REG - Cadence Minerals PLC - Annual Results for the year ended 31 December 2021
21/06/2022 07:00
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RNS Number : 6045P Cadence Minerals PLC 21 June 2022
Cadence Minerals Plc
("Cadence Minerals", "Cadence" or "the Company")
Annual Results for the year ended 31 December 2021
Cadence Minerals (AIM/NEX: KDNC) is pleased to announce its final results for
the year ended 31 December 2021. The full Annual Report and Audited Financial
Statements will be made available on the Company's website
at https://www.cadenceminerals.com/ (https://www.cadenceminerals.com/)
and will be posted to shareholders on the 30 June 2022
Chairman's Statement
I am pleased to present the Company's Annual Results for the year ended 31
December 2021.
Maintaining a balanced perspective on the macro picture has become
increasingly difficult, with unexpected factors such as Russia's invasion of
Ukraine creating a supply and price squeeze for many commodities. As I review
the year and reflect on global events, and again on events more specific to
our company outlook, it is remarkable how the macro backdrop has changed in
totally unexpected ways. Previously unprecedented levels of economic stimulus
have now been overtaken by inflation and interest rate hikes, while the shift
towards globalisation has slowed down with the prospect of a localised war in
Ukraine becoming more entrenched and widespread.
On behalf of the Board of Directors (Board) and management, I would like to
thank all of our advisors, consultants and service providers and especially
our shareholders for their support throughout the year. The Board and company
have resumed pre pandemic work schedules and trips to visit site and project
operational hubs, along with viewing potential investment opportunities and
attending industry conferences. The opportunity to travel freely, to reconnect
with people in person and to see projects in transition has truly been a
highlight.
Our portfolio companies have continued to progress and have in many cases
delivered landmark achievements. In no order of priority, the Board
congratulates Macarthur Minerals on completing the Bankable Feasibility Study
and moving significantly closer to operational success. European Metal
Holdings has painstakingly continued to complete reviews and studies that
highlight its low carbon footprint while it evolves into the largest hard rock
lithium producer in Europe. As I have already stated, we continue to look for
opportunities to unlock and discover value across our whole portfolio. Given
the increased underlying prices of Lithium and Rare Earths we expect to be
able to take advantage of these opportunities in the coming year. Recent
announcements from the current Mexican Government over potentially controlling
the nation's domestic Lithium supply have in no way put paid to our hopes that
Bacanora's JV with Gangfeng will prove to be a success.
Of course, the highlight of the year was the formalising and successful
settlement of the 'pending' investment into the Company's flagship Iron Ore
Project at Amapa, Brazil. This process triggered the release of escrow funds
to realise our investment, which then became a physical manifestation of the
same when Iron Ore shipments commenced from the Stockpile at the Port of
Santana. I write this after returning from a truly inspirational visit to see
the project operations, and after viewing the port, railway and mine assets in
Macapa (the Amapa system). Our investment there has also precipitated a
transformation in the area's infrastructure, which will in time make a
difference to the standard of living for the local people. Although this
process has only just begun, early findings from our commissioned studies and
reports are increasingly positive, giving the Board every confidence that our
investment there will be a great and lasting success.
On a practical level, challenges still persist today, with global disruption
to shipping and freight rates, along with increased costs associated with the
capital and equipment required to bring projects into production. While
Cadence is not alone in facing these challenges, your Board firmly believes we
remain well positioned in the underlying commodity markets that reflect the
Cadence portfolio. China continues to be the dominant focus of so much global
supply and demand analysis, and with the prolonged lockdowns many commentators
have expressed concern about economic expansion in the region. Initial
analysis still suggests that economic stimulus and infrastructure spending
will continue, and this, together with the Biden $1 trillion infrastructure
bill passed in November, will help sustain steel demand and therefore continue
to support the demand for Iron ore, a key focus for Cadence.
As the impact of the pandemic begins to recede, we face new challenges of
higher interest rates and inflation. For Cadence, sustained higher commodity
prices especially those of Lithium and Iron Ore has remained one of the great
positives across our portfolio, and together with the successful settlement
and initial investment into the Amapa project, your Board believes we continue
to be well placed to meet these challenges, both present and future.
In closing, I would like to personally thank my fellow Board members, staff
and partners in the wider Cadence Community and of course all Shareholders for
their continued encouragement and confidence in the Company.
Andrew Suckling
Non-Executive Chairman
Chief Executive Officer's Commentary
I am pleased to present Annual Results for the year ended 31 December 2021, a
full review of business activities during the year is provided within the
Strategic Report.
The results presented for the period ended 31 December 2021 reflect a
historical position in terms of the Company's progress and financial position,
therefore we have included additional information on key post-year-end events
in the Strategic Report.
Cadence has continued to pursue its strategic objectives despite the continued
volatility in 2021 because we think that assets that are undervalued,
de-risked, or have strategic advantages will outperform their peers in the
long run. This plan yielded fruit in 2021, with the Company continuing to
report profitable returns on its public investments and significant operation
progress being made across its core investments.
The relaxation of Covid-19 restrictions, combined with the implementation of
mass vaccination programmes and significant levels of monetary and fiscal
stimulus by many governments around the world, resulted in a rapid resurgence
of global economic activity in 2021: the IMF estimates 5.9 percent global
growth for the year. The magnitude of this economic recovery was most
pronounced in Europe and the United States, where, after contractions of 6.3
percent and 3.4 percent in 2020, annual growth rates of 5 percent and 6
percent, respectively, returned in 2021. Such rapid economic expansion was
also observed in major emerging markets, with China growing by 8 percent and
India growing by 9.5 percent.
However, the pace of recovery slowed in the second half of the year. Higher
inflation emerged as part of the recovery, exacerbated by persistent
pandemic-induced bottlenecks in global supply chains. Domestic inflationary
pressures, currency movements, and the prospect of further US monetary
tightening have necessitated more significant monetary policy responses in
some emerging markets, including Brazil, where interest rates have been raised
by 500 basis points since August in an effort to stem the tide of capital
outflows, which has pushed the economy into recession
The impact of the various global fiscal stimuli has meant that the mining
industry is facing the consequences of global commodity cost inflation, which
is causing supply chain disruptions, consumer inflation, and large variations
in energy costs and capital costs.
Overall, a progressive recovery from Covid-19 has resulted in positive demand
growth, with supply gradually adjusting to match this increasing demand. This
has proven beneficial in practically all of the exploration and development
assets Cadence has invested in, in particular lithium and iron ore. Which by
the end of the year had increased by 485% and 47% respectively in price.
Iron Ore tracked economic progress and were affected by geopolitical shifts
throughout the year. Global crude steel production is expected to have climbed
by 4.3 percent in 2021, setting a new high. Europe and the Americas
experienced the most rapid increase. In China, the world's largest steel
producer, output reached a new high in May before declining economic mood and
a faltering real estate sector weighed on output. Iron ore prices reached a
new high in May, fuelled by China's robust growth earlier in the year, to
which supply struggled to respond. Prices averaged $160/tonne for the entire
year, the highest level since 2011.
The buoyancy of the lithium price has been driven by the market tightening as
the electric vehicle revolution accelerates. Demand has eroded the oversupply
seen in 2019 and 2020. This market tightness is projected to persist, with
Credit Suisse predicting that lithium demand might triple by 2025 from current
levels, and that supply would be stretched to meet that demand, with higher
prices required to incentivise the necessary supply response
As a result of this substantial shift in consumer behaviour, demand for
lithium is expected to climb by 30 percent to 675,000 tonnes LCE in 2023, up
from 2021 levels. Global battery consumption is predicted to climb 14-fold by
2030, with Statista projecting 1.8 million tonnes of lithium demand by 2030.
Despite the strong market fundamentals, lithium production is expected to be
441,000 tonnes LCE in 2021, down from 464,000 tonnes in 2020. However, lithium
output is predicted to increase at a 13.4 percent CAGR to 679,000 tonnes in
2023. According to Macquarie, the deficit this year will be 2,900 tonnes of
LCE, rising to 20,200 tonnes in 2022 and 61,000 tonnes in 2023.
Our portfolio has been focused on two main investments, and the first is the
private Amapa Iron Ore Project. The key outstanding item for Cadence to
complete its initial US$2.5 million (20%) investment in the Amapa Project was
the execution of a settlement agreement with the secured bank creditors. This
was achieved at the end of the year, with Cadence vesting its 20% in February
2022 and subsequently increasing its stake to 27% in March 2022.
DEV Mineração S.A's ("DEV") the owner of the Amapa Project also began
shipping of its 58% iron ore stockpiles during the years it shipped some
143,000 wet tonnes. The majority net proceeds of these sales is being paid to
the secured bank creditors as part of the settlement agreement.
Operationally DEV progress has been solid, with DEV continuing to invest in
the project with the priorities on the completion of a Pre-feasibility Study
('PFS') and the rehabilitation of the tailings dams at the Amapa Iron Ore
Mine.
As we have mentioned on numerous occasions, the opportunity to invest in such
a project is rare within our industry, and we believe this project provides us
with a potentially transformative asset for our Company. The Amapa Project
gives Cadence the potential for an exceptional return on investment in the
run-up to full production and an opportunity to become a significant
shareholder in a mid-tier iron ore producer.
