Resource of 17.7 Mt at an average grade of
912 ppm Li and 3.4% K for a total of 85 kt LCE; and
- an Inferred Mineral Resource of 57.6 Mt at an average grade of 717
ppm Li and 3.3% K for a total of 220 kt LCE.
The updated MRE replaces a 10 hole, 1,110m diamond core drilling programme,
completed in November 2021. Since the 2018 drill programme, the drilling
coverage at Basin East has increased by approximately 20% in area, and has
provided some deeper intersections to add some previously missed lower clay.
As a result, we can now report a total of 305 kt LCE, including 58 kt of LCE
in a High-Grade zone within the Upper Clay zone with an average grade of some
1,300 ppm Li. The exploration target for the Basin Project, covering the
claims for Basin North, Basin East, Basin East Extension, Basin West and Basin
West Extension, has been upgraded to between 300 to 1,300 Mt of material
grading between 600 to 850 ppm Li, equivalent to between 1 and 6 Mt LCE.
Basin East 2022 Mineral Resource Estimate
Classification Domain Tonnes Mean Grade Contained Metal
Mt Li (ppm) K (%) LCE (kt) K (Mt)
Indicated Upper Clay 12.0 730 3.6 46 0.4
Upper Clay HG 5.7 1,296 2.8 39 0.2
Lower Clay - - - - -
SubTotal 17.7 912 3.4 85 0.6
Inferred Upper Clay 29.6 766 3.4 121 1.0
Upper Clay HG 2.6 1,345 3.1 18 0.1
Lower Clay 25.4 597 3.1 81 0.8
SubTotal 57.6 717 3.3 220 1.9
Total 75.2 763 3.3 305 2.5
During May and September 2022, permits to commence drilling at our Basin North
and Basin East Extension projects were received. The Company also completed a
step-out drill programme at Basin East, with results to be included in a
further MRE at Basin East, due before the year-end.
The Company also commenced the second stage of metallurgical testwork at Basin
East, working towards producing a final battery quality lithium product and
also maximising future revenue from its Basin Project by looking into how to
extract economic quantities of co-products, which will help to reduce overall
operating costs at its Basin Project. Once successful, the process will be
optimised to apply the technology designed by Bradda Head on the
lithium pregnant leach solution produced by this metallurgical test work.
An initial 18-hole scout drill programme at Wikiuep sections 12 and 13 was
completed during June 2022, using sonic drilling , which uses significantly
less water than core drilling. The results highlighted the presence of lithium
bearing clays, opening up a new potential resource area for the Company, with
further work planned in this area.
Following receipt of permits at our San Domingo project, drilling commenced
during August 2022. The permitted programme at San Domingo is for 30 holes,
equivalent to approximately 7,000m of diamond core drilling. This drilling
programme continues the fieldwork at San Domingo, which includes mapping,
geophysics, surface sampling, and a 3D mapping exercise having been completed.
Completed 3D mapping identified a 190% increase in the area of likely
pegmatite outcrops, which originally covered 75 acres and now covers 220
acres. The Company also increased its landholding in the area by 75%, with
c.23km(2) being held within the San Domingo project area. With completion of
the first hole, significant intersections of spodumene-bearing pegmatite were
identified. Drilling is expected to be completed during Q4, 2022.
Following receipt of permits, we also commenced a 23-hole drill programme at
our Eureka project during April 2022. Previous surface sampling carried out by
Bradda Head geologists identified grades of up to 550ppm Li at Eureka. This
programme is designed to test the potential for a shallow clay project at
surface, similar to Bradda's other clay assets in Arizona (Wikieup and
Basin).
Financial Review
During the six-month period ended 31 August 2022, the Company recorded a loss
for the period of US$ 1,165,319 (period ended 31 August 2021: US$ 2,052,675).
As at period end, cash balance stood at US$ 13,312,892 (28 February 2022: US$
7,327,303), capitalised deferred mining, exploration, licence and permit costs
stood at US$ 6,697,960 (28 February 2022: US$ 5,732,820), and total assets
were US$ 20,808,040 at 31 August 2022 (28 February 2022: US$ 13,354,840).
