REG - Empire Metals Ltd - Final Results
19/06/2023 07:00
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RNS Number : 0717D Empire Metals Limited 19 June 2023
Empire Metals Limited / LON: EEE / Sector: Natural Resources
19 June 2023
Empire Metals Limited
("Empire" or "the Company")
Final Results
Empire Metals Limited (LON: EEE), the AIM-quoted resource exploration and
development company, announces its final results for the year ended 31
December 2022.
The annual report and accounts for the year ended 31 December 2022 will be
posted to shareholders today and will be available for download on the
Company's website, www.empiremetals.co.uk, later today.
Highlights:
· Confirmed discovery of a new emerging "Giant" mineral system at the
Pitfield Project which has been found to host titanium mineralisation of
globally significant size and grade in addition to widespread anomalous copper
values.
· Titanium rich mineralisation (between 4% and 10% TiO(2)) was
identified in all but one of 21 holes drilled, starting at or very near
surface and with nearly a quarter of the holes still ending in high TiO(2)
values of up to 154 metres depth.
· Only 2% of this highly prospective, giant mineral system has been
drilled to date demonstrating enormous potential for additional discoveries
through future drilling currently being planned.
· Cash at bank as at the date of signing the Financial Statements of
£1.8 million, well-funded for planned work programmes focussed on our recent
titanium discovery at the Pitfield Project.
· Continued exploration activity at the Eclipse-Gindalbie Project - a
highly prospective and high-grade gold project with a new kaolin discovery of
potential economic significance.
· Significant growth of exploration footprint across Australia's
premier mining regions - portfolio now has exposure to commodities including
gold, copper, titanium and lithium.
· Increased exploration area from 3.1km(2) to 2,155km(2) comprising
four major projects and transforming Empire into a significant explorer and
potential developer in Australia.
· Talented exploration and development team now established in Western
Australia including Ed Baltis, Louisa Stokes and bolstered by the appointment
of Andrew Faragher as Exploration Manager post period end.
Shaun Bunn, Managing Director, commented: "Empire can now boast one of the
largest and most prospective exploration footprints across Australia - a
premier mining jurisdiction which continues to produce some of the most
exciting exploration success stories globally. Our agreement in April 2022
which saw Empire acquire majority interests in three highly prospective
exploration projects, Pitfield, Walton and Stavely, set the tone for our
activities for the next year. All projects are in geological regions well
known for world-class copper and/or gold discoveries and we are actively
leveraging the expertise of our technical team to deliver new discoveries as
our exploration programmes continue.
"We have also been building an experienced and highly capable exploration team
and we are now in an excellent position to move forward with exploration
programmes across multiple projects, prioritising work at our Pitfield Project
in Western Australia. Although at an early stage, Pitfield has consistently
demonstrated that there is a "Giant" mineral system present and
understandably, our exploration team are eager to press on with work here
towards defining the parts of this giant mineral system that host economically
significant concentrations of metals. To this end, our maiden drill
programme at Pitfield discovered a zone of high-grade titanium mineralisation
of genuinely massive proportions; a Giant in a Land of Giants. Copper values
are also ubiquitously anomalous indicating that the fluid(s) involved in the
titanium mineralising event were also carrying huge amounts of copper which we
believe formed significant copper deposits in other parts of this giant
mineral system as evidenced by the historic copper mines and prospects in this
region. Pitfield has every potential to become a giant polymetallic orebody
district of global significance that Empire now controls.
"I look forward to sharing updates from across our portfolio over the coming
months, including more from our exploration activities at Pitfield, expected
during the course of Q3. We are also expecting more news from
Eclipse-Gindalbie including further details about the kaolin discovery, plus
the launch of our exploration programme at Walton. We are entering into an
exciting year of exploration activity and potential discovery, and I remain
very enthusiastic about what the future has in store for us."
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.