The second of our key investments is European Metals Holdings ("EMH"), whose
strategy is to become a Czech based lithium and tin producer. During the year,
EMH's Cinovec Project has been significantly de-risked and is moving rapidly
towards a final investment decision.
The progress and performance of our investment portfolio was well reflected in
our share price performance during the year, which increased from around 15
pence to 28 pence. This was clearly driven by the agreement reached with the
Amapa Iron Project's secured bank creditors at the end of 2021.
During the year, we saw prices of up to 31 pence, which was driven by an
increase in iron ore prices that reached US$220 per tonne in August, but
prices then fell to US$90 by November 2021, which was reflected in our share
price, which reached 17 pence in October 2022. Cadence's share price has
increased by more than 314 percent over the last two years, representing
significant growth.
However, 2022 has been a very different story, with inflationary pressures
affecting the entire equity market (the SP 500 is down some 20 percent this
year). Cadence's share price performance in 2022 reflects the performance of
our equity investments, such as European Metals Holdings and other higher risk
assets. This is despite our portfolio continuing to make solid operational
progress and being fundamentally the same investments that drove our share
price increases in 2020 and 2021.
During 2022, our priorities on the Amapa Iron Ore Project will be the
publication of a maiden Ore Reserve Estimate, followed by the release of a PFS
on the project. We will also plan to increase our stake in the asset. In
addition, we anticipate that our investment in Lithium Technologies and
Lithium Supplies will have listed during 2022, and we are hoping to
crystallise some additional value from our other privately held investments.
I would like to express my gratitude to the Cadence team and our investee
companies, who have all worked tirelessly to bring the Company and its
investment to their current position. We believe that concentrating risk
across a few important investments and commodities will pay off.
Kiran Morzaria
Chief Executive Officer
Investment Review
As outlined in the section "Our Business and Investment Strategy," Cadence
operates an investment strategy in which we invest in private projects via a
private equity model and in public equity. In both investment classes, we take
either an active or passive role. We have reported in these segments below.
Private Investments, Active
The Amapa Iron Ore Project, Brazil
Interest - 20 % at 31/12/2022 increased to 27% by 31/05/2022
The Amapa Project is a large-scale iron open pit ore mine with associated
rail, port and beneficiation facilities that commenced operations in December
2007. Production increased to 4.8 Mt and 6.1 Mt of iron ore concentrate
product in 2011 and 2012, respectively. Before its sale in 2012, Anglo
American valued its 70% stake in the Amapa Project at US$462m (100% US $660m).
In 2019 Cadence entered into a binding investment agreement to invest in and
acquire up to 27% in the Amapa iron ore mine, beneficiation plant, railway and
private port owned by DEV ("The Agreement"). The Agreement also gave Cadence a
first right of refusal to increase its stake to 49%.
To acquire its 27% interest, Cadence will invest US$6 million over two stages
in a joint venture company. The first stage is for 20% of the JV, the
consideration for which is US$2.5 million. The second stage of investment is
for a further 7% of JV for a consideration of US$3.5 million.
Vesting of Equity Interest in the Amapa Project
During the year, the key target for Cadence was to vest its first 20% in the
Amapa Project. This required DEV and the investors (Cadence and Indo Sino via
our joint venture company) to reach a settlement agreement ("Settlement
Agreement") with the secured bank creditors.
This was achieved on the 29 December 2021, when all the parties entered into a
binding Settlement Agreement. The original credit facility provided to DEV by
the secured creditors had a principle amount outstanding amount of US$135
million. The Settlement Agreement settles all of the principal amount plus all
interest, default interest, outstanding costs and fees ("Settlement Amount").
As a result of the Settlement Agreement and the Judicial Restructuring Plan
approved in August 2019, the total principal amounts owed to the secured and
unsecured creditors in classes I to IV of DEV have been reduced from
approximately US$231 million to approximately US$103 million or approximately
45% of the original value.
The Settlement Amount will be paid over two years from the effective date of
the Settlement Agreement, and it is to be satisfied by the net profits from
the sale of DEV's iron ore stockpiles. The unsecured creditors will be paid
from DEV's free cash flow over a period of nine years. Under the Settlement
Agreement, DEV remains the obligor with the Secured Creditors having no
recourse of repayment of the Settlement Amount to either Cadence or Indo Sino.
The Settlement Agreement will remain secured over all of DEV's equity and
assets.
Although the Settlement Agreement was executed within the year, the required
contractual and regulatory documentation was completed post year end and
Cadence vested its 20% interest in February 2022 and its 27% in March 2022.
Iron Ore Shipments
During the year the Commercial Court of São Paulo ("the Court") ruled that
DEV could commence the shipment of the iron ore stockpiles situated at DEV's
wholly-owned port in Santana, Amapa, Brazil. DEV was initially to export
sufficient iron ore to realise a US$10 million of iron ore (after the
deductions of all logistical, regulatory, shipping and sale costs) from the
Amapa stockpiles at the port.
By the end of May 2021 DEV had shipped three cargoes totalling approximately
143,500 wet tonnes of 58% sinter feed iron ore. After all costs these sales
netted DEV circa US$8 million. In July 2022, the Court permitted the export a
further US$10 million of iron ore (after the deductions of all logistical,
regulatory, shipping and sale costs). However, with the 58% iron ore pricing
decreasing some 40% from May to August 2021 and shipping pricing remaining
strong during the period DEV determined that there was a substantial risk to
profitably by continuing to ship while shipping prices remained at high levels
(US$ 80 - US$90 per wet tonne)
Once the Settlement Agreement had been completed in February 2022, DEV has
been free to ship from its stockpiles and is not restricted by the Court
permissions outlined above. Subsequent to the year end DEV shipped a further
48,492 wet tonnes of 58% iron ore sinter fines, DEV expect to receive circa
US$ 900k for this shipment. Shipping prices have continued to increase
during 2022, driven by higher diesel prices and limited availability of
vessels. This combined with iron price volatility has meant that DEV is
currently not shipping form its stockpiles.
The vast majority of the net proceeds from the sales of the Iron Ore has been
paid to the secured bank creditors as part of the Settlement Agreement. The
remainder of the funds have been applied to DEV operations.
Operations Review
The operational focus for the year at the Amapa Project has been the start
the rehabilitation process of the project. This has primarily focused on
tailing dam maintenance. DEV has employed a civil engineer and two
geotechnical consulting firms to advance the work programme, including
monitoring, geotechnical stability testing and statutory reporting. The end
goal is to ensure that the current dams will be suitable for future operations
amid Brazil's more stringent regulatory environment.
In addition, DEV also began early rehabilitation of light infrastructure, the
regularising the statutory reporting with the federal mining authority and
state environmental authorities.
The other important focus for DEV and Cadence was to start the PFS. This began
in 2021 with DEV appointing several internationally accredited engineering and
consulting firms to carry out the PFS. At the time of writing The PFS is
progressing as expected, with the consulting engineers for the mine
operations, ore reserve estimation, metallurgy, processing, infrastructure and
shipping having submitted their draft reports.
The PFS contemplates refurbishing and rehabilitating the existing port, rail
and plant with modifications being made to the beneficiation plant to achieve
a larger portion of 65% iron concentrate (4.9 Mt). The PFS is based on
producing 5.3 Mt of iron ore concentrate per annum.
The Amapa Project's Current Development Plan
The PFS, once complete will outline more fully the development timelines,
capital required to achieve the stated project aims. Subsequent to the
publication of an economic PFS we expect the DEV will seek to commission a
Definitive Study ("DFS"). The DFS is required to seek project debt and equity
finance which will be sought once the DFS is complete.
Cadence and its joint venture partners are having early discussions with
potential debt providers and corporate financiers, which we will advance once
the PFS is complete. On completion of the DFS and securing debt and equity
financing project construction will commence.
Lithium Technologies Pty Ltd & Lithium Suppliers Pty Ltd ("LT" & "LS")
Interest - 31.5% at 31/12/2022 and 31/05/2022
In December 2017, Cadence Minerals announced that it had executed binding
investment agreements to acquire up to 100% LT & LS, which was
subsequently varied to acquire three prospective assets in Australia that are
in regions with proven high-grade lithium mineralisation.
LT and LS, through their subsidiaries, are the holders of two prospective
exploration licenses and one exploration application in Australia and a
further seven exploration license applications in Argentina.
All of the licenses and applications target prospective hard rock lithium
deposits. The most significant of these is the Litchfield lithium prospect,
which is contiguous to Core Lithium's (ASX: CXO) strategic Finniss Lithium
Project (JORC compliant ore reserves: 7.4Mt @ 1.3% Li2O)2.
During the year we saw a renewed interest in hard rock lithium projects in
Australia. As such we increased our investment to 31.5% into LT & LS which
funded operations on the Litchfield exploration license.
Satellite imagery verified the geology along the Litchfield exploration
license north-west boundary is comparable to Core Lithium Ground. LT &
LS's geological consultant conducted intensive surface sampling across four
target areas within the NW quadrant, taking 657 samples to determine the
potential for contiguous mineralisation. The sampled areas mostly comprised
metamorphic rocks linked to the Burrell Creek formation - a host rock for the
regional occurrences of pegmatites. The samples results were returned in 2022,
these results confirmed LT & LS's view that the areas adjacent to Core
Lithium boundary are prospective for lithium pegmatites.
