REG - Empire Metals Ltd - Final Results
24/06/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220624:nRSX0455Qa&default-theme=true
RNS Number : 0455Q Empire Metals Limited 24 June 2022
Empire Metals Limited / AIM: EEE / Sector: Natural Resources
24 June 2022
Empire Metals Limited ('Empire' or the 'Company')
Final Results
Empire Metals Limited, the AIM-quoted exploration and resource development
company, announces its final results for the year ended 31 December 2021.
The annual report and accounts for the year ended 31 December 2021 will be
posted to shareholders today and will be available for download on the
Company's website, www.empiremetals.co.uk (http://www.empiremetals.co.uk/) ,
later today.
Highlights:
· Significant expansion of the Company's exploration footprint across
highly prospective areas of its target jurisdiction, Australia
· Appointment of highly experienced Managing Director, Mr. Shaun Bunn,
in June 2021 to advance rapid expansion strategy in Australia
· Bolstered core technical team through the appointment of two highly
regarded exploration professionals: Mr. Ed Baltis, as Exploration Consultant,
and Ms. Louisa Stokes as Exploration Geologist
· Comprehensive drilling and exploration programme conducted at
Empire's proven discovery, the Eclipse Gold Project ('Eclipse' or the
'Project'):
o Completion of a 4,589m reverse circulation ('RC') drilling programme over 44
holes in February 2021, including an intercept of 24m @ 1.44 g/t gold ('Au')
near Jack's Dream old workings
o Other significant intercepts include:
§ 8m @ 2.83 g/t Au from 118m downhole
§ 3m @ 2.61 g/t Au from 134m downhole
§ 8m @ 2.32 g/t Au from 70m downhole
§ 6m @ 5.52 g/t Au from 33m downhole
§ 5m @ 4.77 g/t Au from 49m downhole
o Completion of a fully funded 1,893m RC drill programme over 19 holes and 3
PQ core diameter drill holes drilled for 201m in July 2021, which identified a
new mineralised lode, the Twin Shafts
o Strategic technical review completed in December 2021 highlighted potential
for significant additional mineralisation discovery within the licence area
o Follow-up large scale exploration programme now underway
· Post period end, the acquisition of the Gindalbie Gold Project
("Gindalbie"), located adjacent to Eclipse, resulted in a 200% expansion of
this high-grade gold exploration camp, followed by the expansion of the
overall Australian exploration footprint from 9.5km(2) to 1,728km(2) through
the strategic acquisition of three highly prospective copper-gold projects
· Successful conclusion of the Definitive and Binding Sale and Purchase
Agreement over the Bolnisi Project in Georgia for a total cash consideration
of US$3.3million in June 2021
· Oversubscribed placing raised £1.7 million post period end resulting
in a cash at bank of £2.7 million at the date of signing to support
exploration programmes throughout 2022 and 2023
Shaun Bunn, CEO, commented: "This has been a pivotal year for Empire and it
has been an incredibly exciting time to be part of the team. I had the
pleasure of joining Empire at the key turning point in its strategy as it
intensified its exploration focus on Australia, an area which I know well and
has, quite rightly, been continuously hailed as the world's leading mining
jurisdiction. With Eclipse forming the initial stepping stone to establishing
an Australian exploration portfolio of quality and scale, we have seen some
very encouraging results from drilling and technical work undertaken in 2021,
further increasing our confidence that our focus within Australia is well
placed. This has been clearly put into action with the decision to bolster our
position at Eclipse post period end, through the Tribute Agreement in respect
to the neighbouring Gindalbie Project, and thus forming the now renamed
Eclipse-Gindalbie Project to create real scale in the region.
"This process gained momentum in April this year when we acquired three
copper-gold projects, Pitfield, Walton and Stavely, located in highly
prospective locations across Australia which combined, cover an area larger
than Greater London. This was a real coup for Empire and one which sets us
apart as an exploration company with potential access to multiple high value
discoveries in sought-after and valued commodities, within a safe and
supportive jurisdiction. It is with this in mind that I look forward to the
remaining months of 2022 with huge optimism and excitement as we begin to
demonstrate the value of these assets through targeted exploration."
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No
596/2014, as incorporated into UK law by the European Union (Withdrawal) Act
2018, until the release of this announcement.
For further information please visit www.empiremetals.co.uk
(http://www.empiremetals.co.uk) or contact:
Empire Metals Ltd Tel: 020 7907 9327
Shaun Bunn / Greg Kuenzel
S. P. Angel Corporate Finance LLP (Nomad & Broker) Tel: 020 3470 0470
Ewan Leggat / Adam Cowl
Shard Capital Partners LLP (Joint Broker) Tel: 020 7186 9950
Damon Heath
St Brides Partners Ltd (Financial Tel: 020 7236 1177
PR)
Susie Geliher / Ana Ribeiro / Selina Lovell
Chairman's Statement
2021 marked a significant year for Empire with an expansion of its footprint
in Western Australia, a process which has accelerated post period end. I am
delighted to see the progress and advancements we have made throughout the
year as we advance our strategy to deliver high impact exploration results
across an exciting portfolio of high value projects in proven mining districts
of Australia.
The year under review began on a positive note having received the approval at
the end of 2020 to proceed with the acquisition of Eclipse Exploration Pty
Ltd, which holds the Eclipse license ("Eclipse"). This was completed in
February 2021 and set in motion the strategic decisions that followed
throughout 2021. Since then, encouraging results from our field work have
indicated that Eclipse is part of a significant gold system that requires
further exploration to reveal its resource potential.
Our activity at Eclipse during the period started promptly with a second phase
drilling programme in January 2021. At this point, drilling was concentrated
on the Eclipse vein and testing the known mineralised structures parallel to
it as it historically yielded attractive intersections. The RC drilling
programme was completed in February 2021 at 4,589m of RC drilling over 44
drillholes. The results confirmed the Company's belief that there are multiple
parallel veins in addition to the main Eclipse vein, as well as a different
stockwork style of near surface mineralisation near Jack's Dream old workings
which included an intercept of 24m @ 1.44 g/t gold, and a number of wide
quartz veins beyond and below the old workings were intercepted. In
conjunction with the programme, Empire's acquisition of the 75% interest in
the project was completed.
These encouraging results prompted the advancement of the next drilling phase
at Eclipse in March 2021. This third phase drilling programme was completed
for a total of 1,893m over 19 holes and 3 PQ core diameter drill holes drilled
for 201.1m in July 2021. The diamond drilling ('DD') replicated the intercepts
from previous RC drilling, and a different stockwork style of near surface
mineralisation near Jack's Dream old workings was identified which indicated
complexity and an increased duration of the gold system. Most significantly,
the targeted RC drilling identified a newly discovered mineralised lode
running sub-parallel to the main Eclipse vein, referred to as the Twin Shafts.
The results confirmed the presence of additional mineralised zones and the
existence of several parallel veins in addition to the main Eclipse vein, as
we previously believed there to be, and extended the scale of Eclipse's
mineralised footprint.
In September 2021, the Company received a technical review of the geology of
Eclipse which marked a significant turning point in our understanding and
confidence in the project: from the review, it was evident that the
mineralised system is much larger than we originally anticipated. It indicated
that the Eclipse Shaft may connect to the Jack's Dream area, which would mean
a total known strike length of 500m and proves multiple parallel mineralised
structures. Paired with our drilling results to date, it implied that gold
mineralisation likely continues at greater depths than previously thought.
With this information, it was clear that Eclipse merited further drilling to
test the strike and depth extensions of the multiple gold structures.
