REG - Cloudbreak Discovery - Final Results for 2022 & Notice of AGM
31/10/2022 07:00
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RNS Number : 5784E Cloudbreak Discovery PLC 31 October 2022
31 October 2022
Cloudbreak Discovery Plc
("Cloudbreak" or the "Company")
Final Results for the Year Ended 30 June 2022
Notice of AnFnual General Meeting
Cloudbreak Discovery PLC (LSE: CDL), a leading natural resources project
generator with a particular focus on commodities key to the energy transition,
is pleased to announce its final results for the year ended 30 June 2022
("FY22" or the "Period").
Period Highlights
Company Updates
· Successful fundraise of £1.5 million to progress projects and
execute on royalty acquisitions which provide near-term cashflow for the
Company
· Strengthened the Board by appointing Paul Gurney, who was
previously a Managing Director at the Bank of Montreal ("BMO"), a top 10 bank
in North America
Projects
· Staked and initiated an exploration programme on the Northwest
Portfolio which targets polymetallic projects in northwestern British Columbia
("BC")
o Optioned the Yak, Atlin West, Rizz and Icefall projects, which are part of
the Northwest Portfolio, to partners
o Commenced a high-resolution magnetic survey over the Northern Treasure,
Rizz, Icefall and Atlin West projects to identify mineralised structures
· Cloudbreak and Alianza Minerals Ltd formed a strategic alliance
(the "Alliance") focused on copper exploration in the United States
o The Alliance staked the Klondike and Stateline properties in Colorado, and
subsequently optioned both projects to Allied Copper Corp
· Optioned the South Timmins gold project, located in Ontario, to
1315956 BC Ltd now Calidus Resources Corp
· Entered into a Mineral Application Cooperation Agreement to
jointly work towards submission of an application to acquire Petroleum
Exploration License 1724 ("Block 1724"), located onshore Namibia
· Entered into a separate agreement to submit a petroleum
development agreement for Petroleum Exploration Licence Block 2019 ("Block
2019"), targeting the Waterberg basin located in central northeast Namibia
· Staked the Foggy Mountain project in central BC, which lies along
a mineralized corridor containing several past producing mines in the
Toodoggone region of British Columbia
· Acquired a 3.25% overriding royalty interest ("ORI") on the
producing Masten Unit Energy project in Cochran County, Texas
· Norseman Silver Inc completed the acquisition of the Caribou
project, ratifying Cloudbreak a 2% net smelter royalty ("NSR")
Post Period Highlights
· Raised £585,625 to support the development of Cloudbreak's
existing portfolio and the acquisition of suitable additions including lithium
assets and bauxite projects globally
· Entered into an agreement to provide Legado Oil & Gas Limited
(formerly Iron Forge Holding (III) Limited) with USD $1.5 million in
development capital for the Butte Strawn energy project as a convertible
debenture, which at Cloudbreak's discretion can be converted into a 6% ORI
· Completed a surface programme at Foggy Mountain, confirming three
of the four historic mineral occurrences, and an airborne magnetic survey on
Northern Treasure, identifying several prominent structures
· Although the Anglo African Minerals Plc ("AAM") investment has
been written off by Cloudbreak, through its subsidiary, Kudu Resources Limited
("Kudu"), it has been proactively working towards the acquisition of the
Somalu Bauxite exploration license in Guinea
o The Somalu Bauxite project was the key license that under pinned the value
in Cloudbreak's investment in AAM
o The Company sees an opportunity to recoup lost shareholder value and have
direct control over a data rich asset that has been substantially de-risked
from a technical point of view
· Andrew Male moved from a Non-Executive Director to take up an
Executive Director position effective from 31 October 2022
Financials
· The loss of the Group for the year ended 30 June 2022 amounts to
£5,557,029 (30 June 2021: £902,060). Loss for FY22 has increased
significantly due to the unrealised fair value losses of £2.83 million on
both listed and unlisted investments
· £310,578 in cash and cash equivalents held at the period end (30
June 2021: £1,277,617)
· Administrative costs as a percentage of total assets of 59.6 per
cent, an increase compared to 14.1 per cent for period ended 30 June 2021
· Exploration and evaluation cash expenditures amount to £370,848
(30 June 2021: £29,675)
· £2,069,302 carrying value of investments held at the period end
(30 June 2021: £4,353,318)
· Consolidated loss per share or the period ended 30 June 2022 was
£0.01
Notice of Annual General Meeting
The Company announces that its Annual General Meeting ("AGM") will be held on
24 November 2022 at 520 - 999 West Hastings Street, Vancouver, British
Columbia, Canada V6C 2W2 at 10:00 am (PST) 6:00 pm (GMT).
The following documents (as applicable) have been posted to shareholders or
otherwise made available today:
· Annual Report and Financial Statements for the period ended 30
June 2022;
· Notice of AGM 2022; and
· Form of Proxy.
Copies of these documents are also available on the Company's website:
https://cloudbreakdiscovery.com/investors/
(https://cloudbreakdiscovery.com/investors/)
--ENDS--
For additional information please contact:
Cloudbreak Discovery PLC Tel: +1 604 428 9480
Kyler Hardy, CEO khardy@cloudbreakdiscovery.com (mailto:khardy@cloudbreakdiscovery.com)
Novum Securities Tel: +44 7399 9400
(Financial Adviser)
David Coffman / George Duxberry
Shard Capital Partners Tel: +44 207 186 9900
(Broker)
Damon Heath / Isabella Pierre
BlytheRay Tel: +44 207 138 3204 Cloudbreak@blyther (mailto:Cloudbreak@blytheray.com) ay.com
(mailto:Cloudbreak@blytheray.com)
(Financial PR/IR-London)
Tim Blythe
Megan Ray
Stellium Services Tel: +44(0)207 129 1205 Cloudbreak@StelliumServices.com (mailto:Cloudbreak@StelliumServices.com)
(Investor Relations)
www.StelliumServices.com (http://www.stelliumservices.com/) Andrew Wilson
Claire Bowden
CHAIRMAN'S REPORT
Company Updates
I am pleased to provide shareholders with an update on Cloudbreak's
developments over the course of our first financial year as a listed company
on the Main Market of the London Stock Exchange.
In what has been a challenging year for many companies, we have seen
continuing shareholder support by way of a successful fundraise of £1.5
million. This will help to progress our portfolio of projects and execute on
royalty acquisitions, providing near-term cashflow.
In addition to strengthening our balance sheet, Cloudbreak also appointed Paul
Gurney to the Board as a Non-Executive Director in April 2022. Paul brings a
wealth of experience in capital markets, deal structuring and facilitating
transactions, having recently worked as a Managing Director of BMO's equity
desk in London.
Projects
Throughout the Period, Cloudbreak has demonstrated the viability of its
project generator model, entering into option agreements for several of its
Northwest Portfolio projects, located in northwestern British Columbia ("BC").
Following a successful first phase of exploration, the Group commenced a
high-resolution helicopter-borne magnetic survey over the Northwest Portfolio,
across the Northern Treasure, Rizz, Icefall and Atlin West projects. The
objective of this survey was to identify prominent, potentially mineralised
structures, and to help determine the next stage of ground-based exploration.
Furthermore, the Group has generated and staked an additional project in the
prolific Toodoggone region of BC, called the Foggy Mountain Project, announced
in April 2022, highlighting Cloudbreak's continued desire to explore and
monetize new opportunities.
Another key milestone for Cloudbreak was the formation of a strategic alliance
with Alianza Minerals (the "Alliance") to explore for copper deposits in the
United States. During the Period, the Alliance made two acquisitions, the
Klondike project in Colorado and the Stateline project. Both properties were
optioned to Allied Copper in December 2021 and February 2022 respectively,
under an agreement which included Allied Copper committing to exploration
expenditure and the Alliance retaining a 2% net smelter royalty ("NSR"), split
equally between the parties.
The Group has been active in expanding its portfolio across several
jurisdictions and commodities throughout the year. In April 2022, Cloudbreak
marked its transition into the energy sector by entering into two separate
partnerships working towards submitting applications to acquire onshore
petroleum exploration licenses in Namibia. These partnerships offer an
exciting opportunity to participate in new generative initiatives in Namibia,
where exploration for hydrocarbons is at an early stage.
Furthermore, the Group entered into its first royalty agreement with G2 Energy
Corp in May 2022. As part of the agreement, Cloudbreak will provide a portion
of the acquisition financing for the Masten Unit Energy Project, located in
Cochran County Texas, by way of debenture and a 3.25% overriding royalty
interest ("ORI") in the project. Through this and similar transactions, we see
an opportunity to create significant shareholder value by growing Cloudbreak's
cashflow through structured deals and royalty acquisitions.
Towards the end of the year, Cloudbreak announced Norseman Silver Inc
completed the acquisition of the Caribou property, ratifying Cloudbreak's 2%
NSR. This transaction exemplifies our business model and how Cloudbreak can
generate accretive opportunities with significant exploration upside for our
partners.
Post year end, the Group entered into an agreement with Legado Oil & Gas
Limited (formerly Iron Forge Holdings (III) Limited) to provide development
capital for the Butte Strawn Energy Project in Irion County, Texas. The
capital is being deployed as a convertible debenture which can be converted
into a 6% ORI.
Progress has continued at Foggy Mountain as the team completed a
reconnaissance surface programme in October 2022 which confirmed three of the
four historic mineral occurrences (the fourth minfile area was not visited in
2022). At our Northern Treasure project, an airborne magnetic survey was also
completed in October 2022, identifying several structures that are coincident
with minfile occurrences.
Outlook
The year ended 30 June 2022 was active for the Group, having hit a number of
operational milestones. We further diversified our portfolio with projects in
the energy sector and in new jurisdictions, as well as acquiring our first
royalty bringing near-term cashflow.
Despite the global macroeconomic climate, the outlook for the natural
resources sector looks robust. Our focus on commodities key to the energy
transition movement offers an attractive opportunity for significant
shareholder returns as demand, and therefore prices, are set to remain high.
Our project generator model allows us to diversify our portfolio across the
resource sector, building value while minimizing risk and cost. This helps
build cashflow for our shareholders.
We are starting to see some projects reach a point where we could potentially
begin receiving royalty payments further underpinning the benefit of our
business model. It is down to the depth of experience within our team that we
are able to execute this model successfully.
We look forward to keeping investors updated over the next year and beyond as
we generate and pursue new ideas, including lithium assets and bauxite
projects, while continuing to diversify into energy royalties and attracting
new partnerships.
Financial Review
During the year ended 30 June 2022, the Group earned £559,523 (2021:
£2,560,070) in revenue from property option sale agreements. At the end of
the fiscal year, there was £310,578 in cash on hand with the cash reserves to
be used in the short term to cover compliance costs, initial mineral property
due diligence and other costs incidental to the identification and development
of mineral acquisition opportunities.
In March 2022, the Company completed a fundraising of £1,469,770 by issuing
19,596,931 ordinary shares at £0.075 per share. In March 2022, the Company
drew down £750,000 of the Crescita Capital LLC facility for an issue of
12,000,000 ordinary shares at £0.0625 per share.
Subsequent to the year end, in July 2022 the Group raised £585,625 through
the issue of new ordinary shares and has continued to review and acquire
mineral and energy projects and generate revenue through optioning these
assets to exploration partners. The buying and selling or optioning of its
projects will continue as the core of the Company as we build a new,
growth-focused diversified project generator, supported with a natural
resource royalty business.
The loss for the year was £5,557,029 (2021: £902,060 loss) was
predominantly made up of administrative expenses and fair value loss on
investments. The result for the year ended 30 June 2022 consisted mainly of
income from property option payments, expenses from professional and
consulting fees and fair value adjustments. The fair value loss of £2.83
million on both listed and unlisted investments held in the Canadian
subsidiary is an unrealised loss but has contributed negatively to the
Company's 2022 year. For a further breakdown on expenses, please refer to note
23 and for further breakdown on fair value of investments, please refer to
note 6.
Financial Position
The Group's Statement of Financial Position as at 30 June 2022 and
comparatives at 30 June 2021 are summarised below:
2022 2021
£ £
Current assets 1,611,212 1,799,847
Non-current assets 3,805,897 4,383,998
Total assets 5,417,109 6,183,845
Current liabilities 1,395,910 895,264
Total liabilities 1,395,910 895,264
Net assets 4,021,199 5,288,581
STRATEGIC REPORT
The Directors of the Company present their Strategic Report on the Group for
the year ended 30 June 2022.
Principal Activity
The principal activity of the Group is natural resource project and royalty
generation as well as acquisition of projects and royalties.
Review of operations
A review of the business of the Company during the year and an indication of
likely future developments may be found in the Chairman's Statement.
Financial performance review
The loss of the Group for the year ended 30 June 2022 amounts to £5,557,029
(30 June 2021: £902,060).
The Board monitors the activities and performance of the Group on a regular
basis. The Board uses financial indicators based on budget versus actual to
assess the performance of the Group. The indicators set out below will
continue to be used by the Board to assess performance over the period to 30
June 2022.
The main KPIs for the Group are as follows. These allow the Group to monitor
costs and plan future exploration and development activities:
KPI 2022 2021
Cash and cash equivalents £310,578 £1,277,617
Administrative expenses as a percentage of total assets 59.6% 14.1%
Exploration and evaluation cash expenditures £370,848 £29,675
Carrying value of investment £2,069,302 £4,353,318
Cash has been used to fund the Group's operations and facilitate its
investment activities (refer to the Statements of Cash Flows).
Administrative expenses are the expenses related to the Group's ability to run
the corporate functions to ensure they can perform their operational
commitments.
Exploration costs included costs non-capitalised costs and costs capitalised
during the period consist of exploration expenditure on the Group's
exploration licences net of foreign exchange rate movements.
Principal risks and uncertainties
The management of the business and the execution of the Group's strategy are
subject to a number of risks. The key business risks affecting the Group are
set out below.
Risks are formally reviewed by the Board, and appropriate processes are put in
place to monitor and mitigate them. If more than one event occurs, it is
possible that the overall effect of such events would compound the possible
adverse effects on the Group.
Exploration risks
The energy and resource business are controlled by a number of global factors,
principally supply and demand which in turn is a key driver of global prices;
these factors are beyond the control of the Group. Exploration is a high-risk
business and there can be no guarantee that any mineralisation discovered will
result in proven and probable reserves or go on to be an operating mine. At
every stage of the exploration process the projects are rigorously reviewed to
determine if the results justify the next stage of expenditure ensuring that
funds are only applied to high priority targets. The energy sector is a cyclic
business and sensitive to several global and regional factors that the company
is not able to predict or control.
Some of the principal assets of the Group are subject to certain financial and
legal commitments. If these commitments are not fulfilled the licences could
be revoked. They are also subject to option agreements and legislation defined
by the local government; if this legislation is changed or option payments are
not made on time, it could adversely affect the value of the Group's assets.
Dependence on key personnel
The Group is dependent upon its executive management team and various
technical consultants. Whilst it has entered into contractual agreements with
the aim of securing the services of these personnel, the retention of their
services cannot be guaranteed. The development and success of the Group
depends on its ability to recruit and retain high quality and experienced
staff. The loss of the service of key personnel or the inability to attract
additional qualified personnel as the Group grows could have an adverse effect
on future business and financial conditions.
