REG - Eurasia Mining PLC - Annual Results and Notice of AGM
29/06/2022 07:00
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RNS Number : 5471Q Eurasia Mining PLC 29 June 2022
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29 June 2022
EURASIA MINING PLC
("Eurasia" or "the Company")
Annual Results and Notice of AGM
Eurasia Mining Plc ("Eurasia" or the "Company"), the palladium, platinum,
rhodium, iridium and gold producing company today reports its audited
financial results and operational summary (the "Annual Report") as well as a
notification of the Annual General Meeting (the "AGM"), to be held on 28 July
2022, at 9am Etc.venues, 8 Eastcheap, London, EC3M 1AE, and virtually via an
electronic meeting platform, more details can be found in the complete notice
of AGM below.
Christian Schaffalitzky, Executive Chairman commented: "We are pleased to
provide our annual report and accounts for 2021, an important year in the
Company's development. We welcome new additions to our team at Board level and
the opportunities provided by our geographic and commodity diversifications as
discussed in more detail in our annual report. We also recently welcomed KPMG
on board as agent within Russia to progress our asset sale strategy."
James Nieuwenhuys, Chief Executive Officer commented: "Operationally the West
Kytlim asset is performing well following a successful winter stripping
programme and a subsequent increase in stripping capacity. As discussed in our
Operational Reports the mine is expected to make the switch to hydro-generated
grid power later this season and the use of electric draglines, both important
developments for sustainable platinum group minerals and gold production
through life of mine. I look forward to providing shareholders with further
updates regarding progress during the second half of 2022."
Audited Group Reporting for the year ending 31 December 2021
The Company's full Annual Report including the audited financial statements to
year end 31 December 2021 are set out below and will be posted, along with
notice of AGM and form of proxy to those of our members electing to receive
paper format notifications. The Company is grateful to the remainder of our
shareholders choosing to receive digital notifications and the report is also
available for download from the Company's website
at; https://www.eurasiamining.co.uk/investors/financial-reports
(https://www.eurasiamining.co.uk/investors/financial-reports) .
The Company would like to remind shareholders that they may sign up for
digital notifications, and help to reduce the number of paper reports printed
and posted, by logging on to www.signalshares.com
(http://www.signalshares.com/) to amend communications preferences. An
Investor Code is required for initial registration. Alternatively, you can
call the Company's registrar, Link Group, on 0371 664 0300 (calls are charged
at the standard geographical rate and may vary by provider) or +44 371 664
0300 if calling from overseas. You can also write to Link Group at 10th Floor,
Central Square, 29 Wellington Street, Leeds, LS1 4DL.
ENQUIRIES:
Eurasia Mining Plc
Christian Schaffalitzky/ Keith Byrne
+44 (0) 207 932 0418
SP Angel Corporate Finance LLP (Nomad and Joint Broker)
David Hignell / Adam Cowl / Jeff Keating
+44 (0)20 3470 0470
Optiva Securities (Joint Broker)
Christian Dennis
Tel: +44 (0) 20 3137 1902
Chairman's statement
I am pleased to write to you to summarise 2021, the year in which your Company
not only consolidated its Battery Metals and PGM assets but added additional
Battery Metals to the mix. In parallel, we expanded our business strategy to
fully grasp the ambitions of the 'Green Economy' by exploring the potential
for Hydrogen to be included in our future developments.
During the past year, our West Kytlim project saw a doubling of mine
production and the development of plans for further expansion, focused on
replacing diesel power with grid electricity from 100% green hydro sources.
Looking forward into 2022 and for subsequent years, we expect to see a further
expansion of production with this conversion scheduled for the second half of
this year.
Our flagship Monchetundra project centred on our Battery Metals and PGM mine
developments in Kola was further strengthened with the addition of new
exploration licences, granted exclusively to the Company. This embraced the
relaunch plan of the NKT nickel dominant mine which immediately became the
focus of detailed assessment by our team and our technical consultants,
Wardell Armstrong International. This confirmed that significant nickel
sulphide ores remain, and we are now working on integrating their development
with our existing Battery Metals and PGM reserves, located next door.
The further expansion of nickel and copper in our existing metals basket
allows us to develop the mix of outputs from the Company's project portfolio
as Battery Metals, which can be supplied into the growing demands of the
modern world. We expect Kola to be a key area for future supplies of these
critical metals and our projects should benefit from 'first mover' advantage
around the well-established refinery city of Monchegorsk. This first mover
advantage has also been further upgraded with our agreement with Rosgeo, which
holds other interests in the immediate area which our project can potentially
include.
While we expect these developments to add value to these projects, we have not
lost sight of our principal strategy, which is to focus on maximising
shareholder value, primarily through a sale of assets, for the benefit of our
shareholders. Active discussions with interested parties continue, and will be
pursued with patience and care, against the background of the now more complex
and changed geopolitical landscape. The Company recently appointed KPMG as
agent within Russia to further this strategy and although there can be no
guarantees, we remain confident of a positive outcome from these discussions.
Apart from the progress on the ground, we strengthened the Company's balance
sheet by way of two financings through private placements with institutional
investors raising gross aggregate proceeds of US$35 million (circa £28
million). This has allowed us to make careful investments in developing our
assets and also has given us flexibility in our approach to facilitating
diversification in the future.
We also enlarged our Board with the addition of two new Asia-based directors:
Tamerlan Abdikeev and Kotaro Kosaka, who play a key role in our Hydrogen
strategy, and, more recently, the appointment of Artem Matyushok, an
experienced M&A and Hydrogen industry professional post year end. On your
behalf I welcome them to our team, as well as new management and employees at
West Kytlim and Kola.
In conclusion, we are confident of achieving additional milestones during the
remainder of 2022. We are well equipped for the challenge, and I look forward
to working towards our goals in the coming months. I want to thank sincerely
all my colleagues on the Board, the management and staff in Russia for
maintaining our progress over the last year. In particular I wish to thank
Alexander Sushchev, metallurgist and advisor to the Board, who is retiring
this month from the Company. He has played a key role in the development of
our Kola projects and has agreed to provide occasional advice as needed.
With continued strong support from the team, I am confident the Company can
continue to build and strengthen the foundations for our future success.
C. Schaffalitzky
Executive Chairman
Strategic Report
Operations update
Eurasia Mining Plc is a producer of palladium, platinum, rhodium, iridium and
gold and a battery metals exploration and development company. The Company
recognised that a switch to electricity from hydro sources as the main energy
source for ore body development and beneficiation at the West Kytlim Mine
would considerably improve the project's overall sustainability and
environmental credentials, while also improving on project efficiencies and
costs. An electric dragline is being assembled on site at West Kytlim for
commissioning later in the 2022 mining season.
The Central Kola Peninsula cluster of Battery Metals (predominantly Nickel and
Copper) and PGM projects are being developed around the Company's fully
permitted flagship NKT relaunch Project adjacent to the town of Monchegorsk,
home to the world's largest nickel and PGM processing facility - Norilsk's
Severonickel. Total of 184.6Moz of Platinum equivalent resource provides for a
new centre for global battery metals and PGM production on Kola.
Both West Kytlim and Monchetundra are based on the Company's own exploration
discoveries and have been successfully advanced through the exploration phase
to the issue of production licenses. The Company demonstrates a consistent
approach to driving shareholder value by bringing quality projects from
exploration through to production.
Eurasia is an international mining company with offices in London (UK),
Monchegorsk and Yekaterinburg (Russia), as well as Tokyo (Japan).
WEST KYTLIM
Producing Open Pit PGM mine in the Ural Mountains with a sustainability focus
- long term target of the world's greenest, i.e., lowest carbon PGM ounces.
Sustainable Mining
· Reduced environmental impact compared to conventional mining
methods, and less long-term environmental impact - no blasting on site and no
chemicals used in the production process.
· Shallow open pits remediated immediately with recovery within 5
to 10 years and with no remnant pit or tailing dumps. Allows the Company to
make provisions for remediation on realistic time scales, as opposed to larger
scale operations with remediation at the end of a 20+ year Life of Mine.
· Hydro generated electricity as the dominant energy source for ore
body development and beneficiation from 2022 to the end of mine life.
· Careful management of water resources at the mine site by water
recycling.
· Limiting the use of asphalt and concrete on site, many mine
buildings built from timber milled on site.
2021 Highlights
• 1,350,000 cubic meters of overburden stripped (November 2020 to
31 October 2021) at the Kluchiki and Bolshaya Sosnovka sites
· 463,500 cubic meters of gravel washed (20 April to 30 October
2021)
· 2.3 times increase in raw platinum production; 3,643 oz (2020 -
1,525 oz)
· COVID response ensured no ongoing impact on operations.
· Significant upgrades to mine fleet as well as mine site buildings
and infrastructure
· West Kytlim Flanks license approved and received
· Commenced exploration at the Typil site.
· Continuing to work and build relations with local community by
making equipment available in the town of Kytlim when en route to site.
Stripping work continued through the winter of 2020/21 and gravel washing
commenced as running water became available in mid-April. Two washplants were
operated initially and a third added in August treating ores from the Bolshaya
Sosnovka and Kluchiki ore bodies. Each of the three washplants operate on
similar process flowsheets - PGM and gold bearing gravels are trucked from
surface pits to the washplant site where they are loaded to a scrubber and
trommel. Oversized material is removed as sediments are disintegrated using
pressurised water jets. Water, clay, sand and nuggets of PGM are then
entrained in a water column which is transferred to a sluice where the
components separate under gravity with the higher density material collecting
on sluice mats. These are then emptied daily, and the material collected for
upgrading at an onsite laboratory. Further processing at the onsite laboratory
includes shaking tabling, gravity concentration and hand picking to produce a
'black sand' concentrate as the mine's product. Weekly shipments of batches of
mine product are sent for further refining under our agreement with the
Ekaterinburg precious metals refinery.
Exploration upside - Typil and West Kytlim Flanks
'Field exploration work at Typil commenced in August 2021 with reconnaissance
and mapping accompanied by stream sediment sampling. Both banks of the Kosva
River have been worked, at the inflows of the Typil and Kyria Rivers and in
the area of the Typilez Creek. 12 samples have shown presence of platinum and
gold.
Land surveying was carried out to allow the planning of drilling traverses.
Drilling then commenced in March 2022 in the area around the inflow of the
Typil River and the adjoining part of the Kosva River valley. 3 traverses
totaling 39 holes and 273 meters have been drilled for a total of 426 samples.
The average depth of the holes is 3-4 meters, maximum - 11.5 m.
Drilling intersected alluvial sediments of the Kosva and Typil terraces, 6-7
meters thick, and pre-Quaternary (assumingly Neogene) sediments up to 5 m
thick. Neogene sediments are a key resource in ore bodies on the current
mining license. At the time of writing, drilling was ongoing, and samples were
being washed in a Kosvinsky Kamen field laboratory.'
Pavel Telegin, Head of Exploration, Kosvinsky Kamen.
West Kytlim powerline, site electrification and e-draglines
Work on project design, appointment of contractors and sourcing long lead time
supplies for the power line to be constructed to site at West Kytlim commenced
in Q3 and Q4 of 2021. The route to site follows the path of a now disused
power line which had been used to power dredges operational in the area in the
1960's and '70's. Chief contractors are OboronEnergo providing the connection
to the main grid which derives power from the Perm Oblast via several
hydro-electric plants. OOO ELS were contracted for technical documentation and
project design and installation works. By the end of May 2022, 10 km of a
total 17 km of the route have been completed as well as the necessary
substations at site. Grid power is expected to be available at the mine site
later this year. Total costs for the project are estimated at $1.5m. The power
line provides a significant cost saving on diesel powered machinery owing to
the considerably greater productivity of draglines when compared to an
excavator and bulldozer combination.
2022 Highlights in the year to date
• Dragline 1 components delivered to site for assembly and
commissioning.
· Powerline and substation construction underway with expected
commissioning in Q2 2022
· No impact of sanctions on operations
· Further additions to on site fleet including 5 new Kamaz ore
haulage trucks as well as six Caterpillar excavators, a Cat D8 bulldozer and
two Komatsu D275 bulldozers
· Stripping capacity increased to a current record of 300,000m(3)
per month (first achieved in March 2022)
· Third washplant is now operational at site- two plants running at
Bolshaya Sosnovka currently, and a third plant at the Kluchiki area.
Following a successful year-round overburden stripping programme focussed on
the Kluchiki and Bolshaya Sosnovka areas, washing of gravels commenced around
end-April as running water became available at site. Winter stripping
operations were maintained on a schedule optimised to ensure supply of gravels
to three washplants throughout the 2022 washing season. The mining permit for
the 2022 mining season was submitted in March 2022 and approved by the local
ministry for subsoil use in mid-April. All other necessary permits including
forestry permits were in place by the end of March.
The mine will operate three washplants throughout the 2022 mining season, two
at Bolshaya Sosnovka and one at the Kluchiki area. All three plants, owned and
operated by Eurasia, were operational by the end of April 2022. Directors
consider the current outlook for the 2022 season to be favourable, given
relatively strong metal prices, greatly increased productivity, an experienced
work force at site as well as a full set of mine and forestry permits in
place.
KOLA BATTERY METALS AND PGM
World class Nickel-Copper and PGM project on the Kola Peninsula is a
cornerstone to a proposed new open-pittable Battery Metals and PGM mining
district. A joint-venture framework agreement with Rosgeo was announced in
March 2021.
Monchetundra - 2021 Highlights
· Definitive Feasibility study on schedule for submission in 2022.
· Wardell Armstrong International engaged for various comprehensive
studies on Eurasia and its projects (also the ones included in the agreement
with Rosgeo), i.e. JORC standard MRE reporting and NPV analyses.
· Recalculation of MT and Flanks resources and pit outlines,
reflecting metal price increase since Feasibility study of 2016.
· Recognition of NKT as a Nickel dominant mine relaunch
opportunity, as a standalone project or integrated with Monchetundra.
A new mining-focused CEO was appointed at Kola subsidiaries level in July 2021
as the Group seeks to develop the options available at Monchetundra, the
Monchetundra Flanks, NKT and projects within the Rosgeo agreement. The
Monchegorsk area is quite unique globally in having high levels of extensive
previous exploration and reporting, and numerous deposits of a similar deposit
style and metallurgical type in both the Monchegorsk and Monchepluton Massifs,
directly adjacent to a major infrastructure corridor and in a mining friendly
jurisdiction. This has created a large body of work by previous explorers and
producing mines, state funded and private.
The focus at Monchetundra during 2022 has been on the analysis of this
catalogue of projects - the Kola Battery Metals and PGM projects. The task for
Eurasia and its subsidiaries has been in identifying the most sensible and
economic means to schedule project development, within the context of the
Rosgeo agreement and as independent projects. Wardell Armstrong International
have been appointed as chief mining consultants to manage the reporting
process in some cases undertaking new resource calculations.
Two new subsidiaries were created in the Group in January and February 2022 as
Kola Nickel and Kola Mining, both 100% owned. Having these two subsidiaries
available allows the Group flexibility in how it manages and markets the
various multi-commodity deposits and licenses within the Kola Battery metals
and PGM projects.
NKT PROJECT - Base metal mine relaunch adjacent Monchetundra projects
Tier-1 scale Nickel deposit with JORC MRE containing: 305Kt Nickel, 143Kt
Copper, and 57 tonnes PGM and Gold (11.2Moz of Platinum equivalent) estimated
by Wardell Armstrong International (WAI) as JORC-compliant resources for a
step room and pillar mining operation, with nickel comprising half of the
value in the metal basket on a Net Smelter Royalty basis.
The project occurs directly adjacent to Severonickel, the world's largest
nickel processing plant and is a mine formerly operated by Norilsk. A recent
exploration and diamond drilling campaign was undertaken by Rosgeo during 2015
to 2017, building on an already significant catalogue of exploration and
mining data from predecessors.
During 2021 work commenced on analysis of options for reopening the mine.
Eurasia's West Nittis deposit occurs at the south-west extension of the NKT
deposit. The current development programme is based on extension of West
Nittis type mineralisation throughout the NKT massif with treatment at the
Monchetundra deposit process plant. A full independent technical review, mine
plan and mineral resource estimate was undertaken by WAI during 2021, as
presented in the adjacent table.
During 2022 drilling commenced to the east and north of the West Nittis
deposit targeting extensions to the West Nittis ore body within the NKT
Massif. Historical drill core from Norilsk/ Severonickel drilling prior to
2015 did not include an assay for PGM and the Company has undertaken to
complete this work with an expected improvement in reliability of confidence
levels and therefore resource classification.
Key performance indicators
Results for the year - the Group has made a loss before tax of £3,138,521 for
the year ended 31 December 2021 (2020: loss before tax of £3,693,308).
Shareholder return - the performance of the share price. The Company's shares
are quoted on AIM and the shares have traded at 15p-36.5p*(2020: 3.3-42.5p)
during the year under review. A range of factors both internal and external to
the Company can impact share price performance, including geopolitics,
commercial and new business developments, operational performance and metal
price and metal price forecasting fluctuations.
Exploration and development funding and expenditure
The Group was successful in securing the necessary funding to develop and
expand operations at both projects during the year reported. In 2021, the
Group acquired additional plant and equipment mainly for West Kytlim Mine with
a total value of £622,745 (2020: £338,237); The Group also incurred £64,371
(2020: £118,654) of development costs at West Kytlim, including ore body
development costs during and after the production season.
A feasibility study for the Monchetundra project was advanced during 2021.
In 2021 the Group raised gross funds of $35 million (2020: £7.9 million) from
equity markets through two placings lead by H.C. Wainwright & Co. No
options or warrants were exercised in the period reported. At 31 December 2021
the Group had a cash balance of £22,009,507 (31 December 2020: £5,404,101)
which allowed it to continue development programmes at all projects. During
2020 the Group acquired some mining equipment under five-year lease terms. The
balance of existing lease commitments for machinery for the West Kytlim
operation at 31 December 2021 was £429,543 (31 December 2020: £526,930).
For more details see the operations update herewith.
(*Based on yahoo finance historical data of Eurasia Mining Plc (EUA.L) closing
prices for 01 January 2021 to 31 December 2021)
( )
Non-financial KPIs
Environmental management - the Group has environmental policies in place and
receives annual approvals for development work at West Kytlim, where adherence
to the relevant environmental subsoil licensing laws is clearly stipulated.
Performance against environmental policies is continuously monitored and
annually audited including a provision for environmental rehabilitation. The
Company is responsible for the technical and biological rehabilitation of
disturbed areas, as discussed in the environmental section in this report.
Rehabilitation plans are subject to approval prior to commencing mining, on a
site-by-site basis. The Directors consider that rehabilitation plans are
achievable with some involvement of external specialists to minimise and
rectify any negative impact of current exploration and operational activities
on the environment. Further details may be found in the operational update and
ESG section herein.