By the end of the year, we undertook a strategic technical review of Eclipse
and revisited all data collected to develop a more advanced understanding of
the known mineralisation. The database highlighted the potential for
significant additional mineralisation discovery within the licence area as
only 20% of the RC holes drilled to date penetrated below the gold depleted
regolith zone - meaning that we have only scratched the surface of Eclipse's
potential. The design of a larger scale exploration programme was soon
underway, and a new series of drilling programmes was scheduled for Q1 2022.
It also became obvious that additional ground was needed to be acquired to
cover what was clearly emerging as a much larger gold system.
Post-period end, Empire increased its mineralised footprint in the Eclipse
area by +200% by entering into a Tribute Agreement giving Empire the rights to
explore, develop and mine the Gindalbie Gold Project ('Gindalbie'). By
consolidating Eclipse and Gindalbie into the Eclipse-Gindalbie Project Area
('Eclipse-Gindalbie'), Empire successfully furthered its hold in Western
Australia with a highly prospective and significant area to explore. I am
confident that Eclipse-Gindalbie will continue to reveal its resource
potential as we advance our exploration and development strategy here.
Aside from the developments with Eclipse, the Company was involved in
continued discussions with other parties to evaluate potential additional
acquisitions. In May 2021, Empire entered into an Option Agreement (the
'Agreement') to acquire a 75% interest in the Central Menzies Gold Project
('Central Menzies'), which consisted of four highly prospective early-stage
exploration licences in Western Australia. Empire began exploration activities
in June 2021 and undertook an RC drilling campaign for over 2,100m throughout
August and September 2021, following the identification of two mineralised
corridors known as the Teglio and Nugget Patch prospects. After receiving
results in November 2021 that confirmed the prospectivity of Central Menzies,
a follow up second phase drilling programme begun in December 2021. The
results were received in January 2022 and were generally inconclusive, which
prompted the board to finalise their plans to terminate the Option over
Central Menzies in order to focus fully on what has now become
Eclipse-Gindalbie, which presented a more promising opportunity. Similarly, in
February 2021, Empire decided to not extend the agreement to acquire the Munni
Munni Palladium Project in Western Australia for the same reason.
As shareholders will be aware, Empire agreed to sell its 50% interest in JSC
Georgian Copper and Gold in June 2021 for a total cash consideration of US$3.3
million. This sale allowed a transition in strategy to focus on actively
exploring new assets in Australia, a top exploration and mining jurisdiction,
together with an injection of capital to execute our exploration plans.
Financial Results
As an exploration and development group which has no revenue we are reporting
a loss for the twelve months ended 31 December 2021 of £589,254 (31 December
2020: loss of £572,989).
The Group's cash position at the date of signing this report is £2,700,000.
Corporate
In line with Empire's shift in focus to Australia, Mike Struthers, who held
the position of CEO at the Company since January 2018, stepped down in
February 2021. Mike remained a key member of the team during this handover
period to Shaun Bunn, who joined as Managing Director in June 2021, and Mike
continued as a Non-Executive Director of the Company until June 2022. I am
extremely grateful to Mike for his time with us, and his dedication to
advancing Empire's portfolio, and I know he will continue to support our
developments as a valued shareholder of the Company.
We were delighted to report in May 2021, that Shaun Bunn would be joining the
Board as Managing Director effective from 1 June 2021. His impressive 35
years' experience in exploration, mining, processing and project development,
including 25 years' experience in the gold mining sector, has proved to be
invaluable to Empire over the past year. Furthermore, his origins and networks
in the Western Australian mining sector further complements Empire's strategy
to find and develop new opportunities, and as we develop Eclipse-Gindalbie and
extend our portfolio to new areas and commodities.
In addition, we appointed Ed Baltis as Exploration Consultant and Louisa
Stokes as Exploration Geologist in September 2021. The appointment of two
highly regarded and experienced professionals represented a significant
milestone for Empire as the core exploration team continues to grow in order
to support the advancement of its portfolio of assets.
Outlook
Australia, and Western Australia in particular, has cemented its status as a
leading mining jurisdiction over recent years. Having witnessed first-hand
the increase in mining activity surrounding our projects, gold exploration and
mining has particularly seen a boom. This, alongside the strong gold and
copper price performance in recent years, places us in a strong position.
With this in mind, Empire has made significant strides in increasing its
exploration footprint across the country and has, post period end, expanded
its commodity focus to include three copper-gold projects as well.
These projects, the Pitfield Copper-Gold Project, the Walton Copper-Gold
Project and the Stavely Copper-Gold Project, are located in mining regions of
Western Australia, and in the Stavely Arc region of Victoria in the case of
Stavely, all known for world class and significant copper and/or gold
discoveries. Along with these assets, which has provided Empire with an
exploration landholding of the highest calibre, we also grew the technical and
exploration capabilities of our team with the inclusion of the geologists who
first identified these prospects.
This is a careful evolution of our strategy whereby Empire now has a
significant landholding, across various prospective mineralised terranes,
encompassing several commodities in demand and with distinct geological
signatures. With the application of comprehensive, yet low cost, exploration
programmes across this portfolio, I believe Empire is in an exceptionally
strong position to make significant new discoveries and develop valuable
future resources.
I would like to extend my sincere thanks to our shareholders for their
patience and resolve, my colleagues on the board and in our operational teams
for their continued guidance and expertise, and on behalf of the whole Empire
team, I look forward to providing our shareholders with further regular
updates over the coming months.