**ENDS**
For further information please visit www.empiremetals.co.uk
(http://www.empiremetals.co.uk) or contact:
Empire Metals Ltd Tel: 020 4583 1440
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
CHAIRMAN'S STATEMENT
Our objective for 2022 was to establish a portfolio of high-quality
exploration assets through which to deliver value to our shareholders by
making new discoveries, and by developing known deposits. We had a strong
first project in the Eclipse-Gindabie Project, however our exploration
aspirations were truly realised in April of last year when we acquired
majority interests in three large new project areas, Pitfield, Walton and
Stavely. Pitfield and Walton are located in mining regions of Western
Australia, and in the Stavely Arc region of Victoria in the case of the
Stavely project, and all are known for world class and significant copper
and/or gold discoveries. These new projects opened up prospective new
geological terranes for us, and importantly, increased our exploration area
from 3.1km2 to 2,155km2, instantly transforming Empire into an explorer and
potential developer with substantial scope and scale.
Our immediate priority has been the Pitfield Project, which has demonstrated
all the hallmarks of a "Giant" mineral system with the potential to contain
multiple giant metal deposits across its huge regional extent. Given the
many historic copper prosects and small mines in the district our focus has
been on locating the parts of this giant mineral system most favourable for
hosting economic copper deposits. On our very first reconnaissance drill
program this giant mineral system has delivered to us a globally significant
primary titanium discovery. Copper values are also strongly anomalous which
tells us that other parts of this giant mineral system may host significant
copper deposits as well.
Pitfield lies within the Neoproterozoic Yandanooka intracratonic sedimentary
basin; the Neoproterozoic being one of the major copper mineralisation epochs
globally. Pitfield is located immediately adjacent to the historic Baxters
copper mine at Arrino which produced 106 tonnes of copper at a grade between
20-30% which, along with numerous other prospects, demonstrates high regional
prospectivity for copper. We embarked on our exploration efforts confident
in our ability to demonstrate a new copper discovery but realizing that giant
mineral systems are special and can surprise.
Our work began with an airborne magnetic survey, carried out in June 2022,
which identified a significant structure along the western boundary of the
magnetic anomaly that closely aligns with a surface copper anomaly stretching
over 7km, previously identified by Conzinc Riotinto of Australia (which became
part of Rio Tinto Group) when conducting surface sampling in the early
1990s. This airborne magnetic survey was quickly followed with an airborne
electro-magnetic survey, and an evaluation of the historical exploration
database, which, following an expert review undertaken by Ed Baltis, confirmed
the presence of an exceptionally large magnetic anomaly extending over 40km in
length.
Field work began in November 2022, with the first phase of activity comprised
of mapping surface geology and soil sampling. This surface mapping resulted in
a number of rock samples being collected which confirmed copper enrichment
along with quartz and magnetite hosted by sandstones -key elements of certain
types of sediment-hosted stratabound copper deposits such as Udokan in
Russia. The following month, a contract geophysical survey crew was
mobilised and they completed five traverses of Dipole-Dipole Induced
Polarisation (DD-IP) for a total of 8,450-line metres. The aim of the DD-IP
survey was to identify drillable targets of sufficient scale within the
prospective Mt. Scratch Formation sandstones, as supported by existing
geological mapping and surface sampling results. Although the lines were
wide-spaced the DD-IP programme successfully outlined a number of extensive,
strong IP/resistivity anomalies, many coinciding with the regional gravity and
magnetics anomalies, copper-in-soil geochemical anomalies and the prospective
sedimentary host rocks.
Armed with this information, Empire launched its maiden drill programme post
period end in March 2023, completing 21 holes for a total of 3,206m. The
results of this programme, announced in May 2023, were both expected and
unexpected. As expected, the holes confirmed the presence of a regionally
significant and robust, giant (~40km by 8km) metal-rich hydrothermal mineral
system formed by a fluid(s) that carried a lot of copper but unexpectantly
where the Company has drilled widespread and high-grade concentrations of
titanium were found which were nonetheless extremely exciting. Titanium rich
mineralisation (between 4% and 10% TiO2) was identified in all but one of the
21 holes drilled, starting at or very near surface and with nearly a quarter
of the holes still ending in high TiO2 values of up to 154 metres depth.
Given the scale and extent of the known mineral system, as defined by combined
geological-geophysical-geochemical datasets, the Company believes it has
discovered a new high-grade, titanium deposit with the potential to be among
the most significant primary titanium orebodies globally. The Company also
maintains that other parts of this giant mineral system are more prospective
for the formation and preservation of significant copper deposits and perhaps
other metals as well. This is a complex but rich mineral system that clearly
will reward our continued exploration.