Health and Safety - the Group has occupational health and safety policies and
procedures in place ensuring that all efforts are made to minimise adverse
personal and corporate outcomes, through best practice training,
implementation, and monitoring. These were reviewed following the COVID-19
pandemic and have been appropriately upgraded commensurate with the expansion
of the operation of West Kytlim which now includes electric power and large
draglines. The Group's Lost Time Injury Frequency remains at zero for the 2021
year and 2022 season to the end of May.
Operational - The Group has had operational success in effectively managing
the mining operation at West Kytlim through 2021. The Group has also
successfully managed a programme of works at the Kola projects and has
continued to manage applications for new exploration license tenements in the
Monchegorsk area.
Governance - The Board has appointed two new non-executive Directors during
the year in review; Tamerlan Abdikeev in April 2021 and Kotaro Kosaka in
December 2021. Tamerlan is also representing the Company as head of the
Company's emerging Asia focussed interests and Japanese representative office
where he is joined by Kotaro Kosaka. Independent non-executive Director Kotaro
strengthens the Company's representation in Asia and the Far East markets.
Artem Matyushok was appointed to the position of independent non-executive
Director in May 2022. Artem brings experience in and in-depth knowledge of
high-level Mergers and Acquisitions transactions and expertise in the hydrogen
sector. Artem is a director of H4Enegy Joint Stock Company ("H4Energy"), which
entered into an agreement with the Company on 30 December 2021 to assist
Eurasia in finding joint venture partners ("JVs"), the ultimate aim of which
JVs would be to secure off-take for Eurasia's metal production and associated
financing, which could be used for the development of the Company's metal
production and use of hydrogen in its operations.
The Board does not regard the agreement with H4Energy to be material at this
time and neither Artem nor H4 Energy has received or receives remuneration
from Eurasia as a consequence of this agreement. Accordingly, the Board does
consider that Artem's independence is not impugned by the agreement between
the Company and H4Energy.
Additional Projects and license applications - Key personnel continued to
assess opportunities in a range of commodities in Russia and globally, as
potential exploration and development projects. The Company has broadened its
interests geographically through 2021 and is also targeting commodity
diversification through its strategies in battery metals and the hydrogen
economy.
Principal risk and uncertainties
The risks inherent in all mineral exploration and development businesses are
kept under constant review by the Board and the Executive Team. The risks
affecting the Group and the Company are set out respectively in the Directors'
Report. The principal operating risks affecting the Group are highlighted
below.
Exploration and project development risks
Inherent risks associated with the failure to discover or develop an
economically recoverable ore reserve, to conclude a definitive feasibility
study, or to obtain the necessary consents and approvals to conduct
exploration and mining. The Board impresses on senior management the need to
identify and address the major sources of operational risk in any development
project, and to continuously monitor deviation from schedules or targets.
Operating mine risks
Machinery availability, deviations from expected grade and other operational
risks may have a significant impact on West Kytlim mine revenue, which is a
component of the Group's financial capacity and performance. At West Kytlim,
multiple areas are developed concurrently to mitigate risks of a lower than
expected grade at any location. Most of the machinery in the West Kytlim mine
fleet is relatively new, having been acquired from 2019-2022 onwards and
currently operate at very high availability levels.
Political risk and sanctions compliance
The Group's assets are located in Russia. In view of sanctions imposed on
identified individuals and entities in Russia, from 2014, legal and economic
risks may arise. Further sanctions were imposed on certain activities,
entities and individuals connected with Russia in 2022, which continue to
evolve, which are being carefully monitored by the Group in accordance with
the Company's sanctions compliance policy, and with the assistance of its
external legal advisers. The Company has satisfied itself that neither of its
current activities at the West Kytlim Mine or on the Kola Peninsula are
prohibited under UK or EU sanctions rules. Furthermore, the Group does not
engage and has not engaged with any sanctioned persons/ entities or agencies.
To date there has been no significant impact on the Group's activities as a
result of recent updates to the UK and EU sanctions legislation. Sanctions
introduced by the Russian Federal government have also not affected the Group,
although this is being closely monitored. The Group closely monitors all
regulatory requirements and changes to the laws, rules and regulations, taking
steps whenever necessary to ensure compliance with new legislation.
Environmental risks
The Group's operations are subject to environmental regulation, including
environmental impact assessments and permitting. Russian environmental
legislation comprises numerous federal and regional codes. The Group makes an
assessment of the environmental impact of any of its activities at the time it
applies for the relevant permits and licences. Review and approval of the
rehabilitation plan is a pre-requisite of the mine plan approval for each
season of mining at the West Kytlim mine. The Group mitigates risk to the
operation arising from environmental issues by strictly adhering to relevant
environmental laws and codes. The West Kytlim mine by its nature does not
require management of hazardous mine tailings within a tailings dam, as is
necessary for large scale underground mining operations.
The regulatory environment
The Company's and the Group's activities are subject to extensive federal and
regional laws and regulations in Russia governing various matters, including
licensing, production, taxes, mine safety, labour standards, occupational
health and safety and environmental protection. They are also subject to
various UK and international regulatory requirements. Amendments to current
laws and regulations governing operations and activities of mining companies,
or more stringent implementation or interpretation of these laws and
regulations can have a material adverse impact on the Group and/or delay or
prevent the development or expansion of the Group's assets in Russia.
The Group closely monitors all regulatory requirements and changes to the
laws, rules and regulations taking steps whenever necessary to comply with
relevant regulations. The Board considers the regulatory environment for
mining companies operating in Russia to be transparent, not more difficult
than other jurisdictions, sufficiently clear and prescriptive and in general
navigable for a company employing sufficient expertise and resources to manage
that aspect of its business.
The Group has entered into an agreement with Rosgeo, an exploration and
development company with unparalleled expertise in the Russian mineral and
subsoil licensing regulatory framework as well as an agreement with the Far
East and Arctic Development Corporation both of whom may provide advice and
guidance on the Russian regulatory environment as it pertains to mining and
development companies.
The Group maintains close ties to the Russian Minerals extraction industries
for example by attending industry events with its mining peers and by
maintaining in house expertise in sub-soil legislation.
Commodity market risk
A potential fall in commodity prices could result in it becoming uneconomic
for the Group to mine its assets. A Russian rouble (that is highly dependent
on the prices of natural resources) devaluation against USD (as has occurred
in Q1 2022) provides a natural hedge against a potential fall in commodity
prices as the Company's costs are Russian rouble denominated while commodity
prices are USD denominated. The Group closely monitors the markets for
platinum group metals (and the prices of other relevant metals to the extent
these are relevant), changes in their demand and supply, and the effect these
have on metal prices, with a view to taking necessary measures in response to
such changes.
The Group has pursued commodity diversification in targeting battery metals
through its agreement with Rosgeo, adding additional nickel and copper as well
as cobalt potential to its interests, and adding hydrogen and ammonia
interests through its agreement with H4Energy and the establishment of its
representative office in Japan.
Demand for platinum group metals from their principal use in autocatalysts,
which reduce harmful engine emissions, is perceived by market commentators to
remain strong for the foreseeable future as electric vehicle uptake is offset
by tighter emissions control for traditional internal combustion engine
vehicles, and as PGMs continue to find application in emerging transport
technologies such as Fuel Cell Electric Vehicles.
Loss of key personnel risk
The loss of key personnel consists of the departure (voluntary or otherwise)
of an important employee, which would, in all likelihood, result in a loss of
management capacity or specific expertise capacity, or increased expense to
the business, for a period. In general, any loss of management capacity or
expertise can be replaced by recruitment of personnel who are readily
available from the market, while the financial impact may be of a temporary or
a permanent nature. These increased expenses relate to the search for and
hiring of a new employee, training costs for the new hire, possible "sign on"
bonus and higher remuneration packages. However, such increase (if any) is not
expected to be material.
The Group takes measures to motivate and retain existing employees, including
by bonus incentive schemes as well as participation in the Company's share and
option scheme. Currently there is no shortage of mining industry personnel and
expertise in Russia or London, and the Group is confident that a suitable
replacement could be found should it be necessary to replace any key member of
staff.
Financing risk
The West Kytlim mine is expected to become a material contributor to the
Group's working capital, and the Directors are confident that this source of
capital can be increased considerably from 2022 onwards due to increased
capacity at the mine site, thereby mitigating financing risk to the Group. At
the current time, West Kytlim contributes an important but not critical
component to the Group's working capital. Historically, the Group has
successfully relied on international equity and, to a lesser extent, debt
capital markets to create and maintain adequate levels of working capital, and
these financial resources will be supplemented by revenues from West Kytlim as
and when they arise. The Group maintains tight financial and budgetary
controls as well as cost control, and forward planning helps ensure the Group
is adequately funded to reach its objectives. Two significant equity placings
were undertaken in May and September 2021 raising a total of $35m and the
Directors consider the Group to be well funded for its short and medium-term
objectives.
The Board considers risk assessment to be vitally important in achieving its
strategic objectives.
Pandemic risk
The effects of COVID-19 and any future pandemic, and measures taken globally
to protect populations, can have a direct or indirect impact on the Group's
operations. The Company continues to monitor the situation and will continue
to take the required actions, including consultations, reviews and tightened
expenditure controls as appropriate. Many of the Group's staff and families
who were affected have now recovered from coronavirus and despite a continued
threat globally it appears that the overall impact on the Group will be
insignificant.
There was no operational downtime through the 2020 or 2021 mining seasons, and
no impact at the time of writing on the 2022 mining season from the COVID-19
pandemic. The limited number of employees, the open pit nature of the mine
site, and the employees' ability to naturally social distance using single cab
mining equipment remains a considerable benefit to the operations. The Group
recognises an ongoing risk to the operations from the COVID-19 pandemic and
future pandemics.
Research and future development
The Group's activities during the year continued to be concentrated
principally on mine development and mineral exploration programmes, and the
improvement of mining techniques and metallurgical processes. While developing
its core projects disclosed in the Operations Update the Company will continue
to study and search for new "near production" projects in the geographical
area where its current operations are situated. This has been demonstrated by
the signing of the Rosgeo agreement, securing a pipeline of new Battery Metal
and PGM projects aimed at realising a new PGM mining district on the Kola
Peninsula and by the establishment of a representative office in Japan as a
base from which to generate new business opportunities in the Far East. The
Group is developing strategies in the energy sector through its interest in
hydrogen and ammonia production as evidenced by an agreement signed with H4
Energy in December 2021.
Brief summary of the Group's current operations
The Group operates in 2 key regions of Russia: (1) The Urals, where West
Kytlim is an operating PGM and gold mine in the Central Urals; and (2) Kola
Peninsula, where a mining licence was granted in 2018 and the agreement with
Rosgeo was signed in 2021 to create a pipeline of additional projects. At the
same time, the Group continues to assess the potential of other resource and
energy projects internationally.
At West Kytlim, the Group carried out pilot mining operations in 2016 and has
been running a commercial operation since 2018. The mine has been expanded
efficiently with a phased roll out of new machinery added through successive
mining seasons in line with streamlined statutory reporting requirements and
mineral reserve and resource reporting (see operation update section for
further details).
West Kytlim mine is directly owned by ZAO Kosvinsky Kamen in which the Group
has a 68% stake. On the Kola Peninsula, the Group's discovery of PGM
mineralisation in the Monchetundra area led to submission of a feasibility
study, on completion of exploration work in 2016. A mining permit was
subsequently granted in 2018 for two open-pittable ore bodies at Loipishnune
and West Nittis. The Monchetundra project is owned by ZAO Terskaya Mining
Company, in which the Group has an 80% stake (note 16). More details on both
projects are contained in the Operations Update.
The Board's aim is to deliver value to the Company's shareholders by
leveraging the significant experience of the Directors and management team to
develop the Group's projects. The Board is also focused on maximising
shareholder value and continues to consider the potential for a sale of the
Company's assets.
The Board acknowledges that there is a legal requirement for the Company to
report on how the Board and its Committees have considered the requirements of
Section 172 of the Companies Act 2006 in their decision making. A director of
a company must act in the way he considers, in good faith, would be most
likely to promote the success of the Company for the benefit of its members
and, in doing so, have regard (amongst other matters) to the following
factors:
The likely long-term consequences of any corporate action or decision
The Board takes a long-term approach to creating and realising value for the
shareholders and is keenly aware of the time scale on which resource projects
are developed. This is reflected in the age of the Company itself (it was
incorporated in 1995) and the tenure of some of its longest standing
employees: 6 employees in our Russian offices as well as 4 senior executives,
have worked with the Company for more than a decade, including several
individuals who have been working within the Group for more than 20 years. Two
of the Group's key assets have been progressed through discovery and
early-stage exploration through feasibility studies.
The interests and professional development of the Company's employees;
Staff are encouraged to maintain their professional credentials and the
Company meets annual subscriptions to professional bodies on behalf of its
employees as well as, from time to time, tuition fees for short- and
longer-term studies, and attendance fees for industry events. Key technical
expertise within subsidiaries is in the areas of geology and mineral
exploration, mine engineering, metallurgy as well as Russian subsoil law. In
recent years, and as the Company's assets have developed, new full-time
positions have been filled in mining engineering and health and safety roles.
The need to foster the Company's business relationships with suppliers,
customers and other stakeholders;
The Group employs local workers, contractors and suppliers wherever possible
and maintains a network of contacts in the industry, for example by membership
of the Urals society of gold producers. The Group has numerous long-standing
commercial relationships with consultants and contractors, for example
drilling and exploration contractors for both, the West Kytlim and
Monchetundra assets, who have worked with the Company for many years (e.g.
Central Kola Expedition have worked with TGK for more than 20 years). The
Group's strong network of contacts in equipment and machinery contractors are
a key asset to the West Kytlim mine. The commercial reputation of the Group
and each Company within the Group, within the Russian mining industry, is
recognised as critical to the Group's future success.
The impact of the Company's operations on the communities adjacent its
projects and the environment;
Rehabilitation plans are submitted as a necessary aspect of all mineral
industry statutory reporting in Russia. The Company's mine at West Kytlim is
focused on producing greener, lower emissions PGM, in line with efforts across
the globe to bring climate change awareness to the mining industry. The
construction of the power line to site during 2022 is a key element of this
strategy. The Board welcomes initiatives within the mining industry generally,
which are focussed on lower carbon, indeed zero-carbon mining. Please see the
ESG section of this report for more information.
The West Kytlim mine is remote, with no population directly adjacent the mine,
however efforts are made to ensure the nearest communities are kept informed
of major items of progress at the mine site, especially major capital
developments such as the power line and electric dragline commissioned at West
Kytlim during 2022.
The requirement of the Company to maintain a reputation for high standards of
business conduct and corporate governance;
The Group applies the Quoted Companies Alliance code and considers its
Corporate Governance responsibilities under their 10 guiding principles (see
Directors Responsibilities section). The Company also maintains an extensive
internal body of policies and procedures which is regularly updated and
strictly adhered to. Where necessary, the Company has resort to its Nominated
Advisor and legal advisors on matters concerning the UK regulatory
environment.
The need to treat all members of the Company fairly and equitably.
No individual shareholder/ member has greater influence, rights or obligations
than any other shareholder.
Environmental, social and governance
Introduction
Environmental, Social and Governance priorities are a clear focus of the
Company and Board as well as the Company's investor base. The Board welcome
changes to the international mining landscape particularly with respect to
environmental responsibility, and the example being set by industry majors in
setting net zero emissions targets, as well as the developments amongst OEM's
in developing zero emissions mining equipment in partnership with major mining
companies. The West Kytlim operation is still being scaled up to full
capacity, and the Monchetundra Project on Kola is in pre-mine development, the
Board feel it is therefore premature for the Group to set a net-zero emissions
target but are determined in their goal to deliver innovative and carbon aware
mining solutions. Through the past number of years, the Company has looked in
detail at the developments in reporting standards and guidelines for
sustainability and ESG reporting and the information requirements of our
investors and stakeholders making informed and ESG focussed investment
decisions.
This section of the report describes how Directors consider and adopt
principles of corporate governance, as well as environmental and social
governance and apply them through the group of Companies while achieving
corporate objectives and ensuring the overall direction, supervision, and
accountability of the organisation. Other key aspects of Corporate Governance
within this report are:
· The Section 172 Statement (Strategic Report above) which
describes how the Directors promote the Company for the benefit of members as
a whole.
· Financial and non-financial Key Performance Indicators which are
outlined to measure performance of the Board year on year; and
· Principal Risks and Uncertainties section, which demonstrates
awareness of potential obstacles to achieving corporate goals.
The Board has adopted the QCA Corporate Governance Code (2018) ("QCA Code")
and strives to follow its 10 principles to the fullest extent possible. These
principles are supported by a set of policies and procedures documentation
reviewed annually. The environment is at the forefront of ESG principles for a
mining enterprise and the Directors consider the West Kytlim operation, the
largest mine of its type in the world, to be an opportunity to demonstrate a
potential new style of lower emissions metal production, competing not in
quantity but in quality with other global sources of PGM. The switch to
hydro-derived electric power at site is a considerable step to achieving this
goal. The Group is committed to ensuring the land disturbed by mining
activities is returned, post mining, to a safe and stable landform.
Rehabilitation plans, and forestry permits are a key aspect of mine permitting
and are submitted for approval in advance of final mining permissions.
Typically, these describe how forestry is managed with an equal amount of
forest planted as is removed for mining. Open pits are infilled with the
overburden removed prior to mining, top soil is replaced and the land
regenerates over a period of five to ten growing seasons.
Environmental report
West Kytlim;
A total of 32.4 hectares of forest were cleared at the Bolshaya Sosnovka and
Kluchiki sites during 2021, in accordance with forestry permits received prior
to the commencement of the mining season and the building were built from the
sawn timber to minimise the waste. At year end the Company did not have any
outstanding rehabilitation liabilities meaning allowance was made for
reforestation elsewhere in the Karpinsk Oblast. Ultimately the area currently
being developed at West Kytlim will itself be replanted with appropriate local
species and will recover to its pre-mine condition within 5 to 10 years
following mining.
Surface mining requires disturbance of the upper layers of top soil and river
sediment terraces. Trees and top soils are removed to allow access to the
platinum and PGM bearing gravels which are 'free digging'. These areas are
then scheduled for remediation.
Water is a key resource in any stable natural environment. Process water at
the mine site is fully recirculated meaning the water used to deagglomerate
and beneficiate pay gravels is continuously recycled through a process water
pond, maintained separate to any natural and free flowing water course. There
were no cases of contamination of rivers or streams in all of the areas under
development in the year under review and in previous years. Tailings from the
mining operation do not contain hazardous chemicals, but do include large
volumes of sediment and clay, which could damage the ecosystem in natural
river course. These are carefully managed to allow clay and fine particles to
precipitate naturally outside of natural river courses. Several relatively
small specially protected water environments are defined within the mine
license and particular care is taken to preserve these areas.