Neil O'Brien
Non-Executive Chairman
23 June 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Group
Registered number: 1570939 Note 2021 2020
£ £
Non-Current Assets
Property, plant and equipment 9 - 1,423
Intangible assets 10 1,952,419 31,673
Total Non-current assets 1,952,419 33,096
Current Assets
Trade and other receivables 11 87,198 294,366
Financial assets at fair value through profit or loss 12 - 427,314
Cash and cash equivalents 13 2,210,371 2,289,638
Assets classified as held for sale 23 - 425,562
Total current assets 2,297,569 3,436,880
Total Assets 4,249,988 3,469,976
Current Liabilities
Trade and other payables 14 124,543 82,340
Total Current Liabilities 124,543 82,340
Total Liabilities 124,543 82,340
Net Assets 4,125,445 3,387,636
Equity attributable to owners of the Parent
Share capital 15 - -
Share premium 15 43,836,855 43,065,981
Reverse acquisition reserve (18,845,147) (18,845,147)
Other reserves 16 520,293 152,793
Accumulated losses (21,386,556) (20,985,991)
Total equity attributable to owners of the Parent 4,125,445 3,387,636
Total Equity 4,125,445 3,387,636
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2021
Group
Note Year ended 31 December 2021 Year ended 31 December 2020
£ £
Continuing Operations
Revenue 6 - 1,204
Cost of sales - -
Gross profit - 1,204
Administration expenses 7 (1,912,498) (958,694)
Other losses 18 (417,138) 3,721
Operating loss before taxation (2,329,636) (953,769)
Income tax 8 (11,154) (1,555)
Loss for the year from continuing operations (2,340,790) (955,324)
(Loss)/profit from discontinued operations (attributable to equity holders of 23 1,751,536 382,335
the Company)
Loss for the year (589,254) (572,989)
Loss attributable to:
- owners of the Parent (589,254) (572,989)
(589,254) (572,989)
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations (8,056) 661
Total Comprehensive Income (597,310) (572,328)
Attributable to:
- owners of the Parent (597,310) (572,328)
Total Comprehensive Income (597,310) (572,328)
- Total comprehensive income attributable to discontinued 1,751,536 382,335
operations
- Total comprehensive income attributable to continuing operations
(2,349,326) (954,663)
Earnings per share (pence) from continuing operations attributable to owners 21 (0.706) (0.456)
of the Parent - Basic & Diluted
Earnings per share (pence) from discontinued operations attributable to owners 21 0.528 0.183
of the Parent - Basic & Diluted
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2021
Share premium Reverse acquisition reserve Other reserves Retained losses Total equity
£ £ £ £ £
As at 1 January 2020 39,265,637 (18,845,147) 138,014 (20,413,002) 145,502
Loss for the year - - - (572,989) (572,989)
Other comprehensive income
Exchange differences on translating foreign operations - - 661 - 661
Total comprehensive income for the year - - 661 (572,990) (572,328)
Transactions with owners
Issue of ordinary shares 4,014,288 - - - 4,014,288
Share issue charge (213,944) - - - (213,944)
Share option charge - - 14,118 - 14,118
Total transactions with owners 3,800,344 - 14,118 - 3,814,462
As at 31 December 2020 43,065,981 (18,845,147) 152,793 (20,985,991) 3,387,636
As at 1 January 2021 43,065,981 (18,845,147) 152,793 (20,985,991) 3,387,636
Loss for the year - - - (589,254) (589,254)
Other comprehensive income
Exchange differences on translating foreign operations - - (8,056) - (8,056)
Total comprehensive income for the year - - (8,056) (589,254) (597,310)
Transactions with owners
Issue of ordinary shares 770,874 - - - 770,874
Share option charge - - 564,245 - 564,245
Expiry of Share Options - - (188,689) 188,689 -
Total transactions with owners 770,874 - 375,556 188,689 1,335,119
As at 31 December 2021 43,836,855 (18,845,147) 520,293 (21,386,556) 4,125,445
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2021
Group
Note 2021 2020
£ £
Cash flows from operating activities
Loss after taxation including discontinued operations (589,254) (572,989)
Adjustments for:
Services satisfied by issue of shares 438,059 82,144
Services satisfied by issue of warrants - 14,118
Share based payment 473,336 -
Share of loss/ (profit) on joint venture - discontinued operations 23,593 (382,335)
Net finance income (71) -
Impairment of investments in joint venture 417,138 -
Loss/(gain) on sale of property, plant and equipment - (12,724)
Gain on sale of investment - discontinued operations (1,775,129)
Tax expense 11,154 1,555
Depreciation and amortisation 1,423 9,183
Decrease in trade and other receivables (22,071) (7,158)
Increase/(Decrease) in trade and other payables 31,281 (8,595)
Net cash used in operating activities (990,541) (876,801)
Cash flows from investing activities
Loans granted to subsidiaries and joint venture partners - discontinued (22,240) (44,164)
operations
Purchase of financial asset - (345,170)
Additions to exploration and evaluation intangible asset (1,512,430) (31,673)
Sale of property, plant and equipment - 20,000
Sale of investment in joint venture - discontinued operations 2,327,944 -
Net cash used in investing activities 793,274 (401,007)
Cash flows from financing activities
Proceeds from issue of shares 118,000 3,730,550
Cost of share issue - (213,944)
Net cash generated from financing activities 118,000 3,516,606
Net Increase/decrease in cash and cash equivalents (79,267) 2,238,798
Cash and cash equivalents at beginning of year 2,289,638 50,840
Cash and cash equivalents at end of year 13 2,210,371 2,289,638
Non-cash investing and financing activities
Purchase of financial asset - share based
payment(1)
- 164,288
Acquisition of exploration license - share based payment(2) 332,185 -
Advisory fees settled in shares(3) 438,059 -
Share options and warrants issued in respect of services 17 473,336 -
Acquisition of exploration license - issue of warrants 17 90,909 -
(1) Comprised of 4,693,954 shares at 1.75p in respect of consideration payable
and 4,693,954 shares at 1.75p in respect of finders' fees related to the
Eclipse Option.
(2) Comprised of 7,095,512 shares at 3.91p in respect of consideration payable
to acquire the remaining 75% of the Eclipse Option and 1,921,068 shares at
2.85p in respect of consideration payable to acquire the remaining 75% of the
Central Menzies license.
(3) Comprised of 3,995,238 shares at 2.65p to settle invoices for advisory
services, 7,095,512 shares at 3.91p in respect of finders' fees related to the
Eclipse Option and 1,921,068 shares at 2.85p in respect of finders' fees
related to the Central Menzies Option.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021
ACCOUNTING POLICIES
1. General Information
The principal activity of Empire Metals Limited ("the Company") and its
subsidiaries (together "the Group") is to implement its mineral exploration
strategy to advance projects towards defining a sufficient in-situ mineral
resource to support a detailed feasibility study towards mine development and
production.
The Company's shares are traded on AIM, a market operated by the London Stock
Exchange. The Company is incorporated in the British Virgin Islands and
domiciled in the United Kingdom. The Company changed its name to Empire Metals
Limited on 10 February 2020.
The address of its registered office is Craigmuir Chambers, PO Box 71, Road
Town, Tortola, BVI.
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 Group Financial Statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRS Interpretations
Committee (IFRS IC) interpretations as adopted by the European Union. The
Group Financial Statements have been prepared under the historical cost
convention, unless stated otherwise.
The Financial Statements are presented in UK Pounds Sterling rounded to the
nearest pound.
The preparation of Financial Statements in conformity with IFRSs requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's Accounting
Policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the Financial
Statements, are disclosed in Note 4.
2.2 Changes in accounting policy and disclosures
(a) New and amended standards mandatory for the first time for the financial
periods beginning on or after 1 January 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 31 December 2021 but did not result in any material changes to the
Financial Statements of the Group.
b) 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
IFRS 16 (Amendments) Property, plant, and equipment *1 January 2022
IAS 1 (Amendments) Classification of Liabilities as Current or Non-Current. 1 January 2022
Annual improvements 2018-2020 Cycle 1 January 2022
IAS 37 (Amendments) Provisions, contingent liabilities and contingent assets *1 January 2022
IAS 8 (Amendments) Accounting estimates 1 January 2023
(* )Subject to endorsement
The Group is evaluating the impact of the new and amended standards
above which are not expected to have a material impact on future Group
Financial Statements.
Basis of Consolidation
The Group Financial Statements consolidate the Financial Statements of Empire
Metals Limited and the Financial Statements of all of its subsidiary
undertakings made up to 31 December 2021.
Subsidiaries are entities over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Where an entity does not have
returns, the Group's power over the investee is assessed as to whether control
is held. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
Below is a summary of subsidiaries of the Group:
Name of subsidiary Place of business Parent company Registered capital Share capital held Principal activities
Kibe Investments No.2 Limited British Virgin Islands Empire Metals Ltd Ordinary shares US$12 100% Dormant
Noricum Gold AT GmbH Austria Kibe Investments No.2 Limited Ordinary shares €35,000 100% Exploration
GMC Investments Limited British Virgin Islands Empire Metals Ltd Ordinary shares US$1 100% Dormant
European Mining Services Limited United Kingdom Empire Metals Ltd Ordinary shares 100% Mining Services
£1
Eclipse Exploration Pty Ltd Australia Empire Metals Ltd Ordinary Shares 100% Exploration
AUD$1
Inter-company transactions, balances, income and expenses on transactions
between group companies are eliminated. Profits and losses resulting from
intercompany transactions that are recognised in assets are also eliminated.
Accounting
policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
2.3 Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the
Chairman's Report from page 3. In addition, Note 3 to the Financial Statements
includes the Group's objectives, policies and processes for managing its
capital; its financial risk management objectives; and details of its exposure
to credit and liquidity risk.
