REG - Kendrick Resources - Final Results for period to 31 December 2022
28/04/2023 17:45
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RNS Number : 9480X Kendrick Resources PLC 28 April 2023
28 April 2023
Kendrick Resources Plc
("Kendrick" or the "Company")
Final Results for period to 31 December 2022
Kendrick Resources Plc (LSE: KEN), a mineral exploration and development
company with vanadium, nickel and copper projects in Scandinavia is pleased to
report ts full year results for the year ended 31 December 2022.
The Annual Report and Financial Statements for the year ended 31 December 2022
will shortly be available on the Company's website at
https://www.kendrickresources.com (https://www.kendrickresources.com) . A copy
of the Annual Report and Financial Statements will also be uploaded to the
National Storage Mechanism where it will be available for viewing at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Please note that page references in the text below refer to the page numbers
in the Annual Report and Financial Statements.
This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU which is part of domestic UK law pursuant to the Market
Abuse (Amendment) (EU Exit) regulations (SI 2019/310).
Further information on the Norwegian projects can be found on the Company's
website at: https://www.kendrickresources.com/nickel/
(https://www.kendrickresources.com/nickel/)
For additional information please contact:
Kendrick Resources Plc: Tel: +44 203 961 6086
Chairman Colin Bird
Novum Securities Tel: +44 7399 9400
Financial Adviser David Coffman / George Duxberry
Joint Broker Jon Bellis
Shard Capital Partners LLP Tel: +44 207 186 9952
Joint Broker Damon Heath / Isabella Pierre
Financial highlights:
· £1.04m loss before tax (2021: £325K)
· Approximately £1.818m cash at bank at the period end (Dec 2021:
£17k).
· The loss per share of 0.68 pence (2021: loss 2.90 pence) has been
calculated on the basis of the loss of £1,043,466 (2021: loss £325,000) and
on 153,882,205 (2021: 11,190,363) ordinary shares, being the weighted average
number of ordinary shares in issue during the year ended 29 December 2022.
· The net asset value as at period end was £5.57m (29 December 2021
(£236k))
CHAIRMAN'S STATEMENT
Dear Shareholder
Kendrick Resources (the Company) despite strong global headwinds has made
significant progress during the period under review and post reporting period.
Our main task post Admission to the Main Market of the London Stock Exchange
("Admission") was to assemble all of the reports and raw data generated by
others during the history of the projects. This systematic data review often
reduces the need for some expenditure and often one encounters work, which
whilst relevant at the time, under new conditions could assume new relevance.
This was the case in all of our projects and the Company has entered 2023 with
many more opportunities, than immediately after Admission.
A review of our portfolio led to a potential contribution reranking, and it is
evident that our nickel positions have short term opportunities and thus we
carried out a full review of our nickel projects in Norway. The results of
this review were that all of our nickel projects, without exception, present
significant opportunity for extension, leading to resource increase and
short-term mining potential.
The ownership of nickel sulphide licences can be considered a premium asset in
a world of reducing sulphide availability against metallurgically very complex
and financially challenging laterite projects. Our position is enhanced by a
nickel price which is some three times higher than when the last serious
nickel exploration occurred in our project area. We have carried out a
drilling programme and by the time of this Chairman's report is disseminated,
the results will be in the public domain.
Our vanadium activities in Sweden, were subjected to review and soil and grab
sampling programmes were carried out and the prognosis is that the area, which
now includes an additional two licences, may also be highly prospective for
copper and graphite along with the known vanadium resource. The work carried
out has given us high confidence that our proposed Spring drilling programme
has the potential to double the current known resource of 44 million tonnes.
During the period under review, samples were sent to metallurgical
laboratories in the UK, with a view to assessing whether the concentrate
quality can be maintained, whilst increasing the actual recovery of the
product. The results of this work to date, have been very encouraging and a
full report should be available for market dissemination during the second
quarter of 2023.
Vanadium Redox Flow Batteries continue to gain importance in the battery
storage world, no loss of capacity over time, longer lifespan, cost
effective and versatile, they offer a compelling alternative for static
battery storage. Vanadium use in steel manufacturing is also increasing due to
global implementation of new standards.
It is considered that the Airijoki Project in Northern Sweden, located in a
well-established mining district that includes the largest underground iron
ore mine in the World, justifies intense focus if the Company wishes to be
a serious player in the rapidly emerging battery storage arena. The vanadium
projects in central Sweden, whilst continuing to have potential, will not be
so actively pursued for now mainly due to their relatively early stage of
development when compared to the known resources at Airijoki.
Our activities in Finland have been of a more desktop review in nature, with
the objective being the identification of targets and rationalisation of
existing information.