The Company's rehabilitation plans consider local climate, geochemistry of
soils, fertility, degree of disturbance and specific landscape and topography
features. The Company and independent advisors determine how the land will be
remediated post mining and this process is easier to manage for an operation
with a limited (per site) life of mine. ZAO Kosvinsky Kamen, Eurasia's project
Company, has 7 active permits for forest plots totalling over 172 hectares.
Prior to the granting of a permit to clear a site from forest vegetation, a
Rehabilitation Plan prepared by the Company is approved by the Ministry of
Natural Resources of the Sverdlovsk Oblast. Rehabilitation Plans follow
guidelines set out within the Russian Subsoil licensing including:
• Federal Law "On Environment Protection" of 10.01.2002 No. 7-FZ;
• Russian Federation ('RF') Land Code of 25.10.2001 No. 136-FZ;
• RF Forest Code of 04.12.2006 No. 200-FZ;
• Resolution of the RF Government "On Land Rehabilitation and Conservation"
of 10.07.2018 No.800.
The Company Rehabilitation Plans and the Company's Environmental Officer set
out the necessary land rehabilitation programme prior to application for a
mining permit.
Waste management
The tailings of alluvial mining do not contain any hazardous substances as no
chemicals are used in the beneficiation process which is driven by gravity and
hydro-mechanical operations. Each washing site is designed to be independent
of free-flowing natural water courses so that mixing of mine process water and
free flowing water cannot occur. Deagglomerating river sediments liberates an
amount of clay material (<.002mm material) which could be damaging to a
natural river course and must be carefully managed.
Air emissions
To reduce air emissions, the Company ensures that the equipment used onsite
complies with the latest accepted quality standards and optimize the routes
taken by mining vehicles. The machinery fleet on site was purchased new and is
specified to the latest environmental compliance standards. The Company is
also focused on preventing dust pollution at the mine site and regularly carry
out dust suppression measures. The switch to electric powered draglines as the
key machine for overburden stripping will remove all of the vehicle emissions
associated with overburden stripping, which is currently done using
bulldozers, excavators and haul trucks.
Social
Relationship with the local community
Building and maintaining close relationships with the communities adjacent to
our operations is a Group priority. As in previous years and mining seasons,
machinery being delivered to site is temporarily made available in the village
of Kytlim where the local Mayor manages a short programme of landscaping or
other work which might benefit from heavy machinery such as bulldozers,
excavators and haulage trucks. This maintains good relations with the
Municipal Administration of the town of Kytlim. A record is kept of any
meetings with representatives of local municipalities and notice given of any
work programmes, such as exploration activity on the Typil license, delivery
of oversized machinery such as draglines, and construction of the substations
and power line from the village of Kytlim to the mine site. Where possible,
the Company relies on the local community for supply of consumables and food
supplies.
Consultation
Giving notice of pre-approved and permitted work such as the West Kytlim power
line project, and receiving feedback from the local community who may be
affected is a key element of good community relations. The power line follows
the route of a previous installation and is not more imposing than a standard
domestic line. No impact on local communities or their activities has been
identified. The West Kytlim operations occur in an area of unpopulated
wilderness without nearby farming operations. The Monchetundra operation
adjacent to the town of Monchegorsk is located in a mining friendly
jurisdiction with mining and metallurgical processing being the largest
employer in the town and district.
Health and Safety report
During 2021 and in the year to date there have been no significant injuries or
accidents on site. Close control is being exercised in the critical areas of
work to ensure no infringements to health and safety rules. Health and safety
protocols have been upgraded at the West Kytlim mine site in preparation for
the arrival of electric draglines and high voltage mains electricity.
Appropriate HSE is available to all employees and its use closely monitored.
Signage is a key element of safety awareness which is maintained by the mine
site Health and Safety Officer. The open pit and open-air nature of the
operation at West Kytlim reduces the risks of serious injury. No individuals
are required in pit during excavation. The highest risk situations are during
construction and assembly of various components of the washplants and their
peripherals.
OUR MINE SITES ARE ENGAGED WITH LOCAL COMMUNITIES
• Consultations are a key aspect of community involvement for high impact
operations.
• All mine workers and equipment operators are local (they reside within a
70km area). Project companies of the Group are registered locally, and taxes
are paid locally.
• The mine has a sustainability focus, for example, most mine building
structures and interiors are constructed from timber milled on site.
ENVIRONMENTAL PROTECTION IS FRONT OF MIND
• Minimise impact:
o Surface mining with limited remnant waste and tailing dumps.
o Limited use of concrete, steel and asphalt at the mine site.
• Rehabilitate:
o The Group is committed to ensuring the land disturbed by mining is
returned to a safe and stable
o Landform with no long-term damage to the environment or eco system.
o Rehabilitation plans envisage works impacting local climate, geochemistry
of soils, fertility, degree of disturbance, specific landscape and topography
features.
• GHG emissions reduction:
o Installation of e-draglines powered by grid hydro-derived electricity.
• ESG Indices:
o Eurasia has been included in the L&G Future World ESG UK Index; and
Liberum's
climate portfolio.
OVER 20 YEARS EXPERIENCE OF OPERATING IN RUSSIA
• Building robust partnerships and developing industry contacts in the
Russian mining sector including Far East and Arctic Development Corporation
and Rosgeo;
• Leveraging an in-depth knowledge of the Russian licensing system in
partnership with support from expert Russian and international technical
consultants;
• The Group companies maintain strong contacts base amongst equipment
suppliers, contractors, industry consultants, and local and state sub-soil
licensing professionals; and
• Eurasia is a permanent member of Urals Association of gold producers whose
role is to work alongside government agencies to optimise legislation and
improve business environment.
J. Nieuwenhuys
Chief Executive Officer
Directors' report
Directors
The Directors who served during the period were:
Christian Schaffalitzky - Executive Chairman
Gary FitzGerald - Non-Executive Director (passed away February 2021)
Anthony James Nieuwenhuys - Executive Director and CEO
David Iain Rawlinson - Non-Executive Director
Tamerlan Abdikeev - Non-Executive Director (appointed 9 April 2021)
Kotaro Kosaka -Non-Executive Director (appointed 21 December 2021)
Artem Matyushok - Non-Executive Director (appointed 16 May 2022)
Company Secretary
Keith Byrne
Directors' interests
Share interests
The Directors of the Company active at 31 December 2021 held the following
beneficial interests (including interests held by spouses and minor children)
in the ordinary shares of the Company:
31 Dec 2021 31 Dec 2020
No. of shares No. of shares
C. Schaffalitzky 89,569,517 89,569,517
G. FitzGerald - 23,378,445
Total 89,569,517 112,947,962
Share options and warrants
31 Dec 2021 31 Dec 2020
Options No. of shares No. of shares
C. Schaffalitzky 20,000,000 20,000,000
G. FitzGerald - 5,000,000
Total 20,000,000 25,000,000
All options granted to the Directors vested by 31 December 2021.
No share options were exercised by the Directors during 2021 (2020 - nil).
Dividends and profit retention
No dividend is proposed in respect of the year (2020: nil) and the retained
loss for the year attributable to the equity holders of the parent of
£2,910,479 (2020: loss of £3,080,336) has been taken to reserves.
Share capital
The issued capital of the Company as at 31 December 2021 was:
Number of shares Nominal value Share premium account
Fully paid ordinary of shares at 0.1 pence each 2,853,559,995 2,853,560 51,343,246
Deferred shares of 4.9 pence each 143,377,203 7,025,483 -
2,996,947,198 9,879,043 51,343,246
Risk Management
The Directors consider that assessing and monitoring the inherent risks in the
exploration and mine development business, as well as other financial risks,
is crucial for the success of the Group. The Board regularly reviews the
performance of the Company's projects against plans and forecasts. Further
detail on management of financial risks, which includes foreign currency,
interest rate, credit, liquidity and capital risks are set out in Note 31.
Going Concern
Following two significant fund raisings through the issue of new ordinary
shares in May and September 2021, as at 31 December 2021 the Group's net
current assets amounted to £ 23,036,966 (£5,286,051 in 2020). As at the
same date, the Group's cash balance was £22,009,507 (£5,404,101 in 2020).
The Group's debt largely consisted of lease liabilities set up to acquire
mining machinery for a total amount of £429,543 (at 31 December 2020 -
£558,614).
The Group's current (as at 30 May 2022) cash position is around £14,200,000
with the reduction since December 2021 being accounted for by £3,900,000 in
capital expenditure, £1,300,000 on development expenditure on its assets
portfolio, and £3,500,000 in costs.
The Board consider the West Kytlim asset to be fully capitalised for
sustainable mine production for an up to 15 year mine life (at 2022 capacity),
without consideration of possible reserves in the adjacent West Kytlim Flanks
and Typil License areas. The Group is in the process of installing electric
draglines and grid power, realising its plans for the West Kytlim asset which
is intended to be self-funding from 2022.
The Group has spent £682,419 on a development programme for the Monchetundra
asset during 2021 and has budgeted a further £527,000 for statutory reporting
on this asset to November 2022, keeping the asset in good standing while
strategic options for the project's development are considered.
2022 events and sanctions compliance
The Company has satisfied itself that neither of its current activities at the
West Kytlim Mine or on the Kola Peninsula are prohibited under UK or EU
sanctions rules. Furthermore, the Group does not engage and has not engaged
with any sanctioned persons/ entities or agencies
The Company continues to progress discussions with regard to the potential
sale of its assets, appointing KPMG Russia as agent in May 2022, and has set
aside sufficient funds to complete and submit a Definitive Feasibility Study
for the Monchetundra project in November 2022.
All of the Group's net current assets as mentioned above are held in 'A' rated
banks in GBP accounts outside of the Russian Federation. The Company has
continued to fund Group companies as required through the first part of 2022
and in compliance with applicable regulation.
The Company is active in considering new business development outside Russia,
including a potential transition to the hydrogen and ammonia market as
described in the Strategic Report herewith. The Group has also diversified
geographically in the year being reported, by opening a representative office
in Japan, and with the appointment of two Directors working from the Japanese
office.
The Directors have concluded that the combination of these factors, including
the level of the Company's current cash balances (the substantial majority of
which is held within the international banking system outside Russia), and
taking account of the current applicable sanctions regime, support the Board's
opinion that it has a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future,
which management has determined to be at least 12 months from the signing of
this Annual Report to the conclusion of the 2023 financial year. For these
reasons, the Board believes it is appropriate to adopt the going concern basis
in preparing the Annual Report and Accounts.
Directors Responsibilities statement
The Directors are responsible for preparing the Strategic Report and the
Directors' Report.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors must prepare the financial
statements in accordance with UK-adopted international accounting standards
and in accordance with the Companies Act 2006 . Under company law, the
Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs and profit or loss
of the Company and the Group for that period. In preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable accounting standards, have been followed, subject
to any material departures disclosed and explained in the financial
statements;
• with contributions from advisors, set the Company's and Group's corporate
strategy including research and development activities (detailed in the
strategic report above);
• prepare the financial statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time, the financial position of the Company and the
Group and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of
the Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confirm that, so far as each Director is aware, there is no
relevant audit information of which the Company's auditor is unaware; and the
Directors have taken all the steps that they ought to have taken as Directors
in order to make themselves aware of any relevant audit information and to
establish that the Company's auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Revenue
All revenues generated by the Group are from sale of metals, within the
Russian Federation. Currently the sole source of revenue is metal sales from
the West Kytlim mine. Refinery receipts record the total of metal sales with
payments received for platinum and gold, at the market rate, on average every
month throughout the mining season. For reasons related to the nature of
metals refining the revenue for other PGM (Rhodium, Iridium and Palladium) are
received when all shipments for that year have been received. The Company will
be evaluating alternative metal refining and sales options to improve the
revenue stream.
Directors Indemnity
The Group maintains Directors and Officers liability insurance as an indemnity
provision renewed annually.
Corporate Governance
Eurasia Mining applies the QCA Code as a Corporate Governance framework to
ensure adequate corporate governance standards as befits the nature of the
Company's business and the stage attained in the continuing evolution of the
Company, and in-line with its corporate strategy and business goals. The QCA
Code's ten principles and their application to Eurasia Mining PLC and the
Group of companies is described below.
Delivering Growth
Eurasia has established a strategy designed to promote long term value and a
return on investment for its shareholders, a strategy which also aims to build
the Company to an increasingly profitable enterprise while maintaining good
corporate governance and social and environmental responsibility standards.
The Company's strategy is to self-fund exploration and development of
marketable resource and energy projects in various commodities, and to realise
a return on investment, either by carrying the project through feasibility to
commissioning or by straightforward sale.
Principle 1: Strategy
The Company is focused on developing several key assets; The West Kytlim mine
produces Platinum group metals ('PGM') and gold in the Ural Mountains, Russia,
while the Kola battery metal and PGM projects are being developed towards
production of PGM, gold and battery metals near the town of Monchegorsk, on
the Kola Peninsula, Russia. During 2021 the Company has diversified both
geographically and in terms of commodities by developing commercial relations
in far east markets concurrently with interests in the Hydrogen economy. The
Company intends to further these commercial goals while maintaining corporate
governance principles in line with the QCA Code. The key commitments and
challenges in achieving this are set out below.
Principle 2: Understanding shareholders
Eurasia seeks to maintain open, direct and two-way communication with its
shareholders through various media including press releases, the Company
website, twitter feed, presentations, investor events, video blogs filmed on
site at the Company's projects, live and recorded video and audio interviews,
and direct communication by phone and email through the Company's contact
information. The Company employs public relations professionals and maintains
several third-party contracts to better disseminate Company news-flow. Through
shareholder feedback the Company ensures that it remains in touch with the
information requirements of our shareholders, their expectations regarding
their investment, and the motivation behind their voting decisions. Director's
consider shareholder's motivations and expectations to be correlated with that
of the Company and the Company's strategy. Shareholders' information
requirements can therefore be summarised as either operational in nature or
commercial. The Company aims to update on key events within these categories
as events materialise. Directors recognise that shareholders require complete
and timely information as a necessary input to their investment decisions.
Principle 3: Stakeholders and social responsibility
Experienced and knowledgeable long-standing employees and service providers
are a recognised key asset within the Company and our Corporate Governance
principles seek to cultivate a productive and fulfilling working environment
within the Company and the Group of companies.
Our mining and other operations are a further key asset and attention is paid
to how these operations engage with society and the various stakeholders
important to the project's continuous success. These include sub-contractors
to the Company, and officials within the Russian sub-soil licensing and other
agencies. The West Kytlim mining operation is in a remote area and where
possible employs local persons but does not otherwise impact on a local
population. The Company is devoted to maintaining the strictest environmental
policies as required within Russian sub-soil licensing protocols.
Key personnel from the Company's subsidiary maintain communication with
representatives from the nearest village to the West Kytlim mining operation,
in the town of Kytlim, in order to ensure feedback on potential issues. The
mining community in this area of the Urals is relatively small with good
communication between companies operating nearby mines, and with all suppliers
to the industry generally. Communication with officials from sub-soil
licensing agencies and their sub-contractors is more formal, and within the
reporting structures designed by those agencies to protect the environment,
the country's natural resources and the rights of local populations. Any issue
arising from any stakeholder will immediately be dealt with or communicated to
the required level to allow for action to be taken. No such events have
occurred in the history of the mining operation and where an issue may arise
it is reported in full to senior management and directors.
Managing relationships within the Company's workforce, and its outward
interactions with local communities, service providers, and the environment,
all have the potential to impact on the Company's ability to achieve its
medium to long term goals - managing these relationships is considered a
fundamental facet of good Corporate Governance.
Principle 4: Risk management
The leading risks at operational level relate to the reliability of our
resource and reserve estimations and our ability to manage the mining
operation to achieve its goals. These risks are mitigated by ensuring we
employ qualified and knowledgeable personnel who are adequately resourced and
supported by effective management. Resource exploration involves inherent
risks stemming from the fact that information relating to the mineralisation
is not immediately available and is expensive to obtain. Recognising this risk
and then managing it effectively is a critical aspect of a successful resource
exploration and development business.
The Company's annual audit provides an opportunity to reassess the chief risks
facing the business at both a corporate and operational level. These are
agreed by directors and delineated and audited on an annual basis, thus
ensuring adequate recognition and articulation of each risk category.
Principle 5: Maintaining a dynamic management framework
The Board consists of a Chairman and Chief Executive Officer supported by four
Non-Executive Directors. The Board endeavours to maintain two independent
Non-Executive Director positions at all times. At the date of this revision
Iain Rawlinson, Artem Matyushok and Kotaro Kosaka are considered independent
Non-Executive Directors. In addition, the board maintains appointments made as
strategic advisors. Current Board and advisor roles are listed on our website
at https://www.eurasiamining.co.uk/about/team-2
(https://www.eurasiamining.co.uk/about/team-2)
The board meets when an executive decision requires board approval, and in any
event no less than once per six-week period. Board members are regularly
consulted on executive decisions which would benefit from specific input
relevant to a board members area of expertise. All board members are aware of
and comfortable with the time and resource requirements associated with their
position. Relevant information relating to a board discussion is carefully
prepared and circulated in advance of board meetings. Minutes are kept and
then circulated directly after all board meetings. Minutes are noted on a
prescribed form, which includes heading information such as attendance. An
attendance record for each director is maintained and annualised for
distribution within the board. Separately, the Company secretary, is
considered a key position necessary in preserving a functional and ergonomic
management framework within the Company and good communication across the
Group of companies.
Principle 6: Experience and skills
The board has an effective combination of commercial and technical experience,
being led by a chair with a strong background in geology, who is supported by
non-executive directors with commercial, legal and technical experience in a
range of markets and jurisdictions. Board members retire on a fixed rota and
declare themselves eligible for reappointment by shareholders at the Company's
AGM.
The board considers the skill sets within the board to be sufficient for the
successful running of the business, and the delivery of the stated corporate
strategy and goals through the medium to long term, however further
appointments may be made in due course. In addition, where more specialised
skills are required, the board has access to a network of individuals and
organisations with whom it can consult for further information. This can
include input to operational decisions relating to the Company's operating
mine, or advice of a commercial nature. Each board member's long-standing
career in the industry is invaluable in this regard.
Continuing Professional Development ('CPD') and membership of institutions
which promote best practice in industry is encouraged in all board members,
though not compulsory to board membership. As an example, the professional
accreditations PGeo ('Professional Geologist', Institute of Geologists of
Ireland) and EurGeol ('European Geologist', European Federation of
Geologists), attained by the Executive Chairman, are maintained by strict
adherence to a programme of quantitative and qualitative CPD activities.
Likewise, the Company's financial controller maintains membership of the
Association of Chartered and Certified Accountants by following a prescribed
CPD programme. All board members regularly attend industry events and
conferences to keep abreast of developments in their area of expertise.
No one board member, or group of board members, dominates decision making
within the Board.
Principle 7: Board performance
The Remuneration Committee, whose membership is considered annually is
responsible for evaluating the performance of the executive directors. As
mentioned above board members retire on a fixed rota, and efforts are made
with regard to succession planning and appointment of new board members.