The Financial Statements have been prepared on a going concern basis. Although
the Group's assets are not generating steady revenue streams, an operating
loss has been reported and an operating loss is expected in the 12 months to
31 December 2022, the Directors believe that the Group will have sufficient
funds to meet its immediate working capital requirements and undertake its
targeted operating activities over the next 12 months from the date of
approval of these Financial Statements. As at the balance sheet date, the
Group has cash and cash equivalents of £2,210,372 which is foreseen to
adequately cover forecast working capital requirements.
Post year end, the Parent Company successfully raised gross proceeds of
£1,700,000 via the issue of 85,000,000 new ordinary shares, providing the
Group with additional liquidity.
The Directors have, in the light of all the above circumstances, a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the Group Financial Statements.
2.4 Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors that makes strategic decisions.
Segment results, include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
2.5 Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the 'functional currency'). The functional currency of the
Company is Sterling, the functional currency of the BVI subsidiaries is US
Dollars, the functional currency of the Austrian subsidiary is Euros and the
functional currency of the Australian subsidiary is AUD Dollars. The Financial
Statements are presented in Pounds Sterling, rounded to the nearest pound.
(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.
(c) Group companies
The results and financial position of all the Group's entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
· assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that statement of
financial position;
· income and expenses for each statement of comprehensive income
presented are translated at average exchange rates (unless this average is not
a reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
· all resulting exchange differences are recognised in other
comprehensive income where material.
On consolidation, exchange differences arising from the translation of the net
investment in foreign entities, and of monetary items receivable from foreign
subsidiaries for which settlement is neither planned nor likely to occur in
the foreseeable future, are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised in the
income statement as part of the gain or loss on sale.
2.6 Intangible Assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it
determines that those assets will be successful in finding specific mineral
resources. Expenditure included in the initial measurement of exploration and
evaluation assets and which are classified as intangible 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
mineral resource. Capitalisation of pre-production expenditure ceases when the
mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost.
Exploration and evaluation assets are assessed for impairment annually or when
facts and circumstances suggest that the carrying amount of an asset may
exceed its recoverable amount. The assessment is carried out by allocating
exploration and evaluation assets to cash generating units, which are based on
specific projects or geographical areas. IFRS 6 permits impairments of
exploration and evaluation expenditure to be reversed should the conditions
which led to the impairment improve. The Group continually monitors the
position of the projects capitalised and impaired.
Whenever the exploration for and evaluation of mineral resources in cash
generating units does not lead to the discovery of commercially viable
quantities of mineral resources and the Group has decided to discontinue such
activities of that unit, the associated expenditures are written off to the
Income Statement.
2.7 Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less accumulated
depreciation and any accumulated impairment losses. Depreciation is provided
on all property, plant and equipment to write off the cost less estimated
residual value of each asset over its expected useful economic life on a
straight-line basis at the following annual rates:
Computer equipment - 20 to 50% straight line
Field equipment - 20 to 50% straight line
Vehicles - 20% straight line
All assets are subject to annual impairment reviews. An asset's carrying
amount is written down immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated recoverable amount.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replacement
part is derecognised. All other repairs and maintenance are charged to the
Income Statement during the financial period in which they are incurred.
The asset's residual value and useful economic lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposal are determined by comparing the proceeds with the
carrying amount and are recognised within 'Other net gains / (losses)' in the
income statement.
2.8 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 (except goodwill) are reviewed
for possible reversal of the impairment at each reporting date.
2.9 Assets classified as held for sale
Assets are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through
continuing use and a sale is considered highly probable. They are measured at
the lower of their carrying value and fair value less costs to sell. An
impairment loss is recognised for any subsequent write-down of the asset to
fair value less costs to sell.
2.10 Financial Assets
(a) Classification
The Group classifies its financial assets in the following categories: at
amortised cost including trade receivables and other financial assets at
amortised cost, at fair value through other comprehensive income and at fair
value through profit or loss, loans and receivables, and available-for-sale.
The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets
at initial recognition.
(b) Recognition and measurement
Amortised cost
Trade and other receivables are recognised initially at the amount of
consideration that is unconditional, unless they contain significant financing
components, in which case they are recognised at fair value. The group holds
the trade and other receivables with the objective of collecting the
contractual cash flows, and so it measures them subsequently at amortised cost
using the effective interest method.
The group classifies its financial assets as at amortised cost only if both of
the following criteria are met:
· the asset is held within a business model whose objective is to
collect the contractual cash flows; and
· the contractual terms give rise to cash flows that are solely
payments of principle and interest.
(c) 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.
2.11 Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs. The Group's financial liabilities
include trade and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as
described below:
Trade and other payables
After initial recognition, trade and other payables are subsequently measured
at amortised cost using the EIR method. Gains and losses are recognised in the
statement of profit or loss and other comprehensive income when the
liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by considering any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss
and other comprehensive income.
Derecognition
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
profit or loss and other comprehensive income.
Fair value
All assets and liabilities for which fair value is measured or disclosed in
the consolidated Financial Statements are categorised within the fair value
hierarchy. The fair value hierarchy prioritises the inputs to valuation
techniques used to measure fair value. The Group uses the following hierarchy
for determining and disclosing the fair value of financial instruments and
other assets and liabilities for which the fair value was used:
- level 1: quoted prices in active markets for identical assets or
liabilities;
- level 2: inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices); and
- level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
2.12 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.13 Taxation
Tax for the period comprises current and deferred tax. Tax is recognised in
the income statement, except to the extent that it relates to items recognised
directly in equity. In this case the tax is also recognised directly in
other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the Company's subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on
the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated Financial Statements. However, the
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. Deferred income tax is determined using tax rates (and laws) that have
been enacted, or substantially enacted, by the end of the reporting period and
are expected to apply when the related deferred income tax asset is realised,
or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences
arising from investments in subsidiaries, associates and joint arrangements,
except for deferred income tax liability where the timing of the reversal of
the temporary difference is controlled by the group and it is probable that
the temporary difference will not reverse in the foreseeable future. Generally
the group is unable to control the reversal of the temporary difference for
associates. Only where there is an agreement in place that gives the group the
ability to control the reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries, associates and joint arrangements
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 utilised.
Deferred income 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 income tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the taxable
entity or different taxable entities where there is an intention to settle the
balances on a net basis.
There has been no tax credit or expense for the period relating to current or
deferred tax.
2.14 Share Capital, share premium and other reserves
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity, as a
deduction, net of tax, from the proceeds provided there is sufficient premium
available. Should sufficient premium not be available placing costs are
recognised in the Income Statement.
Other reserves consist of the share option reserve and the foreign exchange
translation reserve. See Note 16 for further detail.
2.15 Reverse acquisition reserve
The reverse acquisition reserve arose on the acquisition of Kibe Investments
No. 2 Limited in 2010. There has been no movement in the reserve since that
date.
2.16 Share Based Payments
The Group operates a number of equity-settled share-based schemes, under which
the entity receives services from employees or third-party suppliers as
consideration for equity instruments (shares, options and warrants) of the
Group. The Group may also issue warrants to share subscribers as part of a
share placing. The fair value of the equity-settled share based payments is
recognised as an expense in the income statement or charged to equity
depending on the nature of the service provided or instrument issued. The
total amount to be expensed or charged in the case of options is determined by
reference to the fair value of the options or warrants 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).