We have assembled a team of professionals who have the country and commodity
experience to fast track our projects and consequently, since listing we have
reduced our dependency on local consultants and to a large degree are
independent in our project management.
We feel as we advance our project base, Kendrick will assume a position where
its full market potential is realised. The projects, commodities and position
in Scandinavia are unique and should gain the necessary recognition as the
demand for new age metals advances as predicted. We have made few attempts to
seek new acquisitions, since our current project base is considered to be of
high quality, with the potential to significantly enhance shareholder value.
In this regard, we have examined a number of opportunities consistent with our
mission and I have little doubt that our presence in the region will give us
advantage over others, as global commodity needs increase.
I would like to thank my fellow directors and team for their diligent work, in
reviewing a massive data base, formulating a mid-term plan and implementing
the initial components of the plant. We look forward to 2023 to be a year of
positive advancement, which will reposition Kendrick in the eyes of the trade
and investment market.
Results for the year
The Company reported a loss before taxation for the year of £1,043,000 (2021:
£325,000) mainly due to administrative costs of £418,000 (2021: 289,000),
including professional, consulting and directors' fees. And Listing related
costs of £607,000 (2021:Nil). Net assets at 29 December 2022 amounted to
£5,567,000 (2021: Net liabilities £236,000) including exploration and
evaluation assets of £3,933,000 (2021: Nil) and cash of £1,818,000 (2021:
17,000).
AGM and Resolutions
The resolutions for the forthcoming Annual General Meeting will be contained
in a separate Notice which will be made available to shareholders and on the
website www.kendrickresources.com (http://www.kendrickresources.com/) . The
Directors will recommend shareholders to vote in favour of all the resolutions
and a form of proxy will be dispatched to all shareholders for this purpose.
Colin Bird
Chairman
28 April 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 29 December 2022
Notes Year to Year to
29 December 29 December
2022 2021
£ £
Administrative expenses (418,294) (289,255)
Listing costs (606,575) -
Realised (loss)/gain on disposal of investments (10,872) 51,931
Loss in fair value of investment (5,314) (86,413)
Operating loss 5 (1,041,055) (323,737)
Finance expense (2,411) (1,249)
Loss before tax (1,043,466) (324,986)
Taxation 8 - -
Loss for the period (1,043,466) (324,986)
Other comprehensive income /(loss):
Foreign currency reserve movement (3,891) -
Total comprehensive loss for the year (1,047,357) (324,986)
Basic and diluted loss per share 9 (0.68) p (2.90) p
GROUP STATEMENT OF FINANCIAL POSITION
As at 29 December 2022
Company No. 02401127
Notes 29 December 29 December
2022 2021
£ £
Assets
Non-current assets
Property, plant and equipment 10 - 2,050
Exploration and evaluation assets 12 3,932,973 -
Investment in Nordic Projects and related transaction costs - 673,755
3,932,973 675,805
Current assets
Current asset investment 11 8,174 102,932
Trade and other receivables 15 92,758 89,488
Cash and cash equivalents 1,817,706 16,871
1,918,638 209,291
Total assets 5,851,611 885,096
Liabilities
Current liabilities
Trade and other payables 16 247,673 441,959
EMX Deferred Share Consideration 12 36,265
Convertible loan notes 19 - 679,500
Total liabilities 283,938 1,121,459
Net assets/(liabilities) 5,567,673 (236,363)
Equity
Share capital 17 22,998,307 22,929,743
Share premium 17 31,810,107 25,027,278
Merger reserve 1,824,000 1,824,000
Accumulated losses (51,064,741) (50,017,384)
Total equity 5,567,673 (236,363)
COMPANY STATEMENT OF FINANCIAL POSITION
As at 29 December 2022
Notes 29 December 29 December
2022 2021
£ £
Assets
Non-current assets
Property, plant and equipment 10 - 2,050
Exploration and evaluation assets 12 704,730 -
Investment in subsidiaries 14 3,285,999 -
Investment in Nordic Projects and transaction costs 673,755
3,990,729 675,805
Current assets
Current asset investment 11 8,174 102,932
Trade and other receivables 15 86,880 89,488
Cash and cash equivalents 1,769,719 16,871
1,864,773 209,291
Total assets 5,855,502 885,096
Liabilities
Current liabilities
Trade and other payables 16 247,673 441,959
EMX Deferred Share Consideration 12 36,265
Convertible loan notes 19 - 679,500
Total liabilities 283,938 1,121,459
Net assets/(liabilities) 5,571,564 (236,363)
Equity
Share capital 17 22,998,307 22,929,743
Share premium 17 31,810,107 25,027,278
Merger reserve 1,824,000 1,824,000
Accumulated losses (51,060,850) (50,017,384)
Total equity 5,571,564 (236,363)
The loss for the year for the Company was £1,043,466.