The appointment process involves; assessment of suitability based on
qualifications and work history, due diligence by the Company and its
Nominated Adviser, a series of meetings with board members and key personnel,
and finally contract negotiation and appointment.
Board evaluations are internal to the Company and on an ad-hoc basis, as
befits the small scale of the Company currently, but not less than once per
year at the time of the Company AGM. Adhering to the Company's strategy,
achieving the Company's goals, and maintaining good corporate governance
standards are the three most prominent identifiers by which board
effectiveness is evaluated. Board evaluations are not currently made public,
and it is the Company's intention to reconsider this position and ensure
continued compliance with the Code as the Company develops.
Principle 8: Values
The Company is founded on a culture of following and promoting the highest
ethical standards with regard to its commercial transactions, business
practices, strategy, internal employee relations and outward-facing
stakeholder and community relationships. The Company operates chiefly in the
Russian Federation though it is incorporated in the UK and governed by the
laws of England and Wales. The corporate culture and values extend from the
corporate level throughout the organisation irrespective of jurisdiction. An
ability to recognise and promote good ethical values and behaviours is seen
throughout the organisation as an excellent behavioural asset to an employee,
potential employee or board member. The current board members have been chosen
with this awareness of the corporate culture and the Company's ethical
standards in mind - new board appointments are also considered in this light.
Corporate culture, and high ethical standards with regard to business
practices are considered a critical element in attaining the Company's
strategy and goals and these standards are reinforced through the appraisal
process. High standards of ethics create a competitive advantage for the
Company and are a core element of the Company's business model, as they ensure
the Company's long-term sustainability. Eurasia is an equal opportunities
employer and the Board has recognised a lack of board diversity which it
intends to address.
Principle 9: Governance
Maintaining governance structures that are fit for use as the Company evolves
in size and complexity is an essential element of good corporate governance.
Maintenance of the corporate governance code is the sole remit of the
Chairman, who instigates changes in policy, and ensures the code is applied
throughout the organisation.
Non-executive directors are appointed and participate in all board level
decisions and also provide scrutiny and oversight of the executive director's
roles. The board's non-executive directors are each skilled in different
aspects of commerce, law, finance and the UK regulatory environment, with a
combined breath of experience across various markets, commodities and
jurisdictions. They communicate regularly with the Chairman and executive
directors and provide reliable advice in their areas of expertise. The terms
and functions of the audit and risk, remuneration and nomination committees
are set out below. The Company Secretary is available to non-executive
directors to support their information requirements and decision making and
reports directly to the Chairman.
AUDIT AND RISK COMMITTEE
The Audit and Risk Committee may examine any matter relating to the financial
affairs of the Group and the Group's audits, this includes reviews of the
annual financial statements and announcements, internal control procedures,
accounting procedures, accounting policies, the appointment, independence,
objectivity, terms of reference and fees of external auditors and such other
related functions as the Board may require. The external Auditors have direct
access to the members of the committee, without presence of the executive
Directors, for independent discussions. Several Audit and Risk Committee
meetings are held during the year, prior to and during the annual audit; and
to approve Interim and Annual Financial Statements. The Audit and Risk
Committee opines on whether accounts are in compliance with International
Financial Reporting Standards.
The Chairman of the Audit and Risk Committee is Iain Rawlinson and the
committee comprises Iain Rawlinson and Tamerlan Abdikeev. The Audit and Risk
Committee is guided by company policy and procedure including the Audit and
Risk Committee terms of reference.
REMUNERATION COMMITTEE
The Remuneration Committee determines the terms and conditions of employment
and annual remuneration of the executive Directors and senior staff. It
consults with the Executive Chairman, takes into consideration external data
and comparative third-party remuneration and has access to professional advice
outside the Company. The Chairman of the Remuneration Committee is Iain
Rawlinson and the committee comprises Iain Rawlinson and Tamerlan Abdikeev.
The key policy objectives of the Remuneration Committee in respect of the
Company's executive Directors and other senior executives are:-
· to ensure that individuals are fairly rewarded for their personal
contribution to the Company's overall performance, and
· to act as an independent committee ensuring that due regard is
given to the interests of the Company's Shareholders and to the financial and
commercial health of the Company.
Remuneration of executive Directors comprises basic salary, discretionary
bonuses, participation in the Company's Share Option Scheme and other
benefits. The Company's remuneration policy with regard to options is to
maintain an amount of not more than 10% of the issued share capital in options
for the Company's management and employees which may include the issue of new
options in line with any new share issues. The Remuneration Committee is
guided by company policy and procedure including the Remuneration Committee
terms of reference.
NOMINATIONS COMMITTEE
The Chairman of the Nominations Committee is Christian Schaffalitzky and the
committee comprises Christian Schaffalitzky and Iain Rawlinson. The committee
convenes at a minimum twice annually to consider board composition, and, if
considered necessary, seek further appointments. The committee is conscious of
a need for board diversity when considering future appointments.
The Nominations Committee is guided by company policy and procedure including
the Nominations Committee terms of reference.
Principle 10: Build trust
The Board seeks to maintain both direct and two-way communication with its
shareholders through its public and investor relations programmes. All
shareholders may at their discretion chose to attend the Company AGM and speak
directly to the Board and management.
The Company employs Public Relations and Investor Relations professionals and
maintains several third-party contracts to better disseminate Company
news-flow. Through shareholder feedback the Company ensures that the Board's
communication of the Company's progress is thorough and well understood.
A clear statement on the outcomes of board resolutions is communicated
immediately after the Company's AGM by RNS and posted to the Company's
website. This includes a summary of votes for and against the resolutions put
before the shareholders, and where a significant number of votes is cast
against a resolution this is clearly stated, with an explanation as to
possible remediation regarding that voting. A catalogue of historical annual
reports and AGM notices is maintained at an appropriate location on the
Company's website.
Matters which are reserved strictly for the consideration of the board
include, but are not limited to, discussions and decision on Company strategy,
major investment decisions in new business development, commercial
arrangements including funding requirements, high-level decisions on
distribution of funds, and recruitment or dismissal of senior personnel and
board members.
The above outline of the Company's corporate governance framework befits the
current scale of the Company but will be subject to appropriate modifications
as the Company grows in line with its stated strategy. An annual review of the
corporate governance framework is undertaken at the board meeting preceding or
directly following the Company's AGM. Changes considered to the current
corporate governance framework, to be assessed in due course, include further
appointments to the board, and establishing independent bodies to review and
assess board performance.
HEALTH AND SAFETY
The Group has occupational health and safety policies and procedures in place
ensuring that all efforts are made to minimise adverse personal and corporate
outcomes, through best practice training, implementation and monitoring. No
serious incidents occurred in the past year.
UK CODE ON TAKEOVER AND MERGERS
Eurasia Mining is subject to the UK City code on takeovers and mergers, which
was revised and extended to apply to all companies listed on the AIM market in
October 2013.
AUDITORS
Grant Thornton are willing to continue in office and a resolution proposing
their re-appointment as auditors of the Company and a resolution authoring the
Directors to agree their remuneration will be put to shareholders at the
Annual General Meeting.
By order of the Board
K. Byrne
Company Secretary
Consolidated statement of profit of loss and other comprehensive income
For the year ended 31 December 2021
Note Year to Year to
31 December 2021 31 December 2020
£ £
Sales 8 2,331,225 937,962
Cost of sales 9 (2,584,680) (1,131,954)
Gross (loss)/profit (253,455) (193,992)
Administrative costs 9 (2,717,765) (1,889,793)
Investment income 1,394 486
Finance cost 10 (103,445) (100,886)
Other losses 11 (65,250) (1,509,123)
Loss before tax (3,138,521) (3,693,308)
Income tax expense 12 - -
Loss for the year (3,138,521) (3,693,308)
Other comprehensive income:
Items that will not be reclassified subsequently to profit and loss:
NCI share of foreign exchange differences on translation of foreign operations 16 36,855 181,670
Items that will be reclassified subsequently to profit and loss:
Parent's share of foreign exchange differences on translation of foreign (58,679) 382,686
operations
Other comprehensive income for the year, net of tax (21,824) 564,356
Total comprehensive loss for the year (3,160,345) (3,128,952)
Loss for the period attributable to:
Equity holders of the parent (2,910,479) (3,080,336)
Non-controlling interest 16 (228,042) (612,972)
(3,138,521) (3,693,308)
Total comprehensive loss for the year attributable to:
Equity holders of the parent (2,969,158) (2,697,650)
Non-controlling interest 16 (191,187) (431,302)
(3,160,345) (3,128,952)
(Loss)/profit per share attributable to equity holders of the parent:
Basic and diluted loss (pence per share) 29 (0.10) (0.11)
The accompanying notes are an integral part of these financial statements.
Consolidated statement of financial position
As at 31 December 2021
Note 31 December 31 December
2021 2020
£ £
ASSETS
Non-current assets
Property, plant and equipment 13 5,061,743 4,295,908
Assets in the course of construction 13 640,423 28,957
Intangible assets 14 1,389,029 696,504
Investment to potential share in joint venture 15 367,464 -
Total non-current assets 7,458,659 5,021,369
Current assets
Inventories 18 38,673 13,695
Trade and other receivables 19 1,681,864 285,081
Current tax asset 5,334 5,307
Cash and cash equivalents 20 22,009,507 5,404,101
Total current assets 23,735,378 5,708,184
Total assets 31,194,037 10,729,553
EQUITY
Issued capital 21 61,187,111 37,812,856
Other reserves 23 3,922,691 3,981,370
Accumulated losses (33,114,532) (30,204,053)
Equity attributable to equity holders 31,995,270 11,590,173
of the parent
Non-controlling interest 16 (1,950,049) (1,758,862)
Total equity 30,045,221 9,831,311
LIABILITIES
Non-current liabilities
Lease liabilities 25 307,136 425,923
Provisions 27 143,268 50,186
Total non-current liabilities 450,404 476,109
Current liabilities
Borrowings 24 31,953 31,684
Lease liabilities 25 122,407 101,007
Trade and other payables 26 486,558 287,491
Provisions 27 57,494 1,951
Total current liabilities 698,412 422,133
Total liabilities 1,148,816 898,242
Total equity and liabilities 31,194,037 10,729,553
These financial statements were approved by the board on 28 June 2022 and were
signed on its behalf by:
C. Schaffalitzky
Executive Chairman
The accompanying notes are an integral part of these financial statements.
Company statement of financial position
As at 31 December 2021
Note 31 December 31 December
2021 2020)
£ £
ASSETS
Non-current assets
Property, plant and equipment 13 804 1,507
Investments in subsidiaries 16 1,132,246 1,132,246
Total non-current assets 1,133,050 1,133,753
Current assets
Trade and other receivables 19 308,485 106,042
Other financial assets 17 12,681,450 8,226,176
Cash and cash equivalents 20 21,892,793 5,247,106
Total current assets 34,882,728 13,579,324
Total assets 36,015,778 14,713,077
EQUITY
Issued capital 21 61,187,111 37,812,856
Other reserves 23 3,924,026 3,924,026
Accumulated losses (29,371,048) (27,366,492)
Total equity 35,740,089 14,370,390
LIABILITIES
Current liabilities
Trade and other payables 26 275,689 342,687
Total current liabilities 275,689 342,687
Total liabilities 275,689 342,687
Total equity and liabilities 36,015,778 14,713,077
In accordance with section 408(3) of the Companies Act 2006, Eurasia Mining
plc is exempt from the requirement to present its own statement of profit or
loss. The amount of loss for the financial year recorded within the financial
statements of Eurasia Mining plc is £2,004,556 (2020: loss of £1,432,061).
These financial statements were approved by the board on 28 June 2022 and were
signed on its behalf by:
C. Schaffalitzky
Executive Chairman
The accompanying notes are an integral part of these financial statements.
Consolidated statement of changes in equity
For the year ended 31 December 2021
Note Share capital Share premium Deferred shares Other reserves Translation reserve Retained loss Attributable to equity holders of the parent Non-controlling interest Total
£ £ £ £ £ £ £ £ £
Balance at 1 January 2020 2,693,757 20,572,186 7,025,483 3,958,087 (325,342) (27,157,778) 6,766,393 (1,327,560) 5,438,833
Issue of ordinary share capital for cash 33,927 7,599,661 - - - - 7,633,588 - 7,633,588
Issue of ordinary shares on exercise of warrants 22,018 202,983 - (674) - 674 225,001 - 225,001
Issue of shares under employee share option plan 9,000 67,200 - (14,904) - 14,904 76,200 - 76,200
Share issue cost - (413,359) - - - - (413,359) - (413,359)
Reversal on cancellation or exercise of options and warrants - - - (18,483) - 18,483 - - -
Transaction with owners 64,945 7,456,485 - (34,061) - 34,061 7,521,430 - 7,521,430
Loss for the year - - - - - (3,080,336) (3,080,336) (612,972) (3,693,308)
-
Other comprehensive income
Exchange differences on translation - - - - 382,686 - 382,686 181,670 564,356
of foreign operations
Total comprehensive loss - - - - 382,686 (3,080,336) (2,697,650) (431,302) (3,128,952)
for the period ended 31 December 2020
Balance at 31 December 2020 2,758,702 28,028,671 7,025,483 3,924,026 57,344 (30,204,053) 11,590,173 (1,758,862) 9,831,311
Note Share capital Share premium Deferred shares Other reserves Translation reserve Retained loss Attributable to equity holders of the parent Non-controlling interest Total
£ £ £ £ £ £ £ £ £
Balance at 1 January 2021 2,758,702 28,028,671 7,025,483 3,924,026 57,344 (30,204,053) 11,590,173 (1,758,862) 9,831,311
Issue of ordinary share capital for cash 94,858 24,834,836 - - - - 24,929,694 24,929,694
Share issue cost - (1,555,439) - - - - (1,555,439) (1,555,439)
Transaction with owners 94,858 23,279,397 - - - - 23,374,255 - 23,374,255
Loss for the year - - - - - (2,910,479) (2,910,479) (228,042) (3,138,521)
-
Other comprehensive income
Exchange differences on translation - - - - (58,679) - (58,679) 36,855 (21,824)
of foreign operations
Total comprehensive loss - - - - (58,679) (2,910,479) (2,969,158) (191,187) (3,160,345)
for the period ended 31 December 2021
Balance at 31 December 2021 2,853,560 51,308,068 7,025,483 3,924,026 (1,335) (33,114,532) 31,995,270 (1,950,049) 30,045,221
The accompanying notes are an integral part of these financial statements.
Company statement of changes in equity
For the year ended 31 December 2021
Note Share capital Share premium Deferred shares Other reserves Retained loss Total
£ £ £ £ £ £
Balance at 1 January 2020 2,693,757 20,572,186 7,025,483 3,958,087 (25,968,492) 8,281,021
Issue of ordinary share capital for cash 33,927 7,599,661 - - - 7,633,588
Issue of ordinary shares on exercise of warrants 22,018 202,983 - (674) 674 225,001
Issue of shares under employee share option plan 9,000 67,200 - (14,904) 14,904 76,200
Share issue cost - (413,359) - - - (413,359)
Reversal on cancellation or exercise of options and warrants - - - (18,483) 18,483 -
Transactions with owners 64,945 7,456,485 - (34,061) 34,061 7,521,430
Loss and total comprehensive income - - - - (1,432,061) (1,432,061)
Balance at 31 December 2020 2,758,702 28,028,671 7,025,483 3,924,026 (27,366,492) 14,370,390
Note Share capital Share premium Deferred shares Other reserves Retained loss Total
£ £ £ £ £ £
Balance at 1 January 2021 2,758,702 20,028,671 7,025,483 3,924,026 (27,366,492) 14,370,390
Issue of ordinary share capital for cash 94,858 24,834,836 - 24,929,694
Share issue cost - (1,555,439) - (1,555,439)
Transactions with owners 94,858 23,279,397 - - - 23,374,255
Loss and total comprehensive income - - - - (2,004,556) (2,004,556)
Balance at 31 December 2021 2,853,560 51,308,068 7,025,483 3,924,026 (29,371,048) 35,740,089
The accompanying notes are an integral part of these financial statements.
Consolidated statement of cash flows
For the year ended 31 December 2021
Note Year to Year to
31 December 31 December
2021 2020
£ £
Cash flows from operating activities
Loss for the year (3,138,521) (3,693,308)
Adjustments for:
Depreciation of non-current assets 13 422,752 205,200
Asset value write offs to cost of sales 149,882 -
Finance costs recognised in profit or loss 24 103,445 100,886
Investment income recognised in profit or loss (1,394) (486)
Rehabilitation (change in estimate)/cost recognised in profit or loss 145,785 (14,671)
Income tax expense recognised in profit or loss - -
Net foreign exchange loss 11 65,250 1,509,123
(2,252,801) (1,893,256)
Movement in working capital
Increase in inventories (24,862) (12,152)
Increase in trade and other receivables (1,395,059) (130,219)
Decrease/(increased) in trade and other payables 197,728 (65,555)
Cash outflow from operations (3,474,993) (2,101,182)
Income tax paid - -
Net cash used in operating activities (3,474,993) (2,101,182)
Cash flows from investing activities
Investment income 1,394 486
Investment to acquire interest in joint venture 15 (367,464)
Purchase of property, plant and equipment 13 (1,910,033) (687,167)
Payment for exploration and evaluation assets 14 (682,419) (9,599)
Net cash used in investing activities (2,958,523) (696,280)
Cash flows from financing activities
Proceeds from issue of equity shares 24,929,694 7,934,789
Share issue costs (1,555,439) (413,359)
Proceeds from borrowings - 300,000
Repayment of borrowings - (306,341)
Repayment of lease liability (101,674) (81,491)
Interest paid (101,048) (96,965)
Net cash proceeds from financing activities 23,171,533 7,336,633
Net increase in cash and cash equivalents 16,737,996 4,539,171
Effects of exchange rate changes on the balance of cash held in foreign (132,611) (55,083)
currencies
Cash and cash equivalents at beginning of year 5,404,101 920,013
22,009,507 5,404,101
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these financial statements.
Company statement of cash flows
For the year ended 31 December 2021
Note Year to Year to
31 December 31 December
2021 2020
£ £
Cash flows from operating activities
Loss for the year (2,004,556) (1,432,061)
Adjustments for:
Depreciation of non-current assets 703 416
Finance costs recognised in profit or loss 10 - 4,586
Net foreign exchange loss 26,576 -
(1,977,277) (1,427,059)
Movement in working capital
Increase in trade and other receivables (202,443) (14,481)
(Decrease)/increase in trade and other payables (66,998) (184,863)
Cash outflow from operations (2,246,718) (1,626,403)
Income tax paid - -
Net cash used in operating activities (2,246,718) (1,626,403)
Cash flows from investing activities
Amounts advanced to related party (4,455,274) (1,537,070)
Purchase of property, plant and equipment - (1,260)
Net cash used in investing activities (4,455,274) (1,538,330)
Cash flows from financing activities
Proceeds from issue of equity shares 24,929,694 7,934,789
Share issue costs (1,555,439) (413,359)
Proceeds from the borrowings - 300,000
Repayment of borrowings - (304,586)
Net cash proceeds from financing activities 23,374,255 7,516,844
Net increase in cash and cash equivalents 16,672,263 4,352,111
Effects of exchange rate changes on the balance of cash held in foreign (26,576) -
currencies
Cash and cash equivalents at beginning of year 5,247,106 894,995
21,892,793 5,247,106
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these financial statements.