In the case of shares and warrants the amount charged to the share premium
account is determined by reference to the fair value of the services received
if available. If the fair value of the services received is not determinable
the shares are valued by reference to the market price and the warrants are
valued by reference to the fair value of the warrants granted as described
previously.
Non-market vesting conditions are included in assumptions about the number of
options or warrants 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
another reserve in equity.
When the warrants or options are exercised, the Company 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 warrants
or options are exercised.
2.17 Operating Leases
Leases of assets under which the short-term exemption under IFRS 16 has been
taken and which a significant amount of the risks and benefits of ownership
are effectively retained by the lessor are classified as operating leases.
Operating lease payments are charged to the income statement on a
straight-line basis over the period of the respective leases.
2.18 Revenue Recognition
Revenue is recognised in respect of amounts recharged to project strategic
partners in accordance with their contractual terms. Revenue is also generated
from management and consulting services to third parties.
The Group derives revenue from the transfer of services overtime and at a
point in time in the service lines detailed below. Revenues from external
customers come from consulting services.
The Group provides management services to subsidiary undertakings and joint
venture entities for a fixed monthly fee. Revenue from providing services is
recognised in the accounting period in which the services are rendered.
Efforts to satisfy the performance obligation are expended evenly throughout
the performance period and so the performance obligation is considered to be
satisfied evenly over time.
2.19 Finance Income
Finance income consists of bank interest on cash and cash equivalents which is
recognised using the effective interest rate method.
2.20 Discontinued Operations
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which:
• represents a separate major line of business or geographic area of
operations;
• is part of a single co-ordinated plan to dispose of a separate major line
of business or geographic area of operations; or
• is a subsidiary acquired exclusively with a view to resale. Classification
as a discontinued operation occurs at the earlier of disposal or when the
operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative
statement of profit or loss and OCI is represented as if the operation had
been discontinued from the start of the comparative year.
3. Financial Risk Management
3.1 Financial Risk Factors
The Group's activities expose it to a variety of financial risks being market
risk (including, interest rate risk, currency risk and price 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.
Market Risk
(a) Foreign currency risks
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the USD and
Euros against the UK pound. Foreign exchange risk arises from future
commercial transactions, recognised assets and liabilities and net investments
in foreign operations. The Group negotiates all material contracts for
activities in relation to its subsidiary in USD and Euros. The Directors will
continue to assess the effect of movements in exchange rates on the Group's
financial operations and initiate suitable risk management measures where
necessary.
(b) Price risk
The Group is not exposed to commodity price risk as a result of its
operations, which are still in the exploration phase. Other than insignificant
consulting revenue, the only revenue relates to revenue charged to the joint
venture JSC Georgian Copper & Gold. The Directors will revisit the
appropriateness of this policy should the Group's operations change in size or
nature.
The Group has no exposure to equity securities price risk, as it has no listed
equity investments.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest rate risk on
financial liabilities. The Group's interest rate risk arises from its cash
held on short-term deposit, which is not significant.
Credit Risk
Credit risk arises from cash and cash equivalents as well as outstanding
receivables. Management does not expect any losses from non-performance of
these receivables.
The amount of exposure to any individual counter party is subject to a limit,
which is assessed by the Board. No credit limits were exceeded during the
reporting period, and management does not expect any losses from
non-performance by these counterparties.
The Group considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized mineral exploration groups, the Group's
continued future operations depend on the ability to raise sufficient working
capital through the issue of equity share capital. The Directors are confident
that adequate funding will be forthcoming with which to finance operations.
Controls over expenditure are carefully managed. In April 2022, the Company
raised net proceeds of £1.7m. See note 2.4 for further details on going
concern and liquidity.
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 to enable the Group to continue its exploration and
evaluation activities. The Group has no debt at 31 December 2021 and defines
capital based on the total equity of the Company being £4.1m. The Group
monitors its level of cash resources available against future planned
exploration and evaluation activities and may issue new shares in order to
raise further funds from time to time.
4. Critical Accounting Estimates and Judgements
The preparation of the Group Financial Statements 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 Statements and the reported amount of
expenses during the year. Actual results may vary from the estimates used to
produce these Financial Statements.
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:
Fair Value Financial Instruments through Profit and Loss
The fair value of financial instruments that are not traded in an active
market is determined using valuation techniques. The group uses its judgement
to select a variety of methods and make assumptions that are mainly based on
market conditions existing at the end of each reporting period. The Financial
Instrument held at FVPL was reclassified to intangible assets during the
current period as the conditions to exercise the option were exercised.
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December 2021 of
£1,952,419 (2020: £31,673): refer to Note 10 for more information. The Group
has a right to renew exploration permits and the asset is only depreciated
once extraction of the resource commences. Management tests annually whether
exploration projects have future economic value in accordance with the
accounting policy stated in Note 2.7. Each exploration project is subject to
an annual review by either a consultant or senior company geologist to
determine if the exploration results returned during the year warrant further
exploration expenditure and have the potential to result in an economic
discovery. This review takes into consideration the expected costs of
extraction, long term metal prices, anticipated resource volumes and supply
and demand outlook. In the event that a project does not represent an
economic exploration target and results indicate there is no additional
upside, a decision will be made to discontinue exploration.
Towards the end of 2021, management had doubts over the viability of Central
Menzies. These were confirmed shortly after the year end with the publication
of the results of a second phase of RC drilling which focused on testing the
Nugget Patch gold trend to confirm if there was higher grade mineralisation
sitting at depth below a supergene gold enriched zone and to confirm historic
high grade gold intersections closely associated with the main workings at
Teglio. The results were generally inconclusive, with no obvious continuity
along strike and no significant high-grade intercepts. In February 2022, the
Directors formally announced that it would not take up the Option over the
Central Menzies Gold Project. As such, management believe there were
conditions at the year end to suggest that Central Menzies exploration asset
was impaired and it was written off in full.
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. These assumptions have
been described in more detail in Note 17.
5. Segmental Information
As at 31 December 2021, the Group operates in three geographical areas, the
UK, Austria and Australia. The Company operates in one geographical area, the
UK. Activities in the UK are mainly administrative in nature whilst activities
in Austria and Australia relate to exploration and evaluation work. The
reports used by the chief operating decision maker are based on these
geographical segments.
The Group generated no revenue during the year ended 31 December 2021 (2020:
£1,204).
2021 Australia Austria UK Total
£ £ £
Revenue - - - -
Administrative expenses (493,695) (16,090) (1,402,713) (1,912,498)
Other gains/(losses) (417,138) - - (417,138)
Operating loss from continued operations per reportable segment (910,833) (16,090) (1,402,713) (2,329,636)
Additions to non-current assets 1,915,069 24,675 - 1,939,744
Reportable segment assets 1,959,947 61,506 2,228,535 4,249,988
Reportable segment liabilities 77,538 3,207 43,798 124,543
Segment assets and liabilities are allocated based on geographical location.
2020 Austria UK Total
£ £ £
Revenue - 1,204 1,204
Administrative expenses (41,781) (916,913) (958,694)
Other gains/(losses) 164 3,557 3,721
Operating loss from continued operations per reportable segment (41,617) (912,152) (953,769)
Additions to non-current assets 31,673 - 31,673
Reportable segment assets 41,155 3,428,821 3,469,976
Reportable segment liabilities 6,867 75,473 82,340
6. Revenue
2021 2020
£ £
Operational services - 1,204
- 1,204
Operational services are recharged by European Mining Services which include
salaries, sample preparation and assay costs and consulting fees. No such
recharges were made during the year.