Uninsured risk
The Group, as a participant in exploration and development programmes, may
become subject to liability for hazards that cannot be insured against or
third-party claims that exceed the insurance cover. The Group may also be
disrupted by a variety of risks and hazards that are beyond control, including
geological, geotechnical and seismic factors, environmental hazards,
industrial accidents, occupational and health hazards and weather conditions
or other acts of God.
Royalty acquisitions risk
The growth and viability of the Group is dependent on its ability to
successfully identify and acquire royalties. The availability of potential
royalties which meet the Group's investing policy will depend, inter alia, on
the state of the world economy, general business conditions, commodity prices,
mining sector appetite, alternative sources of finance and financial markets
generally.
Funding risk
The only sources of funding currently available to the Group are through the
issue of additional equity capital in the parent company, drawdown additional
equity through the Crescita Capital Facility or through bringing in partners
to fund exploration and development costs. The Group's ability to raise
further funds will depend on the success of the Group's exploration activities
and its investment strategy. The Group may not be successful in procuring
funds on terms which are attractive and, if such funding is unavailable, the
Group may be required to reduce the scope of its exploration activities or
relinquish some of the exploration licences held for which it may incur fines
or penalties.
Financial risks
The Group's operations expose it to a variety of financial risks that can
include market risk (including foreign currency, price and interest rate
risk), credit risk, and liquidity risk. The Group has a risk management
programme in place that seeks to limit the adverse effects on the financial
performance of the Group by monitoring levels of debt finance and the related
finance costs. The Group does not use derivative financial instruments to
manage interest rate costs and, as such, no hedge accounting is applied.
Investment risks
The Group holds investments in publicly listed and non-listed securities.
These future valuations are determined by many factors but include the
operational and financial performance of the underlying investee companies, as
well as market perceptions of the future of the economy and its impact upon
the economic environment in which these companies operate. This risk
represents the potential loss that the Group might suffer through holding its
financial investment portfolio in the face of market movements.
Details of the Group's financial risk management policies are set out in Note
3 to the Financial Statements.
Going Concern
The consolidated financial statements have been prepared under the going
concern assumption. Under the going concern assumption, an entity is
ordinarily viewed as continuing in business for the foreseeable future with
neither the intention nor the necessity of liquidation, ceasing trading or
seeking protection from creditors pursuant to laws or regulations.
The Directors are confident that this funding will continue and consider that
the Group will have access to adequate resources to meet operational
requirements for at least 12 months from the date of approval of these
financial statements. On this basis, the Directors have formed a judgement, at
the time of approving the Financial Statements, that there is a reasonable
expectation that the Group has access to adequate resources to continue in
operational existence for the foreseeable future. For this reason, the
Directors have adopted the going concern basis in preparing the Financial
Statements.
Internal Controls
The Board recognises the importance of both financial and non-financial
controls and has reviewed the Group's control environment and any related
shortfalls during the year. Since the Group was established, the Directors are
satisfied that, given the current size and activities of the Group, adequate
internal controls have been implemented. The Directors are aware that no
system can provide absolute assurance against material misstatement or loss,
however, in light of the current activity and proposed future development of
the Group, continuing reviews of internal controls will be undertaken to
ensure that they are adequate and effective.
Section 172(1) Statement - Promotion of the Company for the benefit of the
members as a whole
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
· Consider the likely consequences of any decision in the long
term,
· Act fairly between the members of the Company,
· Maintain a reputation for high standards of business conduct,
· Consider the interests of the Company's employees,
· Foster the Company's relationships with suppliers, customers and
others, and
· Consider the impact of the Company's operations on the community
and the environment.
The Group operates as a project generation and royalty business for the
natural resources sectors, which is inherently speculative in nature and,
without regular income, is dependent upon fund-raising for its continued
operation. The nature of the business is important to the understanding of the
Group by its members, employees and suppliers, and the Directors are as
transparent about the cash position and funding requirements as is allowed
under FCA regulations. The application of the s172 requirements are
demonstrated throughout this report and the financial statements as a whole,
with the following examples representing some of the key decisions made in
2021 and up to the date of the approval of these financial statements:
· Remunerate the Directors with share options in lieu of cash:
during the year, having decided on a plan to raise new funds to finance
operations, the Directors also decided that to maximise funds available for
exploration the Directors would be remunerated in part by share options
instead of cash. This has the added benefit of more fully aligning the
interests of the Directors with those of the members.
· Ethical responsibility to the community and the environment: the
Board takes seriously its ethical responsibilities to the communities and
environment in which it works. We abide by the local and relevant UK laws on
anti-corruption and bribery. Wherever possible, local communities are engaged
in the geological operations and support functions required for field
operations, providing much needed employment and wider economic benefits to
the local communities. In addition, we follow international best practise on
environmental aspects of our work. Our goal is to meet or exceed standards, in
order to ensure we obtain and maintain our social licence to operate from the
communities with which we interact.
· Appointment of new director: Expanding organisational capability
through appointing experienced Board members to govern and lead the Company.
· Securing new partners for exploration properties: During the
year, the Group continued to expand their exploration properties and secure
new option agreements for these properties which continues to generate revenue
for the Group.
The need to act fairly between members of the Company
After weighing up all relevant factors, the Directors consider which course of
action best enables delivery of our strategy over the long-term, taking into
consideration the impact on stakeholders. The Directors believe they have
acted in the way they consider most likely to promote the success of the
Company for the benefit of its members as a whole.
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. The Company has close ongoing
relationships with key private shareholder, analysts and brokers, providing
the opportunity to discuss issues and provide feedback at meetings with the
Company. All shareholders are encouraged to attend the Company's Annual
General Meeting and any general meetings held by the Company.
The desirability of the Company maintaining a reputation for high standards of
business conduct
The Board periodically reviews and approves clear frameworks, such as the
Company's Code of Business Ethics, to ensure that its high standards are
maintained both within the Group and the business relationships we maintain.
This, complemented by the various ways the Board is informed and monitors
compliance with relevant governance standards, help ensure its decisions are
taken and that the Group acts in ways that promote high standards of business
conduct.
Developing relationships with the option agreement partners, suppliers and
others
Delivering on our strategy requires strong mutually beneficial relationships
with suppliers. The Group values all of its suppliers and aims to build strong
positive relationships through open communication and adherence option
agreement terms. The Group is committed to being a responsible entity and
doing the right thing for its suppliers and business partners.
The impact of the Company's operations on the community and the environment
The Group is committed to the highest environmental, social and governance
standards both internally within the Group and externally with its partners.
The Group is committed to being a responsible entity in terms of the community
and the wider environment.
Conclusion
The Directors believe that to the best of their wisdom and abilities, they
have acted in the way they consider prudent to promote the success of the
Company for the benefit of its members as a whole, in the true spirit of the
provisions of Section 172 (1) of the Companies Act 2006.
DIRECTORS REPORT
The Directors are pleased to present their Report and the audited consolidated
Financial Statements of the Company and its subsidiaries for the year ended 30
June 2022.
Results and Dividends
Loss on ordinary activities of the Group after taxation amounted to
£5,557,029 (2021: loss of £902,060). The Directors do not recommend the
payment of a dividend (2021: £Nil).
Directors & Directors' interests
The Directors who held office at 30 June 2022 had the following beneficial
interests in shares and options of the Group:
30 June 2022 30 June 2021
Ordinary Shares Options Ordinary Shares Options
Samuel "Kyler" Hardy 91,626,929 1,500,000 62,458,704 1,500,000
Emma Priestley 2,000,000 1,100,000 2,000,000 500,000
Andrew Male 2,000,000 600,000 2,000,000 -
Kyle Hookey ((1)) - - 3,445,588 500,000
Paul Gurney ((2)) - - 600,000 -
Total 95,626,929 3,200,000 70,504,292 2,500,000
(1) Kyle Hookey resigned on 20 January 2022
(2) At 30 June 2021, Paul Gurney held 600,000 shares which were sold in
February 2022. Paul wasn't appointed as a Director until 14 April 2022.
Substantial shareholders
On 28 October 2022, the following parties had notified the Group of a
beneficial interest that represents 3% or more of the Group's issued share
capital at those dates:
28 October 2022
Holding Percentage
Samuel Kyler Hardy 91,626,929 18.96%
Corporate responsibility
Greenhouse gas emissions
Given the nature of its activities which include aerial geophysics with a
helicopter and the operation of drill rigs, the Group is conscious of
greenhouse gas emissions. The Directors are mindful of their responsibilities
in this regard and strive to seek opportunities where improvements may be
made.
The Board recognises its responsibility to protect the environment and is
fully committed to conserving natural resources and striving for environmental
sustainability, by ensuring that its facilities are operated to optimise
energy usage; minimise waste production; and protect nature and people.
The Group is currently deemed to be a low energy user meaning it has consumed
less that 40MWh of energy during the reporting period. This includes the
combustion of gas, consumption of fuel for transport and the purchase of
electricity for its own use. As such, it is exempt from disclosing actual kWh
of energy emitted during the period from its operations and activities.
As the Group's operations scale up, it will continue to monitor its energy use
and its status as a low energy user. The Group will seek to collect,
structure, and effectively disclose related performance data for the material,
climate-related risks and opportunities identified where relevant.
Internal controls
The Board recognises the importance of both financial and non-financial
controls and has reviewed the Group's control environment and any related
shortfalls during the period. Since the Group was established, the Directors
are satisfied that, given the current size and activities of the Group,
adequate internal controls have been implemented. Whilst they are aware that
no system can provide absolute assurance against material misstatement or
loss, in light of the current activity and proposed future development of the
Group, continuing reviews of internal controls will be undertaken to ensure
that they are adequate and effective.
Supplier payment policy
The Group's current policy concerning the payment of trade creditors is to
follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre
Point, 103 New Oxford Street, London WC1A 1DU).
The Group's current policy concerning the payment of trade creditors is to:
· settle the terms of payment with suppliers when agreeing the
terms of each transaction;
· ensure that suppliers are made aware of the terms of payment by
inclusion of the relevant terms in contracts; and
· pay in accordance with the Group's contractual and other legal
obligations.
Going concern
The Consolidated Financial Statements have been prepared on a going concern
basis. Although the Group's assets are not generating revenues and an
operating loss has been reported, the Directors are of the view that the Group
has sufficient funds to meet all committed and contractual expenditure within
the next 12 months and to maintain good title to the exploration licences.
This will ensure they will still be in a strong financial position once they
are able to re-commence exploration activity.
The Group's business activities together with the additional factors likely to
affect its future development, performance and position are set out in the
Chairman's Report on pages 3 & 4. In addition, Note 3 to the Consolidated
Financial Statements includes the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives; details of
its financial instruments and its exposure to market, credit and liquidity
risk.
Directors' and Officers' indemnity insurance
The Group has made qualifying third-party indemnity provisions for the benefit
of its Directors and Officers. These were made during the period and remain in
force at the date of this report.
Financial risk management objectives
The Group has disclosed the financial risk management objectives within Note 3
to these Financial Statements.
Events after the reporting period
Events after the reporting period are set out in Note 24 to the Financial
Statements.
Future developments
Details of future developments for the Group are disclosed in the Chairman's
Report on page 3.
Provision of information to Auditor
So far as each of the Directors is aware at the time this report is approved:
· there is no relevant audit information of which the Company's auditor
is unaware; and
· the Directors have taken all steps that they ought to have taken to
make themselves aware of any relevant audit information and to establish that
the auditor is aware of that information.
Auditor
PKF Littlejohn LLP has signified its willingness to continue in office as
auditor.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the Group
and Company Financial Statements in accordance with UK-adopted international
accounting standards. Under company law the Directors must not approve the
Financial Statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company, and of the profit or
loss of the Group for that period. In preparing these Financial Statements,
the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent;
state whether applicable UK-adopted international accounting standards have
been followed, subject to any material departures disclosed and explained in
the financial statements; and
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and Company, and enable them to ensure that the Financial Statements
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and Company, and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website,
www.cloudbreakdiscovery.com. Legislation in the United Kingdom governing the
preparation and dissemination of the Financial Statements may differ from
legislation in other jurisdictions.
The Directors confirm that they have complied with the above requirements in
preparing the Financial Statements.
CORPORATE GOVERNANCE REPORT
As a Group listed on the Standard Segment of the Official List of the UK
Listing Authority, the Group is not required to comply with the provisions of
the UK Corporate Governance Code. However, the Board is committed to
maintaining high standards of corporate governance and so far, as appropriate
given the Group's size and the constitution of the Board, complies and intends
to comply with The Corporate Governance Guidelines for Small and Mid-Sized
Companies (the "QCA Code").
In light of the Group's size and recent history, the Group has deviated from
the QCA Code in the following respects:
· The provisions relating to the composition of the Board and the
division of responsibilities are not being complied with as the Board feels
these provisions to be inapplicable, given the size of the Group.
· The Board do not consider an internal audit function to be
applicable due to the size of the Group.
· A diversity policy as applied to the Group's administrative
management and supervisory bodies has not yet been developed.
The Directors are responsible for internal control in the Group and for
reviewing effectiveness. Due to the size of the Group, all key decisions are
made by the Board. The Directors have reviewed the effectiveness of the
Group's systems during the period under review and consider that there have
been no material losses, contingencies or uncertainties due to weaknesses in
the controls.
The Group will hold timely board meetings as issues arise which require the
attention of the Board. The Board is responsible for the management of the
business of the Group, setting the strategic direction of the Group and
establishing the policies of the Group. It is the Directors' responsibility to
oversee the financial position of the Group and monitor the business and
affairs of the Group, on behalf of the Shareholders, to whom they are
accountable. The primary duty of the Directors is to act in the best interests
of the Group at all times. The Board also addresses issues relating to
internal control and the Group's approach to risk management and has formally
adopted an anti-corruption and bribery policy.
The Directors have established an audit committee, a nomination committee and
a remuneration committee with formally delegated duties and responsibilities.
Emma Priestley and Paul Gurney are each considered by the Board to be an
independent Non-Executive Director. At the date of release, Andrew Male is
considered to be an Executive Director.
The QCA Code has ten principles of corporate governance that the Group has
committed to apply within the foundations of the business. These principles
are:
1. Establish a strategy and business model which promote long-term
value for shareholders;
2. Seek to understand and meet shareholder needs and expectations;
3. Take into account wider stakeholder and social responsibilities and
their implications for long term success;
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation;
5. Maintain the board as a well-functioning balanced team led by the
Chair;
6. Ensure that between them the directors have the necessary up to
date experience, skills and capabilities;
7. Evaluate board performance based on clear and relevant objectives,
seeking continuous improvement;
8. Promote a corporate culture that is based on ethical values and
behaviours;
9. Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board; and
10. Communicate how the Group is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders.
There follows a short explanation of how the Group will apply each of the
principles:
Principle One
Business Model and Strategy
The Board has determined that the best medium and long term value can be
delivered through the adoption of a single strategy. The Group's principal
activity is natural resource project and royalty generation as well as
acquisition of projects and royalties. Cloudbreak maximizes its returns by
seeking buyers to purchase its properties or by seeking partners to jointly
develop its properties through joint ventures or other partnering mechanisms.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. Shareholders are encouraged to
attend the Group's Annual General Meeting ("AGM"). Investors also have access
to current information on the Group though its website,
www.cloudbreakdiscovery.com, and via Kyler Hardy, Chief Executive Officer, and
Andrew Male, Executive Director who are responsible for shareholder liaison
and are available to answer investor relations enquiries. Shareholders can
email the Group at info@cloudbreakdiscovery.com or via a submission on the
Group website.