Notes to the financial statements
1 General information
Eurasia Mining Plc (the "Company") is a public limited company incorporated
and domiciled in Great Britain with its registered office at International
House, 142 Cromwell Road, London SW7 4EF, United Kingdom and principal place
of business at Clubhouse Holborn, 20 St Andrew Street, EC4A 3AG, United
Kingdom. The Company's shares are listed on the AIM Market of the London Stock
Exchange plc. The principal activities of the Company and its subsidiaries
(collectively "Group") are related to the exploration for and development of
platinum group metals, gold and other minerals in Russia.
Eurasia Mining Plc's consolidated financial statements are presented in Pounds
Sterling (£), which is also the functional currency of the parent company.
2 Going concern
Following two significant fund raisings through the issue of new ordinary
shares in May and September 2021, as at 31 December 2021 the Group's net
current assets amounted to £ 23,036,966 (£5,286,051 in 2020). As at the
same date, the Group's cash balance was £22,009,507 (£5,404,101 in 2020).
The Group's debt largely consisted of lease liabilities set up to acquire
mining machinery for a total amount of £429,543 (at 31 December 2020 -
£558,614).
The Group's current (as at 30 May 2022) cash position is around £14,200,000
with the reduction since December 2021 being accounted for by £3,900,000 in
capital expenditure, £1,300,000 on development expenditure on its assets
portfolio, and £3,500,000 in costs.
The Board consider the West Kytlim asset to be fully capitalised for
sustainable mine production for an up to 15 year mine life (at 2022 capacity),
without consideration of possible reserves in the adjacent West Kytlim Flanks
and Typil License areas. The Group is in the process of installing electric
draglines and grid power, realising its plans for the West Kytlim asset which
is intended to be self-funding from 2022.
The Group has spent £682,419 on a development programme for the Monchetundra
asset during 2021 and has budgeted a further £527,000 for statutory reporting
on this asset to November 2022, keeping the asset in good standing while
strategic options for the project's development are considered.
3 Changes in accounting policies
3.1 New and revised relevant standards that are effective for annual periods commencing on or after 1 January 2021
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16:
The amendments provide temporary reliefs which address the financial reporting
effects when an interbank offered rate (IBOR) is replaced with an alternative
nearly risk-free interest rate (RFR). The amendments include the following
practical expedients:
· A practical expedient to require contractual changes,
or changes to cash flows that are directly required by the reform, to be
treated as changes to a floating interest rate, equivalent to a movement in a
market rate of interest
to cash flows that are directly required by the reform, to be treated as
changes to a floating interest rate, equivalent to a movement in a market rate
of interest;
· Permit changes required by IBOR reform to be made to
hedge designations and hedge documentation without the hedging relationship
being discontinued;
· Provide temporary relief to entities from having to
meet the separately identifiable requirement when an RFR instrument is
designated as a hedge of a risk component.
These amendments did not have any impact on the financial statements of the
Group. The Group intends to apply the practical expedients in future periods,
if necessary.
COVID-19-Related Rent Concessions beyond 30 June 2021 Amendments to IFRS 16
On 28 May 2020, the IASB issued COVID-19-Related Rent Concessions - amendment
to IFRS 16 Leases. The amendments provide relief to lessees from applying IFRS
16 guidance on lease modification accounting for rent concessions arising as a
direct consequence of the COVID-19 pandemic. As a practical expedient, a
lessee may elect not to assess whether a COVID-19 related rent concession from
a lessor is a lease modification. A lessee that makes this election accounts
for any change in lease payments resulting from the COVID-19 related rent
concession the same way it would account for the change under IFRS 16, if the
change were not a lease modification.
The amendment was intended to apply until 30 June 2021, but due to the
continued impact of the COVID-19 pandemic, on 31 March 2021 the IASB elected
to extend the application of the practical expedients until 30 June 2022.
The new amendment is effective for annual periods beginning on or after 1
April 2021.
The Group does not have any granted rent concessions related to the COVID-19,
but plans to apply practical expedients, if necessary, within a reasonable
period.
3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group
IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a
comprehensive new accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure. Once effective, IFRS
17 replaces IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005. IFRS
17 applies to all types of insurance contracts (i.e., life, non-life, direct
insurance and re-insurance), regardless of the type of entities that issue
them, as well as to certain guarantees and financial instruments with
discretionary participation features. There are several scope exceptions. The
overall objective of IFRS 17 is to provide an accounting model for insurance
contracts that is more useful and consistent for insurers. In contrast to the
requirements in IFRS 4, which are largely based on grandfathering previous
local accounting policies, IFRS 17 provides a comprehensive model for
insurance contracts, covering all relevant accounting aspects. The core of
IFRS 17 is the general model, supplemented by:
· A specific adaptation for insurance contracts with
direct participation terms (the variable fee approach).
· A simplified approach (the premium allocation approach)
is mainly for short-duration contracts.
IFRS 17 is effective for reporting periods starting on or after 1 January
2023, with comparative figures required. Early application is permitted,
provided the entity also applies IFRS 9 and IFRS 15 on or before the date it
first applies IFRS 17. This standard is not applicable to the Group.
Amendments to IAS 1 - Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to
specify the requirements for classifying liabilities as current or
non-current. The amendments clarify:
· What is meant by a right to defer settlement;
· That a right to defer must exist at the end of the
reporting period;
· That classification is unaffected by the likelihood
that an entity will exercise its deferral right;
· That only if an embedded derivative in a convertible
liability is itself an equity instrument would the terms of a liability not
impact its classification.
These amendments are effective for annual periods beginning on or after 1
January 2023 and are applied retrospectively. The Group is currently assessing
the possible impact the amendments will have on current liabilities and
whether existing loan agreements may require renegotiation.
Reference to the Conceptual Framework - Amendments to IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations -
Reference to the Conceptual Framework. The amendments are intended to replace
a reference to the Framework for the Preparation and Presentation of Financial
Statements, issued in 1989, with a reference to the Conceptual Framework for
financial Reporting issued in March 2018 without significantly changing its
requirements.
The Board also added an exception to the recognition principle of IFRS 3 to
avoid the issue of potential 'day 2' gains or losses arising for liabilities
and contingent liabilities that would be within the scope of IAS 37 or IFRIC
21 Levies, if incurred separately.
At the same time, the Board decided to clarify existing guidance in IFRS 3 for
contingent assets that would not be affected by replacing the reference to the
Framework for the Preparation and Presentation of Financial Statements.
These amendments are effective for annual periods beginning on or after 1
January 2022 and are applied prospectively.
Property, Plant and Equipment: Proceeds before Intended Use - Amendments to
IAS 16
In May 2020, the IASB issued Property, Plant and Equipment - Proceeds before
Intended Use, which prohibits entities deducting from the cost of an item of
property, plant and equipment, any proceeds from selling items produced while
bringing that asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Instead, an entity
recognises the proceeds from selling such items, and the costs of producing
those items, in profit or loss.
These amendments are effective for annual reporting periods beginning on or
after 1 January 2022 and must be applied retrospectively to items of property,
plant and equipment made available for use on or after the beginning of the
earliest period presented when the entity first applies these amendments.
These amendments are not expected to have an impact on the Group.
Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an
entity needs to include when assessing whether a contract is onerous or
loss-making.
The amendments apply a "directly related cost approach". The costs that relate
directly to a contract to provide goods or services include both incremental
costs and an allocation of costs directly related to contract activities.
General and administrative costs do not relate directly to a contract and are
excluded unless they are explicitly chargeable to the counterparty under the
contract.
These amendments are effective for annual periods beginning on or after 1
January 2022. The Company will apply these amendments to contracts for which
it has not yet fulfilled all its obligations at the beginning of the annual
reporting period in which it first applies the amendments.
IFRS 1 First-time Adoption of International Financial Reporting Standards -
Subsidiary as a first-time adopter
As part of its 2018-2021 annual improvements to IFRS standards process, the
IASB issued an amendment to IFRS 1 First-time Adoption of International
Financial Reporting Standards. The amendment permits a subsidiary that elects
to apply paragraph D16(a) of IFRS 1 to measure cumulative translation
differences using the amounts reported by the parent, based on the parent's
date of transition to IFRS. This amendment is also applied to an associate or
joint venture that elects to apply paragraph D16(a) of IFRS 1.
This amendment is effective for annual periods beginning on or after 1 January
2022 with earlier adoption is permitted.
IFRS 9 Financial Instruments - Fees in the '10 per cent' test for
derecognition of financial liabilities
As part of its 2018-2020 annual improvements to IFRS standards process the
IASB issued amendment to IFRS 9. The amendment clarifies the fees that an
entity includes when assessing whether the terms of a new or modified
financial liability are substantially different from the terms of the original
financial liability. These fees include only those paid or received between
the borrower and the lender, including fees paid or received by either the
borrower or lender on the other's behalf. An entity applies the amendment to
financial liabilities that are modified or exchanged on or after the beginning
of the annual reporting period in which the entity first applies the
amendment.
This amendment is effective for annual periods beginning on or after 1 January
2022. Early adoption is permitted. The Company will apply the amendment to
financial liabilities that are modified or exchanged on or after the beginning
of the annual reporting period in which the Company first applies the
amendment.
The amendment is not expected to have a material impact on the Group.
Amendment to IAS 41 Agriculture - Taxation in fair value measurements
As part of its 2018-2020 annual improvements to IFRS standards process the
IASB issued amendment to IAS 41 Agriculture. The amendment removes the
requirement in paragraph 22 of IAS 41 that entities exclude cash flows for
taxation when measuring the fair value of assets within the scope of IAS 41.
An entity applies the amendment prospectively to fair value measurements on or
after the beginning of the first annual reporting period beginning on or after
1 January 2022. Early adoption is permitted.
The amendment is not expected to have an impact on the Group.
Definition of Accounting Estimates - Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces
a definition of 'accounting estimates. The amendments clarify the distinction
between changes in accounting estimates and changes in accounting policies and
the correction of errors. It also explains how organizations use measurement
methods and inputs to develop accounting estimates.
The amendments are effective for annual reporting periods beginning on or
after 1 January 2023 and apply to changes in accounting policies and changes
in accounting estimates that occur on or after the start of that period. Early
application is permitted and must be disclosed.
These amendments are not expected to have an impact on the Group.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice
Statement 2 Making Materiality Judgments, which provide guidance and examples
to help entities apply materiality judgments to accounting policy disclosures.
The amendments should help entities disclose more useful information about
accounting policies by replacing the requirement for entities to disclose
"significant accounting policies" with a requirement to disclose "material
accounting policy information", and by adding guidance on how entities should
apply materiality judgements to disclosure of accounting policies.
The amendments to IAS 1 apply for annual periods beginning on or after 1
January 2023, early application is permitted. Since the amendments to the
Practice Statement 2 provide non-mandatory guidance on the application of the
definition of material to accounting policy information, an effective date for
these amendments is not necessary.
The Group is currently assessing the impact these amendments.
4 Summary of significant accounting policies
4.1 Basis of preparation
The consolidated financial statements of the Group and the Company financial
statements have been prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the Companies Act
2006.
These financial statements have been prepared under the historical cost
convention. The accounting policies have been applied consistently throughout
the Group for the purposes of preparation of these consolidated financial
statements.
4.2 Presentation of financial statements
The consolidated financial statements are presented in accordance with IAS 1
Presentation of Financial Statements. The Group has elected to present the
"Consolidated Statement of Profit or Loss" in one statement.
4.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company. Control is achieved where
the Company has all of the following:
· Power over investee;
· Exposure, or rights, to variable returns from its
involvement with the investee;
· The ability to use its power over the investee to
affect the amount of investor's returns.
The results of subsidiaries acquired or disposed of are included in the
Consolidated Statement of Profit or Loss from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies in line with those used by
other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in
full on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's equity therein. Non-controlling
interests consist of the amount of those interests at the date of the original
business combination and the non-controlling party's share of changes in
equity since the date of the combination.
4.4 Business combinations
The Group applies the acquisition method in accounting for business
combinations. The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition-date fair values of
assets transferred, liabilities incurred, and the equity interests issued by
the Group, which includes the fair value of any asset or liability arising
from a contingent consideration arrangement. Acquisition costs are expensed as
incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a
business combination regardless of whether they have been previously
recognised in the acquiree's financial statements prior to the acquisition.
Assets acquired and liabilities assumed are generally measured at their
acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible
assets. It is calculated as the excess of the sum of a) fair value of
consideration transferred, b) the recognised amount of any non-controlling
interest in the acquiree and c) acquisition-date fair value of any existing
equity interest in the acquiree, over the acquisition-date fair values of
identifiable net assets. If the fair values of identifiable net assets exceed
the sum calculated above, the excess amount (i.e. gain on a bargain purchase)
is recognised as a profit or loss immediately.
In a business combination achieved in stages, the Group re-measure its
previously held equity interest in the acquiree at its acquisition-date fair
value and recognise the resulting gain or loss, if any, in profit or loss or
other comprehensive income, as appropriate.
4.5 Foreign currencies
Functional and presentation currency
The individual financial statements of each group entity are prepared in the
currency of the primary economic environment in which the entity operates
("the functional currency"). The consolidated financial statements are
presented in GBP, which is the functional and the presentation currency of the
Company.
Transaction and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the profit or
loss.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
Group companies
The results and financial position of all the Group 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 Profit or Loss 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 rate on the dates of the
transactions); and
• all resulting exchange differences are recognised as a separate component
of other comprehensive income.
4.6 Share-based payments
Equity-settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instrument at the grant
date. Fair value is measured by use of Black Scholes model. The expected life
used in the model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and behavioural
considerations.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of shares that will eventually vest.
Equity-settled share-based payment transactions with other parties are
measured at the fair value of the goods and services received, except where
the fair value cannot be estimated reliably, in which case they are measured
at the fair value of the equity instruments granted, measured at the date the
entity obtains the goods or the counterparty renders the service.
All equity-settled share-based payments are ultimately recognised as an
expense in the profit or loss with a corresponding credit to "Share-based
payments reserve".
Upon exercise of share options, the proceeds received net of attributable
transaction costs are credited to share capital, and where appropriate share
premium. No adjustment is made to any expense recognised in prior periods if
share options ultimately exercised are different to that estimated on vesting
or if the share options vest but are not exercised.
When share options lapse or are forfeited the respective amount recognised in
the Share-based payment reserve is reversed and credited to accumulated profit
and loss reserve.
4.7 Revenue
To determine whether to recognise revenue, the Group follows a 5-step process:
1 Identifying the contract with a customer;
2 Identifying the performance obligations;
3 Determining the transaction price;
4 Allocating the transaction price to the performance obligations;
5 Recognising revenue when/as performance obligation(s) are satisfied.
The Group earns its revenues primarily from the sale of platinum group metals
from the West Kytlim mine. The Company enters into a contract with its main
customer to deliver all mined metals extracted from the mine. There is one
performance obligation under the sales contract, and that is the delivery of
metals. As such, the entire price under the contract is allocated to the
single performance obligation. Revenue is recognised when control over the
metals passes to the customer.
The Group has determined that it is the principal in the sales transactions as
the Group holds the mining license and has the rights to the underlying
resources. The Group controls the sales process, from selecting the customer
to determining sales price.
4.8 Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
The tax payable is based on taxable profit for the year. Taxable profit
differs from profit as reported in the statement of comprehensive income
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the statement of
financial position date.
Deferred tax
Deferred income tax is provided in full, 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 income tax is not accounted for if it arises from initial
recognition of goodwill, 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
substantively enacted by the statement of financial position date 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 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 is provided on temporary differences arising on
investments in subsidiaries and associates, except 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.
4.9 Property, plant and equipment
Mining assets
Mining assets are stated at cost less accumulated depreciation. Mining assets
include the cost of acquiring and developing mining assets and mineral rights,
buildings, vehicles, plant and machinery and other equipment located on mine
sites and used in the mining operations.
Mining assets, where economic benefits from the asset are consumed in a
pattern which is linked to the production level, are depreciated using a unit
of production method based on the volume of ore reserves. This results in a
depreciation charge proportional to the depletion of reserves
Stripping activity asset costs
In alluvial mining operations, it is necessary to remove overburden and other
waste in order to improve access the ore body. Associated costs are recognised
as a stripping activity asset. A stripping activity asset is initially
measured at cost and subsequently carried at cost or its revalued amount less
depreciation or amortisation and impairment losses.
A stripping activity asset is depreciated or amortised on a systematic basis,
over the expected useful life of the identified component of the ore body that
becomes more accessible as a result of the stripping activity. The units of
production method is used.
Other assets
Freehold properties held for administrative purposes, are stated in the
statement of financial position at cost.
Fixtures and equipment are stated at cost less accumulated depreciation and
any accumulated impairment losses.
Depreciation is charged to write off the cost or valuation of assets over
their estimated useful lives, using the straight-line method. The estimated
useful lives, residual values and depreciation method are reviewed at each
year end, with the effect of any changes in estimate accounted for on a
prospective basis.
The estimated useful lives are as follows:
Property
30 years
Plant &
machinery 3-30
years
Office, fixture and fittings 3-5 years
The gain or loss arising on the disposal or retirement of an item of property,
plant and equipment is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in profit or loss.
4.10 Intangible assets
Exploration and evaluation of mineral resources
Exploration and evaluation expenditure comprise costs that are directly
attributable to:
· researching and analysing existing exploration data;
· conducting geological studies, exploratory drilling and sampling;
· examining and testing extraction and treatment methods; and/or
· compiling prefeasibility and feasibility studies.
4.11 Investments in subsidiary undertakings
Investments in subsidiaries are measured at cost less accumulated impairment.
The carrying values of non-financial assets are reviewed annually for
impairment when events or changes in circumstances indicate the carrying value
may not be recoverable. The recoverable amount of non-financial assets is the
greater of net selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount is
determined for the cash generating unit to which the asset belongs. If such
indication of impairment exists and where the carrying values exceed the
estimated recoverable amount, the assets or cash generating units are written
down to their recoverable amount. Impairment losses are recognised within
operating loss.
4.12 Impairment testing intangible assets and property, plant and equipment
At each statement of financial position date, the Group reviews the carrying
amounts of the assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet
available for use are tested for impairment annually, and whenever there is an
indication that the asset may be impaired.