GROUP STATEMENT OF CASH FLOW
for the year ended 29 December 2022
Year to 29 December Year to 29 December
2022 2021
£ £
Cash flows from operating activities
Loss before tax (1,047,357) (324,986)
Adjustments to reconcile net losses to cash utilised :
Depreciation of property, plant and equipment 10 2,050 8,620
Listing costs paid in previous year 216,537 -
Loss/(Gain) on disposal of investment shares 10,872 (38,444)
Loss in fair value of investment at reporting date 5,314 86,413
Operating cash outflows before movements in working capital
(812,584) (268,397)
Changes in:
Trade and other receivables (3,270) (78,560)
Trade and other payables (194,286) 276,148
Net cash outflow from operating activities (1,010,140) (70,809)
Investing activities
Proceeds of sale of Investment shares 78,573 72,439
Exploration & Evaluation assets 12 (648,142) -
Investment in Nordic Projects and related transaction costs - (673,755)
Net cash outflow from investing activities: (569,569) (601,316)
Cash flows from financing activities
Proceeds from issue of convertible loan notes - 679,500
Proceeds from issue of shares, net of issue costs 3,380,544
Net cash inflow from financing activities 3,380,544 679,500
Net increase in cash and cash equivalents 1,800,835 7,375
Cash and cash equivalents at beginning of period 16,871 9,496
Cash and cash equivalents at end of period 1,817,706 16,871
COMPANY STATEMENT OF CASH FLOW
for the year ended 29 December 2022
Year to 29 December Year to 29 December
2022 2021
£ £
Cash flows from operating activities
Loss before tax (1,043,466) (324,986)
Adjustments to reconcile net losses to cash utilised :
Depreciation of property, plant and equipment 10 2,050 8,620
Listing costs paid in previous year 216,537 -
Loss/(Gain) on disposal of investment shares 10,872 (38,444)
Loss in fair value of investment at reporting date 5,314 86,413
Operating cash outflows before movements in working capital
(808,693) (268,397)
Changes in:
Trade and other receivables 2,609 (78,560)
Trade and other payables (194,286) 276,148
Net cash outflow from operating activities (1,000,370) (70,809)
Investing activities
Proceeds of sale of Investment shares 78,573 72,439
Investment in Subsidiaries 14 (632.669) -
Exploration & Evaluation assets 12 (73,230) -
Investment in Nordic Projects and related transaction costs - (673,755)
Net cash outflow from investing activities: (627,326) (601,316)
Cash flows from financing activities
Proceeds from issue of convertible loan notes - 679,500
Proceeds from issue of shares, net of issue costs 3,380,544 -
Net cash inflow from financing activities 3,380,544 679,500
Net increase in cash and cash equivalents 1,752,848 7,375
Cash and cash equivalents at beginning of period 16,871 9,496
Cash and cash equivalents at end of period 1,769,719 16,871
GROUP STATEMENT OF CHANGES IN EQUITY
Year ended 29 December 2022
Share capital Share premium Merger Accumulated losses Total equity
reserve
£ £ £ £ £
As at 29 December 2020 22,929,743 25,027,278 1,824,000 (49,692,398) 88,623
Total comprehensive loss for the year - - (324,986) (324,986)
-
Other comprehensive income - - - - -
As at 29 December 2021 22,929,743 25,027,278 1,824,000 (50,017,384) (236,363)
Total comprehensive loss for the year - - (1,047,357) (1,047,357)
-
Other comprehensive income - - - - -
Total comprehensive loss for the year (1,047,357) (1,047,357)
Net proceeds from shares issued 30.773 3,349,771 - - 3,380,544
Acquisition of subsidiaries 23,357 2,201,643 - - 2,225,000
Loan notes converted into shares 8,366 671,134 - - 679,500
Acquisition of Norwegian projects from EMX Scandinavia AB 6,068 560,281 - - 566,349
As at 29 December 2022 22,998,307 31,810,107 1,824,000 (51,064,741) 5,567,673
Reserves Description and purpose
Share capital - amount subscribed for share capital at nominal value
Share premium - amounts subscribed for share capital in
excess of nominal value
Merger reserve - amount arising from the issue of shares for non-cash
consideration
Accumulated losses - cumulative net gains and losses recognised in the
consolidated income statement
COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 29 December 2022
Share capital Share premium Merger Accumulated losses Total equity
reserve
£ £ £ £ £
As at 29 December 2020 22,929,743 25,027,278 1,824,000 (49,692,398) 88,623
Total comprehensive loss for the year - - (324,986) (324,986)
-
Other comprehensive income - - - - -
As at 29 December 2021 22,929,743 25,027,278 1,824,000 (50,017,384) (236,363)
Total comprehensive loss for the year - - (1,043,466) (1,043,466)
-
Other comprehensive income - - - - -
Total comprehensive loss for the year (1,043,466) (1,043,466)
Net proceeds from shares issued 30.773 3,349,771 - - 3,380,544
Acquisition of subsidiaries 23,357 2,201,643 - - 2,225,000
Loan notes converted into shares 8,366 671,134 - - 679,500
Acquisition of Norwegian projects from EMX Scandinavia AB 6,068 560,281 - - 566,349
As at 29 December 2022 22,998,307 31,810,107 1,824,000 (51,060,850) 5,571,564
Reserves Description and purpose
Share capital - amount subscribed for share capital at nominal value
Share premium - amounts subscribed for share capital in
excess of nominal value
Merger reserve - amount arising from the issue of shares for non-cash
consideration
Accumulated losses - cumulative net gains and losses recognised in the
consolidated income statement
NOTES TO THE FINANCIAL STATEMENTS
GENERAL INFORMATION
1. Kendrick Resources PLC (the 'Company' or "Kendrick") is
incorporated and domiciled in the United Kingdom. The address of the
registered office is 7/8 Kendrick Mews, London SW7 3HG.