The Group's Annual Report, Notice of AGM are sent to all shareholders and can
be downloaded from our website. Copies of the interim report and other
investor presentations are also available on the Group's website. Shareholders
are kept up to date via regulatory news flow ("RNS") on matters of a material
substance and regulatory nature.
Periodic updates are provided to the market and any deviations to these
updates are announced via RNS. At the AGM, separate resolutions are proposed
on each substantial issue. For each proposed resolution, proxy forms are
issued which provide voting shareholders with an opportunity to vote in
advance of the AGM if they are unable to vote in person. Our registrars, count
the proxy votes which are properly recorded, and the results of the AGM are
announced through an RNS.
The Board is keen to ensure that the voting decisions of shareholders are
reviewed and monitored and that approvals sought at the Group's AGM are as
much as possible within the recommended guidelines of the QCA Code. Non-deal
roadshows will be arranged throughout the year to meet with existing
shareholders and potential new stakeholders to maintain, as much as possible,
transparency and dialogue with the market. Additionally, investor
presentations can be found on the Group's website.
Principle Three
Considering Wider Stakeholder and Social Responsibilities
The Board recognises that the long-term success of the Group is reliant upon
open communication with its internal and external stakeholders: investee
companies, shareholders, contractors, suppliers, regulators and other
stakeholders. The Group has close ongoing relationships with a broad range of
its stakeholders and provides them via regular contact with the opportunity to
raise issues and provide feedback to the Group. The Board regularly reviews
and assesses its key resources and relationships and has established processes
and systems to ensure that there is close oversight and contact with its
minority investee companies and key stakeholders.
Principle Four
Risk Management
The Board is responsible for ensuring that procedures are in place and being
implemented effectively to identify, evaluate and manage the significant risks
faced by the Group, noting that the Group is primarily an operating company
with some remaining minority investments in portfolio companies. A risk
assessment matrix has been established by the Group and is updated at regular
intervals. The following principal risks, and controls to mitigate them, have
been identified:
Risk. Impact Probability Risk Level Mitigating Actions & Controls Risk Owner Accept
Exploration risks High Low Medium Experience of the Board and the technical senior management team; CEO Yes
Dependence on key personnel High Medium Low Key management have significant equity; CEO Yes
Share options awarded;
Exciting business opportunities
Uninsured risk Medium Low Low Group's exploration programmes are in the early stages with no mine CEO Yes
development or operations in place as of yet
Funding risk High Medium Medium Cash on hand, investments held and bought deal equity facility in place CEO Yes
sufficient to fund the Comely for the foreseeable future.
Financial risks High Medium Medium No debt held by the Group. CEO Yes
Audit Committee
Investment risk High Medium Medium Investments are held in both listed and unlisted entities and the board CEO Yes
monitor their investments in a regular basis. For unlisted investments the
board attempt to have regular communication with the management team of the
investee.
Principle Five
A Well Functioning Board of Directors
The Board comprises the Chairman and Chief Executive Officer, Kyler Hardy,
Executive Director, Andrew Male (effective from release of these accounts) and
two Non-Executive Directors, Paul Gurney and Emma Priestley. Biographical
details of the current Directors are set out on the Company's website.
Executive and Non-Executive Directors are subject to re-election in accordance
with both the requirements of the UK Companies Act 2006 and the Group's
articles of association ("Articles"). The Group's Articles state that
Directors are subject to re-election at intervals of no more than three years.
The letters of appointment for all Directors stipulate the time commitment
that each Director is expected to provide to the Group. The Board Chairman
serves as chair of every meeting of the Board of Directors.
The Board meets at least twice per year. It has established an Audit
Committee, the members of which are Paul Gurney and Emma Priestley. The
Nominations Committee consists of Emma Priestley (Chair) and Paul Gurney. A
Remuneration Committee has been established and is composed of Emma Priestley
(chair) and Paul Gurney.
Emma Priestley and Paul Gurney are considered to be independent Directors and
as such the Group is in compliance with the requirement to have a minimum of
two independent Non-Executive Directors on its Board.
The Board shall review further appointments.
The Group reports annually in the Directors' Report on the number of Board and
committee meetings held during the year and the attendance record of
individual Directors. To date, in the current financial year, the Directors
have a 100% record of attendance at such meetings. Directors meet formally and
informally both in person and by telephone.
Principle Six
Appropriate Skills and Experience of the Directors
The Board currently consists of four Directors. Westend Corporate LLP acts as
the Company Secretary. The Group believes that the current balance of skills
in the Board as a whole, reflects a very broad range of commercial and
professional skills across geographies and industries and all of the Directors
have experience in the natural resources sector and public markets.
Information about the directors can be found on the website.
The Board is kept abreast with developments of governance and London Stock
Exchange ("LSE") regulations. The Group's lawyers provide updates on
governance issues. The Directors have access to the Group's company secretary,
lawyers and auditors as and when required and are able to obtain advice from
other external bodies when necessary.
Principle Seven
Evaluation of Board Performance
Internal evaluation of the Board, the Committees and individual Directors is
undertaken on an annual basis in the form of peer appraisal and discussions to
determine the effectiveness and performance against targets and objectives, as
well as the Directors' continued independence. As a part of the appraisal the
appropriateness and opportunity for continuing professional development
whether formal or informal is discussed and assessed.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and risk will
impact the corporate culture of the Group as a whole, which in turn will
impact the Group's performance. The Directors are very aware that the tone and
culture set by the Board will greatly impact all aspects of the Group as a
whole and the way that consultants or other representatives behave. The
corporate governance arrangements that the Board has adopted are designed to
instil a firm ethical code to be followed by Directors, employees, consultants
and representatives alike throughout the entire organisation. The Group
strives to achieve and maintain an open and respectful dialogue with
employees, representatives, regulators, suppliers and other stakeholders.
Therefore, the importance of sound ethical values and behaviours is crucial to
the ability of the Group to successfully achieve its corporate objectives. The
Board places great importance on this aspect of corporate life and seeks to
ensure that this flows through all that the Group does. The Directors consider
that at present the Group has an open culture facilitating comprehensive
dialogue and feedback and enabling positive and constructive challenge. The
Group has adopted, with effect from the date on which its shares were admitted
to LSE, a code for Directors' dealings in securities which is appropriate for
a company whose securities are traded on LSE and is in accordance with the
requirements of the Market Abuse Regulation which came into effect in 2016.
Issues of bribery and corruption are taken seriously, the Group has a
zero-tolerance approach to bribery and corruption and has an anti-bribery and
corruption policy in place to protect the Group, its employees and those third
parties to which the business engages with. The policy is provided to staff
upon joining the business and training is provided to ensure that all
employees within the business are aware of the importance of preventing
bribery and corruption. Each employment contract specifies that the employee
will comply with the policies. There are strong financial controls across the
business to ensure on going monitoring and early detection.
Principle Nine
Maintenance of Governance Structures and Processes
The Audit Committee is chaired by Paul Gurney with Emma Priestley being the
other member. The Board has adopted appropriate delegations of authority which
set out matters which are reserved for the Board. The Chairman is responsible
for the effectiveness of the Board as well as primary contact with
shareholders, while, as an operating company, execution of the Group's
strategy is delegated to the Chief Executive Officer.
The Audit Committee has primary responsibility for monitoring the quality of
internal controls and ensuring that the financial performance of the Group is
properly measured and reported. It receives reports from Group advisors and
auditors relating to the interim and annual accounts and the accounting and
internal control systems in use throughout the Group. The Audit Committee
meets not less than twice in each financial year, and it has unrestricted
access to the Group's auditors.
In accordance with the Companies Act 2006, the Board complies with: a duty to
act within their powers; a duty to promote the success of the Group; a duty to
exercise independent judgement; a duty to exercise reasonable care, skill and
diligence; a duty to avoid conflicts of interest; a duty not to accept
benefits from third parties and a duty to declare any interest in a proposed
transaction or arrangement. The Board notes requirement for the Group to meet
the LSE Rules for Companies such that the Group is suitable at all times to
remain admitted to trading on LSE. This includes the requirement for a
governance structure compatible with this requirement.
The Board retains full and effective control over the Group and holds regular
meetings at which financial, operational and other reports are considered and
where appropriate voted upon. The Board is responsible for the Group's
strategy and key financial and compliance issues.
There are certain matters that are reserved for the Board, they include:
• approval of the Group's strategic aims and objectives;
• Review of Group performance and ensuring that any necessary
corrective action is taken;
• Extension of the Group's activities into new business or
geographical areas;
• Any decision to cease to operate all or any part of the Group's
business;
• Major changes to the Group's corporate structure and management
and control structure;
• Any changes to the Group's listing;
• Changes to governance and key business policies;
• Ensuring maintenance of a sound system of internal control and
risk management;
• Approval of half yearly and Annual Report and accounts and
preliminary announcements of final year results;
• Reviewing material contracts and contracts not in the ordinary
course of business.
As the Group grows, the Directors will ensure that the governance framework
remains in place to support the development of the business.
Principle Ten
Shareholder Communication
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders in compliance with regulations
applicable to companies quoted on the LSE market. All shareholders are
encouraged to attend the Group's AGM where they will be given the opportunity
to interact with the Directors.
Investors also have access to current information on the Group though its
website, www.cloudbreakdiscovery.com, and via Kyler Hardy, Chief Executive
Officer, who is available to answer investor relations enquiries.
The Group shall include, when relevant, in its Annual Report, any matters of
note arising from the Audit Committee (none for the current year).
Copies of all Annual Reports, Notices of Meetings, Circulars sent to
shareholders and Admission Documents (in respect of the last five years) are
included on the Group's website.
If a significant proportion of votes was ever cast against a resolution by
shareholders in General Meeting, the Group would, on a timely basis, provide
an explanation of what actions it intends to take to understand the reasons
behind that vote result, and, where appropriate, any different action it has
taken, or will take, as a result of the vote.
STATEMENT OF FINANCIAL
POSITION
As at 30 June
2022
Company number: 06275976
Group Company
Note 30 June 2022 30 June 2021 30 June 2022 30 June 2021
£ £ £ £
Non-Current Assets
Royalty asset 7 1 1 - -
Intangible assets 5 78,694 30,679 - -
Investments 6 2,069,302 4,353,318 68,056 107,679
Investment in subsidiaries 6 - - 7,252,886 6,485,487
Convertible debenture receivables 8 1,657,900 - 1,657,900 -
3,805,897 4,383,998 8,978,842 6,593,166
Current Assets
Trade and other receivables 10 1, 300,634 522,230 1,676,619 514,849
Cash and cash equivalents 11 310,578 1,277,617 124,118 1,232,385
1,611,212 1,799,847 1,800,737 1,747,234
Total Assets 5,417,109 6,183,845 10,779,579 8,340,400
Current Liabilities
Trade and other payables 13 1,395,910 895,264 1,357,254 449,885
1,395,910 895,264 1,357,254 449,885
Total Liabilities 1,395,910 895,264 1,357,254 449,885
Net Assets 4,021,199 5,288,581 9,422,325 7,890,515
Equity attributable to owners of the Parent
Share capital 14 654,129 560,520 654,129 560,520
Share premium 14 14,821,521 10,905,507 14,821,521 10,905,507
Other reserves 16 599,093 511,501 297,397 407,656
Reverse asset acquisition reserve (4,134,019) (4,134,019) - -
Retained losses (7,919,525) (2,554,928) (6,350,722) (3,983,168)
Total Equity 4,021,199 5,288,581 9,422,325 7,890,515
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2022
Continued operations Note Year ended 30 June Year ended 30 June
2022 2021
£ £
Profit on disposal of exploration & evaluation asset sales 559,523 2,560,070
Administrative expenses 23 (3,308,214) (3,238,057)
Foreign exchange gain/(losses) 39,380 (193,772)
Operating loss (2,709,311) (871,759)
Finance income 19 154,518 46,587
Other income 11,233 -
Other gains/(losses) 20 8,332 -
Impairment of loans 9 (184,365) (1,502,671)
Unrealised fair value gain/(loss) on investments 6 (2,837,437) 1,425,783
Loss before income tax (5,557,029) (902,060)
Income tax 21 - -
Loss for the year attributable to owners of the Parent (5,557,029) (902,060)
Basic and Diluted Earnings Per Share attributable to owners of the Parent (0.01)p (0.85)p
during the period (expressed in pence per share)
Year ended 30 June Year ended 30 June
2022 2021
£ £
Loss for the period (5,557,029) (902,060)
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Currency translation differences 233,866 27,744
Other comprehensive income for the period, net of tax (5,323,163) (874,316)
Total Comprehensive Income attributable to owners of the parent (5,323,163) (874,316)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
Note Share capital Share premium Reverse asset acquisition reserve Other reserves Retained losses Total
£ £ £ £ £ £
Balance as at 30 June 2020 50,120 2,163,168 - 36,645 (1,652,868) 597,065
Loss for the year - - - - (902,060) (902,060)
Other comprehensive income for the year - - - - -
-
Items that may be subsequently reclassified to profit or loss - - - - -
-
Currency translation differences - - 27,744 - 27,744
-
Total comprehensive income for the year - - 27,744 (902,060) (874,316)
-
Issue of shares 14 30,475 55,373 - - - 85,848
Transfer to reverse acquisition reserve 14 (80,595) (2,218,542) 2,259,668 39,469 - -
Recognition of Cloudbreak Discovery Plc equity at reverse acquisition 14 460,423 7,969,714 (6,393,687) - - 2,036,450
Warrants assumed - Reverse take-over - - - 37,971 - 37,971
Options assumed - Reverse take-over - - - 211,978 - 211,978
Issue of shares 100,097 2,935,793 - 157,695 - 3,193,585
Total transactions with owners, recognised directly in equity 510,400 8,742,338 447,113 - 5,565,832
(4,134,019)
Balance as at 30 June 2021 560,520 10,905,507 (4,134,019) 511,501 (2,554,928) 5,288,581
Balance as at 1 July 2021 560,520 10,905,507 (4,134,019) 511,501 (2,554,928) 5,288,581
Loss for the year - - - - (5,557,029) (5,557,029)
Other comprehensive income for the year - - - - -
-
Items that may be subsequently reclassified to profit or loss
- - - - - -
Currency translation differences - - - 233,866 - 233,866
Total comprehensive income for the year - - - 233,866 (5,323,163)
(5,557,029)
Issue of shares 14 93,609 3,994,527 - - - 4,088,136
Issue costs 14 - (78,513) - - - (78,513)
Options Granted 16 - - - 11,238 - 11,238
Warrants Granted 16 - - - 30,075 - 30,075
Options Exercised 16 - - - (24,962) 24,962 -
Share Options Expired 16 - - - (112,406) 112,406 -
Share Options Cancelled 16 - - - (1,180) 1,180 -
Warrants Exercised 16 - - - (13,024) 13,024 -
Other equity movement 16 - - - 4,845 - 4,845
Elimination of other reserves 16 - - - (40,860) 40,860 -
Total transactions with owners, recognised directly in equity (146,274) 192,432 4,055,781
93,609 3,916,014 -
Balance as at 30 June 2022 599,093 4,021,199
654,129 14,821,521 (4,134,019) (7,919,525)
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
Note Share capital Share premium Other reserves Retained losses Total equity
£ £ £ £ £
Equity to be issued
£
Balance as at 30 June 2020 227,586 1,328,494 15,200 112,406 (1,720,602) (36,916)
Loss for the year - - - - (2,262,566) (2,262,566)
Total comprehensive income for the year - - - (2,262,566) (2,262,566)
-
Issue of shares - Acquisition of Cloudbreak Canada Subsidiary 216,183 6,269,294 - - - 6,485,477
Issue of shares 116,751 3,307,719 (15,200) 195,678 - 3,604,948
Options granted - - - 99,572 - 99,572
Total transactions with owners, recognised directly in equity 332,934 9,577,013 295,250 - 10,189,997
(15,200)
Balance as at 30 June 2021 560,520 10,905,507 - 407,656 (3,983,168) 7,890,515
Balance as at 30 June 2021 560,520 10,905,507 - 407,656 (3,983,168) 7,890,515
Loss for the year - - - - (2,523,971) (2,523,971)
Total comprehensive income for the year - - - (2,523,971) (2,523,971)
-
Issue of shares 14 93,609 3,994,527 - - - 4,088,136