On 13 April 2022, the Company completed an over-subscribed secondary
fundraise, with shares commencing to trade on 20 April 2022. The Company
raised total gross proceeds of US$ 12,304,100, issuing 73,195,560 new ordinary
shares to institutional and other investors. All subscribers were issued with
warrants on a 1:1 basis, with 73,195,560 warrants being issued. Listing
related expenditures amounted to US$ 547,916 and these are considered to be
non-recurring items.
As part of the fundraise, warrants were issued to all participating
shareholders. The fair value applied to the shareholder warrants has been
classified as a financial liability. At period end, the warrant liability has
been re-measured to fair value, with a corresponding gain recorded in profit
and loss of US$ 3,679,505 (period ended 31 August 2021: Nil).
The Board are in discussions with legal advisors regarding the options
available to recover the fraudulent option exercise payment, as communicated
to shareholders on 29 March 2022. Updates will be provided when available.
Approach to Risk and Corporate Governance
"The Company's general risk appetite is a moderate, balanced one that allows
it to maintain appropriate growth, profitability and scalability, whilst
ensuring full corporate compliance."
The Group's primary risk drivers include: -
Strategic, Reputational, Credit, Operational, Market, Liquidity, Foreign
Exchange, Capital and Funding, Compliance and Conduct.
Our risk appetite has been classified as high under an "impact" matrix defined
as Zero, Low, Medium and High. Appropriate steps have been taken and adequate
controls implemented to monitor the risks of the Company, and the appropriate
committees and reporting structures have been established, which under the
Chairmanship of the Chairman, will monitor risks facing the Company.
Corporate
We are also delighted to announce that the Company received approval to list
its shares on the Canadian TSX-V Exchange, with trading expected to commence
during November 2022. The TSX-V listing will have significant advantages when
combined with our AIM and OTCQB listings. The TSX-V has an investor base with
a long history of understanding lithium and resource exploration companies.
Given our asset base in Arizona and Nevada, we believe that Bradda Head
will be a very attractive proposition to a new pool of investors on the TSX-V,
and to our existing US and Canadian shareholders with a North American trading
platform.
Strategy and Outlook
We welcome our new North American shareholders following the successful
secondary fundraise completed in April 2022, and the Company is now in a
strong financial position to rapidly and efficiently develop its existing
lithium projects in Arizona and Nevada. The demand for US-based lithium
production is forecast to reach over 350 ktpa LCE by 2030, being a 7,000%
increase from the current USA annual production of only 5ktpa LCE. Lithium has
been classified as a critical element in the USA, with the Biden-Harris
administration announcing awards of US$ 2.8 billion to accelerate US
manufacturing of batteries for electric vehicles and electric grids. We
believe that Bradda Head, with its diversified portfolio of projects located
in the USA, is in a unique position to take advantage of this significant
growth in lithium demand, thereby enhancing value for shareholders.
Ian Stalker
Chairman
31 October 2022
Condensed Interim Consolidated Statement of Comprehensive Income
for the period ended 31 August 2022
Six-month period ended 31 August 2022 Six-month period ended 31 August 2021 Three-month period ended 31 August 2022 Three-month period ended 31 August 2021
(unaudited) (unaudited) (unaudited) (unaudited)
Notes US$ US$ US$ US$
Expenses
General and administrative 2 (2,551,978) (1,627,281) (1,346,449) (1,145,270)
Share based payment and warrant expense 10 (1,285,743) (140,090) (91,539) (138,033)
Foreign exchange loss (1,004,583) (30,140) (694,061) (6,411)
Impairment 4 - (230,230) - -
──────── ──────── ──────── ────────
Operating loss (4,842,304) (2,027,741) (2,132,049) (1,289,714)
Other income
Warrant fair value re-measurement 11 3,679,505 - 849,161 -
Unrealised (loss) / gain on investment (2,520) 7,899 (2,520) (1,463)
──────── ──────── ──────── ────────
Loss before finance costs (1,165,319) (2,019,842) (1,285,408) (1,291,177)
Finance costs - (32,833) - (7,762)
──────── ──────── ──────── ────────
Loss before income tax (1,165,319) (2,052,675) (1,285,408) (1,298,939)
Income tax expense - - - -
──────── ──────── ──────── ────────
Loss for the period (1,165,319) (2,052,675) (1,285,408) (1,298,939)
══════ ══════ ══════ ══════
Other comprehensive income - foreign currency translation reserve
- 186 - -
──────── ──────── ──────── ────────
Total comprehensive loss for the period (1,165,319) (2,052,489) (1,285,408) (1,298,939)
══════ ══════ ══════ ══════
Basic and diluted loss per share (US cents) 12 (0.33) (1.39) (0.33) (0.77)
The notes on pages 9 to 17 form an integral part of these condensed
consolidated interim financial statements.