Only 2% of this highly prospective, giant mineral system has been drilled to
date demonstrating enormous potential for additional discoveries through
future drilling currently being planned. In order to fully realise the
Company's exploration ambitions at Pitfield, in mid-December, Empire took the
decision to expand our exploration licence area through the addition of two
new Exploration Licence Applications, covering extensions to the north and
south of the massive alteration footprint previously identified by us. These
new Exploration Licences increase our Pitfield exploration camp from 615km2 to
over 1,041km(2).
Looking to the wider portfolio, our work at Eclipse-Gindalbie continues to
generate positive results for us. The period started with news that Empire
had negotiated a tribute agreement to access the highly prospective Gindalbie
Gold Project, which is contiguous with the Eclipse licence, therefore
consolidating the mineralised footprint around our foundation asset. This
move increased Empire's exploration land package in the area by over 200%, to
a total of 943ha.
Empire has conducted multiple drilling campaigns at Eclipse-Gindalbie during
2022, which has confirmed that the mineralised system at Eclipse is much
larger than originally thought. Drilling identified high-grade parallel
veins to the Eclipse lode and wide strike extensions at Jack's Dream,
confirming the presence of exceptional gold mineralisation and also a thick
layer of kaolin around the South Gippsland #3 shaft at Gindalbie.
Drilling at the Homeward Bound prospect, located toward the western extent of
the Gindalbie project, reported stellar grade intercepts including 5m @ 8.99
g/t Au from 31m downhole (including 1m at 40.90 g/t Au), 3m @ 8.96 g/t Au from
98m downhole (including 2m at 13.28 g/t Au), and 3m @ 9.88 g/t Au from 46m
downhole (including 1m at 26.20 g/t Au).
Eclipse-Gindalbie continues to merit further exploration efforts, particularly
with regard to the kaolin discovery. Kaolin could provide Empire with a new
industrial mineral dimension to its commodity focus, with kaolin used
extensively in a number of industries including paper, plastics, adhesives,
rubber, paint, refractories, cement, bricks and ceramics, and is considered to
be a desirable feedstock for the production of high-purity aluminium oxide, an
essential component in lithium-ion batteries. Further work to assess the
commercial potential of this discovery is ongoing and will be reported in due
course.
Financial Results
As an exploration and development group which has no revenue we are reporting
a loss for the 12 months ended 31 December 2022 of £1,162,720 (31 December
2021: loss of £589,254).
The Group's cash position at the date of signing this report is £1.8 million.
Outlook
2023 is looking like a particularly promising and productive year for Empire,
as we push forward determinedly with exploration programmes across multiple
projects; most notably Pitfield and Eclipse-Gindalbie, but also the Stavely
and Walton Projects. Following our spectacular drilling results from our
maiden programme at Pitfield, the team is keen to keep up the forward momentum
and undertake additional work to better define and test this giant mineral
system for additional discoveries including copper and begin to prove up the
titanium find which we believe will become an asset of globally significant
magnitude. Across our wider portfolio, we are also awaiting the
metallurgical testwork and evaluation of the kaolin mineralisation at
Eclipse-Gindalbie, and we are eager to commence maiden exploration at Stavely
and Walton using airborne geophysical surveys at Stavely and geological
mapping and rock/soil sampling at Walton.
Under the experienced leadership of Managing Director Shaun Bunn, and Andrew
Faragher, our new Exploration Manager, I believe Empire is very well
positioned to make significant new discoveries and bring new exploration
success stories to our shareholders.
As ever, I am extremely grateful to our shareholders for their continued
support and I look forward to sharing more news with you from across our
portfolio of assets during the course of 2023.