7. Expenses by Nature
2021 2020
£ £
Directors' fees (note 20) 233,849 249,824
Employee Expenses 23,522 -
Fees payable to the Company's auditors for the audit of the Parent Company and 30,955 30,180
group financial statements
Professional, legal and consulting fees 362,808 283,815
Accounting related services 26,471 16,425
Insurance 19,830 23,797
Office and administrative expenses 89,985 39,542
Depreciation 1,423 9,183
Travel and subsistence 19,354 8,156
AIM related costs including investor relations 182,446 154,083
Share option expense 473,336 14,118
Fees paid in shares 438,059 -
Operations related costs - 129,571
Other expenses 10,460 -
Total administrative expenses 1,912,498 958,694
8. Taxation
The tax on the Group's loss 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
2021 2020
£ £
Loss before tax including discontinued operations (578,100) (572,989)
Tax at the weighted average rate of 31.6% (2020: 19%) (182,743) (108,868)
Expenditure not deductible for tax purposes 111,184 (2,360)
Tax losses utilised (367,903) -
Net tax effect of losses carried forward on which no deferred tax asset is 450,616 109,673
recognised
Income tax for the year 11,154 1,555
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 23.3% (2020: 19.08%) used is a
combination of the 19% standard rate of corporation tax in the UK, 25%
Austrian corporation tax and 26% Australian corporation tax.
The Group has accumulated tax losses of approximately £6,965,000 (2020:
£6,547,000) available to carry forward against future taxable profits. A
deferred tax asset has not been recognised because of uncertainty over future
taxable profits against which the losses may be utilised.
9. Property, Plant and Equipment
Field Computer equipment Total
equipment £ £
£
Cost
As at 31 December 2020 10,229 25,545 35,774
As at 1 January 2021 10,229 25,545 35,774
Exchange differences - - -
As at 31 December 2021 10,229 25,545 35,774
Depreciation
As at 31 December 2020 9,674 24,677 34,351
Charge for the year 555 868 1,423
As at 31 December 2021 10,229 25,545 35,774
Net book value as at 31 December 2020 555 868 1,423
Net book value as at 31 December 2021 - - -
10. Intangible Assets
Exploration & Evaluation Assets at Cost and Net Book Value 2021 2020
£ £
Balance as at 1 January 31,673 -
Additions 1,512,430 31,673
Transfer from financial asset 427,314 -
Foreign exchange differences (18,998) -
As at 31 December 1,952,419 31,673
The brought forward Exploration & Evaluation balance relates to work
performed at the Company's Rotguelden licence area in Austria. The Austrian
licences were renewed in December 2020 for an additional 5 years.
The additions in the year relate to two drilling program areas; Eclipse Gold
Project and Gindalbie Gold Project.
Eclipse Gold Project
In 2020 the Group acquired an option to purchase 75% of the Eclipse Gold
license. The option was exercised in February 2021 for a consideration of
AUD$1,000,000 (approximately £550,000) in cash and AUD$500,000 (£277,750)
settled via the issue of 7,095,510 new ordinary shares of no-par value at a
price of 3.91p .
The Group has completed four exploratory drilling programmes at Eclipse -
118 RC drill holes for a total of 10,081 metres and nine diamond drill holes
for a total of 1,200 metres. Drilling has confirmed the presence of parallel
veins to the Eclipse lode at Twin Shaft and also proven wide strike extensions
at Jack's Dream. Further drilling is planned to commence in June 2022
following successful structural mapping along the Eclipse shear.
In accordance with IFRS 6, the Directors undertook an assessment of the
following areas and circumstances which could indicate the existence of
impairment:
• The Group's right to explore in an area has expired or will expire
in the near future without renewal.
• No further exploration or evaluation is planned or budgeted for.
• A decision has been taken by the Board to discontinue exploration
and evaluation in an area due to the absence of a commercial level of
reserves.
• Sufficient data exists to indicate that the book value may not be
fully recovered from future development and production.
The Directors do not consider the assets to be impaired.
11. Trade and Other Receivables
2021 2020
£ £
Trade receivables 2,862 108,284
VAT receivable 59,523 34,519
Prepayments 11,481 16,762
Other receivables 13,332 134,801
87,198 294,366
Trade and other receivables are all due within one year. The fair value of all
receivables is the same as their carrying values stated above. These assets,
excluding prepayments, are the only form of financial asset within the Group,
together with cash and cash equivalents.
The carrying amounts of the Group's trade and other receivables are
denominated in the following currencies:
2021 2020
£ £
UK Pounds 67,049 290,103
Euros 304 4,263
Australian Dollars 19,845 -
87,198 294,366
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivable mentioned above. The Group does not hold any
collateral as security. All trade and other receivables are considered fully
recoverable and performing.
12. Financial Assets At Fair Value Through Profit or Loss
2021 2020
£ £
Balance as at 1 January 427,314 -
Additions 417,138 427,314
Impairment (417,138) -
Transferred to Exploration and Evaluation assets (427,314) -
As at 31 December - 427,314
On 12 August 2020, the Company entered into an Option Agreement to acquire a
75% interest in the Eclipse Gold Project. The Company paid AUD$100,000
(£55,000) in cash and AUD$150,000 (£82,144) settled via the issue of
4,693,954 new ordinary shares of no-par value at a price of 1.75p and the
issue of 4,693,954 warrants exercisable at 3p for two years. As part of the
terms of the arrangement, the Company agreed to spend AUD$300,000 on
exploration at Eclipse within the 6 month option period. Approximately
AUD$615,000 was spent in the period including the cost of the Option.
During December 2020, the Company signed an agreement to exercise the option
to acquire a 75% interest in the Eclipse project, pending certain regulatory
approvals.
On 22 February 2021, the Company announced that it had successfully completed
the Eclipse acquisition and owned 75% of the project and license. The cost of
the option has been transferred to Exploration and Evaluation assets in line
with IFRS 6.
In May 2021, the Group purchased an option to acquire a 75% interest in four
exploration licences which comprise the Central Menzies Gold project. The
Group committed to spend AUD$500,000 on exploration at Central Menzies within
the 9-month option period.
At the year-end management did not have plans to spend further funds on the
Central Menzies license area and the minimum spend commitment had been met.
Shortly after the period end, the Company announced that it would not exercise
the option to acquire the 75% interest in the project. Given the existence of
impairment indicators at the year end, management took the view to impair the
Central Menzies exploration asset in full.
13. Cash and Cash Equivalents
2021 2020
£ £
Cash at bank and in hand 2,210,371 2,289,638
14. Trade and Other Payables
2021 2020
£ £
Trade payables 86,665 44,307
Other payables 4,478 2,091
Accrued expenses 33,400 35,942
124,543 82,340
The carrying amounts of the Group's trade and other receivables are
denominated in the following currencies:
2021 2020
£ £
UK Pounds 44,516 290,103
Euros 5,441 4,263
Australian Dollars 74,586 -
124,543 294,366
15. Share Capital and Share Premium
On 15 December 2010 the shareholders approved the removal of the Company's
authorised share capital and so there is no limit on the number of shares the
Company is authorised to issue. On that date the shareholders also approved
the removal of the nominal value of the shares, as permitted under local
company legislation. As such all amounts raised are considered to be share
premium.