Issue Costs 14 - (78,513) - - - (78,513)
Options granted 16 - - - 11,238 - 11,238
Warrants Granted 16 - - - 30,075 - 30,075
Options Exercised 16 - - - (24,962) 24,962 -
Share Options Expired 16 - - - (112,406) 112,406 -
Share Options Cancelled 16 - - - (1,180) 1,180 -
Warrants Exercised 16 (13,024) 13,024 -
Other equity movement 16 - - - 4,845 - 4,845
Elimination of other reserves 16 - - - (4,845) 4,845 -
Total transactions with owners, recognised directly in equity 93,609 3,916,014 (110,259) 156,417 4,055,781
-
Balance as at 30 June 2022 654,129 14,821,521 - 297,397 (6,350,722) 9,422,325
STATEMENTS OF CASH FLOWS
For the year ended 30 June 2022
Group Company
Note Year ended Year ended Year ended 30 June 2022 Year ended 30 June 2021
30 June 2022 30 June 2021 £ £
£ £
Cash flows from operating activities
Loss before income tax (5,557,029) (902,060) (2,523,981) (2,262,566)
Adjustments for:
Exploration and evaluation asset sales (559,523) (2,186,891) - -
Other income (11,233) - - -
Other gains (8,332) - - -
Change in fair value of investments 2,837,437 (1,425,783) 39,623 (4,173)
Impairment of loans 184,365 1,502,671 123,486 1,035,990
Interest income (154,518) (36,021) (101,367) -
Intercompany sales - - (406,186) -
Unrealised foreign exchange/(loss) 44,615 (155,069) (73,125) 4,617
Finance charge 23 - 200,000 - 200,000
Listing fee 23 - 2,365,634 - -
Share option expenses 23 41,325 41,325 -
Stock based compensation 1,770,000 - 1,770,000 137,553
Decrease/(Increase) in trade and other receivables 10 (776,342) (406,449) (766,999) (474,831)
Increase/(Decrease) in trade and other payables 13 491,807 (542,836) 907,376 338,511
Net cash used in operating activities (1,697,428) (1,586,804) (989,848) (1,024,899)
Cash flows from investing activities
Funds received on sale of investment 6 210,178 195,510 - -
Funds spent on investment 6 (181,937) (173,786) - (103,506)
Funds received on sale of exploration assets 5 97,508 - - -
Loans to subsidiaries 6 - - (762,391) -
Cash received in reverse take-over - 860,389 - -
Exploration and evaluation expenses (41,786) (29,675) - -
Convertible debenture receivable 8 (1,595,635) - (1,595,635) -
Net cash generated from (used in) investing activities (1,511,672) 852,438 (2,358,026) (103,506)
Cash flows from financing activities
Proceeds from issue of share capital 14 2,318,120 2,008,773 2,318,120 2,326,358
Shares cancelled - (3,268) - -
Cost of shares issued 14 (78,513) - (78,513) -
Net cash generated from financing activities 2,239,607 2,005,505 2,239,607 2,326,358
Net decrease/(increase) in cash and cash equivalents 1,271,139 1,197,953
(969,493) (1,108,267)
Cash and cash equivalents at beginning of year 11 6,478 34,432
1,277,617 1,232,385
Exchange gain on cash and cash equivalents 2,454 - - -
Cash and cash equivalents at end of year 310,578 1,277,617 124,118 1,232,385
Major Non-Cash Transactions
During the year ended 30 June 2022, there were share based payments of
£1,770,000 which were made in return for consulting and marketing services.
During the year ended 30 June 2022, £401,944 worth of investments were
received as part of property option income (refer to note 5 and note 6).
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
1. General information
The Company is a public limited company incorporated and domiciled in England
(registered number: 06275976), which is listed on the London Stock Exchange.
The registered office of the Company is Suite 10011, 15 Ingestre Place,
London, England, W1F 0DU.
2. Summary of significant Accounting Policies
The principal Accounting Policies applied in the preparation of these
Financial Statements are set out below. These Policies have been consistently
applied to all the periods presented, unless otherwise stated.
2.1 Basis of preparation of Financial Statements
The Financial Statements have been prepared in accordance with UK-adopted
international accounting standards (UK IAS) in accordance with the
requirements of the Companies Act 2006. The Financial Statements have also
been prepared under the historical cost convention.
The Financial Statements are presented in Pound Sterling rounded to the
nearest pound.
The preparation of financial statements in conformity with UK IAS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Accounting Policies. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Consolidated Financial
Statements are disclosed in Note 4.
2.2 New and amended standards
(a) New and amended standards mandatory for the first time for the financial
periods beginning on or after 1 July 2021
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. The amendments and revisions were applicable for the period
ended 30 June 2022 but did not result in any material changes to the financial
statements of the Group or Company.
ii) New standards, amendments and interpretations in issue but not yet
effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have
not been early adopted are as follows:
Standard Impact on initial application Effective date
IAS 12 Income taxes 1 January 2023
IFRS 17 Insurance contracts 1 January 2023
IAS 8 Accounting estimates 1 January 2023
IAS 1 Classification of Liabilities as Current or Non-Current. 1 January 2023
IAS 1 Presentation of Financial Statements regarding the amendments of disclosure of 1 January 2023
accounting policies
The Group is evaluating the impact of the new and amended standards above
which are not expected to have a material impact on the Group's results or
shareholders' funds.
2.3 Basis of Consolidation
The Consolidated Financial Statements consolidate the financial statements of
the Company and its subsidiaries made up to 30 June. Subsidiaries are entities
over which the Group has control. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over
the investee.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the
consolidated financial statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within
the Parent Company financial statements. Where necessary, adjustments are made
to the financial statements of subsidiaries to bring the accounting policies
used in line with those used by other members of the Group. All significant
intercompany transactions and balances between Group enterprises are
eliminated on consolidation.
2.4 Going concern
The Group Financial Statements have been prepared on a going concern basis.
Although the Group's assets are not generating revenues and an operating loss
has been reported, the Directors are of the view that, the Group has funds to
meet its planned expenses over the next 12 months from the date of these
financial statements.
In assessing whether the going concern assumption is appropriate, the
Directors have taken into account all relevant available information about the
current and future position of the Group, including current level of resources
and the required level of spending on exploration and corporate activities. As
part of the assessment, the Directors have also taken into account the
potential for continuing warrant exercises and the ability to raise new
funding and utilizing the Crescita facility whilst maintaining an acceptable
level of cash for the Group to meet all commitments.
The Directors are confident that the measures they have available will result
in sufficient working capital and cash flows to continue in operational
existence. Taking these matters in consideration, the Directors continue to
adopt the going concern basis of accounting in the preparation of the
financial statements.
2.5 Foreign currencies
a) Functional and presentation currency
Items included in the Financial Information are measured using the currency of
the primary economic environment in which the entity operates (the 'functional
currency'). The functional currency of the parent company is Pounds Sterling
as is the functional currency of the subsidiary Imperial Minerals (UK)
Limited. The functional currency of the other subsidiary, Cloudbreak Discovery
(Canada) Ltd. is Canadian Dollars. The Financial Information in Cloudbreak
Discovery (Canada) Ltd is translated in accordance with IAS 21 - The Effect of
Changes in Foreign Exchange Rates.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where such items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the Income Statement in other
comprehensive income. The financial statements are presented in Pounds
Sterling (£), the functional currency of Cloudbreak Discovery Plc is Pounds
Sterling, and the functional currency of its subsidiary Cloudbreak Discovery
(Canada) Ltd is Canadian Dollars.
2.6 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.
2.7 Finance Income
Interest income is recognised using the effective interest method.
2.8 Other income
The other income of the Group comprises royalty income. It is measured at the
fair value of the consideration received or receivable after deducting
discounts and other withholding tax. The royalty income becomes receivable on
extraction and sale of the relevant underlying commodity, and by determination
of the relevant royalty agreement.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit
balances with banks and similar institutions, which are readily convertible to
known amounts of cash and which are subject to insignificant risk of changes
in value. This definition is also used for the Statement of Cash Flows.
2.10 Trade and other receivables and prepaids
Trade receivables are amounts due from third parties in the ordinary course of
business. If collection is expected in one year or less, they are classified
as current assets. If not, they are presented as non-current assets.
2.11 Royalty assets at fair value through profit and loss
Royalty financial assets are recognised or derecognised on completion date where a purchase or sale of the royalty is under a contract, and are initially measured at fair value, including transaction costs. All of the Group's royalty financial assets have been designated as at fair value through profit and loss ("FVTPL"). The royalty financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in the 'revaluation of royalty financial assets' line item of the income statement.
2.12 Investments in subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value
of the consideration paid, less any impairment provision.
2.13 Intangible assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it
determines that those assets hold potential to be successful in finding
specific resources. Expenditure included in the initial exploration and
evaluation assets relate to the acquisition of rights to explore,
topographical, geological, geochemical and geophysical studies, exploratory
drilling, trenching, sampling and activities to evaluate the technical
feasibility and commercial viability of extracting a resource. Capitalisation
of pre-production expenditure ceases when the prospective property is capable
of commercial production.
Exploration and evaluation assets are recorded and held at cost
Exploration and evaluation assets are not subject to amortisation, as such at
the year-end all intangibles held have an indefinite life but are assessed
annually for impairment. The assessment is carried out by allocating
exploration and evaluation assets to cash generating units ('CGU's'), which
are based on specific projects or geographical areas. The CGU's are then
assessed for impairment using a variety of methods including those specified
in IFRS 6.
Whenever the exploration for and evaluation of resources in cash generating
units does not lead to the discovery of commercially viable quantities of
resources and the Group has decided to discontinue such activities of that
unit, the associated expenditures are written off to the Income Statement.
Exploration and evaluation assets recorded at fair-value on business
combination
Exploration assets which are acquired as part of a business combination are
recognised at fair value in accordance with IFRS 3. When a business
combination results in the acquisition of an entity whose only significant
assets are its exploration asset and/or rights to explore, the Directors
consider that the fair value of the exploration assets is equal to the
consideration. Any excess of the consideration over the capitalised
exploration asset is attributed to the fair value of the exploration asset.
2.14 Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not
ready to use, are not subject to amortisation and are tested annually for
impairment. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset's fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash generating
units). Non-financial assets that suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.
2.15 Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:
Fair Value through Profit or Loss (FVTPL)
Non-derivative financial assets comprising the Group's strategic financial
investments in entities not qualifying as subsidiaries 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 30 June 2022. For
measurement purposes, financial investments are designated at fair value
through the income statement. Gains and losses on the realisation of
investments are recognised in the income statement for the period. The
difference between the market value of financial instruments and book value to
the Group is shown as a gain or loss in the income statement for the period.
Amortised Cost
These assets comprise the types of financial assets where the objective is to
hold these assets in order to collect contractual cash flows and the
contractual cash flows are solely payments of principal and interest. They are
initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less provision for
impairment. Impairment provisions for current and non-current trade
receivables and convertible debenture receivables are recognised based on the
simplified approach within IFRS 9 using a provision matrix in the
determination of the lifetime expected credit losses.
During this process the probability of the non-payment of the trade
receivables and convertible debenture receivables is assessed. This
probability is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the trade
receivables. For the receivables, which are reported net, such provisions are
recorded in a separate provision account with the loss being recognised in the
consolidated statement of comprehensive income. On confirmation that the
receivable will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward-looking expected credit loss
model. The methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk since initial
recognition of the financial asset, based on analysis of internal or external
information. For those where the credit risk has not increased significantly
since initial recognition of the financial asset, twelve month expected credit
losses along with gross interest income are recognised. For those for which
credit risk has increased significantly, lifetime expected credit losses along
with the gross interest income are recognised. For those that are determined
to be credit impaired, lifetime expected credit losses along with interest
income on a net basis are recognised.
The Group considers a financial asset in default when contractual payments are
180 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
The Group's financial assets measured at amortised cost comprise trade and
other receivables, convertible debenture receivables and cash and cash
equivalents in the consolidated statement of financial position. Cash and cash
equivalents include cash in hand, deposits held at call with banks, other
short term highly liquid investments with original maturities of three months
or less, and - for the purpose of the statement of cash flows - bank
overdrafts.
(a) Recognition and measurement
Amortised cost
Regular purchases and sales of financial assets are recognised on the trade
date at cost - the date on which the Group commits to purchasing or selling
the asset. Financial assets are derecognized when the rights to receive cash
flows from the assets have expired or have been transferred, and the Group has
transferred substantially all of the risks and rewards of ownership.
Fair value through the profit or loss
Financial assets that do not meet the criteria for being measured at amortised
cost or FVTOCI are measured at FVTPL. The Group holds equity instruments that
are classified as FVTPL as these were acquired principally for the purpose of
selling in the near term.
Financial assets at FTVPL are measured at fair value at the end of each
reporting period, with any fair value gains or losses recognised in profit or
loss. Fair value is determined by using market observable inputs and data as
far as possible. Inputs used in determining fair value measurements are
categorised into different levels based on how observable the inputs used in
the valuation technique utilised are (the 'fair value hierarchy'):
- Level 1: Quoted prices in active markets for identical items (unadjusted)
- Level 2: Observable direct or indirect inputs other than Level 1 inputs
- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest
level of the inputs used that has a significant effect on the fair value
measurement of the item. Transfers of items between levels are recognised in
the period they occur.
The Group measures its investments in quoted shares using the quoted market
price.
(b) Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original EIR. The expected cash flows
will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has
not been a significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other
receivables due in less than 12 months, the Group applies the simplified
approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group
does not track changes in credit risk, but instead, recognises a loss
allowance based on the financial asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are
90 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually occurs when
past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at
amortised cost are credit impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
(d) Derecognition
The Group derecognises a financial asset only when the contractual rights to
the cash flows from the asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of ownership of the asset to
another entity.
On derecognition of a financial asset measured at amortised cost, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss. This is
the same treatment for a financial asset measured at FVTPL.
2.16 Financial Investments
Non-derivative financial assets comprising the Group'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.