Neil O'Brien
Non-Executive Chairman
16 June 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Group
Registered number: 1570939 Note 2022 2021
£ £
Non-Current Assets
Property, plant and equipment 8 1,328 -
Intangible assets 9 3,337,598 1,952,419
Total Non-current assets 3,338,926 1,952,419
Current Assets
Trade and other receivables 10 69,695 87,198
Financial assets at fair value through profit or loss 11 - -
Cash and cash equivalents 12 1,467,769 2,210,371
Total current assets 1,537,464 2,297,569
Total Assets 4,876,390 4,249,988
Current Liabilities
Trade and other payables 13 110,304 124,543
Total Current Liabilities 110,304 124,543
Total Liabilities 110,304 124,543
Net Assets 4,766,086 4,125,445
Equity attributable to owners of the Parent
Share capital 14 - -
Share premium 14 45,523,695 43,836,855
Reverse acquisition reserve (18,845,147) (18,845,147)
Other reserves 15 448,309 520,293
Accumulated losses (22,360,771) (21,386,556)
Total equity attributable to owners of the Parent 4,766,086 4,125,445
Total Equity 4,766,086 4,125,445
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Year ended 31 December 2022
Group
Note Year ended 31 December 2022 Year ended 31 December 2021
£ £
Continuing Operations
Revenue - -
Cost of sales - -
Gross profit - -
Administration expenses 6 (1,046,638) (1,912,498)
Other losses 17 (114,587) (417,138)
Operating loss before taxation (1,161,225) (2,329,636)
Income tax 7 (1,495) (11,154)
Loss for the year from continuing operations (1,162,720) (2,340,790)
(Loss)/profit from discontinued operations (attributable to equity holders of - 1,751,536
the Company)
Loss for the year (1,162,720) (589,254)
Loss attributable to:
- owners of the Parent (1,162,720) (589,254)
(1,162,720) (589,254)
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations 58,301 (8,056)
Total Comprehensive Income (1,104,419) (597,310)
Attributable to:
- owners of the Parent (1,104,419) (597,310)
Total Comprehensive Income (1,104,419) (597,310)
- Total comprehensive income attributable to discontinued - 1,751,536
operations
- Total comprehensive income attributable to continuing operations
(1,104,419) (2,349,326)
Earnings per share (pence) from continuing operations attributable to owners 20 (0.292) (0.706)
of the Parent - Basic & Diluted
Earnings per share (pence) from discontinued operations attributable to owners 20 - 0.528
of the Parent - Basic & Diluted
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2022
Share premium Reverse acquisition reserve Other reserves Retained losses Total equity
£ £ £ £ £
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
As at 1 January 2022 43,836,855 (18,845,147) 520,293 (21,386,556) 4,125,445
Loss for the year - - - (1,162,720) (1,162,720)
Other comprehensive income
Exchange differences on translating foreign operations - - 58,301 - 58,301
Total comprehensive income for the year - - 58,301 (1,162,720) (1,104,419)
Transactions with owners
Issue of ordinary shares 1,775,760 - - - 1,775,760
Cost of capital (88,920) - - - (88,920)
Share option charge - - 58,220 - 58,220
Expiry of Share Options - - (188,505) 188,505 -
Total transactions with owners 1,686,840 - (130,285) 188,505 1,745,060
As at 31 December 2022 45,523,695 (18,845,147) 448,309 (22,360,771) 4,766,086
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2022
Group
Note 2022 2021
£ £
Cash flows from operating activities
Loss after taxation including discontinued operations (1,162,720) (589,254)
Adjustments for:
Services satisfied by issue of shares 27,500 438,059
Share based payment 58,220 473,336
Share of loss/ (profit) on joint venture - discontinued operations - 23,593
Net finance income (2,795) (71)
Impairment of investments in joint venture - 417,138
Impairment of intangible assets 114,587 -
Gain on sale of investment - discontinued operations - (1,775,129)
Tax expense 1,495 11,154
Depreciation and amortisation 300 1,423
Decrease/ (increase) in trade and other receivables 17,506 (22,071)
Increase/(Decrease) in trade and other payables (26,490) 31,281
Net cash used in operating activities (972,397) (990,541)
Cash flows from investing activities
Loans granted to subsidiaries and joint venture partners - discontinued - (22,240)
operations
Purchase of property, plant and equipment (1,628) -
Additions to exploration and evaluation intangible asset (1,339,952) (1,512,430)
Sale of investment in joint venture - discontinued operations - 2,327,944
Net cash used in investing activities (1,341,580) 793,274
Cash flows from financing activities
Proceeds from issue of shares, less shares issued in lieu of fees 1,657,500 118,000
Cost of share issue (88,920) -
Interest received 2,795 -
Net cash generated from financing activities 1,571,375 118,000
Net decrease in cash and cash equivalents (742,602) (79,267)
Cash and cash equivalents at beginning of year 2,210,371 2,289,638
Cash and cash equivalents at end of year 12 1,467,769 2,210,371
Non-cash investing and financing
activities
Acquisition of exploration license - share based payment(1/2) 9 78,227 332,185
Advisory fees settled in shares(/3) - 438,059
Share options and warrants issued in respect of services 16 58,220 473,336
Acquisition of exploration license - issue of warrants 16 - 90,909
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
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 2022
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 2022 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
IAS 12 Income taxes 1 January 2023
IFRS 17 Insurance contracts 1 January 2023
IAS 8 Accounting estimates 1 January 2023
IAS 1 Presentation of Financial Statements 1 January 2023
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.