Condensed Interim Consolidated Statement of Financial Position
as at 31 August 2022
Notes 31 August 2022 28 February 2022
(unaudited) (audited)
US$ US$
Non-Current assets
Deferred mining and exploration costs 3 4,459,087 4,183,744
Exploration permits and licences 4 2,238,873 1,549,076
Plant and equipment 8 98,666 54,170
Advances and deposits 6 501,956 88,594
Investment 51,437 53,957
─────── ───────
Total non-current assets 7,350,019 5,929,541
─────── ───────
Current assets
Cash and cash equivalents 13,312,892 7,327,303
Trade and other receivables 6 145,129 97,996
─────── ───────
Total current assets 13,458,021 7,425,299
─────── ───────
Total assets 20,808,040 13,354,840
═══════ ═══════
Equity
Share premium 9 30,467,820 23,434,385
Retained deficit (11,056,796) (11,177,220)
─────── ───────
Total equity 19,411,024 12,257,165
─────── ───────
Current liabilities
Trade and other payables 7 353,772 1,097,675
Warrant liability 11 1,043,244 -
─────── ───────
Total current liabilities 1,397,016 1,097,675
─────── ───────
Total equity and liabilities 20,808,040 13,354,840
═══════ ═══════
The notes on pages 9 to 17 form an integral part of these condensed
consolidated interim financial statements.
These financial statements were approved by the Board of Directors on 31
October 2022 and were signed on their behalf by:
Denham
Eke
Director
Condensed Interim Consolidated Statement of Changes in Equity
for the period ended 31 August 2022
Share premium Retained deficit Total
US$ US$ US$
Balance at 1 March 2022 (audited) 23,434,385 (11,177,220) 12,257,165
Total comprehensive loss for the period
Loss for the period - (1,165,319) (1,165,319)
────── ─────── ───────
Total comprehensive loss for the period - (1,165,319) (1,165,319)
Transactions with owners of the Company
Issue of ordinary shares (note 9 and note 11) 7,581,351 - 7,581,351
Share issue costs capitalised (note 9) (547,916) - (547,916)
Equity settled share-based payments (note 10) - 1,285,743 1,285,743
────── ─────── ──────
Total transactions with owners of the Company 7,033,435 1,285,743 8,319,178
────── ─────── ──────
Balance at 31 August 2022 (unaudited) 30,467,820 (11,056,796) 19,411,024
═══════ ═══════ ═══════
The notes on pages 9 to 17 form an integral part of these condensed
consolidated interim financial statements.
Share premium Retained deficit Foreign currency translation reserve Total
US$ US$ US$ US$
Balance at 1 March 2021 (audited) 9,443,676 (9,056,687) 186 387,175
Total comprehensive loss for the period
Loss for the period - (2,052,675) - (2,052,675)
────── ─────── ─────── ───────
Total comprehensive loss for the period - (2,052,675) - (2,052,675)
Transactions with owners of the Company
Issue of ordinary shares (note 8) 11,904,439 - - 11,904,439
Share issue costs capitalised (note 8) (413,731) - - (413,731)
Equity settled share-based payments (note 9) - 140,090 - 140,090
Transfer to retained deficit - 186 (186) -
────── ─────── ─────── ──────
Total transactions with owners of the Company 11,490,708 140,276 (186) 11,630,798
────── ─────── ─────── ──────
Balance at 31 August 2021 (unaudited) 20,934,384 (10,969,086) - 9,965,298
═══════ ═══════ ═══════ ═══════
The notes on pages 9 to 17 form an integral part of these condensed
consolidated interim financial statements.