Subsequent to the year end Cadence and the remaining shareholders entered into
a conditional sale of 100% of LT and LS. The consideration for LT and LS is
up to A$ 21.05 million (£11.82 million). Cadence has 31.5% of LT and LS and
would receive up to A$ 6.63 (£3.72 million). The Buyer is a public, unlisted
company in Australia ("Buyer").
The acquisition of LT and LS has several conditions precedent, including the
completion of due diligence and the relevant regulatory approval. Assuming
this is successful, the Buyer will acquire 100% of LT and LS through a
mixture of cash and shares partially paid on completion of the sale of LT and
LS and the remainder paid on the achievement of key performance milestones.
The Buyer has committed to spending at least A$4 million on the exploration of
Litchfield during the three years post the completion of the sale. Should the
milestones not be achieved during this period, the respective consideration
will not be payable.
The proceeds received by the Company will be used for reinvestment as per our
investment strategy. In relation to the shares received as part of the
consideration, the Company will be bound by an escrow agreement with the Buyer
as per the regulatory authorities in Australia and will be in the form and
substance consistent with the ASX Listing Rules. After the lapse of the escrow
arrangement, Cadence will retain or dispose of these shares as per our
investment strategy.
Private Investments, PASSIVE
Sonora Lithium Project, Mexico
Interest - 30% at 31/12/2021 and 31/05/2022
Cadence holds an interest in the Sonora Lithium Project via a 30% stake in the
joint venture interests in each of Mexalit S.A. de CV ("Mexalit") and Megalit
S.A. de CV ("Megalit").
Mexalit forms part of the Sonora Lithium Project. The Sonora Lithium Project
consists of ten contiguous concessions covering 97,389 hectares. Two of the
concessions (La Ventana, La Ventana 1) are owned as of the date 100% by
subsidiaries of Gangfeng Lithium Co., Ltd ("Gangfeng"). El Sauz, El Sauz 1, El
Sauz 2, Fleur and Fleur 1 concessions are owned by Mexalit S.A. de C.V.
("Mexalit"), which is owned 70% by Gangfeng and 30% by Cadence.
The Sonora Project holds one of the world's larger lithium resources and
benefits from being both high grade and scalable. The polylithionite
mineralisation is hosted within shallow dipping sequences, outcropping on the
surface. A Mineral Resource estimate was prepared by SRK Consulting (UK)
Limited ('SRK') in accordance with NI 43-101. The current lithium resources
and reserves for the Sonora Lithium Project and the attributable amounts to
Cadence are available on our website here:
https://www.cadenceminerals.com/projects/sonora-lithium-project/
(https://www.cadenceminerals.com/projects/sonora-lithium-project/) .
A feasibility study report was published in January 2018, which confirmed the
positive economics and favourable operating costs of a 35,000 tonnes per annum
battery-grade lithium carbonate operation. The feasibility study report
estimates a pre-tax project net present value of US$1.253 billion at an 8%
discount rate and an Internal Rate of Return of 26.1%, and Life of Mine
operating costs of US$3,910/t of lithium carbonate. It should be noted that
under the published feasibility study, the concession owned by Mexalit will be
mined starting in year 9 of the mine plan cease at the end of the mine life in
year 19, and as such, assuming Cadence retains its position, any net
realisable economic benefit to Cadence would only accrue at this time.
The full report can be found here:
https://www.bacanoralithium.com/pdfs/Bacanora-FS-Technical-Report-25-01-2018.pdf
(https://www.bacanoralithium.com/pdfs/Bacanora-FS-Technical-Report-25-01-2018.pdf)
Summary of Activities
The most significant development for the Sonora Lithium project both during
2021 and 2022, was that Ganfeng completed the acquisition of the Sonora
Lithium Project.
Although this does not directly affect the terms of our Joint Venture, having
Gangfeng as a partner in the development of this project is highly encouraging
, given that Gangfeng's involvement in the development of the project to date
and their extensive experience in the lithium market holding company is the
world's third-largest and China's largest lithium compounds producer and the
world's largest lithium metals producer in terms of production capacity.
Whilst COVID-19 has impacted the progress on the Sonora Lithium Project, work
to complete the front-end engineering design ("FEED") has continued throughout
the period. Ganfeng is currently appointing a Chinese Design Institute to
complete the FEED with initial site layouts scheduled for Q2 2022. Ganfeng is
continuing to work with its equipment suppliers and, along with the Company,
is maintaining its previously advised project delivery schedule with first
lithium production in H2 2024.
Rescue and removal of surface vegetation and topsoil in the area required for
the construction of the lithium
processing plant have been completed. Plant site location survey,
geotechnical, and hydrogeological works
have also been completed. Works to build the construction road and early work
camp have commenced. Site works for bulk earthworks are expected to commence
in late 2022.
On September 30, 2021, Mexican politicians from the MORENA party tabled a
draught bill to reform Mexico's energy sector, including statements that
lithium would be included among the minerals considered strategic for the
energy transition and that no new concessions for lithium exploitation by
private companies could be granted. Subsequent to the year end the Mexican
senate elevated lithium deposits to the category of "strategic minerals",
declaring the exploration, exploitation, and use of lithium to be the
exclusive right of the state.
We are constantly examining possible legislative changes and Gangfeng is
ensuring that the mineral concessions remain legitimate. It is our current
view that the Decree passed by the senate only impacts licenses, concessions
or contracts to be granted not already those already granted as is the case
for the Sonora Lithium Project. Therefore, at this point we do not believe
there is a material impact to our joint venture areas.
Yangibana Project, Australia
Interest - 30% at 31/12/2022 and 31/05/2022
The Yangibana Project is a significant Australian Rare Earths Project,
containing substantial Neodymium and Praseodymium resources. The Project
currently covers approximately 650 square kilometres. The Project is located
in the Gascoyne region of Western Australia, some 250 kilometres northeast of
Carnarvon.
Cadence holds interests in tenements covering some of the prospective Gifford
Creek Ferrocarbonatite Complex. Through wholly-owned subsidiaries, Cadence
holds:
· 30% interest in 3 Mining Leases, 6 Exploration Licences, and 2
General Purpose Leases;
· 3 Mining Licenses Include:M09/159,M09/161,M09/163;
· 6 Exploration Licenses Included: E09/1043, E09/1049, E09/1703,
E09/1704, E09/1705, E09/1706;
· 2 General Purpose Leases: G09/11, G09/13.
The tenements in which Cadence holds a 30% interest are in joint-venture with
Australian listed Hastings Technology Metals ("Hastings"), and Hastings
carries all costs up to the decision to commission a bankable feasibility
study.
A definitive feasibility study published in 2017, modelled two production
scenarios the second of which had included within it 808,000 tonnes of plant
feed from one of our joint venture areas (Yangibana) in year 6. This
production target and additional production target from the definitive
feasibility study indicates that 11% of the plant feed will come from our
joint venture area * .
The economic model contemplated by Hastings assumes Cadence through its
subsidiary will participate in the and mining of the deposits held 70% by
Hastings and 30% by Cadence. Assuming there is a development of the mine by
the joint venture a new Mining Joint Venture Agreement will need to be agreed
and put in place to replace the existing joint venture documentation and
regulate the arrangements between the participants for the mine development.
No costs or revenue ascribed to 30% interest in the deposits held by Cadence
were reported in the financial modelling published by Hastings.
Although Hastings Technology Minerals has progressed the development of the
Yangibana Rare Earth project, most of this has been in relation to its wholly
owned assets, with the only a change being reassessment of our joint venture
mineral resources and reserves occurring in July 2021. There was no material
difference in the recalculation of our portion of the resource and reserves;
an updated summary can be found on our website here:
https://www.cadenceminerals.com/projects/yangibana-rare-earth-project-2/
(https://www.cadenceminerals.com/projects/yangibana-rare-earth-project-2/) .
PUBLIC EQUITY
The public equity investment segment includes both active and passive
investments as part of our trading portfolio. The trading portfolio consists
of investments in listed mining entities that the board believes possess
attractive underlying assets. The focus is to invest in mining companies that
are significantly undervalued by the market and where there is substantial
upside potential through exploration success and/or the development of mining
projects for commercial production. Ultimately, the aim is to make capital
gains in the short to medium term. Investments are considered individually
based on various criteria and are typically traded on the TSX, ASX, AIM or
LSE.
During the period, our public equity investments generated an unrealised
profit of £0.57 million (2020: £10.24 million) and a realised gain of
£0.59 million (2020: £0.07 million). The majority of these profits were
derived from the sale of European Metals Holdings shares. The total unrealised
gains on our equity portfolio as at the end of 31 December 2021 was £9.27
million.
As of 31 December 2021, our public equity stakes consisted of the following
Company Business Summary Year ended 31 Dec 2021 Year ended 31 Dec 2020 Cumulative Total Return Since Inception Active / Passive
£,000 £,000
European Metals Holding Limited Lithium mine development 11,287 13,426 461% Active
Charger Metals NL Lithium exploration 342 - 22% Passive
Macarthur Minerals Limited Iron Ore mine development 181 329 118% Passive
Eagle Mountain Mining Limited Copper exploration 122 - -42% Passive
Mont Royal Resources Limited Gold and Copper exploration 35 - -6% Passive
Miscellaneous Various 7 6 -86% Passive
Total 11,974 13,761
PUBLIC EQUITY (ACTIVE)
European Metals Holdings Limited ("European Metals")
Interest - 8.1% at 31/12/2021 and 31/05/2022
Cadence has held an investment in European Metals since June 2015. As of
year-end, Cadence held 8.1% in European Metals.