2.3 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 2022.
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.
2.4 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 2023, 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 £1,467,769 and a further £1.25
million was raised via the issue of new ordinary shares in March 2023. These
amounts combined are expected to adequately cover forecast working capital
requirements.
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.
2.5 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.
2.6 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.
2.7 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.
2.8 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
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 gains / (losses)' in the
income statement.
2.9 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.
2.10 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.
2.11 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.
2.12 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).
2.13 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.14 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.
2.15 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 Notes 15 and 16 for further detail.
2.16 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.
2.17 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.
2.18 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.
2.19 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.
2.20 Finance Income
Finance income consists of bank interest on cash and cash equivalents which is
recognised using the effective interest rate method.
2.21 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, there is no revenue. 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 March 2023, the Company
raised net proceeds of £1.25m. 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 2022 and defines
capital based on the total equity of the Company being £4.6m. 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:
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December 2022 of
£3,337,598 (2021: £1,952,419): refer to Note 9 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 16.
5. Segmental Information
As at 31 December 2022, 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 2022: £nil
(2021: £nil).
2022 Australia Austria UK Total
£ £ £
Revenue - - - -
Administrative expenses (143,454) (13,151) (890,033) (1,046,638)
Other gains/(losses) (114,587) - - (114,587)
Operating loss from continued operations per reportable segment (258,041) (13,151) (890,033) (1,161,225)
Additions to non-current assets 1,410,026 6,778 1,375 1,418,179
Reportable segment assets 3,416,905 76,126 1,383,359 4,876,390
Reportable segment liabilities 34,196 3,239 72,869 110,304
Segment assets and liabilities are allocated based on geographical location.
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
6. Expenses by Nature
2022 2021
£ £
Directors' fees (note 19) 342,095 233,849
Employee Expenses 40,882 23,522
Fees payable to the Company's auditors for the audit of the Parent Company and 39,000 30,955
group financial statements
Professional, legal and consulting fees 142,507 362,808
Accounting related services 36,226 26,471
Insurance 32,270 19,830
Office and administrative expenses 71,585 89,985
Depreciation 300 1,423
Travel and subsistence 84,556 19,354
AIM related costs including investor relations 188,703 182,446
Share option expense 58,220 473,336
Fees paid in shares - 438,059
Other expenses 10,294 10,460
Total administrative expenses 1,046,638 1,912,498
7. 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
2022 2021
£ £
Profit/Loss before tax from continued operations (1,162,720) (2,340,790)
Tax at the weighted average rate of 23% (2021: 23.3%) (267,082) (545,404)
Expenditure not deductible for tax purposes 45,863 111,184
Effect of differing tax rates across juristictions 78,186 26,984
Net tax effect of losses carried forward on which no deferred tax asset is 144,528 418,390
recognised
Income tax for the year 1,495 11,154
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 23% (2021: 23.3%) used is a
combination of the 19% standard rate of corporation tax in the UK, 25%
Austrian corporation tax and 25% Australian corporation tax.
The Group has accumulated tax losses of approximately £7,110,000 (2021:
£6,965,000) 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.