In assessing whether an impairment is required, the carrying value of the
asset is compared with its recoverable amount. The recoverable amount is the
higher of the fair value less costs of disposal (FVLCD) and value in use
(VIU).The FVLCD is estimated based on future discounted cash flows expected to
be generated from the continued use of the asset, including any expansion
prospects and eventual disposal, using market-based commodity prices, exchange
assumptions, estimated quantities of recoverable minerals, production levels,
operating costs and capital requirements based on the latest Life of mine
plans. These cash flows were discounted using a real post-tax discount rate
that reflect the current market assessments of time value of money.
Value in use is determined as the present value of the estimated cash flows
expected to arse from continued use in its current form and eventual disposal.
Value in use cannot take into consideration future development. The
assumptions used in the calculation are often different than those used in a
FVLCD and therefore is likely to yield a different result.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss of the assets is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation
increase.
4.13 Inventories
Inventories are measured at the lower of cost and net realisable value. The
cost of inventories is based on the first-in first-out principle, and includes
expenditure incurred in acquiring the inventories, production or conversion
costs and other costs incurred in bringing them to their existing location and
condition. In the case of manufactured inventories and work in progress, cost
includes an appropriate share of production overheads based on normal
operating capacity.
Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
4.14 Cash
Cash and cash equivalents comprise cash balances, call deposits and highly
liquid investments with maturities of three months or less from the
acquisition date that are subject to insignificant risk of changes in their
fair value.
4.15 Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged,
cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS
15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial instruments, other than those designated and effective as hedging
instruments, are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
The classification is determined by both:
• the entity's business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding After initial recognition, these are measured at amortised cost
using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The
Group's cash and cash equivalents, trade and most other receivables fall into
this category of financial instruments as well as listed bonds.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than
'hold to collect' or 'hold to collect and sell' are categorised at fair value
through profit and loss. Further, irrespective of business model financial
assets whose contractual cash flows are not solely payments of principal and
interest are accounted for at FVTPL. All derivative financial instruments fall
into this category, except for those designated and effective as hedging
instruments, for which the hedge accounting requirements apply. The category
also contains an equity investment. Assets in this category are measured at
fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by
reference to active market transactions or using a valuation technique where
no active market exists.
Financial assets at fair value through other comprehensive income (FVOCI)
The Group accounts for financial assets at FVOCI if the assets meet the
following conditions:
• they are held under a business model whose objective it is "hold to
collect" the associated cash flows and sell and
• the contractual terms of the financial assets give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding.
Any gains or losses recognised in other comprehensive income (OCI) will be
recycled upon derecognition of the asset.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking information to
recognise expected credit losses - the 'expected credit loss (ECL) model'.
Instruments within the scope of the new requirements included loans and other
debt-type financial assets measured at amortised cost and FVOCI, trade
receivables, contract assets recognised and measured under IFRS 15 and loan
commitments and some financial guarantee contracts (for the issuer) that are
not measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Group first
identifying a credit loss event. Instead the Group considers a broader range
of information when assessing credit risk and measuring expected credit
losses, including past events, current conditions, reasonable and supportable
forecasts that affect the expected collectability of the future cash flows of
the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit
quality since initial recognition or that have low credit risk ('Stage 1') and
• financial instruments that have deteriorated significantly in credit
quality since initial recognition and whose credit risk is not low ('Stage
2').
'Stage 3' would cover financial assets that have objective evidence of
impairment at the reporting date.
'12-month expected credit losses' are recognised for the first category while
'lifetime expected credit losses' are recognised for the second category.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other
receivables as well as contract assets and records the loss allowance as
lifetime expected credit losses. These are the expected shortfalls in
contractual cash flows, considering the potential for default at any point
during the life of the financial instrument. In calculating, the Group uses
its historical experience, external indicators and forward-looking information
to calculate the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they
possess shared credit risk characteristics they have been grouped based on the
days past due.
Borrowings
Amounts borrowed from third parties are recorded initially at fair value,
being the amount received under the agreements less issuance costs, and
subsequently measure at amortised cost using an effective interest rate. There
are times when there are conversion options included in the Group's borrowing
agreements. The conversion options are analysed under IAS 32 - Financial
Instruments: presentation to determine the proper classification. If the
option is determined to be equity, the fair value of the conversion option is
included in other reserves, with the fair value of the liability portion being
recorded as a liability with interest accruing under the effective interest
rate. If the conversion option is determined to be a liability, it is treated
as a derivative financial instrument measured at fair value through profit or
loss.
When a conversion option is exercised, the fair value of the shares issued is
recorded in share capital and share premium. The amortised carrying value of
the liability portion is extinguished. If the conversion option is an equity
instrument, this is closed to retained earnings. If the conversion option is a
liability component, it is extinguished. Any difference between the carrying
value of the liability and the conversion option and the fair value of share
issued is taken to the profit and loss as gain or loss on extinguishment.
If debt agreements are modified, any difference between the fair value of the
original debt and the modified debt is included as a gain or loss on
modification. If the modification is significant, this is considered an
extinguishment of the old debt and recognition of new debt.
Warrants
The Company will issue warrants in association with debt and equity issuances
and as compensation to suppliers or vendors in exchange for services. These
are determined to be equity instruments. When warrants are issued with debt or
as compensation to suppliers or vendors, the value of the warrants are
included within the share-based payments reserve that sits within the other
reserve. When warrants are issued together with equity issuances any fair
value associated with these are recognised when the warrants are exercised
within share premium. On exercise of the warrants, the value of the warrants
will be transferred from other reserves to the profit and loss reserve as
applicable.
4.16 Provisions
A provision is recognised if, as a result of a past event, the Group has a
present legal or constructive obligation that can be estimated reliably, and
it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The unwinding of
the discount is recognised as finance cost.
Environmental protection, rehabilitation and closure costs
Provision is made for close down, restoration and environmental rehabilitation
costs (which include the dismantling and demolition of infrastructure, removal
of residual materials and remediation of disturbed areas) in the financial
period when the related environmental disturbance occurs, based on the
estimated future costs using information available at the reporting date. The
provision is discounted using a discount rate equal to yield to maturity of
relevant state bonds and the unwinding of the discount is included in interest
expense.
The provision is reviewed on an annual basis for changes to obligations,
legislation or discount rates that impact estimated costs or lives of
operations. .
4.17 Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of
the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of
12 months or less) and leases of low value assets (such as tablets and
personal computers, small items of office furniture and telephones). For these
leases, the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic benefits from the
leased assets are consumed.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
.
Lease payments included in the measurement of the lease liability comprise:
Fixed lease payments (including in-substance fixed payments), less any lease
incentives receivable;
Variable lease payments that depend on an index or rate, initially measured
using the index or rate at the commencement date;
The amount expected to be payable by the lessee under residual value
guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to
exercise the options; and
Payments of penalties for terminating the lease, if the lease term reflects
the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated
statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right-of-use asset) whenever:
The lease term has changed or there is a significant event or change in
circumstances resulting in a change in the assessment of exercise of a
purchase option, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in
expected payment under a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised lease payments using an
unchanged discount rate (unless the lease payments change is due to a change
in a floating interest rate, in which case a revised discount rate is used).
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day, less
any lease incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment
losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a
leased asset, restore the site on which it is located or restore the
underlying asset to the condition required by the terms and conditions of the
lease, a provision is recognised and measured under IAS 37. To the extent that
the costs relate to a right-of-use asset, the costs are included in the
related right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right-of-use asset reflects that the Group
expects to exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The right-of-use assets are presented within property plant and equipment in
the consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired
and accounts for any identified impairment loss as described in the
'Impairment testing intangible assets and property, plant and equipment'
policy.
4.18 Segmental 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 Executive
Directors of the Group that make the operating decisions.
5 Critical accounting judgements and key sources of estimation uncertainty
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.
5.1 Key sources of estimation uncertainty
The following are the key assumptions / uncertainties at the statement of
financial position date, which have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year.
5.1.1 Provision for environmental rehabilitation
Provision is made for close down, restoration and environmental rehabilitation
costs based on the estimated future costs using information available at the
reporting date. Costs are estimated based on the observable local prices, fees
and already agreed contract for specific jobs. The provision is discounted
using a risk-free discount rate of from 8.39% to 8.66% attributed to the
Russian Federal bonds with corresponding maturity.
5.1.2 Impairment review of the mining assets
The impairment assessment of the West Kytlim mining asset was performed by
calculating the higher of fair value less cost of disposal and value in use
and compared against the carrying value of the mining assets. Projected cash
flows from 2021 to 2030 were used to assess the fair value less costs of
disposal. The chosen period is consistent with the quantity of the approved
reserves and resources and available for mining operations. No impairment has
been recognised.
Assumptions used throughout 2021-2030:
Pt grade 0.332g/tonne
Process recovery 75%
Platinum/Gold price $1,000/oz / $1,800/oz
Post-tax discount rate 8.01%
Management has performed a sensitivity analysis on the key variable, such as
platinum and production levels and the model is robust up to 17.26% on
platinum and gold prices and lower than anticipated production levels. Every
0.1% change above the said 17.26% would cause recognition of impairment loss
in the amount of £40,943.
PGM deliveries commenced in May 2022 at a current platinum price is around 5%
lower than that modelled. Stripping of overburden to access platinum bearing
gravels was carried out over the 2021/22 and will ensure better control on
production levels during the current season.
5.1.3 Impairment review of the intangible asset
Intangible asset represents Monchetundra (the "MT") development and
Nittis-Kumuzhya-Travyanaya (the "NKT") exploration and evaluation assets. NKT
is a northeast extension of the MT mineralisation. The MT has been assessed as
economically viable asset for the purpose of obtaining of the mining licence,
parameters of the assessment are being regularly evaluated for the signs which
can trigger impairment of the asset. The NKT exploration and evaluation asset
falls under the IFRS 6 treatment. There were no indicators of impairment
identified during the course of the year ended 31 December 2021.
5.1.4. Impairment of investments in subsidiary and receivables from subsidiaries
The Company's financial statements, and in particular its investments in and
receivables from subsidiaries, are affected by certain of the critical
accounting judgements and key sources of estimation uncertainty.
The critical estimates and judgments referred to application of the expected
credit loss model to intercompany receivables (note 31). Management determined
that the interest free on demand loans were required to be assessed on the
lifetime expected credit loss approach and assessed scenarios considering
risks of loss events and the amounts which could be realised on the loans. In
doing so, consideration was given to factors such as the cash held by
subsidiaries and the underlying forecasts of the Group's divisions and their
incorporation of prospective risks and uncertainties.
In relation to impairment of investments in subsidiary please refer to Note
4.11.
6 Segmental information
During the year under review management identified the Group consisting of
separate segments operating mainly in mining and exploration for and
development of platinum group metals, gold and other minerals in Russia. These
segments are monitored, and strategic decisions are made based upon it and
other non-financial data collated from the on-going mining and exploration
activities.
The Company is developing two key assets, West Kytlim and Monchetundra, their
geography outlined in the following table.
West Kytlim Monchetundra Corporate and other segments Total
Geographical location Urals Mountains, Russia Kola Peninsula, Russia -
Activity Operating mine and revenue generating unit Licenced mining project Management and investment
2021 £ £ £ £
Non-current assets 5,362,684 1,376,006 719,969 7,458,659
Total assets 6,730,257 1,546,716 22,917,064 31,194,037
Total liability 826,471 15,653 306,692 1,148,816
Revenue 2,331,225 - - 2,331,225
Loss for the year (621,695) (145,502) (2,371,324) (3,138,521)
2020 £ £ £ £
Non-current assets 3,999,098 669,080 353,191 5,021,369
Total assets 4,231,046 804,065 5,694,442 10,729,553
Total liability 726,276 3,590 168,376 898,242
Revenue 937,962 - - 937,962
Loss for the year (1,754,307) (289,707) (1,649,294) (3,693,308)
7 Employees
Average number of staff (excluding Non-Executive Directors) employed
throughout the year was as follows:
2021 2020
By the Company 4 3
By the Group 74 54
8 Revenue
Disaggregation of by primary markets is as follows:
Year to 31 December 2021 Year to 31 December 2020
Group Company Group Company
£ £ £ £
Revenue from sale of platinum and other precious metals 2,331,225 - 937,962 -
Revenue from other management services - 120,000 - 120,000
2,331,225 120,000 937,962 120,000
Disaggregation of revenue from contracts with customers:
Year to 31 December 2021 Year to 31 December 2020
Group Company Group Company
Russia Cyprus Russia Cyprus
£ £ £ £
Revenue from external customers
- Sale of platinum and other precious metals 2,331,225 - 937,962 -
Revenue from related parties
- Management services - 120,000 - 120,000
2,331,225 120,000 937,962 120,000
Timing of revenue recognition
At a point of time 2,331,225 - 937,962 -
Over time - 120,000 - 120,000
2,331,225 120,000 937,962 120,000
All revenue recognised in 2021 and 2020 relate to the sale of PGM from West
Kytlim. West Kytlim revenue generated from sale of platinum and other precious
metals to a single customer "Ekaterinburg Non-ferrous Metals Refinery", being
the only regional refinery, processing platinum group metals and being duly
licenced by the Russian governmental to deal with precious metals.
9 Profit/(loss) for the year
Profit/(loss) for the year has been arrived at after charging:
Year to 31 December 2021 Year to 31 December 2020
Group Company Group Company
£ £ £ £
Cost of sales (2,584,680) - (1,131,954) -
Administrative expenses (2,717,765) (2,296,563) (1,889,793) (1,547,475)
Cost of sales includes:
Staff benefits expenses 433,872 - 291,036 -
Depreciation* 421,987 - 204,748 -
Administration expenses include:
Staff benefits expenses 1,517,088 1,275,474 812,076 598,012
Depreciation* 765 702 452 416
Audit fees payable 110,000 110,000 110,000 110,000
Mineral extraction tax 149,918 - 57,578 -
Staff benefits expense:**
Wages, salaries and Directors' fees (note 28) 1,958,156 1,253,471 1,067,790 581,941
Social security costs 196,319 20,684 138,420 16,071
Other short-term benefits 1,319 1,319 1,314 1,314
2,155,794 1,275,474 1,207,524 599,326
* Total depreciation for the year ended 31 December 2021 was £422,588 (2020:
£205,200)
** Inclusive of capitalised employee costs during the financial year amounted
to £204,412 (2020: 104,412).
10 Finance cost
Year to 31 December 2021 Year to 31 December 2020
Group Company Group Company
£ £ £ £
Interest on obligations under finance leases 101,048 - 92,379 -
Interest on unsecured borrowings - - 4,586 -
Unwinding of discounts on provisions 2,397 - 3,921 -
103,445 - 100,886 -
11 Other losses
Year to 31 December 2021 Year to 31 December 2020
Group Company Group Company
£ £ £ £
Losses
Net foreign exchange loss (65,250) (26,576) (1,509,123) -
(65,250) (26,576) (1,509,123) -
The majority of the foreign exchange gains and losses are a result of the
revaluation of monetary assets and liabilities in the subsidiary accounts as a
result of movements in the Rouble exchange rates.
12 Income taxes
(a) tax charged in the statement of profit and loss
Year to Year to
31 December 2021 31 December 2020
Group Group
£ £
Current tax - -
There was no tax payable by the Company for the year ended 31 December 2021
(2020: nil) due to the Company having taxable losses.
(b) Reconciliation of the total tax charge
Year to Year to
31 December 2021 31 December 2020
Group Group
£ £
Loss before tax (3,182,199) (3,693,308)
Current tax at 19% (2020: 19%) (604,618) (701,729)
Adjusted for the effect of:
Expenses not deductible for tax purposes - -
Profits not subject to tax - -
Tax losses utilised - -
Unrecognised tax losses carried forward 604,618 701,729
Actual tax expense - -
The Group operates in the following jurisdictions with the following
applicable tax rates:
Jurisdiction Year to Year to
31 December 2021 31 December 2020
United Kingdom 19% 19%
Russia 20% 20%
Cyprus 12.5% 12.5%
No tax is payable for the year ended 31 December 2021 (2020: nil) due to the
Group and the Company having taxable losses.
13 Property, plant and equipment
(a) Group property, plant and equipment
Mining asset Stripping asset Property Plant and machinery Right of use assets Office fixture and fittings Total
£ £ £ £ £ £
Cost
Balance at 1 January 2020 4,385,753 - 24,621 179,972 - 12,246 4,602,592
Additions 118,654 148,618 338,237 682,691 - 1,288,200
Disposals - - - (178) (178)
Exchange differences (799,896) - (1,584) (35,062) - (1,926) (838,468)
Balance at 31 December 2020 3,704,511 148,618 23,037 483,147 682,691 10,142 5,052,146
Additions 64,371 609,968 622,745 - 1,729 1,298,813
Disposals - - - (2,834) - (868) (3,702)
Written off to cost of sales (149,882) - - - - (149,882)
Exchange differences 35,380 1,264 56 4,106 5,802 66 46,674
Balance at 31 December 2021 3,804,262 609,968 23,093 1,107,164 688,493 11,069 6,244,049
Depreciation
Balance at 1 January 2020 (582,896) - (1,194) (78,481) - (10,984) (673,555)
Disposals - - - 178 178
Depreciation expense (84,087) - (87) (29,421) (92,277) 672 (205,200)
Exchange differences 105,005 - 233 15,290 - 1,811 122,339
Balance at 31 December 2020 (561,978) - (1,048) (92,612) (92,277) (8,323) (756,238)
Disposals - - - 2,834 - 868 3,702
Depreciation expense (127,280) - (87) (156,536) (137,699) (1,150) (422,752)
Exchange differences (5,372) - (10) (787) (784) (65) (7,018)
Balance at 31 December 2021 (694,630) - (1,145) (247,101) (230,760) (8,670) (1,182,306)
Carrying amount:
at 31 December 2021 3,109,632 609,968 21,948 860,063 457,733 2,399 5,061,743
at 31 December 2020 3,142,533 148,618 21,989 390,535 590,414 1,819 4,295,908
The Group's right of use assets represents plant and machinery type assets
acquired under lease terms (note 25).
The stripping asset is also a component of the mining assets; however, this is
being shown separate from the mining assets for presentational purposes.
There was no depreciation of the stripping asset in the current period.
(b) Assets in the course of construction
2021 2020
£ £
Cost
Balance at 1 January 28,957 35,964
Additions 611,220 -
Exchange differences 246 (7,007)
Balance at 31 December 640,423 28,957
Assets in the course of construction represent the Group's investment in the
powerline to deliver electricity to the West Kytlim mining site. At 31
December 2021 the power line had not been commissioned yet. The Group has
resumed building powerline and site electrical infrastructure to power drag
lines, which are being acquired in accordance with plans of expanding its
mining operations.
(c) Company's office fixture and fittings
2021 2020
£ £
Cost
Balance at 1 January 2,298 2,354
Additions - 1,260
Disposal - (1,316)
Balance at 31 December 2,298 2,298
Depreciation
Balance at 1 January (791) (1,691)
Depreciation expense (703) (416)
Disposals - 1,316
Balance at 31 December (1,494) (791)
804 1,507
Carrying amount
The Company's property, plant and equipment are free from any mortgage or
charge.