Listed investments are valued at closing bid price on 30 June 2022. Unlisted
investments that are not publicly traded and whose fair value cannot be
measured reliably, are measured at cost less impairment.
2.17 Equity
Equity comprises the following:
· "Share capital" represents the nominal value of the Ordinary
shares;
· "Share Premium" represents consideration less nominal value of
issued shares and costs directly attributable to the issue of new shares;
· "Reverse asset acquisition reserve" represents the retained
losses of the Company before acquisition and the Company equity at reverse
acquisition.
· "Other reserves" represents the foreign currency translation
reserve, warrant reserve and share option reserve where;
o "Foreign currency translation reserve" represents the translation
differences arising from translating the financial statement items from
functional currency to presentational currency;
o "Warrant reserve" represents share warrants awarded by the Group;
o "Share option reserve" represents share options awarded by the Group;
· "Retained earnings" represents retained losses.
2.18 Share based payments
The Group operates an equity-settled, share-based scheme under which the Group
receives services from employees or contractors as consideration for equity
instruments (options and warrants) of the Group. The fair value of the
third-party suppliers' services received in exchange for the grant of the
options is recognised as an expense in the Income Statement or charged to
equity depending on the nature of the service provided. The value of the
employee services received is expensed in the Income Statement and its value
is determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability or sales growth targets, or
remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save).
The fair value of the share options and warrants are determined using the
Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about the number of
options that are expected to vest. The total expense or charge is recognised
over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each reporting period,
the entity revises its estimates of the number of options that are expected to
vest based on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the Income Statement or equity
as appropriate, with a corresponding adjustment to a separate reserve in
equity.
When the options are exercised, the Group issues new shares. The proceeds
received, net of any directly attributable transaction costs, are credited to
share capital (nominal value) and share premium when the options are
exercised.
2.19 Taxation
No current tax is yet payable in view of the losses to date.
Deferred tax is recognised for using the liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the consolidated financial statements and the
corresponding tax bases used in the computation of taxable profit. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill; deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets (including those arising from
investments in subsidiaries), are recognised to the extent that it is probable
that taxable profits will be available against which deductible temporary
differences can be utilised.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries only to the extent that it is
probable the temporary difference will reverse in the future and there is
sufficient taxable profit available against which the temporary difference can
be used.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred tax assets and liabilities relate to income taxes levied
by the same taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances on a net
basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted
or substantively enacted by the statement of financial position date and are
expected to apply to the period when the deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax assets and liabilities are not discounted.
3 Financial risk management
The Group's activities expose it to a variety of financial risks: market risk
(foreign currency risk, price risk and interest rate risk), credit risk and
liquidity risk. The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potential adverse
effects on the Group's financial performance. None of these risks are hedged.
Risk management is carried out by the Canadian based management team under
policies approved by the Board of Directors.
3.1 Treasury policy and financial instruments
During the years under review, the financial instruments were cash and cash
equivalents, shares in listed and unlisted companies and other receivables
which were or will be required for the normal operations of the Group.
The Group operates informal treasury policies which include ongoing
assessments of interest rate management and borrowing policy. The Board
approves all decisions on treasury policy.
The Group has raised funds to finance future activities through the placing of
shares, placing of shares via the Crescita Capital LLC draw down facility,
together with share options and warrants. There are no differences between the
book value and fair value of the above financial assets. The risks arising
from the Group's financial instruments are liquidity and interest rate risk.
The Directors review and agree policies for managing these risks and they are
summarised below:
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.
Market risk & foreign currency risk
The Group is exposed to market risk, primarily relating to interest rate and
foreign exchange movements. The Group does not hedge against market or foreign
exchange risks as the exposure is not deemed sufficient to enter into forwards
or similar contracts.
Credit risk
Credit risk arises from cash and cash equivalents as well as outstanding
receivables. The amount of exposure to any individual counter party is subject
to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk.
Liquidity risk and interest rate risk
The Group seeks to manage financial risk, to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. This is achieved by the close control by the Directors of the
Group in the day-to-day management of liquid resources. Cash is invested in
deposit accounts which provide a modest return on the Group's resources whilst
ensuring there is limited risk of loss to the Group.
3.2 Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
4 Critical accounting estimates and judgements
The preparation of the Financial Information in conformity with IFRSs requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the Financial Information and the reported amount of expenses
during the year. Actual results may vary from the estimates used to produce
this Financial Information.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Significant items subject to such estimates and assumptions include, but are
not limited to:
Share based payment transactions
The Group has made awards of options and warrants over its unissued share
capital to certain Directors and employees as part of their remuneration
package. Certain warrants have also been issued to shareholders as part of
their subscription for shares and to suppliers for various services received.
The valuation of these options and warrants involves making a number of
critical estimates relating to price volatility, future dividend yields,
expected life of the options and forfeiture rates.
Classification of royalty arrangements: initial recognition and subsequent
measurement
The Directors must decide whether the Group's royalty arrangements should be
classified as:
· Intangible assets in accordance with IAS 38 Intangible
Assets; or
· Financial assets in accordance with IFRS 9 Financial
Instruments
The Directors use the following selection criteria to identify the
characteristics which determine which accounting standard to apply to each
royalty arrangement:
Type 1 - Intangible assets: Royalties, are classified as intangible assets by
the Group. The Group considers the substance of a simple royalty to be
economically similar to holding a direct interest in the underlying mineral
asset. Existence risk (the commodity physically existing in the quantity
demonstrated), production risk (that the operator can achieve production and
operate a commercially viable project), timing risk (commencement and quantity
produced, determined by the operator) and price risk (returns vary depending
on the future commodity price, driven by future supply and demand) are all
risks which the Group participates in on a similar basis to an owner of the
underlying mineral licence. Furthermore, in a royalty intangible, there is
only a right to receive cash to the extent there is production and there are
no interest payments, minimum payment obligations or means to enforce
production or guarantee repayment. These are accounted for as intangible
assets under IAS-38.
Type 2 - Financial royalty assets (royalties with additional financial
protection): In certain circumstances where the risk is considered too high,
the Group will look to introduce additional protective measures. This has
taken the form of minimum payment terms. Once an operation is in production,
these mechanisms generally fall away such that the royalty will display
identical characteristics and risk profile to the intangible royalties;
however, it is the contractual right to enforce the receipt of cash which
results in these royalties being accounted for as financial assets under IFRS
9. There are currently no royalties classified as financial royalty assets.
Estimated impairment of convertible loan notes receivable & Convertible
debenture receivables
Anglo African Minerals Plc ('AAM')
The Group has assessed whether the AAM convertible loan notes receivable which
has been previously fully impaired in the prior year. They have reassessed
this asset and determined that there are no conditions to reverse the
impairment.
G2 Energy Corp. ("G2")
The Group also assessed whether the G2 convertible debenture receivable should
be impaired and based on the current production levels and the programme at
the Masten Unit Energy Project, they have determined it should not be impaired
as G2, through the funding from the Company, now have the funds required to
undertake the exploration activity and advance the project. The terms of the
debenture is still being met by both parties and G2 are paying the necessary
interest payments. The directors assessed this debenture in accordance with
IFRS and concluded it is a financial asset accounted for as amortised cost as
the financial asset is held within a business model with the objective to hold
and collect the contractual cash flows which is in the form of interest and
principal payments. As part of the debenture agreement, the Group received a
3.25% Overriding Royalty Interest in the project which has limited production
and revenues. In accordance with IFRS the directors has assessed the royalty
interest and accounted for it as intangible assets in accordance with IAS 38
because there is only a right to receive cash to the extent there is
production and there are no interest payments, minimum payment obligations or
means to enforce production or guarantee repayment. These are accounted for as
intangible assets under IAS 38. The directors considered the fair value of the
royalty assets which they receive in exchange as part of the debenture
agreement for which they did not pay any consideration. Fair value is
determined based on discounted cash flow models (and other valuation
techniques) using assumptions considered to be reasonable and consistent with
those that would be applied by a market participant. The determination of
assumptions used in assessing fair values is subjective and the use of
different valuation assumptions could have a significant impact on financial
results. The current royalty covers a very small production site and only
£11k has been received to date from this royalty. Following their assessment,
the directors concluded that the fair value of the royalty agreement was not
material and has not been recognised as intangible asset. As part of the
debenture agreement, the Group received 6,500,000 warrants for G2, however
management have deemed that these warrants have no material value at this
stage as the assets held by G2 are predominantly made up of early stage
exploration and production assets which currently producing limited amounts of
revenue. The group is in regular communication with G2 and is monitoring the
results of its exploration activities that will be undertaken as the result of
the funding by the Group to G2.
Unlisted investments
The Group 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 have assessed whether any impairment on the unlisted
investments is required and have determined that no impairment is required.
Recovery of other receivables
Included in other receivables is an amount of £190,000 (2021: £190,000) as
at 30 June 2022 in respect of unpaid ordinary share capital issued on 3 June
2021. The Directors believe that the amount will be recovered in full and
therefore have not recognised any impairment to the carrying value of this
amount.
Valuation of exploration and evaluation assets
Exploration and evaluation costs have a carrying value of 30 June 2022 of
£78,694 (2021: £30,679). Such assets have an indefinite useful life as the
Group has the right to renew exploration licenses or options and the asset is
only amortised once extraction of the resource commences. The value of the
Group's exploration and evaluation expenditure will be dependent upon the
success of the Group in discovering economic and recoverable resources,
especially in the countries of operation where political, economic, legal,
regulatory and social uncertainties are potential risk factors. The future
revenue flows relating to these assets is uncertain and will also be affected
by competition, relative exchange rates and potential new legislation and
related environmental requirements. The Group's ability to continue its
exploration programs and develop its projects is dependent on future
fundraisings and utilising the Crescita Capital LLC drawdown facility. The
ability of the Group to continue operating within some of the jurisdictions
contemplated by management is dependent on a stable political environment
which is uncertain based on the history of the country. This may also impact
the Group's legal title to assets held which would affect the valuation of
such assets. There have been no changes made to any past assumptions.
The Directors have undertaken a review to assess whether circumstances exist
which could indicate the existence of impairment as follows:
• The Group no longer has title to mineral leases.
• A decision has been taken by the Board to discontinue exploration due to
the absence of a commercial level of reserves.
• Sufficient data exists to indicate that the costs incurred will not be
fully recovered from future development and participation.
Following their assessment, the Directors concluded that no impairment charge
is necessary (2021: Nil).
5 Intangible assets
As at June 30, 2022, the Group's exploration and evaluation assets are as
follows:
Group
Exploration & Evaluation Assets 30 June 2022 30 June 2021
£ £
Caribou Property, British Columbia - 1
South Timmins, British Columbia 1 16,080
Klondike Property 1 -
Atlin West Property 1 -
Yak Property 1 -
Stateline Property 13,013 -
Rizz Property 6,053 -
Icefall Property 9,018 -
Northern Treasure Property 34,638 -
Gold Vista Property, British Columbia - 1
Silver Vista Property, British Columbia 1 1
Silver Switchback Property, British Columbia 1 1
Rupert Property, British Columbia 15,966 14,595
As at June 30 78,694 30,679
As at June 30, 2022, the Group's reconciliation of exploration and evaluation
assets are as follows:
Group
Exploration & Evaluation Assets 30 June 2022 30 June 2021
£ £
Cost
As at 1 July 30,679 228,863
Additions 139,294 97,058
Disposals (97,508) -
Net proceeds from sale 1 (295,242)
Forex movement 6,228 -
As at June 30 78,694 30,679
Caribou Property, Canada
On November 20, 2017, the Group acquired the Caribou mineral property for £1
from a company controlled by the CEO of the Group. As at June 30, 2022,
included in Exploration and Evaluation Assets is £1 (June 30, 2021 - £1)
attributed to the Caribou property.
On June 2, 2020, the Group entered into an option agreement with Norseman
Silver Inc. ("Norseman"), a company with a common director, under which
Norseman may acquire up to a 100% interest in the Group's Caribou Property
subject to a 2% net smelter return ("NSR") to the Group. In order for Norseman
to fully exercise the option on the Caribou Property, they must pay the Group
an aggregate of $80,000 CAD, issue 2,750,000 common shares of Norseman and
incur exploration expenses of $225,000 CAD over three years. Norseman will
have the right to repurchase one-half (1%) of the 2% NSR for $1,000,000 CAD.
During the year ended June 30, 2022, the Group received cash payments of
$50,000 CAD (£31,929) and 1,000,000 Norseman shares in relation to the option
payments due under the agreement.
On June 28, 2022 The Group announced that Norseman completed their obligations
under the option agreement taking complete ownership of the property and
ratifying The Group's interest into a 2% net smelter royalty.
South Timmins Property, Canada
During the year ended June 30, 2021, the Group paid $27,540 CAD (£16,080) in
asset staking costs to acquire twelve mineral titles in Ontario, Canada known
as the South Timmins property.
On 23 September 2021, the Group entered into an option agreement with 1315956
BC Ltd, under which 1315956 BC Ltd may acquire up to a 100% interest in the
Group's South Timmins property subject to a 1% net smelter return ("NSR") to
the Group. In order for 1315956 BC Ltd to fully exercise the option on the
South Timmins Property, they must pay the Group an aggregate of $495,000 CAD,
issue 2,250,000 common shares of 1315956 BC Ltd and incur exploration expenses
of $1,515,000 with a minimum of $265,000 CAD in the first year.
During the year ended 30 June 2022, the Group received cash payments of
$270,000 (£157,579) and 500,000 shares in relation to the option payments due
under the agreement.
Gold Vista Property, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of
the rights to the Gold Vista Property located in British Columbia, Canada. To
earn a 100% interest, the Group must make aggregate cash payments of $65,000
CAD ($30,000 CAD paid - £17,700), issue 1,375,000 shares in the Group and
incur work commitments on the property of $225,000 CAD, over three years. The
property is subject to a 2% NSR which the Group may acquire one-half (1%) for
$1,000,000 CAD.
On October 6, 2020, the Group entered into an option agreement with Deep Blue
Trading ("Deep Blue") in which Deep Blue may acquire up to a 100% interest in
the Gold Vista Property subject to a 1% NSR to the Group. Deep Blue will have
the right to repurchase one-half (0.5%) of the NSR for $500,000 at any time
prior to commercial production. In order for Deep Blue to fully exercise the
option on the Gold Vista Property, they must pay the Group a $10,000 CAD
(£5,839) and assume certain obligations payable to the original vendor.
After 30 June 2022, the option was cancelled and the property was terminated
as Cloudbreak Discovery (Canada) Ltd no longer wished to pursue the project.
Spectrum Property, Canada
On January 10, 2019, the Group entered into an option agreement to acquire
100% interests in the Southern Spectrum Mineral Property located in the
Lillooet Mining Division of British Columbia. In order to exercise the option,
the Group must pay an aggregate of $70,000 CAD in cash ($50,000 CAD, £29,500
paid), issue 1,200,000 common shares (675,000 issued), and incur work
commitments of $1,250,000 ($50,000 CAD, £29,500 incurred) over three years.
The property is subject to a 3% NSR which the Group may acquire 1% for
$1,000,000 CAD.