8. Property, Plant and Equipment
Field Computer equipment Total
equipment £ £
£
Cost
As at 31 December 2021 10,229 25,545 35,774
As at 1 January 2022 10,229 25,545 35,774
Additions - 1,628 1,628
Exchange differences - - -
As at 31 December 2022 10,229 27,173 37,402
Depreciation
As at 31 December 2021 10,229 25,545 35,774
Charge for the year - 300 300
As at 31 December 2022 10,229 25,845 36,074
Net book value as at 31 December 2021 - - -
Net book value as at 31 December 2022 - 1,328 1,328
9. Intangible Assets
Exploration & Evaluation Assets at Cost and Net Book Value 2022 2021
£ £
Balance as at 1 January 1,952,419 31,673
Additions 1,418,179 1,512,430
Transfer from financial assets - 427,314
Impairments (114,587) -
Foreign exchange differences 81,587 (18,998)
As at 31 December 3,337,598 1,952,419
The additions in the year relate to two of the Group's main project areas; the
Eclipse-Gindalbie Project and the Pitfield Project.
Eclipse-Gindalbie 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.
In January 2022, the Group entered into a Tribute Agreement for the Gindalbie
license. The cost to enter into the Tribute Agreement was AUD$250,000 for an
initial 6-month exploration term. An additional A$250,000 was paid in August
2022 to extend the exploration period by a further 18 months.
In February 2022, 1,676m of Reverse Circulation ("RC") drilling was completed,
focused mainly on the Homeward Bound, Laurel-Bulletin, South Gippsland #3,
Golden Puzzle and Bud's Find areas. Of the four RC holes drilled at the
Homeward Bound target, three reported very high-grade intercepts.
Following from this, a further six Diamond Drill ("DD") holes for a total of
999m were completed at Eclipse during the year to test for continuity between
Eclipse and Jack's Dream and to the north-west of Jack's Dream. Five of the
six DD holes intercepted the mineralised shear reporting significant gold
intercepts.
Following on from successful drilling campaigns in February 2022 and June
2022, the Company decided to carry out a small RC campaign consisting of nine
RC drill holes for 770m. The Company found evidence of kaolinite-rich clays
within the intensely leached upper part of the weathering profile. The next
phase of the exploration programme will focus on the metallurgical quality of
the white kaolin samples collected from this drill programme.
Pitfield Project
During 2022, work was focussed on the reinterpretation of historic geochemical
and geophysical work undertaken by previous explorers as well as some first
phase mapping and sampling.
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.
10. Trade and Other Receivables
2022 2021
£ £
Trade receivables - 2,862
VAT receivable 15,796 59,523
Prepayments 18,230 11,481
Other receivables 35,669 13,332
69,695 87,198
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:
2022 2021
£ £
UK Pounds 58,308 67,049
Euros 626 304
Australian Dollars 10,761 19,845
69,695 87,198
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.
11. Financial Assets At Fair Value Through Profit or Loss
2022 2021
£ £
Balance as at 1 January - 427,314
Additions - 416,547
Impairment - (416,547)
Transferred to Exploration and Evaluation assets - (427,314)
As at 31 December - -
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 was 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.
12. Cash and Cash Equivalents
2022 2021
£ £
Cash at bank and in hand 1,467,769 2,210,371
The Group's cash is held with facilities with AA and A credit ratings.
The carrying amounts of the Group and Company's cash and cash equivalents are
denominated in the following currencies:
2022 2021
£ £
UK Pounds 1,200,351 1,607,045
Euros 11,469 6,939
US Dollars 185,458 554,436
Australian Dollars 70,491 41,951
Cash at bank and in hand 1,467,769 2,210,371
13. Trade and Other Payables
2022 2021
£ £
Trade payables 67,298 86,665
Other payables 6,422 4,478
Accrued expenses 36,584 33,400
110,304 124,543
The carrying amounts of the Group's trade and other payables are denominated
in the following currencies:
2022 2021
£ £
UK Pounds 72,869 44,516
Euros 3,239 5,441
Australian Dollars 34,196 74,586
110,304 124,543
14. 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 2021 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
Issue of Ordinary Shares - 13 April 2022 5,611,863 75,760 75,760
Issue of Ordinary Shares - 28 April 2022 85,000,000 1,700,000 1,700,000
Cost of Capital - 28 April 2022 - (88,920) (88,920)
At 31 December 2022 427,323,618 45,523,695 45,523,695
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.
On 13 April 2022, following completion on Pitfield Copper Project, the Company
issued 5,611,863 consideration shares to Century Minerals Pty Ltd.