14 Intangible assets
In 2021 intangible assets represented only capitalised costs associated with
the Group's exploration, evaluation and development of mineral resources.
2021 2020
£ £
Cost
Balance at 1 January 696,504 854,995
Additions 682,420 9,599
Exchange differences 10,105 (168,090)
Balance at 31 December 1,389,029 696,504
At 31 December 2021 and 31 December 2020, the intangible asset consisted of
Monchetundra (the "MT") development and Nittis-Kumuzhya-Travyanaya (the "NKT")
exploration and evaluation assets. NKT is a northeast extension of the MT
mineralisation.
The Company did not directly own any intangible assets at 31 December 2021
(2020: nil)
15 Investment to potential share in joint venture
In 2021 the Group entered into an agreement with Rosgeo a Russian registered
and state funded exploration Company, to set up a joint venture. The Rosgeo
agreement allows the Group to gain a 75% equity stake in several new assets
with the remaining 25% equity stakes to be held by Rosgeo. Eurasia will be the
operator of the joint venture and will develop the additional assets at its
discretion.
By 31 December 2021 the Company invested RUB37,180,000 (£367,464 at a
prevailing exchange rate at the reporting date) out of total RUB169,000,000.
16 Subsidiaries
Details of the Company's subsidiaries at 31 December 2021 are as follows:
Name of subsidiary Place of incorporation Proportion of ordinary shares held Principal activity
Urals Alluvial Platinum Limited Cyprus 100% Holding Company
ZAO Eurasia Mining Service Russia 100% Holding Company
ZAO Kosvinsky Kamen Russia 68% Mineral Evaluation
ZAO Terskaya Mining Company Russia 80% Mineral Evaluation
ZAO Yuksporskaya Mining Company Russia 100% Mineral Evaluation
Eurasia Mining (UK) Limited UK 100% Dormant company
The Company's investments in subsidiaries presented on the basis of direct
equity interest and represent the following:
2021 2020
£ £
Investment in subsidiaries (i) 1,132,246 1,132,246
1,132,246 1,132,246
Investment in subsidiaries represents the Company investments made into its
100% subsidiary Urals Alluvial Platinum Limited (the "UAP"), which in turn
controls other subsidiaries within the Group.
Subsidiaries with material non-controlling interests ("NCI")
Summary of non-controlling interest
2021 2020
£ £
As at 1 January (1,758,862) (1,327,560)
NCI arising on reduction of interest in subsidiary
Loss attributable to NCI (228,042) (612,972)
Exchange differences 36,856 181,670
As at 31 December (1,950,049) (1,758,862)
Non-controlling interest on subsidiary basis
2021 2020
£ £
ZAO Kosvinsky Kamen (1,218,383) (1,055,149)
ZAO Terskaya Mining Company (731,666) (703,713)
(1,950,049) (1,758,862)
ZAO Kosvinsky Kamen
2021 2020
£ £
Non-current assets 5,362,684 3,850,480
Current assets 1,367,573 380,566
Total assets 6,730,257 4,231,046
Non-current liabilities 7,874,026 6,137,681
Current liabilities 570,275 442,739
Total liabilities 8,444,301 6,580,420
Net assets (1,714,044) (2,349,374)
Equity attributable to owners of the parent (495,661) (1,294,225)
Non-controlling interests (1,218,383) (1,055,149)
Loss for the year attributable to owners of the parent (449,647) (1,199,276)
Loss for the year attributable to NCI (198,942) (555,031)
Loss for the year (648,589) (1,754,307)
Total comprehensive income for the year attributable to owners of the parent (367,601) (904,135)
Total comprehensive income for the year attributable to NCI (163,234) (331,654)
Total comprehensive loss for the year (530,835) (1,235,789)
ZAO Terskaya Mining Company
2021 2020
£ £
Non-current assets 1,376,006 669,080
Current assets 170,710 134,985
Total assets 1,546,716 804,065
Non-current liabilities 2,097,248 1,213,855
Current liabilities 66,434 57,430
Total liabilities 2,163,682 1,271,285
Net assets (616,966) (467,220)
Equity attributable to owners of the parent 114,700 236,493
Non-controlling interests (731,666) (703,713)
Loss for the year attributable to owners of the parent (116,402) (231,766)
Loss for the year attributable to NCI (29,100) (57,941)
Loss for the year (145,502) (289,707)
Total comprehensive income for the year attributable to owners of the parent (121,793) (114,493)
Total comprehensive income for the year attributable to NCI (27,953) (99,648)
Total comprehensive loss for the year (149,746) (214,141)
17 Other financial assets
2021 2020
Group Company Group Company
£ £ £ £
Current
Advances to related parties - 12,681,450 - 8,226,176
- 12,681,450 - 8,226,176
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of assets mentioned above.
The Group has assessed the estimated credit losses of these loans and given
the effective interest rate of the loans is 0%, there would be an immaterial
loss expected on these loans.
Amounts due from related parties are non-interest bearing and are repayable on
demand.
18 Inventories
2021 2020
Group Company Group Company
£ £ £ £
Stores 38,673 - 13,695 -
38,673 - 13,695 -
Inventories held by the Group represent stores, stated at the lower of cost
and net realisable value.
19 Trade and other receivables
2021 2020
Group Company Group Company
£ £ £ £
Trade receivables 480,588 - - -
Advances made* 520,385 -
Prepayments 140,335 134,661 75,041 22,365
VAT recoverable 361,906 25,796 142,477 -
Other receivables 178,652 120,000 66,256 59,942
Due from related parties - 28,028 - 23,735
1,681,864 308,485 285,081 106,042
* The Group had made several advances to and down payments to secure new earth
moving machinery to be acquired for the West Kytlim mine and to progress with
installation of power line to the mine.
The fair value of trade and other receivables is not materially different to
the carrying values presented. None of the receivables are provided as
security or past due.
20 Cash and cash equivalents
2021 2020
Group Company Group Company
£ £ £ £
Cash at bank 22,009,507 21,892,793 5,404,101 5,247,106
22,009,507 21,892,793 5,404,101 5,247,106
All amounts are short -term. The carrying value of cash and cash equivalents
is considered a reasonable approximation of fair value.
21 Issued capital
2021 2020
Issued and fully paid ordinary shares
with a nominal value of 0.1p
Number 2,853,559,995 2,758,701,681
Nominal value (£) 2,853,560 2,758,702
Issued and fully paid deferred shares
with a nominal value of 4.9p
Number 143,377,203 143,377,203
Nominal value (£) 7,025,483 7,025,483
Share premium
Value (£) 51,308,068 28,028,671
Total issued capital (£) 61,187,111 37,812,856
Fully paid ordinary shares carry one vote per share and carry the right to
dividends.
Deferred shares have attached to them the following rights and restrictions:
- they do not entitle the holders to receive any dividends and distributions;
- they do not entitle the holders to receive notice or to attend or vote at
General Meetings of the Company;
- on return of capital on a winding up the holders of the deferred shares are
only entitled to receive the amount paid up on such shares after the holders
of the ordinary shares have received the sum of 0.1p for each ordinary share
held by them and do not have any other right to participate in the assets of
the Company.
Issue of ordinary share capital in 2021:
Price Number Nominal value
in pence per share £
As at 1 January 2021 2,758,701,681 2,758,702
20-May-2021 - Share placing for cash 26.5 53,306,751 53,307
20-September-2021 - Share placing for cash 26.0 41,551,563 41,551
94,858,314 94,858
As at 31 December 2021 2,853,559,995 2,853,560
Issue of ordinary share capital in 2020:
Price Number Nominal value
in pence per share £
As at 1 January 2020 2,693,756,753 2,693,757
12 February 2020 - Exercise of warrants 26.5 20,000,000 20,000
12 February 2020 - Exercise warrants 1.24 2,017,871 2,018
12 February 2020 - Exercise options 0.90 8,000,000 8,000
12 February 2020 - Exercise options 0.42 1,000,000 1,000
18 August 2020 - Share placing for cash 22.5 33,927,057 33,927
64,944,928 64,945
As at 31 December 2020 2,758,701,681 2,758,702
22 Share based payments
Share options and warrants outstanding at the end of the year have the
following expiry date and exercise prices:
Expiry date Exercise price in pence per share Number of options as at Number of options as at
31 December 2021 31 December 2020
Share options
02 November 2022 0.42 55,000,000 55,000,000
02 November 2022 0.60 40,000,000 40,000,000
02 November 2022 0.90 35,000,000 35,000,000
Weighted average exercise price 0.60 130,000,000 130,000,000
Warrants
20 May 2021 26.5 53,306,751 -
23 September 2021 26.0 41,531,563 -
Weighted average exercise price 26.28 94,838,314 -
Total contingently issuable shares 224,838,314 130,000,000
at 31 December
All the listed options and warrants were exercisable as at 31 December 2021
(2020 - all).
Share options
Movement in number of share options outstanding and their related weighted
average exercise prices are as follows:
(Price expressed in pence per share) 2021 2020
Average exercise price No. of share options Average exercise price No. of share options
Share options
At 1 January 0.60 130,000,000 0.61 139,000,000
Exercised - - 0.42 (1,000,000)
Exercised - - 0.9 (8,000,000)
At 31 December 0.6 130,000,000 0.60 130,000,000
No options were granted by the Group in 2021 (2020 - nil) to the Directors,
Group employees and consultants to the Group. 21,000,000 options have been
authorised in 2018 to be granted at later date. No amounts are paid or payable
by the recipient on receipt of the option. The options carry neither right to
dividends nor voting rights. Options may be exercised at any time from the
vesting date to the date of their expiry. The Group has no legal or
constructive obligation to repurchase or settle the options in cash.
Out of 173,000,000 options granted by the Group in 2018:
- 72,000,000 options issued with exercise price of 0.42p and
vested on the issue date.
- 53,000,000 options issued with exercise price of 0.6p and were
due to vest at the date when VWAP has been 0.6 p or above for 10 consecutive
days, or at the latest 31 December 2018. Options vested on 22 November 2018.
- 48,000,000 options issued with exercise price of 0.9p vesting at
the date when VWAP has been 0.9 p or above for 10 consecutive days, or at the
latest 30 June 2019. Options vested on 30 June 2019.
All options granted in 2018 expire on 02 November 2022.
Warrants
94,838,314 warrants were granted by the Group in 2021 (2020 - nil).
Movement in number of warrants outstanding and their related weighted average
exercise prices are as follows:
(Price expressed in pence per share) 2021 2020
Average exercise price No. of warrants Average exercise price No. of warrants
Warrants
At 1 January - - 1.02 32,017,871
Granted 26.5 53,306,751 - -
Granted 26.0 41,531,563
Exercised - - 1.00 (20,000,000)
Exercised - - 1.24 (2,017,871)
Expired - - 1.00 (10,000,000)
At 31 December 26.28 94,838,314 - -
23 Other reserves
2021 2020
Group Company Group Company
£ £ £ £
Capital redemption reserve 3,539,906 3,539,906 3,539,906 3,539,906
Foreign currency translation reserve:
At 1 January 57,344 - (325,342) -
Recognised in the period (58,679) - 382,686 -
At 31 December (1,335) - 57,344 -
Share-based payments reserve:
At 1 January 384,120 418,181 418,181 418,181
Recognised in the period - (18,483) (18,483) (18,483)
Utilised on exercise of warrants - (15,578) (15,578) (15,578)
At 31 December 384,120 384,120 384,120 384,120
3,922,691 3,924,026 3,981,370 3,924,026
The capital redemption reserve was created as a result of a share capital
restructure in earlier years.
The foreign currency translation reserve represents exchange differences
relating to the translation from the functional currencies of the Group's
foreign subsidiaries into GBP.
The share-based payments reserve represents (i) reserve arisen on the grant of
share options to employees under the employee share option plan and (ii)
reserve arisen on the grant of warrants under terms of professional service
agreements and/or issued under terms of financing arrangements.
24 Borrowings
2021 2020
Group Company Group Company
£ £ £ £
Current borrowings
Unsecured loan 31,953 - 31,684 -
31,953 - 31,684 -
In 2017 the Group entered into unsecured loan facility to borrow up to 57
million Russian Rubbles (RUB) at 14% per annum, from Region Metal, the then
contractor and the West Kytlim mine operator. The Group had drawn RR 4.18
million and repaid RR0.9 million by 31 December 2021. As the contractor's
arrangements had been discontinued the Group has no intention to utilise any
more funds from this facility. The loan was due for repayment in 2021 but the
Group received a court order not to repay the loan due to ongoing court
arbitrage between the lender and its creditors.
The Group is not a party of this arbitrage and/or not linked to any party.
25 Lease liabilities
Leases
The Group leases certain of its plant and equipment. The average lease term is
3.5 years (2020: 4.5 years). The Group has option to purchase the equipment
for a nominal amount at the maturity of the finance lease. The Group's
obligation under finance leases are secured by the lessor's title to the
leased assets.
Interest rates underlying all obligations under finance leases are fixed at
respective contract dates ranging from 21.9% to 23.5% per annum.
Minimum lease payments Present value of minimum lease payments
2021 2021 2020 2020
£ £ £ £
Less than one year 200,633 201,392 122,407 101,007
Between one and five years 377,027 572,791 307,136 425,923
More than five years - - - -
577,660 774,183 429,543 526,929
Less future finance charges (148,117) (247,254) - -
Present value of minimum lease payments 429,543 526,929 429,543 526,929
Reconciliation of movements in lease liabilities
2021 2020
Group Company Group Company
£ £ £ £
At 1 January 526,929 - - -
Lease acquired - - 601,033 -
Interest accrued 101,048 - 92,379 -
Interest paid in cash (101,048) - (92,379) -
Principle paid in cash (101,674) - (81,491) -
Exchange differences 4,288 - 7,387 -
At 31 December 429,543 - 526,929 -
Short-term leases
Short-term leases relate to the office premises with lease terms up to one
year. The Group does not have an option to purchase the leased asset at the
expiry of the lease period.
2021 2020
Group Company Group Company
£ £ £ £
Payments recognised as an expense:
Minimum lease payments 10,494 - 12,708 -
Non-cancellable operating lease commitments:
No longer than one year 8,741 - 9,531 -
8,741 - 9,531 -
The short-term lease commitments represent full commitment by the Company
under office lease arrangements.
26 Trade and other payables
2021 2020
Group Company Group Company
£ £ £ £
Trade payables 210,665 - - -
Accruals 161,035 121,565 101,090 82,630
Social security and other taxes 18,751 4,965 18,559 3,745
Other payables 96,107 149,159 167,842 57,729
Due to related party - - - 198,583
486,558 275,689 287,491 342,687
The fair value of trade and other payables is not materially different to the
carrying values presented. The above listed payables were all unsecured.
27 Provision
2021 2020
£ £
Long term provision:
Environment rehabilitation 143,268 50,186
Short term provision:
Environment rehabilitation 57,494 1,951
200,762 52,137
Movement in provision is as follows
2021 2020
£ £
At 1 January 52,137 78,103
Recognised in the period 138,020 15,545
Utilised in the period - (11,986)
Results of re-measurement or settlement without cost 7,487 (19,301)
Unwinding of discount and effect of changes in the discount rate 2,397 3,921
Exchange differences 721 (14,145)
At 31 December 200,762 52,137
Provision is made for the cost of restoration and environmental rehabilitation
of the land disturbed by the West Kytlim mining operations, based on the
estimated future costs using information available at the reporting date.
The provision is discounted using a risk-free discount rate of from 8.39% to
8.66% (2020: 3.87% to 5.08%) depending on the commitment terms, attributed to
the Russian Federal Bonds.
Provision is estimated based on the sub-areas within general West Kytlim
mining licence the Company has carried down its operations on by the end of
the reporting period. Timing is stipulated by the forestry permits issued at
the pre-mining stage for each of sub-areas. Short term provision relates to
technical and biological recultivation and forest compensation to be completed
by the end of financial year end 2022.
28 Related party transactions
Transactions with subsidiaries
In the normal course of business, the Company provides funding to its
subsidiaries for reinvestment into exploration projects.
2021 2020
£ £
Receivables from subsidiaries 28,028 23,735
Loans provided to subsidiaries 12,681,450 8,226,176
Payables to subsidiaries - (198,583)
Service charges to subsidiary 120,000 120,000
The amounts owed by subsidiaries are unsecured and receivable on demand.
Amount payable to a subsidiary was written off. Subsidiary has been in dormant
state for a long period and does not have bank account or prospects of further
operations.
Transactions with key management personnel
The Group considers that the key management personnel are the Directors of the
Company.
The following amounts were paid and/or accrued to the Directors of the Company
who held office at 31 December 2021:
2021 2020
£ £
Short-term benefits 638,288 254,575
638,288 254,575
The remuneration of the Directors is determined by the remuneration committee
having regard to the performance of individuals and market trends. No pension
contribution has been made for the Directors in 2021 (2020: nil).
An analysis of remuneration for each Director of the Company during 2021:
Name Position Salaries, bonuses and allowances Directors fees Total
£ £ £
C. Schaffalitzky Executive Chairman 187,504 - 187,504
J. Nieuwenhuys Executive Director 350,000 - 350,000
I. Rawlinson Non-Executive Director - 42,500 42,500
T. Abdikeev Non-Executive Director 22,620 29,333 51,953
K. Kosaka Non-Executive Director - 1,331 1,331
G. FitzGerald Non-Executive Director - 5,000 5,000
560,124 78,164 615,668
29 Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity
holders of the Company by the weighted average number of ordinary shares in
issue during the year.
2021 2020
£ £
Loss attributable to equity holders of the Company (2,910,479) (3,080,336)
Weighted average number of ordinary shares in issue 2,803,433,563 2,733,821,972
Basic loss per share (pence) (0.10) (0.11)
Potential number of shares that could be issued following exercise of share
options or warrants:
Number of exercisable instruments: 2021 2020
£ £
Share options 139,000,000 139,000,000
Warrants 94,838,314 -
224,838,314 139,000,000
There is no dilutive effect of share options or warrants (2020: nil) as the
Group was in a loss position.
30 Commitments
At the time of the award of the Monchetundra mining license a royalty payment
was calculated by the Russian Federal Reserves Commission. 20% of this payment
was paid in December of 2018 and the remaining 80%, or RUB6.68 mln
(approximately £165,000) to be paid by November 2023.
During 2020 the Group entered into several lease agreements to lease mining
plant and equipment. As at 31 December 2021 the average lease term was 3.5
years and present value of minimum lease payments £429,543 (2020: £526,929).
In 2021 the Group entered into a framework agreement with Rosgeo, a Russian
registered exploration company, to develop up to nine projects in a joint
venture. The Rosgeo agreement allows the Group to gain a 75% equity stake in
these new assets with the remaining 25% equity stakes to be held by Rosgeo and
acquired subsequently at Eurasia's option. Eurasia will be the operator of
each joint venture asset and will develop the additional assets at its
discretion.