During the year ended June 30, 2021, the Group sold, transferred and assigned
all of the Group's right, title interest and obligations under its original
Spectrum property option agreement to 1162832 BC Ltd. (the "Vendor") for
$10,000 CAD (£5,839) cash. Upon the Vendor receiving at least 500,000 shares
from the transfer, option, or other disposition of some or all of the Vendor's
interest in the Spectrum property ("Consideration Shares"), the Vendor will
transfer to the Group at least 500,000 of those Consideration Shares. As a
result of the sale, total value in exploration and evaluation assets of
$117,722 CAD (£49,456) attributed to the property was expensed in the prior
year.
Silver Switchback Property, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of
the rights to the Silver Switchback Property located in British Columbia,
Canada. To earn a 100% interest, the Group must make aggregate cash payments
of $75,000 CAD ($15,000 CAD paid - £8,850), issue 1,850,000 shares (250,000
shares issued at a value of $40,000 CAD - £23,356) in the Group and incur
work commitments on the property of $475,000 CAD over three years. The
property is subject to a 2% NSR which the Group may re-purchase 1.5% for
$1,250,000 CAD.
On August 27, 2020, the Group entered into an option agreement with Norseman,
under which Norseman may acquire up to a 100% interest in the Group's Silver
Switchback Property subject to a 1% NSR to the Group. In order for Norseman to
fully exercise the option on the Silver Switchback Property, they must pay the
Group $30,000 CAD (received), issue 750,000 common shares (370,000 received
valued at $83,250 CAD - £46,610) and assume certain obligations due to the
original vendor over three years. Norseman will have the right to repurchase
one-half (0.5%) of the NSR from the Group for $500,000 CAD.
During the year ended June 30, 2022, the Group received 380,000 Norseman
shares in relation to the option payments due under the agreement.
Silver Vista, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of
the rights to the Silver Vista Property located in British Columbia, Canada.
To earn a 100% interest, the Group will need to make aggregate cash payments
of $65,000 CAD ($20,000 CAD paid - £11,678), issue 1,375,000 shares (370,000
shares issued at a value of $75,000 CAD - £43,793) in the Group and incur
work commitments on the property of $275,000 CAD, over three years. The
property is subject to a 2% NSR which the Group may acquire one-half (1%) for
$1,000,000 CAD.
During the year ended June 30, 2021, the Group made a payment of $80,000 CAD
(£46,713) to a prior optionor to fulfil prior option agreement obligation.
On September 21, 2020, the Group entered into an option agreement with
Norseman, under which Norseman may acquire up to a 100% interest in the
Group's Silver Vista Property subject to a 1% NSR payable to the Group. In
order for Norseman to fully exercise the option on the Silver Switchback
Property, they must pay the Group $50,000 CAD (received - £29,500), and issue
2,000,000 common shares (received and valued at $40,000 CAD - £23,600).
Norseman will have the right to repurchase one-half (0.5%) of the NSR for
$500,000 CAD.
Rupert, Canada
On September 11, 2018, the Group entered into an asset purchase agreement with
a company controlled by a director of the Group and two unrelated persons to
purchase the Rupert Property, located in British Columbia, Canada. As
consideration for the property, the Group issued 2,000,000 common shares
valued at $100,000 CAD (£59,000) and granted a 2% NSR. At any time, 1% of the
NSR can be purchased by the Group for $1,500,000 CAD. Of the common shares
issued to acquire the property, 1,000,000 were issued to a company that was
controlled by a director of the Group. The Group also agreed to incur
aggregate expenditures on the property of $800,000 ($100,000 CAD - £59,000
incurred).
On December 11, 2020, the Group sold the Rupert Property to Buscando Resources
Corp. ("Buscando"), a company with a director in common. Payments to be
received by the Group are as follows:
• $150,000 CAD in total cash payments with $25,000 CAD (£14,750) on
closing (received), $50,000 CAD on or before 12 months after Buscando is
listed on a public exchange, $75,000 CAD on or before 24 months after Buscando
is listed on a public exchange;
• 3,750,000 shares in total issued to the Group with 1,000,000
shares issued on closing (received and valued at $50,000 CAD - £29,500,
1,250,000 on or before 12 months after Buscando is listed on a public
exchange, 1,500,000 on or before 24 months after Buscando is listed on a
public exchange; and
• $200,000 expenditures incurred on the property with $100,000 CAD
on or before 12 months after Buscando is listed on a public exchange, $100,000
CAD on or before 24 months after Buscando is listed on a public exchange.
As a result of the sale to Buscando, the original vendors waived the
exploration commitments required by the Group under the September 11, 2018,
agreement.
New Moon, Canada
On August 20, 2020, the Group acquired the New Moon property in British
Columbia, Canada for acquisition costs of $6,188 CAD (£3,651). On December 9,
2020, the Group sold the New Moon property to Norseman, in exchange for
$10,000 CAD (£5,800) (received) and 2,500,000 Norseman shares (received and
valued at $50,000 CAD - £29,500). The Group retained a 2% net smelter return
on the property. Norseman has subsequently allow the claim group to expire and
has reverted to open crown land.
Atlin West, Canada
On August 9 2021, the Group entered into an option agreement with 1315843 BC
Ltd to purchase 100% of the rights to the Atlin West Project located in
British Columbia, Canada. To earn a 100% interest, 1315843 BC Ltd make
aggregate cash payments of $700,000 CAD, issue 8,000,000 shares in 1315843 BC
Ltd and make payments of $325,000 over a three-year period to Cloudbreak. Upon
completion of the work Cloudbreak will transfer 100% interest. Cloudbreak will
retain a net 2% NSR.
During the year ended June 30, 2022, the Group received cash payments of
$100,000 CAD (£78,321.30) and 3,000,000 in relation to the option payments
due under the agreement.
Yak, Canada
On October 13 2021, the Group entered into an option agreement with Moonbound
Mining Ltd ('Moonbound'). In respect of the Yak Project located in British
Columbia, Canada. Moonbound will issue Cloudbreak 2,700,000 common shares and
make aggregate cash payments of $145,000 CAD over a three-year period.
Additionally, Moonbound will commit to spending up to £700,000 CAD in
exploration expenditure on the property and enter into a public transaction
within six months of the agreement. Upon completion of the obligations,
Cloudbreak will transfer 100% interest and retain a net 2% NSR.
During the year ended June 30, 2022, the Group received cash payments of
$10,000 CAD (£8,034.94) and 700,000 shares in relation to the option payments
due under the agreement.
Klondike, United States
On July 15 2021, the Group entered into the Klondike project based in
Colorado, United States, with Alianza Minerals Ltd.
On December 7 2021, Cloudbreak and Alianza Minerals entered into an option
agreement with Allied Copper Corp for the advancement of the Klondike project.
Allied Copper will issue Cloudbreak and Allied 7,000,000 common shares and
make a total of $400,000 CAD in cash payments over a three-year period. Upon
completion of the obligations, the alliance will transfer 100% interest in the
Klondike project to Allied Copper. Allied Copper will also issue 3,000,000
warrants exerciseable for a 36-month term.
During the year ended June 30, 2022, the Group received cash payments of
$100,000 CAD (£58,136.90) and 1,000,000 Allied Copper shares in relation to
the option payments due under the agreement.
Stateline, United States
On February 9 2022, Cloudbreak and Alianza Minerals entered into an option
agreement with Allied Copper Corp in respect of the Stateline Project in
Colorado, United States. Allied Copper will issue the alliance 4,250,000
common shares over a three-year period and make aggregate cash payments of
$315,000 CAD ($40,000 CAD paid) with a further $50,000 CAD due on closing.
Additionally, Allied will commit to spending up to £3,750,000 CAD in
exploration expenditure on the property over three years. The alliance will
retain a net 2% NSR, not subject to a buy down provision.
During the year ended June 30, 2022, the Group received cash payments of
$20,000 CAD (£11,632.40).
Icefall, Canada
On March 3 2022, the Group entered into an option agreement with 1311516 BC
Ltd in respect of the Icefall Project in British Colombia, Canada. 1311516 BC
Ltd will issue 2,000,000 common shares to Cloudbreak's subsidiary Cloudbreak
(Canada) Ltd and make an aggregate of $120,000 CAD in cash payments to the
Group. Additionally, 1311516 will commit to spending up to £700,000 CAD in
exploration expenditure on the property over three years. This will need to be
done to earn an interest of 75% in the project. Upon completion of the terms
Cloudbreak and 1311516 BC Ltd will enter a joint venture in which each party
will be responsible for its pro-rata share of expenditures on the project.
During the year ended June 30, 2022, the Group received cash payments of
$25,000 CAD (£14,804.10) and 2,000,000 shares in relation to the option
payments due under the agreement.
Rizz, Canada
On February 25 2022, the Group entered into an option agreement with 1311516
BC Ltd in respect of the Rizz Project in British Colombia, Canada. 1311516 BC
Ltd will issue 3,000,000 common shares to Cloudbreak and make an aggregate of
$120,000 CAD in cash payments to the Group. Additionally, 1311516 will commit
to spending up to $750,000 CAD in exploration expenditure on the property over
three years. This will need to be done to earn an interest of 75% in the
project. Upon completion of the terms, Cloudbreak and 1311516 BC Ltd will
enter a joint venture in which each party will be responsible for its pro-rata
share of expenditures on the project.
During the year ended June 30, 2022, the Group received cash payments of
$25,000 CAD (£14,826.90) and 3,000,000 shares in relation to the option
payments due under the agreement.
Northern Treasure, Canada
During 2022, the Group staked the Northern Treasure property for $50,645 CAD
which is located in Northern British Columbia. The Company continues to
actively explore this property and look for a partner to develop the property
further.
Foggy Mountain, Canada
During 2022, the Group staked the Foggy Mountain property which is located in
Central British Columbia. The Company continues to actively explore this
property and look for a partner to develop the property further.
6 Investments in subsidiary undertakings
Company
30 June 2022 30 June 2021
£ £
Shares in Group Undertakings
At beginning of period 6,485,487 10
Additions 5,008 6,485,477
At end of period 6,490,495 6,485,487
Loans to group undertakings 762,391 -
Total 7,252,886 6,485,487
Subsidiaries
Details of the subsidiary undertaking at 30 June 2022 are as follows:
Name of subsidiary Registered office address Country of incorporation and place of business Proportion of ordinary shares held by parent (%) Proportion of ordinary shares held by the Group (%) Nature of business
Imperial Minerals (UK) Limited 6th Floor, 60 Gracechurch United Kingdom 100% 100% Make investments in the Group's chosen business sector
Street, London, EC3V 0HR
Cloudbreak Discovery (Canada) Limited Suite 520/999 West Hastings Street, Vancouver BC V6C2W2 Canada 100% 100% A mineral property project generator
Cloudbreak Discovery (US) Ltd. 1209 Orange Street, Wilmington, New Castle, Delaware, 19801 USA 100% 100% Mineral exploration projects
Kudu Resources Limited 12 New Fetter Lane, London, United Kingdom, EC4A 1JP United Kingdom 100% 100% Mineral exploration projects
Investments held by subsidiaries
Financial assets at fair value through profit or loss are as follows:
Level 1 Level 2 Total
£ £ £
Level 3
£
30 June 2021 4,324,063 - 29,255 4,353,318
Additions 511,494 - 158,254 669,748
Disposals (210,178) - (5,214) (215,392)
Fair value changes (2,563,914) - (101) (2,564,016)
Foreign exchange (160,779) - (13,578) (174,357)
30 June 2022 1,900,686 - 168,617 2,069,302
As at June 30, 2022, investments were classified as held for trading and
recorded at their fair values based on quoted market prices (if available).
Investments that do not have quoted market prices are measured at cost less
impairment.
Imperial Helium Corp.
On April 20, 2020, the Group purchased 450,000 preferred shares in Imperial
Helium Corp. for $45 CAD (£26). On December 15, 2020, 45,000 of these
preferred shares were converted into common shares for no additional
consideration. On December 11, 2020, the Group purchased $110,000 CAD
(£66,138) in Imperial Helium Corp. convertible debenture notes that yielded
10%. On May 18, 2021, the convertible debenture converted into 575,767
ordinary shares of Imperial Helium Corp. At 30 June 2022, fair value of the
Imperial Helium Corp. shares is $37,487 CAD (£23,946).
Temas Resources Corp.
On September 23, 2020, the Group sold its La Blache property to Temas
Resources Corp. ("Temas") for a cash payment of $30,000 CAD (£17,517) and
10,000,000 Temas shares which had a value at the time of $2,000,000 CAD
(£1,167,815). The Group retained a 2% NSR on the La Blache property. The
Temas shares are subject to pooling restrictions with 2,500,000 Temas shares
released March 23, 2021, and 7,500,000 Temas released September 23, 2021. In
2022, the Group sold 29,000 shares for $2,020 CAD (£1,290). At 30 June 2022,
fair value of the Temas shares is $947,245 CAD (£610,408).
Norseman Silver Inc.
On 23 August 2021, the Group received 380,000 shares in Norseman from the
option agreement for the Silver Switchback property for $129,200 CAD
(£74,235).
On 31 May 2021, the Group received 1,000,000 shares in Norseman from the
option agreement for the Caribou property for $170,000 CAD (£108,575).
During the year ended 30 June 2022, the Group sold 1,766,500 shares in
Norseman for a total of $352,002 CAD (£208,888).
At 30 June 2022, fair value of the Norseman shares is $1,089,760 CAD
(£696,123).
Buscando Resources Corp.
On December 31, 2020, the Group sold the Rupert property to Buscando, in
exchange for 1,000,000 shares in Buscando at a value of $50,000 CAD
(£29,195).
During the year ended 30 June 2022, the Group purchased an additional 50,000
shares in Buscando for a total of $6,840 CAD (£4,305)
At 30 June 2022, fair value of the Buscando shares is $168,000 CAD
(£108,260).
Linceo Resources Corp.
On August 17, 2019, the Group sold the Granny Smith and Fuji mineral claims to
Linceo Media Group ("Linceo"), a company with a director in common, for 4,000
shares in Linceo at a value of $47,600 CAD (£27,793) and retained a 2.5% NSR
on each property. During the year ended June 30, 2021, the Group impaired the
shares in Linceo to $1. Management assessed the value at year end and
confirmed there is no further changes to the fair value of the Linceo shares.
AAM shares
On June 2, 2021, the Group acquired 12,500,000 AAM share purchase warrants
that had a conversion price of $0.03 USD and expiry date of July 1, 2021 and
acquired 11,000,000 AAM ordinary shares. The Group issued 1,200,000 ordinary
shares to acquire the 12,500,000 AAM share purchase warrants (£36,000 value)
and 3,520,000 ordinary shares (£105,600 value) to acquire the 11,000,000 AAM
ordinary shares. The warrants expired on July 1, 2021, with the £36,000
impaired to $1. During the year ended June 30, 2021, the Group impaired the
shares in AAM to $1. Management assessed the value at year end and confirmed
there is no further changes to the fair value of the AAM shares.
Moonbound Mining Ltd
On October 13 2021, the Group received 700,000 shares from Moonbound Mining
Ltd. from the option agreement for the Yak property for $35,000 CAD
(£20,638.70). Management assessed the value at year end and confirmed there
is no further changes to the fair value of the Moonbound shares.
Power Group Project Ltd.