On 28 April 2022, the Company announced a placing of 85,000,000 new ordinary
shares of no par value, at a price of 0.02p.
15. Other reserves
2022 2021
£ £
Foreign currency translation reserve (180,776) (239,077)
Share option Reserve 629,085 759,370
448,309 520,293
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 16
outlines the share based payments made in the year.
16. Share Based Payments
Warrants and options outstanding at 31 December 2022 have the following expiry
dates and exercise prices, and were valued using the Black Scholes model using
the assumptions below:
Number
Grant date Expiry date Exercise price in £ per share 2022 2021
30 January 2017 3 March 2022 0.1200 - 1,900,000
22 June 2017 21 July 2022 0.1825 - 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
1 February 2021 31 January 2025 0.0400 10,500,000 10,500,000
1 February 2021 31 January 2025 0.0550 10,500,000 10,500,000
18 February 2021 22 February 2023 0.0470 14,191,020 14,191,020
20 April 2022 20 April 2026 0.0250 2,500,000 -
20 April 2022 20 April 2026 0.0350 2,500,000 -
20 April 2022 20 April 2026 0.0500 2,500,000 -
28 July 2022 29 July 2024 0.0300 1,600,000 -
49,667,573 55,155,481
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
2021 Options 2021 Options 2021 Warrants
Granted on: 01/02/2021 01/02/2021 18/02/2021
Life (years) 4 years 4 years 2 years
Share price on grant date 3.45p 3.45p 3.7p
Risk free rate 1.75% 1.75% 1.75%
Expected volatility 98,49% 98,49% 92.17%
Expected dividend yield - - -
Exercise price 4p 5.5p 4.7p
Marketability discount 20% 20% 20%
Total fair value (£) 192,016 176,292 181,818
2022 Options 2022 Options 2022 Options
Granted on: 20/04/2022 20/04/2022 20/04/2022
Life (years) 4 years 4 years 4 years
Share price on grant date 1.7p 1.7p 1.7p
Risk free rate 1.75% 1.75% 1.75%
Expected volatility 94.08% 94.08% 94.08%
Expected dividend yield - - -
Exercise price 2.5p 3.5p 5p
Marketability discount 20% 20% 20%
Total fair value (£) 20,289 18,149 15,829
2022 Warrants
Granted on: 28/07/2022
Life (years) 2 years
Share price on grant date 1.125p
Risk free rate 1.75%
Expected volatility 95.86%
Expected dividend yield -
Exercise price 3p
Marketability discount 20%
Total fair value (£) 3,953
The risk free rate of return is based on zero yield government bonds for a
term consistent with the warrant and option life. Volatility is calculated
using an average of the Company's share price 6 months prior to the granted
date.
The movement of options and warrants for the year to 31 December 2022 is shown
below:
2022 2021
Number Weighted average exercise price (£) Number Weighted average exercise price (£)
As at 1 January 55,155,481 0.06 24,964,461 0.09
Granted 9,100,000 0.04 35,191,020 0.04
Exercised - - - -
Expired (14,587,908) (0.02) (5,000,000) (0.14)
Outstanding as at 31 December 49,667,573 0.05 55,155,481 0.06
Exercisable at 31 December 49,667,573 0.05 55,155,481 0.06
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)
0.013-0.2 0.05 49,667,573 3 3 0.06 55,155,481 3 3
The total fair value charged to the statement of comprehensive income for the
year ended 31 December 2022 and included in administrative expenses was
£58,220 (2021: £473,059).
17. Other losses
Group
2022 2021
£ £
Impairments of financial assets - (417,138)
Impairment of intangible assets (114,587) -
(114,587) (417,138)
18. Employees
Group
2022 2021
£ £
Salaries and wages 27,030 11,937
Pensions 2,737 1,194
29,767 13,131
The average monthly number of employees during the year was 1 (2021: 1).