The Company's period being reported on in these accounts is for the year to 29
December 2022. The comparative period is for the year to 29 December 2021.
2. ADOPTION OF NEW AND REVISED STANDARDS
A number of new standards and amendments to standards and interpretations have
been issued but are not yet effective and, in some cases, have not yet been
adopted by the UK.
The directors do not expect that the adoption of these standards will have a
material impact on the financial statements of the Company in future periods.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with UK-adopted
international accounting standards ('IFRS') and those parts of the Companies
Act 2006 applicable to companies reporting under IFRSs.
The principal accounting policies adopted are set out below.
The financial statements are presented in Pounds Sterling ("£").
Going concern
The operational requirements of the Company comprise maintaining a Head Office
in the UK with a Board of one executive Director and three non-executive
Directors, and one consultant for, amongst other things, determining and
implementing strategy and managing operations.
The company currently has no income and meets its working capital requirements
through raising development finance. In common with many businesses engaged in
exploration and evaluation activities prior to production and sale of minerals
the company will require additional funds and/or funding facilities in order
to fully develop its business plan.
Ultimately the viability of the company is dependent on future liquidity in
the exploration period and this, in turn, depends on the company's ability to
raise funds to provide additional working capital to finance its ongoing
activities. Management has successfully raised money in the past, but there is
no guarantee that adequate funds will be available when needed in the future.
As at 29 December 2022, the company had net assets of £5.57m and cash and
cash equivalents of £1.82 million, which will enable the Company to carry out
its planned exploration activities on its newly acquired projects. An
operating loss is expected in the year subsequent to the date of these
accounts and as a result the Company will need to raise funding to provide
additional working capital to finance its ongoing activities.
Based on its current reserves and the Board's assessment that the Company will
be able to raise additional funds, as and when required, to meet its working
capital and capital expenditure requirements, the Board have concluded that
they have a reasonable expectation that the Group can continue in operational
existence for the foreseeable future and at least for a period of 12 months
from the date of approval of these financial statements.
For these reasons the financial statements have been prepared on the going
concern basis, which contemplates continuity of normal business activities and
the realisation of assets and discharge of liabilities in the normal course of
business.
As there can be no guarantee that the required future funding can be raised in
the necessary timeframe, a material uncertainty exists that may cast
significant doubt on the Company's future ability to continue as a going
concern.
This financial report does not include any adjustments relating to the
recoverability and classification of recorded assets amounts or liabilities
that might be necessary should the entity not continue as a going concern.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement 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
Company's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from the initial
recognition of goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised. Deferred tax
is charged or credited in the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation and amortisation is charged so as to write off the cost or
valuation of assets, other than land, over their estimated useful lives, using
the straight-line method, on the following bases:
Office equiptment and
computers
The gain or loss arising on disposal or retirement of an asset is determined
as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in the income statement.
Exploration and evaluation assets
Exploration, evaluation and development expenditure incurred is accumulated in
respect of each identifiable area of interest. These costs are only carried
forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not
yet reached a stage which permits reasonable assessment of the existence of
economically recoverable reserves. Accumulated costs in relation to an
abandoned area are written off in full in the year in which the decision to
abandon the area is made. When production commences, the accumulated costs for
the relevant area of interest are transferred to development assets and
amortised over the life of the area according to the rate of depletion of the
economically recoverable reserves. A regular review is undertaken of each area
of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
Investment in subsidiaries
In the Company's financial statements, investment in subsidiaries are stated
at cost and reviewed for impairment if there are any indications that the
carrying value may not be recoverable.