European Metals owns 49% of Geomet s.r.o. with 51% owned by CEZ. CEZ is a
significant energy group listed on various European Exchanges. Geomet s.r.o.
owns 100% of Cinovec which hosts a globally significant hard-rock lithium
deposit with a total Indicated Mineral Resource of 372.4Mt at 0.45% Li2O and
0.04% Sn and an Inferred Mineral Resource of 323.5Mt at 0.39% Li2O and 0.04%
Sn containing a combined 7.22 million tonnes Lithium Carbonate Equivalent and
263kt of tin, as reported to ASX on 28 November 2017 (Further Increase in
Indicated Resource at Cinovec South).
An initial Probable Ore Reserve of 34.5Mt at 0.65% Li2O and 0.09% Sn reported
on 4 July 2017 (Cinovec Maiden Ore Reserve) has been declared to cover the
first 20 years' mining at an output of 22,500tpa of battery-grade lithium
carbonate reported on 11 July 2018 (Cinovec Production Modelled to Increase to
22,500tpa of Lithium Carbonate).
This makes Cinovec the largest hard-rock lithium deposit in Europe, the fourth
largest non-brine deposit in the world and a globally significant tin
resource. In June 2019 EMH completed an updated Preliminary Feasibility Study,
conducted by specialist independent consultants, which indicated a return post
tax NPV of USD1.108B and a post-tax IRR of 28.8%. Subsequent to the year end,
in January 2022 EMH updated the 2019 PFS, which indicated a post tax NPV of
US$1.938Bn and a post-tax IRR of 36.3%.
The study confirmed that the Cinovec Project is a potential low operating cost
producer of battery grade lithium hydroxide or battery grade lithium carbonate
as markets demand. It confirmed the deposit is amenable to bulk underground
mining. Metallurgical test-work has produced both battery grade lithium
hydroxide and battery grade lithium carbonate in addition to high-grade tin
concentrate.
The Definitive Feasibility Study continues, albeit with some minor delays
related primarily to Covid-19 and the effect that has had on logistics
globally. Whilst the project had no direct Covid-19 related issues at site,
moving samples and our people has been problematic at times. We don't
anticipate any escalation in this.
Apart from these delays, we have made steady progress of the Cinovec Project
with positive developments in the areas of our locked cycle testwork,
permitting advancement and Measured Resource drilling programme.
The Project has been significantly de-risked and at the time of this report is
moving rapidly towards a final investment decision.
The Project Company appointed SMS group, a German-based world-leading
engineering firm, as the lead engineer for the minerals processing and lithium
battery-grade chemicals production at Cinovec. This marks the beginning of the
formal Front-End Engineering Design study as the major component of the
ongoing Definitive Feasibility Study. This detailed engineering contract,
along with advances in permitting and offtake discussions, moves us closer to
the development of Europe's largest hard rock lithium resource for the benefit
of all stakeholders.
Financial Review
Total comprehensive income for the year attributable to equity holders was a
loss of £0.14m (2020: profit of £7.82m). This decrease in profitability from
the previous year of approximately £7.96m is mainly due to the reduced amount
of realised and unrealised profits and losses for the year of approximately
£1.2m (2020: £10.4m) relating to our share investment portfolio (listed
financial investments) held during the period. Administrative expenses were up
£0.36m from £1.44m to £1.80m, but foreign exchange gains were up £1.28m
from a loss £0.82m to a gain of £0.46m.
Basic negative earnings per share was 0.102p (2020: positive earnings per
share of 6.897p).
The net assets of the Group at the end of the period were £22.15 million
(2020: £22.09 million). This increase of approximately £0.06m reflects the
losses and shares issued in the year.
Principal Risks and Uncertainties
Cadence continuously monitors its risk exposures and reports its review to the
Board. The Board reviews these risks and focuses on ensuring effective systems
of internal financial and non-financial controls are in place and maintained.
The main business risk is considered to be investment risk.
The Company faces external risks that can materially impact or influence the
investment environment within which the Company operates and can include
changes in commodity prices, and the numerous factors which can influence
those changes, including economic recession and investor sentiment and
including the current and potential effects of the coronavirus pandemic.
Commodity prices have an impact on the investment performance and prospects of
all our investments. The extent of the impact varies depending on a wide
variety of factors but depend largely by where the investment sits on the
mineral development curve. The majority of Cadence's investments sit at the
more advanced stage of the development curve. Commodity price risk is
pervasive at all stages of the development curve, but other prominent risks
such as exploration risk and technical and funding risks at the
exploration/development stage, may be considered to be weighted higher earlier
in the curve than pure commodity risk which tends to have a greater impact on
producers.
The Company's investments are located in jurisdictions other than the UK and
therefore carries with it country risk, regulatory/permitting risk, political
risk and environmental risk. Our investments can be at different stages of
development and each stage within the mining exploration and development cycle
can carry its own risks.
Where possible Cadence seeks to mitigate these risks by structuring its
investments in a format which the Board can influence, obtain high level
oversight (often at board level) and use legal agreements to provide control
mechanisms (often negative control) to protect the Company's investments. In
addition, we seek to further mitigate our risk exposure by obtaining a deep
fundamental understanding of an asset, its potential economics, operating and
legal environment and its management team, prior to investment.
It should be noted that because the Company does not operate its project
investments on a day-to-day basis, there is a risk that the operator does not
meet deadlines or budgets; fails to propose or pursue the appropriate
strategy; does not adhere to the legal agreements in place or does not provide
accurate or sufficient information to Cadence on a timely basis.
The Equity Investment segment of the Company's investments is exposed to price
risk within the market, interest rate changes, liquidity risk and volatility.
Although the investment risk within the portfolio is dependent on many
factors, the Group's principal investments at the year-end are in companies
with significant iron ore and lithium assets and, to some extent, dependent on
the market's view of these commodities or chemicals and/or the market's view
of the management of the companies in managing those assets. As with our
private investment, the Board seeks to mitigate this by obtaining a deep
fundamental understanding of an asset and its potential economics; its
operating and legal environment and its management team, prior to any
investment by Cadence.
All countries carry political risk that can lead to interruption of activity.
Politically stable countries can have enhanced environmental and social risks;
risks of strikes and changes to taxation; whereas less developed countries can
have, in addition, risks associated with changes to the legal framework; civil
unrest and government expropriation of assets. The Company has working
knowledge of the countries in which the joint venture holds exploration
licences, and its local joint venture partner has experienced local
operators to assist the Company in its management of its investment in order
to help reduce possible political risk.
STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
Note 31 December 2021 31 December 2020
£'000 £'000
Income
Unrealised profit on financial investments 6 577 10,252
Realised profit on financial investments 6 593 65
Other income 1 - 54
1,170 10,371
Share based payments (197) (57)
Other administrative expenses (1,604) (1,379)
Total administrative expenses (1,801) (1,436)
Operating (loss)/profit 1 (631) 8,935
Finance income 35 6
Finance cost 3 (3) (298)
Foreign exchange gain/(loss) 455 (820)
(Loss)/profit before taxation (144) 7,823
Taxation 4 - -
(Loss)/profit attributable to the equity holders of the Company (144) 7,823
Total comprehensive earnings for the year, attributable to the equity holders (144) 7,823
of the company
Earnings per ordinary share
Basic earnings per share (pence) 5 (0.102) 6.897
Diluted earnings per share (pence) 5 n/a 6.795
The accompanying principal accounting policies and notes form an integral part
of these financial statements.
statement OF FINANCIAL POSITION
31 December 2021 31 December 2020
ASSETS Note £'000 £'000
Non-current
Financial Assets 6 5,660 2,885
5,660 2,885
Current
Trade and other receivables 7 5,048 5,365
Financial Assets 6 11,974 13,761
Cash and cash equivalents 324 596
Total current assets 17,346 19,722
Total assets 23,006 22,607
LIABILITIES
Current
Trade and other payables 8 853 295
Borrowings 9 - 219
Total current liabilities 853 514
Total liabilities 853 514
EQUITY
Issued share capital 10 1,903 1,896
Share premium 10 33,207 33,159
Share based payment reserve 249 39
Investment in own shares (70) -
Retained earnings (13,136) (13,001)
Equity attributable 22,153 22,093
to equity holders of the Company
Total equity and liabilities 23,006 22,607
The accompanying principal accounting policies and notes form an integral part
of these financial statements.