19. Directors' Remuneration
For the year ended 31 December 2022
Short term benefits Post-Employment benefits Share based payment Total
£ £ £ £
Executive Directors
Shaun Bunn 156,250 - 54,267 210,517
Michael Struthers* 57,625 - - 57,625
Gregory Kuenzel 74,000 2,220 - 76,220
Non-executive Directors
Neil O'Brien 30,000 - 30,000
Peter Damouni 22,000 - - 22,000
339,875 2,220 54,267 396,362
*Resigned 8 June 2022
For the year ended 31 December 2021
Short term benefits Post-Employment benefits Share based payment Total
£ £ £ £
Executive Directors
Shaun Bunn 43,750 - - 43,750
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
231,750 2,099 350,769 584,618
20. Earnings per Share
Continuing operations
The calculation of the total basic losses per share of 0.292 pence (2021: loss
0.706 pence) is based on the losses attributable to equity owners of the group
of £1,162,720 (2021: £2,340,790) and on the weighted average number of
ordinary shares of 398,508,796 (2021: 331,475,515) in issue during the period.
Discontinued operations
The calculation of the total basic and diluted earnings per share of nil pence
(2021: 0.528 pence) is based on the profit attributable to equity owners of
the group of £nil (2021: £1,751,536) and on the weighted average number of
ordinary shares of 398,508,796 (2021: 331,475,515) in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share are identical
in 2022 as the effect of the exercise of share options or warrants would be to
decrease the loss per share as the entity is loss making, these instruments
are anti-dilutive.
21. Commitments
(a) Work programme commitment
The Eclipse Mining Licence has an annual minimum expenditure commitment of
AUD$30,300.
Pitfield/Walton/Stavely - Eclipse has a commitment to spend AUD$1.4 mill in
total across these three licence areas within 3 years of first completion
being 6 April 2025
Gindalbie - under the tribute agreement we are obliged to spend a total of
AUD$250,000 between 24th August 2022 and 24th Feb 2024
(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 Exploration Pty Ltd, a wholly owned subsidiary of
Empire Metals Limited, entered into a 12 month office lease of AUD$17,160 per
annum. At the year end the commitment amounted to AUD$3,900. Additionally,
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.
22. 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 2022.
There were no assets held at fair value as at 31 December 2021.
31 December 2022 31 December 2021
At amortised cost Total At amortised cost Total
Assets per Statement of Financial Position
Trade and other receivables (excluding prepayments) 51,465 51,465 75,717 75,717
Cash and cash equivalents 1,467,769 1,467,769 2,210,371 2,210,371
Total 1,519,234 1,519,234 2,286,088 2,286,088
Liabilities per Statement of Financial Position
Trade and other payables (excluding accruals) 73,720 73,720 88,080 88,080
Total 73,720 73,720 88,080 88,080
23. Related Party Transactions
Loans provided by Parent Company
As at 31 December 2022 there were amounts receivable of £10,933 (2021:
£8,958) from Kibe No.2 Investments Limited. No interest was charged on the
loans.
As at 31 December 2022 there were amounts receivable of £696,186 (2021:
£694,186) from European Mining Services Limited.
As at 31 December 2022 there were amounts receivable of £4,376,213 (2021:
£2,737,475) from Eclipse Exploration Pty Ltd.
As at 31 December 2022 there were amounts receivable of £145,325 (2021:
£119,704) from Noricum AT GmbH.
As at 31 December 2022 there were amounts receivable of £51,602 (2021:
£50,062) from GMC Investments Limited.
Loans provided by Kibe No.2 Investments Limited
As at 31 December 2022 there were amounts receivable of £754,517 (2021:
£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 £84,040 (2021: £69,640) for accounting and corporate services
to the Group. At the year-end there was an outstanding balance of £7,124
(2021: £7,053).
Michael Struthers received £57,625 (2021: £65,000) through his service
company, MS Mining Consulting LDA, as disclosed in Note 19.
24. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
25. Events after the Reporting Date
On 13 March 2023 the Company completed a placing to raise £1.25 million
before expenses by way of a placing of 55,555,554 new ordinary shares of no
par value in the capital.
On 23 March 2023 the Company agreed to issue options over a total of 28,500,00
ordinary shares of no-par value in the capital to Directors and an employee of
the Group.
On 26 April 2023 the Company announced the granting of the exploration licence
for the Walton Copper-Gold-Lithium Project, in which a 70% interest is held.
On 27 April 2023 the Company received notification from a warrant holder to
exercise warrants over 1,500,000 new ordinary shares of no par value in the
share capital of the Company at a price of 1.3 pence per share.
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