Financial instruments
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the Company's
balance sheet when the Company becomes a party to the contractual provisions
of the instrument.
De-recognition of financial assets and financial liabilities
The Company derecognises a financial asset only when the contractual rights to
cash flows from the asset expire; or it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
entity. If the Company neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the transferred asset,
the Company recognises its retained interest in the asset and an associated
liability for the amount it has to pay. If the Company retains substantially
all the risks and rewards of ownership of a transferred financial asset, the
Company continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received. The Company derecognises
financial liabilities when the Company's obligations are discharged, cancelled
or expired.
Loans and receivables
Trade and other receivables are measured at initial recognition at fair value,
and are subsequently measured at amortised cost less any provision for
impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash with three months or less remaining to maturity and are subject
to an insignificant risk of changes in value.
Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit losses
associated with its receivables carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk. For trade and other receivables, the Company applies the
simplified approach permitted by IFRS 9, resulting in trade and other
receivables recognised and carried at amortised cost less an allowance for any
uncollectible amounts based on expected credit losses.
Trade and other payables
Trade and other payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective interest rate
method.
Provisions
Provisions are recognised when the Company has a legal or constructive
obligation, as a result of past events, for which it is probable that an
outflow of economic resource will result, and that outflow can be reliably
measured.
Share-based payments
The Company applies IFRS 2 Share-based Payment for all grants of equity
instruments.
The Company issues equity-settled share-based payments to its employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Company's estimate of the shares that will eventually
vest.
Fair value is measured using the Black Scholes model. The expected life used
in the model is adjusted, based on management's best estimate, for the effects
of non-transferability, exercise restrictions and behavioural considerations.
The inputs to the model include: the share price at the date of grant,
exercise price expected volatility, risk free rate of interest.
Share capital
Financial instruments issued by the Company are treated as equity only to the
extent that they do not meet the definition of a financial liability. The
Company's ordinary shares are classified as equity instruments.
The Company considers its capital to be total equity. There have been no
changes in what the Company considers to be capital since the previous period.
The Company is not subject to any externally imposed capital requirements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and all entities, which are controlled by the Company. Control is
achieved when the Company:
· has the power over the investee;
· is exposed, or has rights to variable return from its involvement with the
investee; and
· has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above.
The results of subsidiaries are included in the consolidated financial
statements from the effective date of acquisition to the effective date of
disposal. Adjustments are made when necessary to the financial statements of
subsidiaries to bring their accounting policies in line with those of the
Group.
All intra-Group transactions, balances, income and expenses are eliminated in
full on consolidation.
When the Company has less than a majority of the voting rights of an investee,
it considers that it has power over the investee when the voting rights are
sufficient to give it the practical ability to direct the relevant activities
of the investee unilaterally. The Company considers all relevant facts and
circumstances in assessing whether or not the Company's voting rights in an
investee are sufficient to give it power, including:
· the size of the Company's holding of voting rights relative to the size and
dispersion of holdings of the other vote holders;
· potential voting rights held by the Company, other vote holders or other
parties;
· rights arising from other contractual arrangements; and
· any additional facts and circumstances that indicate that the Company has,
or does not have, the current ability to direct the relevant activities at the
time that decisions need to be made, including voting patterns at previous
shareholders' meetings.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified and recognised separately from the Group's interest therein and are
recognised within equity. Losses of subsidiaries attributable to
non-controlling interests are allocated to the non-controlling interest even
if this results in a debit balance being recognised for non-controlling
interest.
Transactions which result in changes in ownership, where the Group had control
of the subsidiary, both before and after the transaction, are regarded as
equity transactions and are recognised directly in the statement of changes in
equity. The difference between the fair value of consideration paid or
received and the movement in non-controlling interest for such transactions is
recognised in equity attributable to the owners of the parent.
Where a subsidiary is disposed of and a non-controlling shareholding is
retained, the remaining investment is measured to fair value with the
adjustment to fair value recognised in profit or loss as part of the gain or
loss on disposal of the controlling interest.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, management is required
to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and
other factors that are relevant. Actual results may differ from these
estimates. The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period, on in the
period of the revision and future periods if the revision affects both current
and future periods.
Critical accounting estimates and judgments are those that have a significant
risk of causing material adjustment and are often applied to matters or
outcomes that are inherently uncertain and subject to change. As such,
management cautions that future events often vary from forecasts and
expectations and that estimates routinely require adjustment.