On October 1, 2021, the Group took part in a private placement with 1315843 BC
Ltd whereby the Company purchased 2,350,000 shares at a price of $0.0001 per
share which had a value of $235 CAD (£137) when received.
On October 1, 2021, the Group received 3,000,000 shares from 1315843 BC Ltd.
in relation to the option agreement with 1315843 BC Ltd for the West Atlin
property. The 1315843 BC Ltd shares had a value of $300 CAD (£175) when
received.
In December 2021, 1315843 BC Ltd. was acquired by Power Group Projects Ltd.
("PGP") with the 5,350,000 held in 1315843 BC Ltd. exchanged for 5,350,000 PGP
shares.
Calidus Resources Corp.
On September 1 2021, the Group received 500,000 shares from Calidus Resources
Corp. for the option agreement for the South Timmins property for $500 CAD
(£320). The value of shares remained the same for the year ended 30 June
2022.
Prosper Africa Resources Ltd.
On March 7 2022, the Group purchased 1,500,000 shares from Prosper Africa
Resources Ltd. for $150 CAD (£96). Management assessed the value at year end
and confirmed there is no further changes to the fair value of the Prosper
Africa Resources shares.
Allied Copper Corp.
On 3 February 2022, the Group received 1,000,000 shares from Allied Copper
Corp. from the option agreement for the Klondike project for $225,000
(£130,661). At 30 June 2022, fair value of the Allied Copper Corp. shares is
$138,194 CAD (£88,276).
Canary Biofuels Inc.
On 28 June 2022, the Group purchased 59,700 shares from Canary Biofuels Inc.
for $200,095 (£127,753). Management assessed the value at year end and
confirmed there is no further changes to the fair value of the Canary Biofuels
shares.
Alchemist Mining Inc.
On 14 January 2022, the Group purchased 1,250,000 shares from Alchemist Mining
Inc. for $93,750 (£54,184). At 30 June 2022, fair value of the Alchemist
Mining Inc..shares is $375,000 CAD (£239,503).
1311516 B.C. Ltd
On 3 March 2022, the Group received 3,000,000 shares from 1311516 B.C. Ltd
from the option agreement for the Rizz property for $5,010 CAD (£2,963).
On 9 March 2022, the Group received 2,000,000 shares from 1311516 B.C. Ltd
from the option agreement for the Icefall property for $3,340 CAD (£1,978).
Management assessed the value at year end and confirmed there is no further
changes to the fair value of the 1311516 B.C. Ltd shares.
7 Royalty Asset
Apple Bay Property, Canada
On April 5, 2017, the Group purchased a 1.50% production royalty on the Apple
Bay property located in British Columbia, Canada. The production royalty was
purchased for 3,000,000 shares of the Group at a deemed value of $0.10 CAD
(£0.058) per share from a company controlled by the CEO of the Group. During
the year ended June 30, 2021, the Group determined that the royalty was
impaired and reduced the balance to £1. As at June 30, 2022, included in
Royalty Assets is £1 (June 30, 2021 - £1) attributed to the Apple Bay
property.
Caribou Property, Canada
On 28 June 2022, The Group announced that Norseman Silver Limited completed
their obligations under the option agreement taking complete ownership of the
property and ratifying The Group's interest into a 2% net smelter royalty. As
at June 30, 2022 the royalty asset was valued at has no value attributed to
it.
8 Debentures Receivable
Group
30 June 2022 30 June 2021
£ £
Opening - -
Additions 1,595,635 -
Royalties to be received 11,233 -
Fair Value Movement 51,032 -
At end of period 1,657,900 -
Masten Unit, United States
On 31 May 2022, the Group entered into an agreement with G2 Energy Corp.
('G2') on the Masten Unit Energy Project located in Cochran County Texas,
United States. Whereby the Company will provide G2 with a $2,000,000 USD
debenture on a two-year term in exchange for a 3.25% Overriding Royalty
Interest in the Project. G2 will pay 12% per annum interest to the Company,
calculated and paid quarterly in cash or shares at the discretion of the
Company. As part of the agreement, The Group received 6,500,000 warrants for
G2, however management have deemed that these warrants have no value at this
stage as the assets held by G2 are predominantly made up of the early stage
exploration assets on which they have received from the Company. The group is
in regular communication with G2 and is monitoring the results of its
exploration activities that will be undertaken as the result of the funding by
the Group to G2.
9 Convertible loans
Group
30 June 2022 30 June 2021
£ £
Convertible loan note $500,000 USD (£411,224) 60,878 450,591
Convertible loan note $420,000 USD (£343,428) 75,720 350,718
Convertible loan note $49,790 USD (£40,950) 11,763 44,000
Convertible loan note $250,000 USD (£205,612) 36,004 220,281
Impairment provision (184,365) (1,065,590)
- -
On March 20, 2019, the Group issued a $500,000 USD (£361,847) unsecured
convertible loan note to Anglo-African Minerals plc ("AAM"). The convertible
loan note bears interest at 10% per annum and compounds monthly, is unsecured,
and had an original maturity date of September 20, 2019. The convertible loan
note is convertible into common shares of AAM at $0.01 USD per share. The
maturity date of the convertible loan note was subsequently extended to March
20, 2020, and the Group was issued 21,029,978 AAM warrants per the terms of
the extension. These warrants have a strike price of $0.025 USD per share,
with an expiry date of September 19, 2021. As at June 30, 2021, the Group
impaired the balance down to $Nil as collectability was considered doubtful.
As at June 30, 2022, Management have accrued interest amounting £60,878 (2021
- £88,744) on the convertible loan but believe this should remain impaired.
On June 2, 2021, the Group acquired an unsecured convertible loan note that
was issued to AAM from Cronin Services Ltd., a company controlled by the
Chairman and CEO of the Group, that had a principal value of $420,000 USD
(£303,744) and accrued interest of $61,261 (£44,304) for total value of
$481,261 USD (£348,048). The Group issued 14,166,790 ordinary shares and
7,083,395 share purchase warrants to acquire this note. Each share purchase
warrant may be converted into one ordinary share of the Group at £0.05 per
ordinary share and expires June 2, 2025. The convertible loan note bears
interest at 10% per annum and compounds monthly, is unsecured, and had a
maturity date of May 31, 2021. The convertible loan note is convertible into
common shares of AAM at $0.01 USD per share. As at June 30, 2021, the Group
impaired the balance down to $Nil as collectability was considered doubtful.
As at June 30, 2022, Management have accrued interest amounting £75,720 (
2021 - £44,304) on the convertible loan but believe this should remain
impaired.
On June 2, 2021, the Group acquired an unsecured convertible loan note that
was issued to AAM from Cronin Capital Corp., a company controlled by the
Chairman and CEO of the Group, that had a principal value of $49,790 USD
(£35,949) and accrued interest of $9,826 USD (£7,094) for total value of
$59,617 USD (£43,043). The Group issued 1,630,832 ordinary shares and
1,630,832 share purchase warrants to acquire this note. Each share purchase
warrant may be converted into one ordinary share of the Group at £0.05 per
ordinary share and expires 2025 June 2. The convertible loan note bears
interest at 15% per annum and compounds monthly, is unsecured, and had a
maturity date of 2020 September 30. The convertible loan note is convertible
into common shares of AAM at $0.005 USD per share. As at June 30, 2021, the
Group impaired the balance down to $Nil as collectability was considered
doubtful. As at June 30, 2022, Management have accrued interest amounting
£11,763 (2021 - £7,094) on the convertible loan but believe this should
remain impaired.
On June 2, 2021, the Group acquired an unsecured convertible loan note that
was issued to AAM by Reykers Nominees Limited that had a principal value of
$250,000 USD (£180,500) and accrued interest of $52,776 (£38,104) for total
value of $302,776 USD (£218,604). The Group also acquired 12,500,000 AAM
share purchase warrants that had a conversion price of $0.03 USD and expiry
date of July 1, 2021 and acquired 11,000,000 AAM ordinary shares. The Group
issued 8,912,756 ordinary shares to acquire this convertible note, 1,200,000
ordinary shares to acquire the 12,500,000 AAM share purchase warrants and
3,520,000 ordinary shares to acquire the 11,000,000 AAM ordinary shares. The
convertible loan note bears interest at 10% per annum and compounds monthly,
is unsecured, and had a maturity date of 30 June 2020. The convertible loan
note is convertible into common shares of AAM at $0.01 USD per share. As at
June 30, 2021, the Group impaired the balance down to $Nil as collectability
of the convertible loan was considered doubtful and the shares and warrants
impaired. As at June 30, 2022, Management have accrued interest amounting
£36,004 (2021 - £38,104) on the convertible loan but believe this should
remain impaired.
10 Trade and other receivables
The following table sets out the fair values of financial assets within Trade
and other receivables.
Group Company
30 June 2022 30 June 2021 30 June 2022 30 June 2021
£ £ £ £
Other Debtors 16,427 - 16,428 -
Inter-company Receivables - - 406,186
Tax Receivables 15,627 3,381 - -
Sundry Debtors 204,574 227,019 190,000 514,849
Prepayments 1,064,005 291,830 1,064,005 -
1,300,634 522,230 1,676,619 514,849
The fair value of all current receivables is as stated above.
Included in sundry debtors is an amount of £190,000 (2021: £190,000) as at
30 June 2022 in respect of unpaid ordinary share capital issued on 3 June
2021.
The maximum exposure to credit risk at the year-end date is the carrying value
of each class of receivable mentioned above. The Group does not hold any
collateral as security. Trade and other receivables are all denominated in £
sterling.
There are no financial assets which are past due and for which no provision
for bad or doubtful debts has been made.
The carrying amounts of the Group and Company's trade and other receivables
are denominated in the following currencies:
Group Company
30 June 2022 30 June 2021 30 June 2022 30 June 2021
£ £ £ £
UK Pounds 1,130,433 518,849 1,676,619 514,849
Canadian Dollars 30,201 3,381 - -
1,160,634 522,230 1,676,619 514,849
11 Cash and cash equivalents
Group Company
30 June 2022 30 June 2021 30 June 2022 30 June 2021
£ £ £ £
Cash at bank and in hand 310,578 1,277,617 124,118 1,232,385
Majority of the entities cash at bank is held with institutions with at least
a AA- credit rating. A bank account in the UK which holds a small percentage
of cash is held with institutions whose credit rating is unknown.
The carrying amounts of the Group and Company's cash and cash equivalents are
denominated in the following currencies:
Group Company
30 June 2022 30 June 2021 30 June 2022 30 June 2021
£ £ £ £
UK Pounds 107,707 1,232,385 107,707 1,232,385
US Dollars 16,411 - 16,411 -
Canadian Dollars 186,460 45,232 - -
310,578 1,277,617 124,118 1,232,385
12 Financial Instruments by Category
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's finance function. The Board receives monthly
reports through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility.
The Group reports in Sterling. Internal and external funding requirements and
financial risks are managed based on policies and procedures adopted by the
Board of Directors. The Group does not use derivative financial instruments
such as forward currency contracts, interest rate and currency swaps or
similar instruments. The Group does not issue or use financial instruments of
a speculative nature.
Capital management
The Group's objectives when maintaining capital are:
· to safeguard the entity's ability to continue as a going concern,
so that it can continue to provide returns for shareholders and benefits for
other stakeholders; and
· to provide an adequate return to shareholders.
The capital structure of the Group consists of total shareholders' equity as
set out in the 'Statement of Changes in Equity'. All working capital
requirements are financed from existing cash resources and the Crescita draw
down facility.
Capital is managed on a day to day basis to ensure that all entities in the
Group are able to operate as a going concern. Operating cash flow is
primarily used to cover the overhead costs associated with operating as London
Standard-listed company.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The Directors consider that there is no significant liquidity risk faced by
the Group. The Group maintains sufficient balances in cash to pay accounts
payable and accrued expenses.
The Board receives forward looking cash flow projections at periodic intervals
during the year as well as information regarding cash balances. At the balance
sheet date the Group had cash balances of £310,578 and the financial
forecasts indicated that the Group expected to draw down on the Crescita
Capital LLC facility to meet its obligations under all reasonably expected
circumstances and will not need to establish overdraft or other borrowing
facilities.
Interest rate risk
As the Group has no borrowings, it only has limited interest rate risk. The
impact is on income and operating cash flow and arises from changes in market
interest rates. Cash resources are held in current, floating rate accounts.
Market risk
Market price risk arises from uncertainty about the future valuations of
financial instruments held in accordance with the Group's investment
objectives. These future valuations are determined by many factors but include
the operational and financial performance of the underlying investee
companies, as well as market perceptions of the future of the economy and its
impact upon the economic environment in which these companies operate. This
risk represents the potential loss that the Group might suffer through holding
its financial investment portfolio in the face of market movements, which was
a maximum of £2,069,302 (2021: £4,353,318).
The investments in equity of quoted companies that the Group holds are less
frequently traded than shares in more widely traded securities. Consequently,
the valuations of these investments can be more volatile.
Market price risk sensitivity
The table below shows the impact on the return and net assets of the Group if
there were to be a 20% movement in overall share prices of the financial
investments held at 30 June 2022.
2022 2021
Other comprehensive income and Other comprehensive income and
Net assets Net assets
£ £
Decrease if overall share price falls by 20%, with all other variables held (2,367,554) (870,664)
constant
Decrease in other comprehensive earnings and net asset value per Ordinary (0.0049)p (0.009)p
share (in pence)
Increase if overall share price rises by 20%, with all other variables held 2,367,554 870,664
constant
Increase in other comprehensive earnings and net asset value per Ordinary 0.0049p 0.009p
share (in pence)
The impact of a change of 20% has been selected as this is considered
reasonable given the current level of volatility observed and assumes a market
value is attainable for the Group's unlisted investments.
Currency risk
The Directors consider that there is minimal significant currency risk faced
by the Group. The current foreign currency transactions the Group enters are
denominated in CAD$ and USD$ in relation to transactions associated with
exploration and evaluation option payments and property expenditures. The
Group maintains minimal foreign currency holdings to minimize this risk.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge an
obligation or commitment that it has entered into with the Group. The Group's
maximum exposure to credit risk is:
2022 2021
£ £
Cash at bank 310,578 1,277,617
Other receivables 1,160,633 522,230
Convertible debenture receivable 1,657,900 -
3,129,111 1,799,847
The Group's cash balances are held in accounts with HSBC, BLK.FX, Bank of
Montreal and with its Investment Broker accounts.
On the 14 May 2022, the Group granted a convertible debenture to G2
Technologies Corp. worth a total of $2,000,000 (£1,657,900).
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of Financial
Position at either their fair value (financial investments) or at a reasonable
approximation of the fair value (trade and other receivables, trade and other
payables and cash at bank).
The fair values are included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale.
Trade and other receivables
The following table sets out the fair values of financial assets within Trade
and other receivables.
2022 2021
Financial assets £ £
Trade and other receivables - Non interest earning 1,160,633 518,849
There are no financial assets which are past due and for which no provision
for bad or doubtful debts has been made.
Trade and other payables
The following table sets out financial liabilities within Trade and other
payables. These financial liabilities are predominantly non-interest bearing.
Other liabilities include tax and social security payables and provisions
which do not constitute contractual obligations to deliver cash or other
financial assets.