Condensed Interim Consolidated Statement of Cash Flows
for the period ended 31 August 2022
Six-month period ended 31 August 2022 Six-month period ended 31 August 2021 Three-month period ended 31 August 2022 Three-month period ended 31 August 2021
Notes (unaudited) (unaudited) (unaudited) (unaudited)
US$ US$ US$ US$
Cash flows from operating activities
Loss before income tax (1,165,319) (2,052,675) (1,285,408) (1,298,939)
Adjusted for non-cash and non-operating items:
Depreciation 8 14,176 - 9,532 -
Unrealised profit on investment 2,520 (7,899) 2,520 1,463
Non-cash interest expense - 32,833 - 7,762
Equity settled share based payments expense 10, 11 1,285,743 140,090 91,539 138,033
Warrant fair value re-measurement 11 (3,679,505) - (849,161) -
Unrealised FX adjustment on convertible loan note - 19,585 - -
Unrealised FX on cash balances 1,004,583 30,140 694,061 6,411
Impairment - 230,230 - -
─────── ─────── ─────── ───────
(2,537,802) (1,607,696) (1,336,917) (1,145,270)
Change in trade and other receivables (460,495) (313,504) (171,491) (269,390)
Change in trade and other payables (743,903) 241,170 7,723 195,221
─────── ─────── ─────── ───────
Net cash flows used by operating activities (3,742,200) (1,680,029) (1,500,685) (1,219,439)
Cash flows from investing activities
Amounts paid for deferred mining and exploration costs 3 (275,343) (157,263) (262,582) (156,402)
Amounts paid for licences and permits 4 (689,797) (407,438) (395,374) (383,839)
Cash paid for bonding deposit - (35,962) - (85,275)
Equipment purchased 8 (58,672) - - -
─────── ─────── ─────── ───────
Net cash flows used by investing activities (1,023,812) (600,663) (657,956) (625,516)
Cash flows from financing activities
Short-term loan received - 60,000 - -
Cash received from shares and warrants issued 9 12,304,100 9,598,923 - 8,645,774
Share issue costs paid 9 (547,916) (413,731) - (413,731)
─────── ─────── ─────── ───────
Net cash flows from financing activities 11,756,184 9,245,192 - 8,232,043
─────── ─────── ─────── ───────
Increase / (decrease) in cash and cash equivalents 6,990,172 6,964,500 (2,158,641) 6,387,088
Cash and cash equivalents at beginning of period 7,327,303 86,972 16,165,594 640,655
Effect of foreign exchange on cash balances (1,004,583) (30,140) (694,061) (6,411)
─────── ─────── ─────── ───────
Cash and cash equivalents at end of period 13,312,892 7,021,332 13,312,892 7,021,332
═══════ ═══════ ═══════ ═══════
The notes on pages 9 to 17 form an integral part of these condensed
consolidated interim financial statements.
Notes to the condensed consolidated interim financial statements
1 Reporting Entity
Bradda Head Lithium Limited (the "Company") is a company domiciled in the
British Virgin Islands. The address of the Company's registered office is
Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. The Company
and its subsidiaries together are referred to as the "Group".
The Company is a lithium exploration Group focused on developing its projects
in the USA.
These interim financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting and should be read in conjunction with the last
annual consolidated financial statements as at and for the year ended 28
February 2022 ("last annual financial statements"). They do not include all of
the information required for a complete set of IFRS financial statements.
However, selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual financial
statements.