Details of the Group's significant accounting judgements and critical
accounting estimates are as follows:
Impairment of Exploration and evaluation assets
The recoverable amounts of individual exploration assets have been determined
based on various factors including Independent Expert Reports, the Company's
exploration activities, and commodity prices. It is reasonably possible that
the assumption may change which may then impact on estimates and may then
require a material adjustment to the carrying value of assets including
intangible assets. The Group tests annually whether exploration assets have
suffered any impairment, in accordance with the accounting policy.
Recoverability of Parent company investment in subsidiary undertakings
The carrying value of the Parent company's investment is ultimately dependent
on the recoverability of the underlying assets i.e. the exploration and
evaluation assets which are reviewed for indicators of impairment on an annual
basis as noted above. An impairment in the exploration and evaluation assets
may then require an adjustment to the carrying value of the investment in the
subsidiary companies.
Business Combination
In line with IFRS3, the Directors have assessed whether the Group has acquired
assets of a business combination in relation to Northern X Group and the
Norwegian Projects and determined that these are not business combinations.
Contingent consideration
Contingent consideration is a financial liability recorded at fair value. The
amount of contingent consideration to be paid is based on the occurrence of
future events, such as the achievement of expected and estimated project
milestones such as a positive feasibility study or a decision to mine.
Accordingly, the estimate of fair value contains uncertainties as it involves
judgment about the likelihood and timing of achieving these milestones and the
period in which they may be achieved as well as the discount rate used. Where
a contingent consideration milestone in relation to an exploration project is
uncertain and may only occur if at all in several years then the Company will
disclose the contingent liability but not provide for it in the financial
statements. Changes in fair value of the contingent consideration obligation
result from changes to the assumptions used to estimate the probability of
success for each milestone, the anticipated timing of achieving the milestones
and the discount period and rate to be applied. A change in any of these
assumptions could produce a different fair value, which could have a material
impact on the results from operations.
Going Concern
The Director's have considered Going Concern and as per note 3 no adjustment
has been made in these financial statements which are prepared on a going
concern basis.
5. LOSS FOR THE YEAR
The loss for the period has been arrived at after charging / (crediting):
2022 2021
£ £
Depreciation of property, plant and equipment (note 2,050 8,620
10)
Staff costs (note 97,015 60,000
7)
Loss/(Gain) on sale of 10,872 (38,444)
investments
Loss in fair value of investment at reporting date 5,314 86,413
Listing costs 606,575 -
Finance charge 2,411 1,249
6. AUDITORS' REMUNERATION
The remuneration of the auditors can be analysed as follows:
2022 2021
£ £
Fees payable to the company's auditor for the audit of the company's financial 37,000 30,000
statements
Fees payable to the company's auditor for other services:
37,000 30,000
7. STAFF COSTS
2022 2021
Number Number
Directors 4 2
Consultants 1 2
The average monthly number of employees 5 4
Their aggregate remuneration comprised:- £ £
Fees 97,015 60,000
97,015 60,000
Included within staff costs £97,015 (2021: £60,000) relates to amounts in
respect of Directors. The highest paid director's emoluments was £51,000
(2021: £60,000)
8. TAXATION
No liability to corporation tax arose for the year ended 29 December 2022 and
year ended 29 December 2021, as a result of underlying losses brought forward.
Reconciliation of effective tax rate:
2022 2021
£ £
Loss before tax (1,043,466) (324,986)
Tax credit at the standard rate of tax in the UK 198,259 61,747
Tax effect of non-deductible expenses (390) (1,638)
Deferred tax not provided (197,869) (60,109)
Tax for the period - -
The standard rate of corporation tax in the UK applied during the year was 19%
(2021: 19%).
At 29 December 2022, the Company are carrying forward estimated tax losses of
£7.3m (2021: £6.3m) in respect of various activities over the years. No
deferred tax asset was recognized in respect to these accumulated tax losses
as there is insufficient evidence that it is probable that the amount will be
recovered in future years.
9. LOSS PER SHARE
29 December 2022 29 December 2021
(Loss) after tax for the purposes of earnings per share attributable to equity £(1,043,466) £(324,986)
shareholders
Weighted average number of shares 153,882,205 11,190,363
Basic and Diluted (loss) per ordinary share (0.68) p (2.90) p
The use of the weighted average number of shares in issue in the period
recognises the variations in the number of shares throughout the period. IAS
33 requires presentation of diluted EPS when a company could be called upon to
issue shares that would decrease earnings per share or increase the loss per
share. There would be no dilutive impact were the share options to be
exercised.