2022 2021
Financial liabilities £ £
Trade and other payables 1,395,910 895,264
13 Trade and other payables
The following table sets out financial liabilities within Trade and other
payables. These financial liabilities are predominantly non-interest bearing.
Other liabilities include tax and social security payables and provisions
which do not constitute contractual obligations to deliver cash or other
financial assets.
Group Company
30 June 2022 30 June 2021 30 June 2022 30 June 2021
£ £ £ £
Trade payables 1,217,736 823,465 1,194,500 407,282
Accruals 157,353 71,799 142,084 42,603
Other Creditors 20,821 - 20,670 -
Trade and other payables 1,395,910 895,264 1,357,254 449,885
The carrying amounts of the Group and Company's trade and other payables are
denominated in the following currencies:
Group Company
30 June 2022 30 June 2021 30 June 2022 30 June 2021
£ £ £ £
UK Pounds 1,357,254 449,885 1,357,254 449,885
Canadian Dollars 38,656 445,379 - -
1,395,910 895,264 1,357,254 449,885
14 Share capital and premium
Number of Share capital Share premium Total
shares £ £ £
As at 30 June 2020 50,119,849 50,120 2,163,169 2,213,289
Issue of new shares 30,475,001 30,475 55,373 85,848
Transfer to reserve acquisition reserve (80,594,850) (80,595) (2,218,542) (2,299,137)
Recognition of Cloudbreak Discovery Plc equity at reverse acquisition 289,468,015 460,423 7,969,714 8,430,137
Issued - private placement (net of issuance costs) 66,666,667 66,667 1,886,312 1,952,979
Issue of shares - AAM acquisitions 29,430,378 29,430 853,481 882,911
Issue of shares - equity drawdown facility fee (net of issuance costs) 4,000,000 4,000 196,000 200,000
As at 30 June 2021 389,565,060 560,520 10,905,507 11,466,027
As at 1 July 2021 389,565,060 560,520 10,905,507 11,466,027
Issue of new shares - 21 July 2021 500,000 500 14,500 15,000
Issue of new shares - 31 December 2021 500,000 500 14,500 15,000
Issue of new shares - 4 January 2022 58,000,000 58,000 1,682,000 1,740,000
Warrant exercised - 28 February 2022 100,000 100 4,900 5,000
Issue of new shares - 1 March 2022 ((1)) 19,596,931 19,597 1,371,660 1,391,257
Warrant exercised - 4 March 2022 1,428,874 1,429 41,437 42,866
Warrant exercised - 7 March 2022 100,000 100 4,900 5,000
Warrant exercised - 9 March 2022 783,335 783 22,717 23,500
Issue of new shares - 31 March 2022 12,000,000 12,000 738,000 750,000
Warrant exercised - 6 April 2022 400,000 400 11,600 12,000
Warrant exercised - 13 April 2022 200,000 200 9,800 10,000
As at 30 June 2022 483,174,200 654,129 14,821,521 15,475,650
(1) Includes issue costs of £78,513
On 21 July 2021, the Group issued and allotted 500,000 new ordinary shares at
a price of 3 pence per share for payment of services.
On 31 December 2021, the Group issued and allotted 500,000 new ordinary shares
at a price of 3 pence per share for payment of services.
On 4 January 2022, the Group issued and allotted 58,000,000 new ordinary
shares at a price of 3 pence per share as part of a marketing and corporate
development services contract.
On 28 February 2022, the Group issued and allotted 100,000 new ordinary shares
at a price of 5 pence per share for exercise of warrants.
On 1 March 2022, the Group raised £1,469,770 net of issue costs via the issue
and allotment of 19,596,931 new ordinary shares at a price of 7.5 pence per
share.
On 4 March 2022, the Group issued and allotted 1,428,874 new ordinary shares
at a price of 3 pence per share for exercise of warrants.
On 7 March 2022, the Group issued and allotted 100,000 new ordinary shares at
a price of 5 pence per share for exercise of warrants.
On 9 March 2022, the Group issued and allotted 783,335 new ordinary shares at
a price of 3 pence per share for exercise of warrants.
On 31 March 2022, the Group issued and allotted 12,000,000 new ordinary shares
at a price of 6.25 pence per share as part of a drawdown on the Crescita
Capital LLC facility.
On 6 April 2022, the Group issued and allotted 400,000 new ordinary shares at
a price of 3 pence per share for exercise of warrants.
On 13 April 2022, the Group issued and allotted 200,000 new ordinary shares at
a price of 5 pence per share for exercise of warrants.
15 Share based payments
During the year ended 30 June 2022, the outstanding options and warrants were
cancelled and the residual value from 30 June 2021 being £1,180 was allocated
to contributed surplus.
The outstanding share options and warrants as at 30 June 2022 are shown below:
Options Warrants Weighted average exercise price (£)
As at 30 June 2021 5,050,000 43,615,967 0.015
Options - Cancelled (1,566,667) - 0.27
Options - Exercised (83,333) - 0.03
Options - Issued 11,250,000 - 0.03
Warrants - Exercised - (2,928,876) 0.04
Warrants - Issued - 3,150,002 0.04
Warrants - Expired - (20,615,401) 0.11
As at 30 June 2022 14,650,000 23,221,692 0.04
The Company and Group have no legal or constructive obligation to settle or
repurchase the options or warrants in cash.
The fair value of the share options and warrants was determined using the
Black Scholes valuation model. The parameters used are detailed below:
2021 Warrants 2021 Warrants 2022 Warrants 2022 Warrants
Granted on: 2/06/2021 2/06/2021 13/8/2021 1/3/2022
Number of warrants 4,530,497 8,714,227 2,750,002 400,000
Life (years) 2.71 years 4 years 2 years 2 years
Share price (pence per share) 0.10p 0.05p 0.025p 0.10p
Risk free rate 0.55% 0.81% 0.58% 0.80%
Expected volatility 100% 100% 20.28% 140.94%
Expected dividend yield - - - -
Total fair value £46,092 £157,695 £2,750 £27,314
2021 Options 2022 Options
Granted on: 2/06/2020 25/8/2021
Number of options 5,050,000 11,250,000
Life (years) 3.08 years 4 years
Share price (pence per share) 0.025p 0.03p
Risk free rate 0.64% 0.62%
Expected volatility 100% 20.55%
Expected dividend yield - -
Total fair value £99,572 £11,238
The expected volatility of the options is based on historical volatility for
the six months prior to the date of granting.
The risk-free rate of return is based on zero yield government bonds for a
term consistent with the option life.
A reconciliation of options and warrants granted over the year to 30 June
2022 is shown below:
2022 2021
Range of exercise prices (£) Weighted average exercise price (£) Number of shares Weighted average remaining life expected (years) Weighted average remaining life contracted (years) Weighted average exercise price (£) Number of shares Weighted average remaining life expected (years) Weighted average remaining life contracted (years)
0 - 0.03 0.0286 16,300,000 4.282 4.282 0 - 0.03 25,665,401 0.96 0.96
0.03 - 0.05 0.0500 16,641,195 1.740 1.740 0.03 - 0.05 17,040,925 2.75 2.75
0.05 - 0.10 0.1000 4,530,497 1.630 1.630 0.05 - 0.10 4,530,497 2.71 2.71
0.10 - 0.15 0.1125 400,000 1.670 1.670 0.10 - 0.15 - - -
16 Other reserves
Share option reserve Warrant option reserve Foreign currency translation reserve Total
£ £ £ £
Other reserves
£
At 30 June 2021 211,977 195,666 67,843 36,015 511,501
Currency translation differences - - 233,866 - 233,866
Expired Options (112,406) - - - (112,406)
Issued Options 11,238 - - - 11,238
Issued Warrants - 30,075 - - 30,075
Exercised Options (1,180) - - - (1,180)
Exercised Warrants - (13,024) - - (13,024)
Cancelled Options (24,962) - - - (24,962)
Other Equity Movement - - - 4,845 4,845
Elimination of other reserves - - - (40,860) (40,860)
At 31 June 2022 84,667 212,717 301,709 - 599,093
17 Employee benefit expense
The total number of Directors who served in the year was 4 (2021: 4). There
are no employees of the Group.
The following amounts were paid during the year to Directors:
Group
Staff costs Year ended Year ended
30 June 2022 30 June 2021
£ £
Directors Fees and Consulting Fees 79,976 23,760
79,976 23,760
Amounts included in Directors fees and salaries include £79,976 (2021:
£23,760) in relation to director fees and consulting fees. Details of fees
paid to Companies and Partnerships of which the Directors detailed above are
Directors and Partners have been disclosed in Note 26.
18 Directors' remuneration
Year ended 30 June 2022
Short-term benefits Post-employment benefits Share based payments Total
£ £ £ £
Directors
Kyler Hardy - - 2,000 2,000
Paul Gurney 7,500 - - 7,500
Emma Priestly - - 600 600
Andrew Male 72,476 - 600 73,076
79,976 - 3,200 83,176
3,200,000 options were issued to directors on 25 August 2021 for their
services. The options have an exercise price of £0.03 and expire on 25 August
2024. Details of the Share Option charges can be found in Note 15.
19 Finance income
Group
Year ended Year ended
30 June 2022 30 June 21
£ £
Interest income on convertible loan 138,107 46,587
G2 Technology - debenture interest 16,411 -
Finance Income 154,518 46,587
The interest income on the convertible loan is interest on the AAM convertible
loans. This interest is subsequently impaired. Refer to note 9 for further
information.
20 Other gain/(losses)
Group
Year ended Year ended
30 June 2022 30 June 2021
£ £
Other gain 8,332 -
Other gain 8,332 -
21 Income tax expense
No charge to taxation arises due to the losses incurred.
The tax on the Group's loss before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to the losses
of the consolidated entities as follows:
Group
Year ended Year ended
30 June 2022 30 June 2021
£ £
Loss before tax (5,557,029) (902,060)
Tax at the applicable rate of 17% (2021: 22.5%) (944,695) (202,964)
Effects of:
Expenditure not deductible for tax purposes 8,181 16,693
Net tax effect of losses carried forward 936,514 186,271
Tax (charge)/refund - -
The weighted average applicable tax rate of 17% (2021: 22.50%) used is a
combination of the 19% standard rate of corporation tax in the UK and 15%
Canadian corporation tax.
The Company has tax losses of approximately £2,130,164 (2021: £1,193,650)
available to carry forward against future taxable profits. No deferred tax
asset has been recognised on accumulated tax losses because of uncertainty
over the timing of future taxable profits against which the losses may be
offset
As set out in Note, the Group has not recognised a deferred tax asset in the
financial statements as there is no certainty that taxable profits will be
available against which these assets could be utilised.
22 Earnings per share
Group
The calculation of the basic loss per share of £0.01 (2021: £0.85) is based
on the loss the loss attributable to equity owners of the group of £5,697,030
(2021: loss of £902,060), and on the weighted average number of ordinary
shares of 428,042,226 (2021: 105,829,101) In issue during the period.
In accordance with IAS 33, no diluted earnings per share is presented as the
effect on the exercise of share options or warrants would be to decrease the
loss per share.
Details of share options and warrants that could potentially dilute earnings
per share in future periods are set out in Note 13.
23 Expenses by nature
Group
Year ended 30 June 2022 Year ended 30 June 2021
£ £
Professional fees 1,564,654 279,568
Consulting fees 1,184,930 302,485
Finance charge - 200,000
Transfer agent and filing fees 110,965 65,178
Travel 86,597 -
Insurance 30,929 -
IT & Software services 2,608 -
Public Relations 188,160 -
LSE listing fee - 2,365,634
Premises and Office costs 18,040 -
Share option expense 41,325 -
Other expenses 80,006 25,192
Total administrative expenses 3,308,214 3,238,057
24 Commitments
License commitments
The Group owns a number of exploration licences in Canada. These licences
include commitments to pay minimum spend requirements. The Group have entered
into option agreements on all of their properties aside from newly staked
properties, Northern Treasure and Foggy Mountain. As part of these option
agreements, the minimum spend obligations have been passed onto the Optionees.
Refer to note 6 for further information.
As at 30 June 2022 these are as follows:
Group
Minimum spend requirement
£
Not later than one year 1,398,700
Later than one year and no later than five years 7,217,035
Total 8,615,735
25 Related party transactions
Details of the Directors' remuneration can be found in Note 16. Key Management
Personnel are considered to be the Directors.
At June 30, 2022, the Group held investments of £1,589,124 in Imperial
Helium, Temas Resources, Norseman Silver, Allied Copper, Calidus Resources and
Buscando Resources where Kyler Hardy is also a Director (2021: £4,353,317).
The holdings of these investments are connected to requirements in the
property option agreements whereby the optionees are to make payments in
shares. All companies except for Calidus Resources are Level 1 investments and
are not directly controlled by Kyler Hardy. For further information, please
refer to note 5.
During the year, the Group paid Cronin Services £1,234,952 for the provision
of consulting and management services during the year (2021: 60,000) a company
controlled by the CEO, Kyler Hardy. These were in relation to consultancy fees
under a management service agreement dated 1 February 2020 and 1 June 2021. In
addition, the Group paid amounts totalling £5,034 (2021: £32,212) to Cronin
Capital Corp,. The amount outstanding owing to Cronin Capital and Cronin
Services at the year-end was £965,340 (2021: £523,021).
During the year, the Group paid amounts totalling £72,476 (2021: 17,168) to
Westridge Management International Ltd. A company controlled by Andrew Male, a
Director of the group. The amount outstanding owing to Westridge Management at
the year-end was £14,000.
26 Ultimate controlling party
The Directors believe there is no ultimate controlling party.
27 Events after the reporting date
On 5 July 2022, the Group elected to draw down £378,000 of the £10,000,000
Equity Draw Down Agreement with Crescita Capital LLC entered on the 16
February 2021 for the issue of 16,800,000 new shares at 2.25 pence.
On 19 July 2022, the Group raised £585,625 through the issue of 26,027,776
new ordinary shares at 2.25 pence per share. On this same day, they also
announced the publication of a Prospectus.
On 9 August 2022, the Group elected to draw down £179,000 of the £10,000,000
Equity Draw Down Agreement with Crescita Capital LLC entered on the 16
February 2021 for the issue of 10,000,000 new shares at 1.79 pence. On this
same day, the Company also granted 7,250,000 options and 2,950,000 warrants
over ordinary shares to directors, PDMR's and other members of staff and
consultants for an exercise price of 2.25 pence per share. The options will
expire after three years and the warrants will expire after one year.
On 16 August 2022, the Group entered into a debenture agreement with Legado
Oil & Gas Ltd. to provide funding of $1.5 million USD (£1,240,872) in the
development capital for the Butt Strawn Energy Project in Irion County, Texas.
$500,000 was paid on signing with the remaining $1,000,000 to be paid within
90 days of signing. The capital is being deployed as a convertible debenture
which, at the Company's discretion, can be converted into a six per cent
Overriding Royalty Interest on the Project.
On 1 September 2022, the Group elected to draw down £180,000 of the
£10,000,000 Equity Draw Down Agreement with Crescita Capital LLC entered on
the 16 February 2021 for the issue of 12,000,000 new shares at 1.5 pence.
On 25 October 2022, the Group elected to draw down £203,500 of the
£10,000,000 Equity Draw Down Agreement with Crescita Capital LLC entered on
the 16 February 2021 for the issue of 18,500,000 new shares at 1.1 pence.
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