The financial information in this report has been prepared in accordance with
the Company's accounting policies and in consistency with the last annual
financial statements. Full details of the accounting policies adopted by the
Company are contained in the financial statements included in the Company's
annual report for the year ended 28 February 2022, which is available on the
Group's website: www.braddheadltd.com (http://www.braddheadltd.com) . These
unaudited condensed consolidated interim financial statements should be read
in conjunction with the audited Consolidated Financial Statements for the year
ended 28 February 2022.
2 General and administrative
The Group's general and administrative expenses include the following:
Six-month period ended 31 August 2022 Six-month period ended 31 August 2021 Three-month period ended 31 August 2022 Three-month period ended 31 August 2021
(unaudited) (unaudited) (unaudited) (unaudited)
US$ US$ US$ US$
Auditors' fees 101,441 26,601 19,600 23,059
Directors and management fees and salaries 269,276 189,711 136,602 122,118
Legal and accounting 174,937 426,553 74,631 324,554
Contractor costs 1,260,523 452,245 694,697 301,364
Professional and marketing costs 609,567 332,227 302,239 228,225
Other administrative costs 136,234 199,944 118,680 145,950
─────── ─────── ─────── ───────
Total 2,551,978 1,627,281 1,346,449 1,145,270
═══════ ═══════ ═══════ ═══════
3 Deferred mine exploration costs
The schedule below details the exploration costs capitalised to date:
Total
US$
Cost and net book value
At 28 February 2021 (audited) 1,767,274
Capitalised during the year 2,501,853
Disposal under royalty agreement (85,383)
───────
At 28 February 2022 (audited) 4,183,744
───────
Capitalised during the period 275,343
───────
At 31 August 2022 (unaudited) 4,459,087
═══════
Cost and net book value
At 31 August 2022 (unaudited) 4,459,087
At 28 February 2022 (audited) 4,183,744
═══════
The recoverability of the carrying amounts of exploration and evaluation
assets is dependent on the successful development and commercial exploitation
or sale of the respective area of interest, as well as maintaining the assets
in good standing. The Group assessed the DMEC relating to areas for which
licenses and permits are held, for impairment as at 31 August 2022. The Board
concluded that no facts and circumstances have been identified which suggest
the recoverable amount of these assets would not exceed the carrying amount
and, as such, no impairment was recognised during the period.
During the year ended 28 February 2022, an impairment charge of US$ Nil was
recognised.
4 Exploration permits and licences
The schedule below details the exploration permit and licence costs
capitalised to date:
Total
US$
Cost and net book value
At 28 February 2021 (audited) 691,465
Capitalised during the year 1,119,455
Disposal under royalty agreement (31,614)
Impairment (230,230)
───────
At 28 February 2022 (audited) 1,549,076
Capitalised during the period 689,797
───────
At 31 August 2022 (unaudited) 2,238,873
═══════
Cost and net book value
At 31 August 2022 (unaudited) 2,238,873
At 28 February 2022 (audited) 1,549,076
═══════
The Group assessed the carrying amount of the licences and permits held for
impairment as at 31 August 2022. The Board concluded that no facts and
circumstances have been identified which suggest the recoverable amount of
these assets would not exceed the carrying amount and, as such, no impairment
was recognised during the period.
During the year ended 28 February 2022, an impairment charge of US$ 230,230
was recognised as a result of project licences and permits that were not
renewed.
5 Investment in subsidiary undertakings
As at 31 August 2022 and 28 February 2022, the Group had the following
subsidiaries:
Name of company Place of incorporation Ownership interest Principal activity
Bradda Head Limited* BVI 100% Holding company of entities below
Zenolith (USA) LLC USA 100% Holds USA lithium licences and permits
Verde Grande LLC USA 100% Holds USA lithium licences and permits
Gray Wash LLC USA 100% Holds USA lithium licences and permits
* Held directly by the Company. All other holdings are indirectly held
through Bradda Head Limited
The condensed interim consolidated financial statements include the results of
the subsidiaries for the full interim period from 1 March 2022 to 31 August
2022, and up to the date that control ceases.