Statement of Changes in Equity
Share capital Share premium Investment in own shares Share based payment reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2019 1,471 30,357 - 1,383 (22,225) 10,986
Share based payments - - - 57 - 57
Transfer on lapse of warrants - - - (1,369) 1,369 -
Transfer on exercise of warrants - - - (32) 32 -
Share issue 425 2,993 - - - 3,418
Share issue costs (191) - - - (191)
Transactions with owners 425 2,802 - (1,344) 1,401 3,284
Profit for the period - - - - 7,823 7,823
Total comprehensive earnings for the period - - - - 7,823 7,823
Balance at 31 December 2020 1,896 33,159 - 39 (13,001) 22,093
Share based payments - - - 197 - 197
Payments made through issue of warrants - - - 22 - 22
Transfer on exercise of options - - - (9) 9 -
Adjustment for shares held in Trust - - (70) - - (70)
Share issue 7 50 - - - 57
Share issue costs - (2) - - - (2)
Transactions with owners 7 48 (70) 210 9 204
Loss for the period - - - - (144) (144)
Total comprehensive earnings for the period - - - - (144) (144)
Balance at 31 December 2021 1,903 33,207 (70) 249 (13,136) 22,153
The accompanying principal accounting policies and notes form an integral part
of these financial statements.
Statement of Cash Flows
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Cash flow from operating activities
Continuing operations
Operating (loss)/profit (631) 8,935
Gain on financial investments (1,170) (10,317)
Equity settled share based payments 197 57
Adjustment for issue of own shares (70) -
Payments made through issue of warrants 22 -
Decrease in trade and other receivables 346 32
Increase/(decrease) in trade and other payables 555 (68)
Net cash outflow from operating activities from continuing operations (751) (1,361)
Cash flows from investing activities
Payments for non-current financial investments (2,775) (645)
Payments for investments in current financial investments (830) (50)
Receipts on sale of current investments 3,787 2,052
Net cash inflow from investing activities 182 1,357
Cash flows from financing activities
Proceeds from issue of share capital 57 2,723
Share issue costs (2) (191)
Net borrowings (220) (2,120)
Net finance income/(cost) (3) (292)
Net cash (outflow)/inflow from financing activities (168) 120
Net change in cash and cash equivalents (737) 116
Foreign exchange movements on cash and cash equivalents 465 (1)
Cash and cash equivalents at beginning of period 596 481
Cash and cash equivalents at end of period 324 596
There were no material non-cash transactions in the year.
The accompanying principal accounting policies and notes form an integral part
of these financial statements.
PRINCIPAL ACCOUNTING POLICIES
General Information
Cadence Minerals plc is a company incorporated and domiciled in the United
Kingdom. The Company's shares are listed on the AIM market of the London Stock
Exchange, and on the AQUIS Growth Market as operated by AQUIS Stock Exchange
("AQUIS").
The Financial Statements are for the year ended 31 December 2021 and have been
prepared under the historical cost convention and in accordance with UK
adopted International Accounting Standards (IAS). These Financial Statements
(the "Financial Statements") have been prepared and approved by the Directors
on 21 June 2022 and signed on their behalf by Donald Strang and Kiran
Morzaria.
Employee Benefit Trusts ("EBTs") are accounted for under IFRS 10 and are
consolidated on the basis that the parent has control, thus the assets and
liabilities of the EBT are included on the Company balance sheet and shares
held by the EBT in the Company are presented as a deduction from equity.
Although shares were issued to the EBT in prior years, the prior year accounts
have not been re-stated for the adjustment as it is not considered to be
material.
The accounting policies have been applied consistently throughout the
preparation of these Financial Statements, and the financial report is
presented in Pound Sterling (£) and all values are rounded to the nearest
thousand pounds (£'000) unless otherwise stated.
PRINCIPAL ACCOUNTING POLICIES
Investing Policy
The Company is an investment entity. The Company's investing policy, which was
approved at a General Meeting on 29 November 2010, is to acquire a diverse
portfolio of direct and indirect interests in exploration and producing rare
earth minerals and/or other metals projects and assets ('Investing Policy').
In light of the nature of the assets and projects that will be the focus of
the Investing Policy, the Company will consider investment opportunities
anywhere in the world.
The Directors have considerable investment experience, both in structuring and
executing deals and in raising funds. Further details of the Directors'
expertise are set out on the Company website. The Directors will use this
experience to identify and investigate investment opportunities, and to
negotiate acquisitions. Wherever necessary, the Company will engage suitably
qualified technical personnel to carry out specialist due diligence prior to
making an acquisition or an investment. For the acquisitions that they expect
the Company to make, the Directors may adopt earn-out structures with specific
performance targets being set for the sellers of the businesses acquired and
with suitable metrics applied.
The Company may invest by way of outright acquisition or by the acquisition of
assets - including the intellectual property - of a relevant business,
partnership or joint venture arrangement. Such investments may result in the
Company acquiring the whole or part of a company or project (which, in the
case of an investment in a company, may be private or listed on a stock
exchange, and which may be pre-revenue), and such investments may constitute a
minority stake in the company or project in question. The Company's
investments may take the form of equity, joint venture, debt, convertible
documents, licence rights, or other financial instruments such as the
Directors deem appropriate.
The Company may be both an active and a passive investor depending on the
nature of the individual investments in its portfolio. Although the Company
intends to be a long-term investor, the Directors will place no minimum or
maximum limit on the length of time that any investment may be held.
There is no limit on the number of projects into which the Company may invest,
or on the proportion of the Company's gross assets that any investment may
represent at any time, and the Company will consider possible opportunities
anywhere in the world.
The Directors may offer new ordinary shares in the capital of the Company by
way of consideration as well as cash, thereby helping to preserve the
Company's cash for working capital and as a reserve against unforeseen
contingencies including, by way of example and without limit, delays in
collecting accounts receivable, unexpected changes in the economic environment
and unforeseen operational problems. The Company may, in appropriate
circumstances, issue debt securities or otherwise borrow money to complete an
investment. There are no borrowing limits in the Articles of Association of
the Company. The Directors do not intend to acquire any cross-holdings in
other corporate entities that have an interest in the ordinary shares.
Going Concern
The Directors have prepared cash flow forecasts for the period ending 30 June
2023 which take account of the current cost and operational structure of the
Company.
The cost structure of the Company comprises a high proportion of discretionary
spend and therefore in the event that cash flows become constrained, costs can
be quickly reduced to enable the Company to operate within its available
funding.
During 2021, the Company received net proceeds of £55,000 through share
issues and £2,957,000 in net receipts, from sales less purchases, of listed
investments, and repaid all remaining loans. Since the year end the Company
has raised gross proceeds of £4,845,000 through share issues and invested USD
$3,500,000 in The Amapa Iron Ore Project.
These forecasts demonstrate that the Company has sufficient cash funds
available to allow it to continue in business for a period of at least twelve
months from the date of approval of these financial statements. Accordingly,
the financial statements have been prepared on a going concern basis.
It is the prime responsibility of the Board to ensure the Company remains a
going concern. At 31 December 2021 the Company had cash and cash equivalents
of £324,000, current financial assets of £11,974,000 and no borrowings. The
Company has minimal contractual expenditure commitments, and the Board
considers the present funds sufficient to maintain the working capital of the
Company for a period of at least 12 months from the date of signing the Annual
Report and Financial Statements. With overheads of £1,154,000 in 2021
excluding Director's bonuses, and creditors of £853,000 at 31 December 2021
the Company would still be able to meet its obligations, without the
requirement to cut costs, should the value of the current listed financial
assets be reduced by 80%. For these reasons the Directors adopt the going
concern basis in the preparation of the Financial Statements.
Statement of Compliance With IAS
The Company's financial statements have been prepared under the historical
cost convention except for the measurement to fair value of financial assets
as described in the accounting policy below, and the financial statements have
been prepared in accordance with UK adopted International Accounting
Standards (IAS) in conformity with the provisions of the Companies Act 2006.
The principal accounting policies adopted by the Company are set out below.
Taxation
Current income tax assets and/or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
period, that are unpaid at the balance sheet date. They are calculated
according to the tax rates and tax laws applicable to the fiscal periods to
which they relate, based on the taxable result for the period. All changes to
current tax assets or liabilities are recognised as a component of tax expense
in the income statement.
Deferred income taxes are calculated using the liability method on temporary
differences. This involves the comparison of the carrying amounts of assets
and liabilities in the financial statements with their respective tax bases.
In addition, tax losses available to be carried forward as well as other
income tax credits to the Company are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets
are recognised to the extent that it is probable that they will be able to be
offset against future taxable income. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to apply to
their respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a
component of tax expense in the income statement. Only changes in deferred tax
assets or liabilities that relate to a change in value of assets or
liabilities that is charged directly to equity are charged or credited
directly to equity.
Financial Assets
The Company's financial assets include cash, other receivables and financial
assets. Except for those trade receivables that do not contain a significant
financing component and are measured at the transaction price in accordance
with IFRS 9, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging
instruments, are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any financial assets
categorised as FVOCI.
The classification is determined by both:
• the entity's business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding
After initial recognition, these are measured at amortised cost using the
effective interest method. Discounting is omitted where the effect of
discounting is immaterial. The Company's cash and cash equivalents, trade and
most other receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than
'hold to collect' or 'hold to collect and sell' are categorised at fair value
through profit and loss. Further, irrespective of business model financial
assets whose contractual cash flows are not solely payments of principal and
interest are accounted for at FVTPL. All derivative financial instruments fall
into this category, except for those designated and effective as hedging
instruments, for which the hedge accounting requirements would apply.