Issued share capital
Group Number of shares Share premium Total
£ £
At 1 January 2020 133,756,991 39,265,637 39,265,637
Issue of Ordinary Shares - 28 February 2020 (2) 60,000,000 570,700 570,700
Issue of Ordinary Shares - 12 August 2020 9,387,908 164,288 164,288
Issue of Ordinary Shares - 10 September 2020 (3) 50,000,000 1,179,131 1,179,131
Issue of Ordinary Shares - 24 November 2020 (4) 61,538,462 1,886,225 1,886,225
At 31 December 2020 314,683,361 43,065,981 43,065,981
Issue of Ordinary Shares - 22 February 2021 7,095,510 277,434 277,434
Issue of Ordinary Shares - 22 February 2021 7,095,510 277,434 277,434
Issue of Ordinary Shares - 20 May 2021 1,921,068 54,750 54,750
Issue of Ordinary Shares - 20 May 2021 1,921,068 54,750 54,750
Issue of Ordinary Shares - 10 June 2021 3,995,238 106,506 106,506
At 31 December 2021 336,711,755 43,836,855 43,836,855
(1) Net of issue costs of £18,700
(2) Net of issues costs of £29,300
(3) Net of issue costs of £70,869
(4) Net of issue costs of £113,775
On 28 February 2020, the Company issued and allotted 60,000,000 new Ordinary
Shares at a price of 1 pence per share for gross proceeds of £600,000.
On 12 August 2020, the Company issued and allotted 4,693,954 new Ordinary
Shares at a price of 1.75 pence per share as consideration for the purchase of
the 75% Eclipse option. The Company issued and allotted a further 4,693,954
new Ordinary shares at the same price as payment of a finder's fee in respect
of the Eclipse transaction.
On 10 September 2020, the Company issued and allotted 50,000,000 new Ordinary
Shares at a price of 2.5 pence per share for gross proceeds of £1,250,000.
On 24 November 2020, the Company issued and allotted 61,538,462 new Ordinary
Shares at a price of 3.25 pence per share for gross proceeds of £2,000,000.
On 22 February 2021, the Company issued and allotted 7,095,510 new Ordinary
Shares at a price of 3.9 pence per share as consideration for the purchase of
75% of the equity of Eclipse Exploration Pty. The Company issued and allotted
a further 7,095,510 new Ordinary Shares at the same price as payment of a
finder's fee in respect of the Eclipse transaction.
On 20 May 2021, the Company issued and allotted 1,921,068 new Ordinary Shares
at a price of 2.85 pence per share as consideration for the purchase of 75% of
the equity of Central Menzies. The Company issued and allotted a further
1,921,068 new Ordinary Shares at the same price as payment of a finder's fee
in respect of the Central Menzies transaction.
On 10 June 2021, pursuant to the advisory agreement, a fee of US$150,000
settled via the issue of 3,995,238 new ordinary shares in the Company at a
price of 2.65p were allotted to the Company's Georgian advisor.
16. Other reserves
2021 2020
£ £
Foreign currency translation reserve (239,077) (231,021)
Share option Reserve 759,370 383,814
520,293 152,793
Foreign currency translation reserve - the foreign currency translation
reserve represents the effect of changes in exchange rates arising from
translating the Financial Statements of subsidiary undertakings into the
Company's presentation currency.
Share option reserve - the share option reserve represents the fair value of
share options and warrants in issue. The amounts included are recycled to
share premium on exercise or recycled to retained earnings on expiry. Note
17 outlines the share based payments made in the year.
17. Share Based Payments
Warrants and options outstanding at 31 December 2021 have the following expiry
dates and exercise prices:
Number
Grant date Expiry date Exercise price in £ per share 2021 2020
20 July 2016 20 July 2021 0.1400 - 5,000,000
30 January 2017 3 March 2022 0.1200 1,900,000 1,900,000
22 June 2017 21 July 2022 0.1825 3,300,000 3,300,000
30 July 2018 26 July 2023 0.1400 1,000,000 1,000,000
30 July 2018 26 July 2023 0.2000 1,000,000 1,000,000
1 July 2019 30 June 2024 0.0130 3,376,553 3,376,553
12 August 2020 12 August 2022 0.0300 9,387,908 9,387,908
1 February 2021 31 January 2025 0.0400 10,500,000 -
1 February 2021 31 January 2025 0.0550 10,500,000 -
18 February 2021 22 February 2023 0.0470 14,191,020 -
55,155,481 24,964,461
2017 Warrants 2017 Warrants 2016 Warrants
Granted on: 30/01/2017 22/06/2017 20/07/2016
Life (years) 5.2 years 5 years 5 years
Share price on grant date 8.8p 17.7p 16p
Risk free rate 0.57% 0.57% 0.5%
Expected volatility 27.06% 34.43% 23.29%
Expected dividend yield - - -
Exercise price 12p 18.25p 14p
Marketability discount 20% 20% 20%
Total fair value (£) 20,225 140,043 188,690
2018 Warrants 2018 Warrants 2019 Warrants
Granted on: 30/07/2018 30/07/2018 1/7/2019
Life (years) 5 years 5 years 5 years
Share price on grant date 9.35p 9.35p 1.05p
Risk free rate 0.75% 0.75% 0.42%
Expected volatility 27.06% 27.06% 40.97%
Expected dividend yield - - -
Exercise price 20p 14p 1.3p
Marketability discount 20% 20% 20%
Total fair value (£) 3,575 8,871 8,292
2020 Warrants 2021 Options 2021 Options
Granted on: 12/08/2020 01/02/2021 01/02/2021
Life (years) 2 years 4 years 4 years
Share price on grant date 2.25p 3.45p 3.45p
Risk free rate 1.75% 1.75% 1.75%
Expected volatility 36.72% 98,49% 98,49%
Expected dividend yield - - -
Exercise price 3p 4p 5.5p
Marketability discount 20% 20% 20%
Total fair value (£) 14,118 192,016 176,292
2021 Warrants
Granted on: 18/02/2021
Life (years) 2 years
Share price on grant date 3.7p
Risk free rate 1.75%
Expected volatility 92.17%
Expected dividend yield -
Exercise price 4.7p
Marketability discount 20%
Total fair value (£) 181,818
The risk free rate of return is based on zero yield government bonds for a
term consistent with the warrant and option life.
The movement of options and warrants for the year to 31 December 2021 is shown
below:
2021 2020
Number Weighted average exercise price (£) Number Weighted average exercise price (£)
As at 1 January 24,964,461 0.09 15,576,533 0.12
Granted 35,191,020 0.04 9,387,908 0.03
Exercised - - - -
Expired (5,000,000) - - -
Outstanding as at 31 December 55,155,481 0.06 24,964,461 0.09
Exercisable at 31 December 55,155,481 0.06 24,964,461 0.09
2021 2020
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)
0.04-0.6 0.06 55,155,481 3 3 0.09 24,964,461 1.741 1.741
The total fair value charged to the statement of comprehensive income for the
year ended 31 December 2021 and included in administrative expenses was
£473,059 (2020: £14,118).
18. Other (losses)/gains - Net
Group
2021 2020
£ £
Net foreign exchange gains / (losses) - (9,006)
Profit on sale of property, plant and equipment - 12,724
Other gains/losses - 3
Impairments of financial assets (417,138)
(417,138) 3,721
19. Employees
Group
Staff costs (excluding Directors) 2021 2020
£ £
Salaries and wages 11,937 4,841
Social security costs - 5,243
Pensions 1,194 2,688
13,131 12,772
The average monthly number of employees during the year was 1 (2020: 1).