6 Trade and other receivables and advances and deposits
Non-current
31 August 2022 28 February 2022
(unaudited) (audited)
US$ US$
Advances and deposits 501,956 88,594
══════ ══════
Current
31 August 2022 28 February 2022
(unaudited) (audited)
US$ US$
Prepayments and other debtors 145,129 97,996
══════ ══════
7 Trade and other payables
31 August 2022 28 February 2022
(unaudited) (audited)
US$ US$
Trade payables 245,638 1,019,175
Accrued expenses and other payables 108,134 78,500
────── ──────
353,772 1,097,675
══════ ══════
8 Plant and equipment
Motor vehicle Total
Cost US$ US$
As at 1 March 2021 (audited) - -
Additions during the year 55,718 55,718
────── ──────
As at 28 February 2022 (audited) 55,718 55,718
Additions during the period 58,672 58,672
────── ──────
As at 31 August 2022 (unaudited) 114,390 114,390
══════ ══════
Motor vehicle Total
Accumulated depreciation US$ US$
As at 1 March 2021 (audited) - -
Depreciation charge for the year (1,548) (1,548)
────── ──────
As at 28 February 2022 (audited) (1,548) (1,548)
Depreciation charge for the period (14,176) (14,176)
────── ──────
As at 31 August 2022 (unaudited) (15,724) (15,724)
══════ ══════
Carrying amount
As at 31 August 2022 (unaudited) 98,666 98,666
As at 28 February 2022 (audited) 54,170 54,170
══════ ══════
9 Share premium
Authorised
The Company is authorised to issue an unlimited number of nil par
value shares of a single class.
Shares Share capital Share premium
Issued ordinary shares of US$0.00 each US$ US$
At 28 February 2021 (audited) 75,040,282 - 9,443,676
═══════ ═══════ ═══════
Shares issued for cash 158,499,941 - 12,098,924
Shares issued to settle loans 48,618,529 - 2,159,722
Shares issued in lieu of Directors fees 3,037,362 - 145,794
Shares issued to Zenith Minerals Limited * 32,217,765 -
Share issue costs capitalised - - (413,731)
─────── ─────── ───────
At 28 February 2022 (audited) 317,413,879 - 23,434,385
═══════ ═══════ ═══════
Shares issued for cash (note 11) 73,195,560 - 7,581,351
Share issue costs capitalised - - (547,916)
─────── ─────── ───────
At 31 August 2022 (unaudited) 390,609,439 - 30,467,820
═══════ ═══════ ═══════
* In line with the agreement entered into with Zenith Minerals Limited
("Zenith"), shares were issued to Zenith to maintain their shareholding at
15%. Following the listing of the Company's shares on AIM in July 2021, the
anti-dilution protection held by Zenith no longer applies to any new issues of
shares.
10 Equity settled share based payments
The cost of equity settled transactions with certain Directors of the Company
and other participants ("Participants") is measured by reference to the fair
value at the date on which they are granted. The fair value is determined
based on the Black-Scholes option pricing model.
During the six-month period ended 31 August 2022, outstanding fees due to
directors totalling US$ Nil were settled by the issue of shares (Six-month
period ended 31 August 2021: US$ 145,794)
Options and warrants
The total number of share options and warrants in issue as at the period end
is set out below.
Recipient Grant Term Exercise Number at 1 March 2022 (audited) Number Issued Number Lapsed/ cancelled/expired Number Exercised Number at 31 August 2022 (unaudited) Fair value
Date in years Price
Options US$
Directors and Participants April 2018 5 US$ 0.15668 1,606,304 - - - 1,606,304 24,028
Directors and Participants June 2021 5 US$ 0.048 18,000,000 - - - 18,000,000 1,110,556
Directors and Participants September 2021 5 £0.09 4,000,000 - - - 4,000,000 314,962
Directors and Participants April 2022 5 £0.18 - 9,200,000 - - 9,200,000 1,122,876
Warrants
Supplier warrants July 2021 5 £0.0550 1,818,182 - - - 1,818,182 124,482
Supplier warrants July 2021 3 £0.0825 2,254,545 - - - 2,254,545 8,275
Shareholder warrants December 2021 2 £0.0885 1,185,687 - - - 1,185,687 44,858
Supplier warrants April 2022 2 £0.1350 - 3,244,331 - - 3,244,331 284,918
─────── ─────── ─────── ─────── ─────── ───────
28,864,718 12,444,331 - - 41,309,049 3,034,955
═══════ ═══════ ═══════ ═══════ ═══════ ═══════
The amount expensed in the income statement has been calculated by reference
to the fair value at grant date of the equity instrument and the estimated
number of equity instruments to vest after the vesting period.