10. PROPERTY PLANT AND EQUIPMENT
Group and Company Group and Company
Office equipment and computer Total
£ £
COMPANY
Cost
At 29 December 2020 60,587 60,587
Additions - -
At 29 December 2021 60,587 60,587
Additions - -
At 29 December 2022 60,587 60,587
Accumulated depreciation
At 29 December 2020 (49,917) (39,861)
Charge for the period (8,620) (8,620)
At 29 December 2021 (58,537) (58,537)
Charge for the period (2,050) (2,050)
At 29 December 2022 (60,587) (60,587)
Carrying amount
At 29 December 2022 - -
At 29 December 2021 2,050 2,050
11. CURRENT ASSET INVESTMENT
Group & Company Group & Company
29 Dec 2022 29 Dec 2021
£ £
Balance as at 29 December 2021 102,932 223,340
Additions - 13,488
Disposals (89,445) (33,996)
Fair value through profit and loss (5,313) (99,900)
Balance as at 29 December 2022 8,174 102,932
The investment represents the holding of 8,174,387
shares in Bezant Resources Plc, which were held at 29 December 2022. At the
start of the year the Company held 9,221,072 shares in Galileo Resources Plc,
but these were disposed during the year.
12. EXPLORATION AND EVALUATION ASSETS
Exploration and Evaluation Assets - Group
Swedish Project Finnish Projects Norwegian projects Total
£
£ £ £
Opening Balance - - - -
Transfer from Investment in Nordic Projects & Related Transactions Costs * 254,871 82,386 119,961 457,218
Additions in year 184,438 4,355 160,745 349,538
Northern X Group Acquisition (Note 13):
Share issues 1,357,473 703,990 163,537 2,225,000
Cash consideration 136,739 70,913 16,474 224,126
Acquisition of Norwegian Projects (Note 17):
Share issues 566,349 566,349
Cash consideration 74,477 74,477
EMX Deferred Share Consideration 36,265 36,265
(note 14)
Balance 29 December 2022 1,933,521 861,644 1,137,808 3,932,973
* There were no Exploration and Evaluation assets as at 29 December 2021
which is why there is no comparative table for 2021. In 2021 the capitalised
Nordic Projects & Related Transactions costs were GBP673,755. On the
acquisition of the Northern X Group GBP457,218 of these costs were transferred
to Group Exploration and Evaluation assets and GBP216,537 were included in the
GBP606,575 of listing & transactions costs charged in the Income Statement
Exploration and Evaluation Assets - Company
Norwegian assets Total
£ £
Opening Balance - -
Transfer from Investment in Nordic Projects 28,886 28,886
Movement in Year 73,230 73,230
EMX Deferred Share Consideration 36,265 36,265
Acquisition of Norway projects 566,349 566,349
Balance 29 December 2022 704,730 704,730
The investment in the Nordic Projects represented the amounts paid in taking
up and extending the option to acquire various Scandinavian assets described
below together with costs incurred in running the projects prior to the
proposed acquisition including the costs associated with the proposed listing.
The Nordic Projects comprise vanadium projects in Sweden and Finland which
were acquired from Pursuit and consist of competently and comprehensively well
drilled tonnages of vanadium ore, estimated at approximately 160 million
tonnes.
Summary of Projects: The projects are a portfolio of early to advanced stage
exploration projects covering a combined area of 466.72 km2 in Scandinavia.
The most advanced of these Projects are the Airijoki and Koitelainen vanadium
projects in Sweden and Finland respectively.
However, the projects acquired include several exploration projects in the
Nordic region,
namely:
* Finland - the Karhujupukka vanadium-magnetite exploration project
* Sweden - the Kramsta, Kullberget, Simesvallen and Sumåssjön exploration
projects in Sweden (collectively known as the Central Sweden Project)
The Karhujupukka project also support defined mineral resources prepared in
accordance with the JORC Code (2012.) However, these remain subject to further
techno-economic assessment. The remaining projects represent brownfield to
greenfields exploration opportunities based on the results of historical
activities, some with historical mineral estimates that remain to be updated
to the requirements of the JORC Code (2012).
On 13 May 2022 the Company exercised its option to conditionally acquire the
Espedalen, Hosanger, and Sigdal nickel-copper-cobalt exploration projects in
Norway (the "Norwegian Projects") (the "Norwegian Projects Acquisition") from
EMX Scandinavia AB (previously named Eurasian Minerals Sweden AB) ("EMX") by
the issue of 20,226,757 new ordinary shares in the Company to EMX or its
nominee, 50% of these shares shall be subject to a three-month voluntary
escrow and the balance of 50% subject to a six-month voluntary escrow.
Kendrick has also made a payment of US$81,949 to EMX. This payment was to meet
a shortfall of this amount in the exploration expenditure to be incurred
during the option period.