Assets in this category are measured at fair value with gains or losses
recognised in profit or loss. The fair values of financial assets in this
category are determined by reference to active market transactions or using a
valuation technique where no active market exists.
Impairment of financial assets
The Company considers trade and other receivables individually in accounting
for trade and other receivables as well as contract assets and records the
loss allowance as lifetime expected credit losses. These are the expected
shortfalls in contractual cash flows, considering the potential for default at
any point during the life of the financial instrument. In calculating, the
Company uses its historical experience, external indicators and
forward-looking information to calculate the expected credit losses using a
provision matrix.
FAIR VALUE MEASUREMENT
IFRS 13 establishes a single source of guidance for all fair value
measurements. IFRS 13 does not change when an entity is required to use fair
value, but rather provides guidance on how to measure fair value under IFRS
when fair value is required or permitted. The resulting calculations under
IFRS 13 affected the principles that the Company uses to assess the fair
value, but the assessment of fair value under IFRS 13 has not materially
changed the fair values recognised or disclosed. IFRS 13 mainly impacts the
disclosures of the Company. It requires specific disclosures about fair value
measurements and disclosures of fair values, some of which replace existing
disclosure requirements in other standards
Financial Investments
Non-derivative financial assets comprising the Company's strategic financial
investments in entities not qualifying as subsidiaries, associates or jointly
controlled entities. These assets are classified as financial assets at fair
value through profit or loss. They are carried at fair value with changes in
fair value recognised through the income statement. Where there is a
significant or prolonged decline in the fair value of a financial investment
(which constitutes objective evidence of impairment), the full amount of the
impairment is recognised in the income statement.
Due to the nature of these assets being unlisted investments or held for the
longer term, the investment period is likely to be greater than 12 months and
therefore these financial assets are shown as non-current assets in the
Statement of financial position. Listed investments are valued at closing bid
price on 31 December 2021. For measurement purposes, financial investments are
designated at fair value through income statement. Gains and losses on the
realisation of financial investments are recognised in the income statement
for the period. The difference between the market value of financial
instruments and book value to the Company is shown as a gain or loss in the
income statement for the period.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand, bank deposits
repayable on demand, and other short term highly liquid investments that are
readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value, less advances from banks repayable
within three months from the date of advance if the advance forms part of the
Company's cash management.
Equity
Share capital is determined using the nominal value of shares that have been
issued.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
The share based payment reserve represents the cumulative amount which has
been expensed in the income statement in connection with share based payments,
less any amounts transferred to retained earnings on the exercise of share
options.
Retained earnings include all current and prior period, as adjusted for prior
year adjustments, results as disclosed in the income statement.
Operating Leases
The Company does not have any leases within the scope of IFRS 16 in the
current year. In the prior year the Company had a short-term lease which
subsequently expired.
Payments, including prepayments, made under operating leases (net of any
incentives received from the lessor) are charged to the statement of
comprehensive income on a straight-line basis over the period of the lease.
Foreign Currencies
The financial statements are presented in Sterling, which is also the
functional currency of the Company.
In the financial statements of the Company, foreign currency transactions are
translated into the functional currency of the Company entity using the
exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign
currencies at year-end exchange rates are recognised in profit or loss.
Share Based Payments
The Company issues equity-settled share-based payments to certain employees
(including directors). Equity-settled share-based payments are measured at
fair value at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, together with a corresponding increase in
equity, based upon the Company's estimate of the shares that will eventually
vest.
Fair value is measured using the Black-Scholes model, as the options have no
market related conditions. The expected life used in the model has been
adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
The expense is allocated over the vesting period, based on the best available
estimate of the number of share options expected to vest. Non-market vesting
conditions are included in assumptions about the number of options that are
expected to become exercisable. Estimates are subsequently revised, if there
is any indication that the number of share options expected to vest differs
from previous estimates.
No adjustment is made to the expense or share issue cost recognised in prior
periods if fewer share options are, ultimately exercised than originally
estimated. Upon exercise of share options, the proceeds received net of any
directly attributable transaction costs up to the nominal value of shares
issued are allocated to share capital with any excess being recorded as share
premium.
Financial Liabilities
The Company's financial liabilities include trade and other payables.
Financial liabilities are obligations to pay cash or other financial assets
and are recognised when the Company becomes a party to the contractual
provisions of the instrument.
All financial liabilities are recognised initially at fair value, net of
direct issue costs, and are subsequently recorded at amortised cost using the
effective interest method with interest related charges recognised as an
expense in the income statement.
Critical Accounting Estimates and Judgements
Sources of Estimation and Key Judgements
The preparation of the Financial Statements requires the Company to make
estimates, judgements and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities. The Directors base their estimates on
historic experience and various other assumptions that they believe are
reasonable under the circumstances, the results of which form the basis of
making judgements about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Significant judgments and estimates
The preparation of financial statements requires management to make estimates
and judgments that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenditure during the
reported period. The estimates and associated judgments are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgments about carrying values of assets and liabilities that are not
readily apparent from other sources.
· The estimates and underlying judgments are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period, or
in the period of the revision and future periods if the revision affects both
current and future periods.
· In the preparation of these financial statements, estimates
and judgments have been made by management concerning calculating the fair
values of the assets acquired on business combinations, and the assumptions
used in the calculation of the fair value of the share options. Actual amounts
could differ from those estimates.
· Management has made the following estimates that have the
most significant effect on the amounts recognised in the financial statements.
Unlisted investments
The Company is required to make judgments over the carrying value of
investments in unquoted companies where fair values cannot be readily
established and evaluate the size of any impairment required. It is important
to recognise that the carrying value of such investments cannot always be
substantiated by comparison with independent markets and, in many cases, may
not be capable of being realised immediately. Management's significant
judgement in this regard is that the value of their investment represents
their cost less previous impairment. Management reviews each unquoted
investment at each reporting date for indications of impairment. Management
concluded that no impairment was necessary in the current or prior year.
Share-based payments
The Company measures the cost of the equity-settled transactions with
employees by reference to the fair value of the equity instruments at the date
at which they are granted. Management has made a number of assumptions in
calculating the fair value of the share options as detailed in note 11. The
charge for the period ended 31 December 2021 of £197,000 (2020: £57,000) is
determined using a Black-Scholes Valuation model, using the risk free interest
rate, the volatility rate based on the prior 12 months of the Company's shares
and the expected life. The expected life used in the model has been adjusted
where applicable, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
Adoption of New or Amended IFRS
New standards, amendments and interpretations adopted by the Company
The company has applied the following standards and amendments for the first
time for its annual reporting period commencing 1 January 2021:
· Amendments to IFRS 4 Insurance contracts - deferral of IFRS 9
· Amendments to IAS 16 - Property, Plant and Equipment - Proceeds
before Intended Use
· Amendments to IAS 37 - Provisions, Contingent Liabilities, Contingent
Assets Onerous Contracts - Cost of Fulfilling a Contract
The adoption of the above has not had any material impact on the disclosures
or amounts reported in the financial statements.
New standards, amendments and interpretations not yet adopted
There are no IFRSs or IFRIC interpretations that are not yet effective that
would be expected to have a material impact on the Company.
Segment reporting
Segmental analysis is not applicable as there is only one operating segment of
the continuing business - investment activities
NOTES TO THE FINANCIAL STATEMENTS
1. Profit Before Taxation And Segmental Information
Profit before taxation - continuing operations
The loss before taxation is attributable to the principal activities of the
Company.
The loss before taxation is stated after charging:
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
Share based payment charge 197 57
Directors' fees and consulting (see note 2) 412 383
Operating lease rentals: land and buildings - 164
Fees payable to the Company's auditor for the audit of the financial 36 28
statements
Segment reporting
The Company operates a single primary activity to invest in businesses so as
to generate a return for the shareholders. The performance and position are
therefore as stated in the primary statements.
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
Unrealised profit on financial investments 577 10,252
Realised profit/(loss) on financial investments 593 65
Other income - 54
1,170 10,371
2. Employee Remuneration
Employee benefits expense
The expense recognised for employee benefits, including Directors' emoluments,
is analysed below:
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Short-term benefits
Wages, salaries and consulting fees 512 475
Bonus payments 450 180
Employers NI 95 48
Shares awarded - 55
Other long-term benefits
Share based payments 197 -
1,237 758
The average number of employees (including directors) employed by the Company
during the period was:
2021 2020
No. No.
Directors 4 4
Other 2 2
6 6
Included within the above are amounts in respect of Directors, who are
considered to be the key management personnel, as follows:
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Short-term benefits
Wages, salaries and consulting fees 412 383
Bonus payments 450 180
Shares awarded - 55
Other long-term benefits
Share based payments charge on issue of options 197 -
1,059 619
3. Finance Income & Costs
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
Loan interest received 35 6
35 6
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
Loan interest 3 296
Finance Fees - 2
3 298
4. Taxation
The tax assessed for the period differs from the standard rate of corporation
tax in the UK as follows:
Year ended Year ended
31 December 2021 2021 31 December 2020 2020
£'000 % £'000 %
(Loss)/profit before taxation (144) 7,823
(Loss)/profit multiplied by standard rate (27) 19 1,486 19
of corporation tax in the UK
Effect of:
Deferred tax asset not recognised 1,760 911
Remeasurement of deferred tax for changes in tax rates (1,573) (451)
Adjustments to brought forward values - (957)
Other permanent differences (1) (2)
Chargeable gains 12 -
Income not taxable (222) (1,960)
Expenses not deductible for tax purposes 51 973
Total tax charge for year - -
The Company has tax losses in the UK of £25.97m (2020: £24.96m), subject to
Her Majesty's Revenue and Customs approval, available for offset against
future operating profits. The Company has not recognised any deferred tax
asset in respect of these losses, due to there being insufficient certainty
regarding its recovery. The unrecognised deferred tax asset is £6.50m (2020:
£4.74m). Changes in tax laws and rates may affect tax assets and liabilities
and our effective tax rate in the future. The main corporation tax rate in the
UK is due to increase to 25% from 19% on 1 April 2023.