Six-month period ended 31 August 2022 Six-month period ended 31 August 2021 Three-month period ended 31 August 2022 Three-month period ended 31 August 2021
(unaudited) (unaudited) (unaudited) (unaudited)
US$ US$ US$ US$
Share based payments charge (1,285,743) (140,090) (91,539) (138,033)
═══════ ═══════ ═══════ ═══════
The inputs used in the measurement of the fair values at grant date of the
equity-settled share-based payment plans issued during the period are as
follows:
April 2022 options
Award date and exercise price
Fair value at grant date £0.09308
Exercise price £0.180
Weight average expected volatility 81.90%
Weighted average expected life (years) 5
Risk-free interest rate (based on comparable companies) 1.52%
Terms of the issued options are as follows:
- 9,200,000 options have been granted and are subject to the three
independent vesting conditions for 1/3 of the entitlement, relating to the
successful fund raising in respect of the Group's operational budget,
commencement of a drilling program in respect of the San Domingo project and
resolution of certain Wickieup project title claims. All un-exercised options
expire after a period of 5 years from grant date. It is assumed that options
are exercised within 5 years from date of grant. The applied volatility is
based on historical volatility.
April 2022 supplier warrants
Award date and exercise price
Fair value at grant date £0.06697
Exercise price £0.135
Weight average expected volatility 81.90%
Weighted average expected life (years) 2
Risk-free interest rate (based on comparable companies) 0.80%
Terms of the issued warrants are as follows:
- As part of the fundraise completed during April 2022, certain service
providers of the Company received warrants for services rendered. As a result,
3,244,331 warrants have been issued. All un-exercised warrants expire after a
period of 2 years from grant date. It is assumed that options are exercised
within 2 years from date of grant. The applied volatility is based on
historical volatility.
-
11 Warrants
The cost of equity warrants granted during the period are measured by
reference to the fair value at the date on which they are granted. The fair
value is determined based on the Black-Scholes option pricing model.
During the six-month period ended 31 August 2022, the Company awarded warrants
to investors who participated in the fundraise completed during April 2022.
The total number of warrants in issue as at the period end is set out below.
Recipient Grant Term Exercise Warrants at 1 March 2022 (audited) Number of Warrants Issued Number of Warrants Lapsed/ cancelled/expired Number of Warrants Exercised Number of Warrants at 31 August 2022 (unaudited) Fair value
Date in years Price
Warrants US$
Shareholder warrants April 2022 2 £0.2100 - 73,195,560 - - 73,195,560 1,043,244
─────── ─────── ─────── ─────── ─────── ───────
- 73,195,560 - - 73,195,560 1,043,244
═══════ ═══════ ═══════ ═══════ ═══════ ═══════
Guidance as per IAS 32: Financial Instruments has been applied in classifying
these as a financial liability. This is due to the exercise price and the
Company's functional currency being different. As a result, the fair value
applied to the shareholder warrants has been classified as a financial
liability. At period end, the warrant liability has been re-measured to fair
value, with a corresponding entry to profit and loss of US$ 3,679,505 (period
ended 31 May 2021: Nil) within Warrant Fair Value Re-Measurement.