20. Directors' Remuneration
For the year ended 31 December 2021
Short term benefits Post-Employment benefits Share based payment Total
£ £ £ £
Executive Directors
Michael Struthers 65,000 - 135,045 200,046
Gregory Kuenzel 68,000 2,040 107,862 177,902
Non-executive Directors
Neil O'Brien 30,000 - 53,931 83,931
Peter Damouni 24,000 44 53,931 77,975
David Ajemian 1,000 14 - 1,014
Shaun Bunn 43,750 - - 43,750
231,750 2,099 350,769 584,618
For the year ended 31 December 2020
Short term benefits Post-Employment benefits Share based payment Total
£ £ £ £
Executive Directors
Michael Struthers 99,824 - - 99,824
Gregory Kuenzel 40,000 1,200 - 41,200
Non-executive Directors
Neil O'Brien 35,000 - - 35,000
Peter Damouni 35,000 444 - 35,444
David Ajemian 40,000 1,044 - 41,044
Laurence Mutch - - - -
249,824 2,688 - 252,512
21. Earnings per Share
Continuing operations
The calculation of the total basic losses per share of 0.706 pence (2020: loss
0.456 pence) is based on the losses attributable to equity owners of the group
of £2,340,790 (2020: £955,324) and on the weighted average number of
ordinary shares of 331,475,515 (2020: 209,429,917) in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share are identical
as the effect of the exercise of share options or warrants would be to
decrease the loss per share.
Discontinued operations
The calculation of the total basic and diluted earnings per share of 0.528
pence (2020: 0.183 pence) is based on the profit attributable to equity owners
of the group of £1,751,536 (2020: £382,335) and on the weighted average
number of ordinary shares of 331,475,515 (2020: 209,429,917) in issue during
the period.
22. Commitments
(a) Work programme commitment
The Eclipse Mining Licence has an annual minimum expenditure commitment of
AUD$30,300.
(b) Royalty agreements
As part of the contractual arrangement with Kibe No.1 Investments Limited the
Group has agreed to pay a royalty on revenue from gold sales arising from gold
mines developed by Noricum Gold AT GmbH and covered by licenses acquired by
Kibe No.1 Investments Limited. Under the terms of the Royalty Agreement
between Kibe No.1 Investments Limited and Noricum Gold AT GmbH, the Group
shall pay royalties, based on total ounces of gold sold, equal to US$1 for
every US$250 of the sale price per ounce.
(c) Lease agreements
During the period Eclipse entered into a 12 month office lease of AUD$17,160
per annum. At the year end the commitment amounted to AUD$3,900. Additionnaly,
Empire entered into a 12 month office lease of £18,000 per annum. The year
end commitment amounted to £12,000.
The lease payments in respect of the two leases have been expensed to the
Consolidated Statement of Comprehensive Income in line with IFRS 16 for
commitments spanning less than 12 months from the year end date.
23. Assets held for sale and discontinued operations
On 10(th) June 2021, the Company announced that it had sold its 50% interest
in GCG to its joint venture partner for cash consideration of $3.3million
(£2,327,944).
As at 31 December 2021
£
Consideration received 2,327,944
Total assets of disposal group held for sale (552,815)
Gain on sale of asset held for sale 1,775,129
The financial performance and cash flow information of the joint venture
presented is for the year ended 31 December 2020.
2021 2020
£ £
Share of (loss)/ profit from joint venture (23,593) 382,335
Profit on disposal of investment 1,775,129 -
Profit from discontinued operations 1,751,536 382,335
Net cash flows from operating activities - -
Net cash flows from financing activities (22,240) (44,164)
Net cash flows from investment activities - -
Net decrease in cash generated from disposal group (22,240) (44,164)
The following assets were reclassified as held for sale in relation to the
discontinued operation prior to disposal:
2021 2020
£ £
Loan receivable 194,073 43,227
Investment in joint venture 358,742 382,335
Total assets of disposal group 552,815 425,562
24. Financial instruments
Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is
provided below. The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets
or liabilities (level 1),
- Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly or indirectly (level
2),
- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
Cost may be an appropriate estimation of fair value at the measurement date
only in limited circumstances, such as for a pre-revenue entity when there is
no catalyst for change in fair value, or the transaction date is relatively
close to the measurement date. The financial asset relates to costs incurred
with the acquisition of an option to invest in a 75% holding of Eclipse
Exploration PTY. Further detail can be found in note 12.
Group
There were no assets held at fair value as at 31 December 2021.
31 December 2020
Level 1 Level 2 Level 3 Total
£'000
Financial assets (fair value through the profit or loss) - - 427,314 427,314
- - 427,314 427,314
25. Related Party Transactions
Services provided by European Mining Services Limited to JSC Georgian Copper
& Gold
During the year European Mining Services Limited provided geological,
technical and other professional services with a total value of £Nil (2020:
£1,204) to JSC Georgian Copper and Gold, the joint venture entity.
Loans provided by Parent Company
As at 31 December 2021 there were amounts receivable of £8,958 (2020:
£7,454) from Kibe No.2 Investments Limited. No interest was charged on the
loans.
As at 31 December 2021 there were amounts receivable of £696,186 (2020:
£694,186) from European Mining Services Limited.
As at 31 December 2021 there were amounts receivable of £2,737,475 (2020:
£Nil) from Eclipse Exploration Pty Ltd.
As at 31 December 2021 there were amounts receivable of £119,704 (2020:
£74,126) from Noricum AT GmbH
Loans provided by Kibe No.2 Investments Limited
As at 31 December 2021 there were amounts receivable of £754,517 (2020:
£754,517) from Noricum AT GmbH.
All intra-group transactions are eliminated on consolidation.
Other Transactions
Westend Corporate LLP, an entity in which Gregory Kuenzel is a partner, was
paid a fee of £69,640 (2020: £46,800) for accounting services to the Group.
At the year-end there was an outstanding balance of £7,053 (2020: £7,208).
Michael Struthers received £65,000 (2020: £99,824) through his service
company, MS Mining Consulting LDA, as disclosed in Note 20. See Note 20 for
further details of directors' remuneration.
26. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
27. Events after the Reporting Date
On 26 January 2022 the Group agreed Heads of Terms to enter into a Tribute
Agreement with Maher Mining Contractors Pty Ltd, giving Empire the right to
explore, develop and mine within a granted area on Maher Mining's 100% owned
mining lease M27/158 ('Gindalbie Gold Project').
On 8 February 2022 the Group announced that it will focus on advanced
exploration opportunities at the Eclipse and Gindalbie Gold Project, resulting
in the termination of the option on Central Menzies Gold Project.
On 6 April 2022 Eclipse acquired a 70% interest in three highly prospective
Australian-based copper-gold projects from Century Minerals Pty Ltd for total
consideration of AUD$100,000 in cash and the issue of 16,835,588 new ordinary
shares in the Company.
On 20 April 2022 the Company issued 7,500,000 options over ordinary shares of
no par value in the capital of the Company to the Managing Director.
On 28 April 2022 the Company completed a placing to raise £1,700,000 before
expenses by way of a placing of 85,000,000 new ordinary shares of no par value
in the capital.
In February 2022 Russia invaded Ukraine, in a major escalation of the
Russo-Ukrainian War. Whilst this has had a huge geo-political impact across
the world, Empire has not seen a direct impact to its organisation including
employees and the ability to carry out its core strategy. Empire continues to
monitor the situation as it evolves.
On 13 June 2022 the Company announced the resignation of Mr Michael Struthers
from the Board of Directors.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FJMBTMTMTTTTRecent news on Empire Metals
See all newsREG - Empire Metals Ltd - Warrant Exercise
AnnouncementREG - Empire Metals Ltd - Exceptional High-Purity TiO2 Product Achieved
AnnouncementREG - Empire Metals Ltd - Final Results
AnnouncementREG - Empire Metals Ltd - Holding(s) in Company
AnnouncementREG - Empire Metals Ltd - Holding(s) in Company
Announcement