By 31 December 2021 the Company had invested RUB37,180,000 (£367,464 at a
prevailing exchange rate at the reporting date) out of total RUB169,000,000 in
respect of the Nyud license and project. Discussions with Rosgeo regarding the
project's development are ongoing concurrent with CPR compilation including
JORC compliant mineral resource estimation and NPV computation by Wardell
Armstrong International, Engineering and Mining consultancy firm. The Nyud
project is being used by the Company as the template for the remaining assets,
which will only be evaluated after the successful conclusion of the Nyud
project.
The Group has no other material commitments.
31 Risk management objectives and policies
Financial risk management objectives
The Group's operations are limited at present to investing in entities that
undertake mineral exploration. All investments in exploration are capitalised
on project basis, which are funded by shareholders funds and fixed rate
borrowings. The Group's activities expose it to a variety of financial risks
including currency, fair value and liquidity risk. The Group seeks to minimise
the effect of these risks on a daily basis, though due to its limited
activities the Group has not applied policy of using any financial instruments
to hedge these risks exposures.
Risk management is carried out by the Company under close board supervision.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to US Dollars
and Russian Roubles. Foreign exchange risk arises from future commercial
transactions, recognised assets and liabilities and net investments in foreign
operations. The Group's policy is not to enter into currency hedging
transactions.
The following significant exchange rates have been applied during the year:
GBP Average rate Reporting date spot rate
2021 2020 2021 2020
USD 1.376 1.284 1.348 1.365
RUB 101.37 92.79 101.18 102.04
Sensitivity analysis
A reasonably possible strengthening (weakening) of the USD and RUB, as
indicated below, against GBP at 31 December would have affected the
measurement of financial instruments denominated in a foreign currency and
affected equity and profit or loss before taxes by the amounts shown below.
The analysis assumes that all other variables, in particular interest rates,
remain constant and ignores any impact of forecast sales and purchases.
Strengthening Weakening
Equity Profit or loss Equity Profit or loss
£ £ £ £
31 December 2021
USD (5% movement) 100,534 69,642 (90,957) (63,013)
RUB (5% movement) 111,281 43,678 (100,700) (39,523)
Strengthening Weakening
Equity Profit or loss Equity Profit or loss
£ £ £ £
31 December 2020
USD (5% movement) 29,075 7,628 (26,308) (6,902)
RUB (5% movement) 135,129 108,443 (122,265) (98,115)
Interest rate risk
As the Group has no significant interest-bearing assets, the group's operating
cash flows are substantially independent of changes in market interest rates.
The Group has interest-bearing loans and lease liabilities disclosed in the
notes 24 and 25 respectively. All loans are at a fixed rate of interest.
Fair values
In the opinion of the Directors, there is no significant difference between
the fair values of the Group's and the Company's assets and liabilities and
their carrying values.
Credit risk
The Group's exposure to credit risk is limited to the carrying amount of
financial assets recognised at the consolidated statement of financial
position date, as summarised below:
2021 2020
Group Company Group Company
£ £ £ £
Non-current loans and advances - - - -
Current loans and advances - 12,681,450 - 8,226,176
Trade and other receivables 1,681,864 275,689 285,081 106,042
Cash and cash equivalents 22,009,507 21,892,793 5,404,101 5,247,106
23,691,371 34,849,932 5,689,182 13,579,324
The Group's risk on cash at bank is mitigated by holding of the majority of
funds at "A" rated bank.
No significant amounts are held at banks rated less than "B". Cash is held
either on current account or on short-term deposit at floating rate. Interest
is determined by the relevant prevailing base rate. The fair value of cash and
cash equivalents at 31 December 2021 are not materially different from its
carrying value.
Recoverability of the loans is dependent on the borrower's ability to
transform them into cash generating units through discovery of economically
recoverable reserves and their development into profitable production.
The Company continuously monitors defaults by the counterparties, identified
either individually or by group, and incorporates this information into its
credit risk control. Management considers that all of the above financial
assets that are not impaired are of good credit quality.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of
Directors, which has built an appropriate liquidity risk management framework
for the management of the Group's short, medium and long term funding and
liquidity management requirements. The Group manages liquidity risk by
maintaining adequate reserves, borrowing facilities, cash and cash equivalent
by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
The following table details the Group's remaining contractual maturity for its
non-derivative financial liabilities.
Current Non-current
within 2 to 5 later
12 months years than 5 years
£ £ £
2021
Borrowings 31,953 - -
Lease liabilities 200,633 377,027 -
Trade and other payables 486,558 - -
719,144 377,027 -
2020
Borrowings 31,684 - -
Lease liabilities 201,392 572,791 -
Trade and other payables 287,491 - -
520,567 572,791 -
The following table details the Company's remaining contractual maturity for
its non-derivative financial liabilities.
Current Non-current
within 2 to 5 later
12 months years than 5 years
£ £ £
2021
Trade and other payables 275,689 - -
275,689 - -
2020
Trade and other payables 342,687 - -
342,687 - -
The tables above have been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Group can be
required to pay. The table includes both interest and principal cash flows.
The contractual maturities reflect the gross cash flows, which may differ to
the carrying values of the liabilities at the statement of financial position
date.
Capital risk
At present the Group's capital management objective is to ensure the Group's
ability to continue as a going concern.
Capital is monitored on the basis of its carrying amount and summarised as
follows:
2021 2020
Group Company Group Company
£ £ £ £
Total borrowings 461,496 - 558,614 -
Less cash and cash equivalents (22,009,507) (21,892,793) (5,404,101) (5,247,106)
Net debt - - - -
Total equity 31,995,270 35,740,089 11,590,173 14,370,390
Total capital 31,995,270 35,740,089 11,590,173 14,370,390
Gearing 0% 0% 0% 0%
Capital structure is managed depending on economic conditions and risk
characteristics of underlying assets. In order to maintain or adjust capital
structure, the Group may issue new shares and debt financial instruments or
sell assets to reduce debt.
32 Events after the statement of financial position date
The Group's assets are located in Russia. In 2022 additional sanctions to
those which had existed since 2014 were imposed on certain activities,
entities and individuals connected with Russia, which continue to evolve and
which are being carefully monitored by the Group in accordance with the
Group's sanctions compliance policy, and with the assistance of its external
legal advisers. The Company has satisfied itself that neither of its current
activities at the West Kytlim Mine or on the Kola Peninsula are prohibited
under UK or EU sanctions rules. Furthermore, the Group does not engage and has
not engaged with any sanctioned persons/ entities or agencies.
To date there has been no significant impact on the Group's activities as a
result of recent updates to the UK and EU sanctions legislation. Sanctions
introduced by the Russian Federal government have also not affected the Group,
although this is being closely monitored. The Group closely monitors all
regulatory requirements and changes to the laws, rules and regulations, taking
steps whenever necessary to ensure compliance with new legislation.
There have been no further adjusting events after the statement of financial
position date and the following non-adjusting events.
Notice of 2022 Annual General Meeting
NOTICE IS HEREBY GIVEN that the AGM of Eurasia Mining Plc, will be held at
Etc.venues, 8 Eastcheap, London, EC3M 1AE, and virtually via an electronic
meeting platform on Thursday 28 July 2022 at 9:00am, to consider the below
resolutions.
Please note that this notice is important and requires your immediate
attention. If you are in any doubt as to the action to be taken, please
consult an independent adviser immediately. If you have sold or transferred
or otherwise intend to sell or transfer all of your holding of ordinary shares
in the Company prior to the record date (as described in Note 1) for the
meeting, you should send this document to the (intended) purchaser or
transferee, or to the stockbroker, bank or other agent through whom the sale
or transfer was or is to be effected for transmission to the (intended)
purchaser or transferee.
At the time of notice, no COVID-19 travel, or public gathering restrictions
are in place, however, as this situation can change at short notice and as
COVID-19 remains a concern for large public gatherings with attendance from
disparate locations, the Company would still encourage shareholders to
exercise their votes by submitting their Form of Proxy electronically or by
post in advance of the meeting, and by making use of the electronic meeting
platform to attend, and vote, electronically. Lodging of a proxy will not
preclude shareholders from attending and voting in person, or attending and
voting virtually via the meeting platform.
The formal business of the Annual General Meeting (AGM) will be to consider
and vote on the resolutions set out in this notice of meeting. Shareholders
wishing to vote, or appoint the Chairman of the meeting as proxy, on any of
the matters of business may do so electronically at www.signalshares.com
(http://WWW.SIGNALSHARES.COM) , or by following instructions in Note 2 below.
A form of proxy is available at the Company's website
(https://www.eurasiamining.co.uk/investors/circulars-notices
(https://www.eurasiamining.co.uk/investors/circulars-notices) ), or can be
requested from the Company's registrar ("Registrar"), and must be completed
and submitted in accordance with the instructions thereon to be received by
the Registrar before 09.00 am on 26 July 2022. Further information on voting
procedures follow the resolutions below. Queries regarding these procedures
may be directed to info@eurasiamining.co.uk or the Company's registrars, Link
Group, https://www.linkgroup.eu/get-in-touch/shareholders-in-uk-companies/
(https://www.linkgroup.eu/get-in-touch/shareholders-in-uk-companies/) ;
telephone number: 0371 664 0300 from the United Kingdom and +44 371 664 0300
from overseas.
Shareholders who wish to attend the annual general meeting virtually will be
able to attend, ask questions and vote in real time via the electronic meeting
platform, Lumi (see note 14 for more details).
The following resolutions will be proposed at the AGM, as ordinary
resolutions.
Ordinary Resolutions
To consider, and if thought fit, pass the following resolutions as ordinary
resolutions:
1. To receive and consider the audited accounts for the
period ended 31 December 2021 together with the Directors' and the auditors'
reports therein.
2. To re-appoint Grant Thornton LLP as auditors of the
Company.
3. To authorise the Directors to determine the remuneration
of the auditors of the Company.
4. To re-appoint Kotaro Kosaka as a Non-Executive Director,
who retires in accordance with Article 47.1.1 of the Company's Articles of
Association, having been appointed by the Board since the last annual general
meeting of the Company.
5. To re-appoint Artem Matyushok as a Non-Executive Director,
who retires in accordance with Article 47.1.1 of the Company's Articles of
Association, having been appointed by the Board since the last annual general
meeting of the Company.
Notice of Meeting Notes:
The following notes explain your general rights as a shareholder and your
right to attend and vote at this Meeting or to appoint someone else to vote on
your behalf.
1. To be entitled to attend or vote
electronically at a general meeting (and for the purpose of the determination
by the Company of the number of votes they may cast), shareholders must be
registered in the Register of Members of the Company at close of trading on 26
July 2022. Changes to the Register of Members after the relevant deadline
shall be disregarded in determining the rights of any person to vote at the
AGM.
2. You can vote, or appoint a proxy, by:
· logging on to the Registrar's website at
www.signalshares.com and following the instructions;
· through your relevant Nominee account platform - Please
note:
§ the Registrar will only accept voting instructions from the legal holder
of a shareholding;
§ Nominee providers may require voting instructions to be submitted by
their clients up to one week in advance of the Registrar/Company's submission
deadline;
· by requesting a hard copy Form of Proxy directly from
Link Group by telephoning 0371 664 0300 (calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Lines are open 9am to
5.30pm Monday to Friday, excluding public holidays in England and Wales). The
form of proxy can also be downloaded and printed from the Eurasia Mining
website - https://www.eurasiamining.co.uk/investors/circulars-notices
(https://www.eurasiamining.co.uk/investors/circulars-notices) .
· In the case of CREST members, by utilising the CREST
electronic voting and proxy appointment service in accordance with the
procedures set out in 7, 8 and 9 below.
In order for a proxy appointment to be valid a form of proxy must be
completed. In each case the form of proxy must be received, electronically or
by post by the Registrar at:
Link Group,
PXS1,
Central Square,
29 Wellington Street,
Leeds,
LS1 4DL.
During normal business hours by 9am on 26 July 2022 or, in the event of any
adjournment of the meeting, 48 hours before the time of the adjourned
meeting).
3. A vote withheld is not a vote in law, which means
that the vote will not be counted in the calculation of votes for or against
the resolution. If no voting indication is given, your proxy will vote or
abstain from voting at his or her discretion. Your proxy will vote (or abstain
from voting) as he or she thinks fit in relation to any other matter which is
put before the Meeting.
4. If you return more than one proxy appointment, either
by paper or electronic communication, the appointment received last by the
Registrar before the latest time for the receipt of proxies will take
precedence. You are advised to read the terms and conditions of use carefully.
Electronic communication facilities are open to all shareholders and those who
use them will not be disadvantaged.
5. The return of a completed form of proxy, electronic
filing or any CREST Proxy Instruction will not prevent a shareholder from
attending the meeting and voting in person, if the meeting is open to general
attendance and he/she wishes to do so.
6. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service may do so for the
Meeting (and any adjournment of the Meeting) by using the procedures described
in the CREST Manual (available from www.euroclear.com/site/public/EUI)
(http://www.euroclear.com/site/public/EUI)) . CREST Personal Members or other
CREST sponsored members, and those CREST members who have appointed a service
provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
7. In order for a proxy appointment or instruction made
by means of CREST to be valid, the appropriate CREST message (a 'CREST Proxy
Instruction') must be properly authenticated in accordance with Euroclear UK
& Ireland Limited's specifications and must contain the information
required for such instructions, as described in the CREST Manual. The message
must be transmitted so as to be received by the issuer's agent (ID RA10)
by 9am on 26 July 2022 (being not less than 48 hours before the time for
the holding of the meeting or any adjourned meeting). For this purpose, the
time of receipt will be taken to mean the time (as determined by the timestamp
applied to the message by the CREST application host) from which the issuer's
agent is able to retrieve the message by enquiry to CREST in the manner
prescribed by CREST. After this time, any change of instructions to proxies
appointed through CREST should be communicated to the appointee through other
means.
8. CREST members and, where applicable, their CREST
sponsors or voting service providers should note that Euroclear UK &
Ireland Limited does not make available special procedures in CREST for any
particular message. Normal system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the CREST member
is a CREST personal member, or sponsored member, or has appointed a voting
service provider(s), to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure that a
message is transmitted by means of the CREST system by any particular time. In
this connection, CREST members and, where applicable, their CREST sponsors or
voting system providers are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
9. Any corporation which is a shareholder can appoint
one or more corporate representatives who may exercise on its behalf all of
its powers as a shareholder provided that no more than one corporate
representative exercises powers in relation to the same shares.
10. As at 27 June 2022 (being the latest practicable
business day prior to the publication of this Notice), the Company's ordinary
issued share capital consists of 2,853,559,995 ordinary shares, carrying one
vote each. Therefore, the total voting rights in the Company as at 27 June
2022 are 2,853,559,995.
11. Under Section 527 of the Companies Act 2006,
shareholders meeting the threshold requirements set out in that section have
the right to require the Company to publish on a website a statement setting
out any matter relating to: (i) the audit of the Company's financial
statements (including the Auditor's Report and the conduct of the audit) that
are to be laid before the Meeting; or (ii) any circumstances connected with an
auditor of the Company ceasing to hold office since the previous meeting at
which annual financial statements and reports were laid in accordance with
Section 437 of the Companies Act 2006 (in each case) that the shareholders
propose to raise at the relevant meeting. The Company may not require the
shareholders requesting any such website publication to pay its expenses in
complying with Sections 527 or 528 of the Companies Act 2006. Where the
Company is required to place a statement on a website under Section 527 of the
Companies Act 2006, it must forward the statement to the Company's auditor not
later than the time when it makes the statement available on the website. The
business which may be dealt with at the Meeting for the relevant financial
year includes any statement that the Company has been required under Section
527 of the Companies Act 2006 to publish on a website.
12. You may not use any electronic address (within the
meaning of Section 333(4) of the Companies Act 2006) provided in either this
Notice or any related documents (including the form of proxy) to communicate
with the Company for any purposes other than those expressly stated.
13. A copy of this Notice and any other information required
by Section 311A of the Companies Act 2006, can be found on the Company's
website at www.eurasiamining.co.uk (http://www.eurasiamining.co.uk) .
14. Virtual Meeting Attendance
The Company is pleased to be able to offer facilities for Shareholders to
attend, ask questions and vote at the AGM electronically in real time should
they wish to do so. The details are set out below.
Instructions on how to join the virtual meeting, vote and ask questions via
the video webcast.
Logging in:
In order to join the AGM electronically, and ask questions via the platform,
Shareholders will need to connect to the following site
https://web.lumiagm.com (https://web.lumiagm.com) . Lumi is available as a
mobile web client, compatible with the latest browser versions of Chrome,
Firefox, Edge and Safari and can be accessed using any web browser, on a PC or
smartphone device.
Once you have accessed https://web.lumiagm.com from your web browser on a
tablet or Computer, you will be asked to enter the Lumi Meeting ID, which is
182-777-772. You will then be prompted to enter your unique 11 digit Investor
Code (IVC) including any leading zeros and 'PIN'. Your PIN is the last 4
digits of your IVC. This will authenticate you as a shareholder.
Your IVC can be found on your share certificate, or Signal Shares users will
find this under 'Manage your account' when logged in to the Signal Shares
portal (www.signalshares.com (http://www.signalshares.com) ). You can also
obtain your IVC by contacting Link, our Registrar, by calling +44 (0) 371 277
1020*
Access to the virtual AGM will be available from 30 minutes before meeting
start time, although the voting functionality will not be enabled until the
Chairman of the meeting declares a poll open. During the AGM, you must ensure
you are connected to the internet at all times in order to vote when the
Chairman commences polling on the Resolutions. Therefore, it is your
responsibility to ensure connectivity for the duration of the AGM via your
wi-fi. A user guide to the Lumi platform is available on our website at:
https://www.eurasiamining.co.uk/investors/circulars-notices.
If you wish to appoint a proxy other than the Chair of the meeting and for
them to attend the virtual meeting on your behalf, please submit your proxy
appointment in the usual way before contacting Link Group on +44 (0) 371 277
1020* in order to obtain their IVC and PIN. It is suggested that you do this
as soon as possible and at least 48 hours (excluding non-business days) before
the meeting.
If your shares are held within a nominee and you wish to attend the electronic
meeting, you will need to contact your nominee as soon as possible. Your
nominee will need to present a corporate letter of representation to Link
Group, our registrar, as soon as possible and at least 72 hours (excluding
non-business days) before the meeting, in order that they can obtain for you
your unique IVC and PIN to enable you to attend the electronic meeting.
*Lines are open from 9.00 a.m. to 5.30 p.m. Monday to Friday, calls are
charged at the standard geographic rate and will vary by provider. Calls
outside the UK will be charged at the applicable international rate.
A copy of this Notice, the proposed amendments to the Company's articles of
association, and other information required by Section 311A of the Companies
Act 2006, can be found on the Company's website at www.eurasiamining.co.uk.
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