5. Earnings per Share
The calculation of the basic earnings per share is calculated by dividing the
consolidated profit attributable to the equity holders of the Company by the
weighted average number of ordinary shares in issue during the period. The
weighted average number of shares excludes shares held by an Employee Benefit
Trust (see Note 10) and has been adjusted for the issue/purchase of shares
during the period.
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
(Loss)/profit attributable to owners of the Company (144) 7,823
2021 2020
Number Number
Weighted average number of shares in issue 148,535,664 116,675,272
Less: shares held by the Employee Benefit Trust (weighted average) (7,020,000) (3,248,689)
Weighted average number of shares for calculating basic earnings per share 141,515,644 113,426,583
Share options and warrants exercisable n/a 1,698,405
Weighted average number of shares for calculating diluted earnings per share n/a 115,124,988
2021 2020
Pence Pence
Basic earnings per share (0.102) 6.897
Diluted earnings per share n/a 6.795
The impact of the share options is considered anti-dilutive when the Company's
result for a period is a loss.
6. Financial Investments
Financial assets at fair value through profit or loss: £'000 £'000 £'000 £'000
Level 1 Level 2 Level 3 Total
Fair value at 31 December 2019 5,446 - 2,240 7,686
Additions 50 - 645 695
Fair value changes 10,252 - - 10,252
Gains on disposals 65 - - 65
Disposal (2,052) - - (2,052)
Fair value at 31 December 2020 13,761 - 2,885 16,646
Additions 830 - 2,775 3,605
Fair value changes 577 - - 577
(Loss)/Gains on disposals 593 - - 593
Disposal (3,787) - - (3,787)
Fair value at 31 December 2021 11,974 - 5,660 17,634
Gains on investments held at fair value through profit or loss
Fair value gain on investments 577 - - 577
Realised gain on disposal of investments 593 - - 593
Net gain on investments held at fair value through profit or loss 1,170 - - 1,170
Level 1 represents those assets, which are measured using unadjusted quoted
prices for identical assets.
Level 2 applies inputs other than quoted prices that are observable for the
assets either directly (as prices) or indirectly (derived from prices).
Level 3 applies inputs, which are not based on observable market data.
Level 1 assets comprise investments in listed securities which are traded on
stock markets throughout the world, and are held by the Company as a mix of
strategic and short term investments. These are classified as current assets
by virtue of their liquidity. The listed investments have been valued at bid
price, as quoted on their respective Stock Exchanges, at 31 December 2021.
During the year ended 31 December 2021 the company disposed of a variety of
its shareholdings.
Level 3 assets comprise of investment in exploration costs where licences are
not 100% owned by the Company, and investments in other companies. The
Directors carried out an impairment review as at 31 December 2021, and
determined that no impairment was necessary.
During 2021, £2,775,000 was invested in exploration costs by the Company
(2020: £645,000).
7. Trade and Other Receivables
31 December 2021 31 December 2020
£'000 £'000
Current
Trade receivables
Other receivables 1,094 1,402
Amounts owed by subsidiaries 3,883 3,883
Prepayments and accrued income 71 80
5,048 5,365
There is no impairment of receivables, and no amounts are past due at 31
December 2021 or 31 December 2020. Other receivables include £554,000
deposited in a lawyer's trust account in relation to the Amapa project. Since
the year end this amount has been applied to increase the Company's investment
in Amapa.
The fair value of these financial assets is not individually determined as the
carrying amount is a reasonable approximation of fair value.
8. Trade and Other Payables
31 December 2021 31 December 2020
£'000 £'000
Trade payables 254 171
Tax and social security - 16
Other payables 8 -
Accruals and deferred income 591 108
853 295
The fair value of trade and other payables has not been disclosed as, due to
their short duration, management considers the carrying amounts recognised in
the balance sheet to be a reasonable approximation of their fair value.
9. Borrowings
31 December 2021 31 December 2020
£'000 £'000
Current liabilities
Loan Notes - 210
Interest accrued - 9
- 219
During the year ended 31 December 2021, £3,000 (USD$4,000) interest and
finance charges were charged in the period, £223,000 (USD$303,000) was
repaid, and £1,000 of foreign exchange was recognised.
9. BORROWINGS CONTINUED
During the year ended 31 December 2020, £296,000 (USD$379,000) interest and
finance charges were charged in the period, £2,416,000 (USD$3,123,000) was
repaid, £695,000 (USD$889,000) was converted into ordinary shares in the
Company and £52,000 of foreign exchange was recognised.
10. Share Capital
31 December 2021 31 December 2020
£'000 £'000
Allotted, issued and fully paid
173,619,050 deferred shares of 0.24p 417 417
148,649,098 ordinary shares of 1p (31 December 2020: 147,949,098 ordinary 1,486 1,479
shares of 1p)
1,903 1,896
Ordinary shares Ordinary Share Capital Share Premium
No. £'000 £'000
Allotted and issued
At 1 January 2020 105,461,968 1,054 30,357
Issue of shares during the year 42,487,130 425 2,993
Share issue costs - - (191)
At 31 December 2020 147,949,098 1,479 33,159
Issue of shares during the year 700,000 7 50
Share issue costs - - (2)
At 31 December 2021 148,649,098 1,486 33,207
During the year ended 31 December 2021 the following shares were issued: On 3
January 2021, 100,000 shares were issued on exercise of options for proceeds
of £6,000. On 19 January 2021, 300,000 shares were issued on exercise of
warrants for proceeds of £25,000. On 28 April 2021, 300,000 shares were
issued on exercise of warrants for proceeds of £25,000.
Investment in Own Shares
At 31 December 2021 the Company held in Trust 7,020,000 (2020: 7,020,000) of
its own shares with a nominal value of £70,200 (2020: £70,200). The Trust
has waived any entitlement to the receipt of dividends in respect of its
holding of the Company's ordinary shares. The market value of these shares at
31 December was £1.75m (2020: £1.02m). In the current period nil were
repurchased (2020: nil) and nil were transferred into the Trust (2020:
4,300,000), with nil reissued on award of shares to directors.
The shares held in EBT were incorrectly classified as an expense in prior
periods. An adjustment has been made in the current period to correct this.
The amounts involved are immaterial.
The deferred shares have no voting rights and are not eligible for dividends.
11. Share Based Payments
Share Options
The Company operates share option schemes for certain employees (including
directors). Options are exercisable at the option price agreed at the date
of grant. The options are settled in equity once exercised. The expected
life of the options varies between 1 and 6 years. All options issued in the
prior years vested immediately, with no vesting requirements. During the
year ended 31 December 2021, 7,200,000 (2020: nil) options were issued to
Directors.
Details of the number of share options and the weighted average exercise price
(WAEP) outstanding during the period are as follows:
31 December 2021 31 December 2020
Number WAEP Number WAEP
£ £
Outstanding at the beginning of the year 100,000 0.060 2,800,000 0.437
Issued 7,200,000 0.290 - -
Lapsed - - (2,500,000) (0.0600)
Exercised (100,000) (0.060) (200,000) (0.0600)
Outstanding at the end of the year 7,200,000 0.290 100,000 0.060
Exercisable at year end 7,200,000 100,000
The share options outstanding at the end of the period have a weighted average
remaining contractual life of 4.33 years (31 December 2020: Nil years) and
have the following exercise prices and fair values at the date of grant:
First exercise date (when vesting conditions are met) Grant date Exercise price Fair value 31 December 2021 31 December 2020
£ £ Number Number
30 April 2021 30 April 2021 0.29 0.02742 7,200,000 -
28 January 2013 28 January 2010 0.06 0.0004 - 100,000
100,000 2,800,000
At 31 December 2021 7,200,000 options were exercisable (31 December 2020:
100,000).
For those options and warrants granted where IFRS 2 "Share-Based Payment" is
applicable, the fair values were calculated using the Black-Scholes model.