Reconciliation of warrant liability fair value:
Fair value
US$
Balance at 1 March 2022 -
Warrants issued during the period 4,722,749
Fair value re-measurement (3,679,505)
───────
Balance at 31 August 2022 1,043,244
═══════
April 2022 shareholder warrants
Grant date fair value Award date and exercise price
Fair value at grant date £0.0492
Exercise price £0.21
Weight average expected volatility 81.90%
Weighted average expected life (years) 2
Risk-free interest rate (based on comparable companies) 0.80%
31 August 2022 fair value Award date and exercise price
Fair value £0.0119
Exercise price £0.21
Weight average expected volatility 74.3%
Weighted average expected life remaining (years) 1.64
Risk-free interest rate (based on comparable companies) 3.45%
As part of the fundraise completed during April 2022, all participating
shareholders received a warrant on 1:1 basis for shares acquired. As a result,
73,195,560 warrants have been issued. All un-exercised warrants expire after a
period of 2 years from grant date. It is assumed that options are exercised
within 2 years from date of grant. The applied volatility is based on
historical volatility.
12 Basic and diluted loss per share
The calculation of basic profit per share of the Company is based on the loss
for the period of US$ 1,165,319 (six-month period to 31 August 2021: loss of
US$ 2,052,489) and the weighted average number of shares of 349,139,509 (at 31
August 2021: 147,618,936) in issue during the period.
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares such as warrants and options. An adjustment for the dilutive
effect of share options and warrants in the current period has not been
reflected in the calculation of the diluted loss per share, as the effect
would have been anti-dilutive, due the Company recognising a loss for the
period.
13 Related party transactions and balances
Galloway Limited
On 16 August 2019, the Company entered into a Convertible Loan Agreement
("Loan") with Galloway Limited ("Galloway"), to the value of US$ 350,000. The
Loan had a repayment date of 31 December 2019 and carries interest at a rate
of 10% per annum. On 13 December 2019, the repayment date was extended to 31
December 2024. The Loan was automatically converted into shares in the capital
of the Company on Admission at the Issue Price.
On 9 December 2019, the Company entered into a Convertible Loan Note ("CLN")
agreement with Galloway, to the value of £650,000. The CLN had a maturity
date of 30 April 2020 and carries interest at a rate of 5% per annum. On 1
October 2020, the repayment date was extended to 31 December 2024. The CLN was
converted into ordinary shares of the Company upon completion of the pre-IPO
fundraising, which raised over US$ 1,000,000. The number of shares that was
issued on conversion was based on a price per share being a 20% discount to
the price per share paid by the investors on the pre-IPO fund raising.
On 17 February 2021, the Company entered into a Term Loan Facility ("Term
Loan") with Galloway, to the value of US$ 500,000. The loan is interest-free,
and repayable on the earlier of 17 February 2022 or upon the completion of a
fundraise by the Company.
On 21 May 2021, the Company completed a private funding round. Following this
and in line with the CLN and Term Loan agreements, balances due to Galloway
under these agreements were settled, in full, by the issuance of 41,033,776
ordinary shares.
On 19 July 2021, the Company completed a successful listing on London AIM.
Following this and in line with the Loan agreement, all balances due to
Galloway were settled, in full, by the issuance of 7,584,753 ordinary shares.
Edgewater Associates Limited ("Edgewater")
During the six-month period ended 31 August 2022, Directors and Officers
insurance was obtained through Edgewater, which is a 100% subsidiary of Manx
Financial Group ("MFG"). James Mellon and Denham Eke are Directors of both the
Company and MFG.
During the period, the premium payable on the policy was US$ 49,318 (year
ended 28 February 2022: US$ 44,303), of which US$ 40,387 was prepaid as at the
period end (28 February 2022: US$ 11,076).
14 Commitments and contingent liabilities
The Group has certain obligations to expend minimum amounts on exploration
works on mining tenements in order to retain an interest in them, which would
be approximately US$ 377,685 during the next 12 months. This includes annual
fees in respect of licence renewals. These obligations may be varied from time
to time, subject to approval and are expected to be filled in the normal
course of exploration and development activities of the Company.
15 Events after the reporting date
The Company received approval to list its shares on the TSX-V Exchange in
Canada, with trading expected to commence during November 2022.
ENDS
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