The inputs into the model for share based payments recognised in the current
and prior year were as follows:
Risk free rate Share price volatility Expected life Share price at date of grant
30 April 2021 0.19% 21.6% 5 years £0.2375
Expected volatility was determined by calculating the historical volatility of
the Company's share price for 12 months prior to the date of grant. The
expected life used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
Warrants
Details of the number of warrants and the weighted average exercise price
(WAEP) outstanding during the period are as follows:
31 December 2021 31 December 2020
Number WAEP Number WAEP
£ £
Outstanding at the beginning of the year 1,598,405 0.11348 - -
Issued 800,000 0.20000 3,024,325 0.10056
Exercised (600,000) (0.085) (1,425,920) (0.86088)
Outstanding at the end of the year 1,798,405 0.16147 1,598,405 0.11348
Exercisable at year end 1,798,405 1,598,405
The warrants outstanding at the end of the period have a weighted average
remaining contractual life of 1.78 years (31 December 2020: 1.98 years) and
have the following exercise prices and fair values at the date of grant:
First exercise date (when vesting conditions are met) Grant date Exercise price 31 December 2021 31 December
2020
£ Number Number
01 January 2020 01 January 2020 0.15 435,905 435,905
01 January 2020 01 January 2020 0.085 - 600,000
06 May 2020 06 May 2020 0.06 41,667 41,667
20 August 2020 20 August 2020 0.12 520,833 520,833
28 September 2021 28 September 2021 0.20 800,000 -
1,798,405 1,598,405
For those warrants granted where IFRS 2 "Share-Based Payment" is applicable,
the fair values were calculated using the Black-Scholes model. The inputs
into the model for share based payments recognised in the current and prior
year were as follows:
Risk free rate Share price volatility Expected life Share price at date of grant
6 May 2020 0.49% 28.4% 3 years £0.0625
10 June 2020 0.47% 29.0% 3 years £0.0875
20 August 2020 (0.06%) 38.5% 3 years £0.15325
28 September 2021 0.19% 28.4% 3 years £0.1825
The Company recognised total expenses of 197,000 (year ended 31 December 2020:
£57,000) relating to equity-settled share-based payment transactions during
the period.
12. Financial Instruments
The Company is exposed to a variety of financial risks which result from both
its operating and investing activities. The Board is responsible for
co-ordinating the Company's risk management and focuses on actively securing
the Company's short to medium term cash flows. Long term financial
investments are managed to generate lasting returns.
The Company has purchased shares in Companies which are listed on public
trading exchanges such as the LSE, TSX and ASX, and these shares are held as
an available-for-sale asset. The most significant risks to which the Company
is exposed are described below:
a Credit risk
The Company's credit risk will be primarily attributable to its trade
receivables. At 31 December 2021 and 31 December 2020 the Company had no
trade receivables and therefore minimal risk arises.
Generally, the Company's maximum exposure to credit risk is limited to the
carrying amount of the financial assets recognised at the balance sheet date,
as summarised below:
31 December 2021 31 December 2020
Investments (carried at fair value) Loans and receivables (carried at amortised cost) Derivative financial assets Statement of Financial position total Investments (carried at fair value) Loans and receivables (carried at amortised cost) Derivative financial assets Statement of financial position total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investments (carried at fair value) 11,974 - - 11,974 13,761 - - 13,761
Other long term financial assets 5,660 - - 5,660 2,885 - - 2,885
Other receivables - 1,094 - 540 - 1,402 - 1,402
Receivables from investee companies 3,883 - 3,883 3,883 - 3,883
Prepayments and accrued income - 71 - 71 - 80 - 80
Cash and cash equivalents - 324 - 878 - 596 - 596
Total 17,634 5,372 - 23,006 16,646 5,961 - 22,607
Financial instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which the fair
value is observable:
· Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;
· Level 2 fair value measurements are those derived from inputs other
than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
· Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
In certain cases, the inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, an investment's
level within the fair value hierarchy is based on the lowest level of input
that is significant to the fair value measurement. Management's assessment
of the significance of a particular input to the fair value measurement in its
entirety requires judgement, and considers factors specific to the investment.
Investments
The Company's investment in shares in Listed Companies are included as a
financial investment and has been classified as Level 1, as market prices are
available and the market is considered an active, liquid market.
The Company's investment in exploration costs where licences are not 100%
owned by the Company, and investments in other companies are classified as
non-current Level 3.
The credit risk on liquid funds is limited because the Company only places
deposits with leading financial institutions in the United Kingdom.
a Liquidity risk
The Company seeks to manage financial risk by ensuring sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. The Directors prepare rolling cash flow forecasts and seek to
raise additional equity funding whenever a shortfall in funding is forecast.
Details of the going concern basis of preparing the financial statements are
included in the principal accounting policies.
b Market risk
The amount and quality of minerals available and the related costs of
extraction and production represent a significant risk to the Company. The
Company is exposed to fluctuating commodity prices in respect of the
underlying assets. The Company seeks to manage this risk by carrying out
appropriate due diligence in respect of the projects in which it invests.
The Company is exposed to the volatility of the stock markets around the
world, on which it holds shares in various listed entities, and the
fluctuation of share prices of these underlying companies. The Company manages
this risk through constant monitoring of its investments share prices and news
information, but does not hedge against these investments.
c Interest rate risk
The Company only has borrowings at fixed coupon rates and therefore minimal
interest rate risk, as this is deemed its only material exposure thereto.
d Foreign exchange risk
The Company had no borrowings at 31 December 2021. At 31 December 2020 the
Company had borrowings of £219,000 which were denominated is US dollars. The
Company operates foreign currency bank accounts to help mitigate the foreign
currency risk.
e Financial liabilities
The Company's financial liabilities are classified as follows:
31 December 2021 31 December 2020
Other financial liabilities at amortised cost Liabilities not within the scope of IAS 39 Total Other financial liabilities at amortised cost Liabilities not within the scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000
Trade payables 254 - 254 171 - 171
Accruals and deferred income - 591 591 - 108 108
Other payables 8 - 8 16 - 16
Borrowings - - - 219 - 219
Total 262 591 853 406 108 514
Maturity of financial liabilities
All financial liabilities at 31 December 2021 and 31 December 2020 mature in
less than one year.
Borrowing facilities for the period ended 31 December 2021
The Company had no committed borrowing facilities at 31 December 2021 (31
December 2020: £219,000). See Note 9 for details.
The Company had no committed undrawn facilities at 31 December 2021 or 31
December 2020.
f Capital risk management
The Company's objectives when managing capital are:
- to safeguard the Company's ability to continue as a going concern,
so that it continues to provide returns and benefits for the shareholders;
- to support the Company's stability and growth; and
- to provide capital for the purpose of strengthening the Company's
risk management capability.
The Company actively and regularly reviews and manages its capital structure,
to ensure an optimal capital structure, and equity holder returns, taking into
consideration the future capital requirements of the Company and capital
efficiency, prevailing and projected profitability, projected operating cash
flows, projected capital expenditures and projected strategic investment
opportunities. Management regards total equity as capital and reserves, for
capital management purposes.
13. Reconciliation of Liabilities Arising from Financing Activities
Short-term borrowings Total
1 January 2021 219 219
Cash-flows:
- Interest charged 3 3
- Realised foreign exchange 1 1
- Repayments (223) (223)
31 December 2021 - -
Short-term borrowings Total
1 January 2020 2,982 2,982
Cash-flows:
- Interest charged 296 296
- Realised foreign exchange 39 39
- Repayments (2,416) (2,416)
Non-cash:
- Loans converted (695) (695)
- Unrealised Foreign exchange movement 13 13
31 December 2020 219 219
14. Related Party Transactions
The Company accrued rent of £19,200 due to Gunsynd Plc, a company of which
Don Strang is a director (2020: £8,000 charged). Andrew Suckling is a
director of Macarthur Minerals Limited. During the year the Company sold
286,000 shares of its holding in Macarthur Minerals for proceeds of £50,581
(2020: 5,951,000 shares disposed of for proceeds of £607,386). At the year
end the company held 1,016,000 shares in Macarthur Minerals (2020: 1,302,000).
Key Management Personnel are considered to be the Company Directors only, and
their fees and remuneration are disclosed within Note 2 to the financial
statements.
15. Events after the end of the Reporting Period
On 3 February 2022, the Company announced it had issued 19,999,985 ordinary
shares in respect of a placing and subscription at 20.5p per share.
On 21 February 2022, the Company announced it had issued 3,634,825 ordinary
shares in respect of an open offer at 20.5p per share.
On 19 April 2022, the Company announced it had issued 435,905 ordinary shares
in respect of an exercise of warrants at 15p per share.
15. EVENTS AFTER THE END OF THE REPORTING PERIOD (CONTINUED)
On 7 February 2022, the Company announced that the material preconditions for
the second stage of its investment in the Amapa Project has been satisfied and
the Company's next 7% interest would now vest. This completed on 15 March 2022
and the Company now has a 27% interest in the Pedra Branca Alliance. For
further details please see the Strategic Report.
On 30 March 2022, the Company announced that it has entered into a Conditional
Sale Agreement of its 31.5% Equity Stake in Lithium Technologies and Lithium
Supplies, and would receive up to A$6.63 million (£3.72 million). The
consideration payable to LT and LS shareholders will be via a mixture of cash
and shares. For further details please see the Strategic Report.
Following these share issues, the Company has 172,719,813 Ordinary shares of 1
pence each in issue. No ordinary shares are held in treasury. The figure of
172,719,8113 Ordinary shares may be used by the Company's shareholders as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
Company under the Financial Conduct Authority's Disclosure and Transparency
Rule.
16. Ultimate Controlling Party
In the opinion of the directors there is no controlling party.
* Hastings Technology Metals Limited (2017) Yangibana Project Definitive
Feasibility Study, Executive Summary. pp 58-60.
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