Deferred Share consideration due to EMX: On or before 27 April 2023, the
Company has to issue to EMX or its nominee the number of shares which is the
lower of i) 9.9% of the Company's then issued share capital and ii) the number
of shares whose value based on the then 5-day VWAP equals 20,000,000 of the
shares issued at closing of the acquisition (the "Established Value") divided
by the 5 day VWAP at the date of issue of these shares. On 24 April 2023 the
Company issued 4,144,395 new Ordinary shares at 0.875 pence each to settle
this deferred consideration for £36,265, (the "EMX Deferred Share
Consideration") . As the liability to pay the EMX Deferred Share Consideration
arose during the period a provision of £36,265 was made for this liability
with the amount being recognised an exploration and evaluation asset.
The Acquisition was conditional upon the Norwegian Directorate for Mineral
Administration approving the transfer of the licences to a wholly owned
subsidiary of Kendrick and this process was completed and confirmed on 12
August 2022 and the Company applied for the 20,226,757 new ordinary shares to
be admitted to trading on the Standard Segment of the London Stock Exchange on
17 August 2022 (see note15).
The Norwegian Projects comprise:
o The Espedalen Project consisting of 16 contiguous exploration permits
covering a combined area of 139.89 km(2) currently contains two nickel
deposits
o The Sigdal Project consisting of three exploration licences totalling 30
km(2) containing a geophysical conductor associated with historical mine
workings, which has only been tested with two short drill holes, returning
gold grades over 10g/t with encouraging nickel and copper mineralisation
The Hosanger Project consisting of a coherent tenure package of four
exploration licences covering 40 km(2) and contains the historical Litland
nickel mine
Further commitments under Norwegian Projects Acquisition
· beginning on 13 May 2025 and ceasing on the date upon which the
Company commissions a Pre-Feasibility Study on any one of the Projects: the
Company has committed to one thousand meter drilling for each Project
("Drilling Commitment"); and
· upon attainment of each development milestone ((milestone 1) being
the completion of an economic assessment of mineral potential and (milestone
2) the completion of a feasibility study), the Company shall pay EMX the sum
of USD$500,000. If milestone 1 is not met but milestone 2 is met then an
aggregate of USD$1,000,000, will become due ("Milestone Payments")
Royalty Agreement: At the closing of the Norwegian Projects Acquisition the
Company entered into a royalty agreement under which a 3% net smelter royalty
is payable to EMX on commercial production from any of the three Norwegian
Projects ("Production Royalty"). A 1% interest in this royalty may be bought
back in stages for a total cash consideration of US$1,000,000 on or before the
fifth anniversary of the closing of the Acquisition.
No provision has been made in these accounts for the further commitments under
the Norwegian Projects Acquisition above in relation to;
a) the Drilling Commitment as the Company's Projects are in the
exploration phase and therefore it is in the normal course to on an ongoing
basis to review projects and continue work on projects that remain prospective
and it can take several years to get to the stage of commissioning a
Pre-Feasibility study therefore there is no certainty as to the period over
which the Drilling Commitment would have to be met and whether or not it would
be met by the Company's ongoing exploration activities on the Norwegian
Projects;
b) Milestone Payments as the Norwegian Projects are in the exploration
phase and therefore it is not certain that an economic assessment of mineral
potential or a feasibility study will be completed in the next few years, or
if at all; or
c) Production Royalty as the Norwegian Projects are in the exploration
phase and therefore it is not certain that they will become mines producing
ore on which a royalty is due in the next several years, or if at all
13. ACQUISITIONS
Acquisition of Northern X Group
On 6 May 2022 the Company completed the acquisition of;
(a) 100% of Northern X Finland Oy ("Northern X Finland"), which
owns in Finland the Koitelainen vanadium projects which hosts a defined
Mineral Resource as defined by the JORC Code (2012) and the Karhujupukka
vanadium-magnetite exploration project ("Finnish Projects"); and
(b) 100% of Northern X Scandinavia AB ("Northern X Scandinavia")
which owns in Sweden the Airijoki and vanadium project (the "Airijoki
Project") which hosts a defined Mineral Resource as defined by the JORC Code
(2012) and the Kramsta, Kullberget, Simesvallen and Sumåssjön exploration
projects in Sweden (collectively known as the "Central Sweden Projects") (the
Airijoki Project and the Central Sweden Projects are collectively the "Swedish
Projects")
Collectively the Northern X Group
The acquisition price was as follows:
Consideration £
Equity consideration Ordinary shares issued 2,225,000
Cash consideration 224,126
Total consideration 2,449,126
Fair value of assets acquired
Exploration assets 2,420,245
Receivables 5,879
Cash and cash equivalents 23,002
2,449,126
-
As part of the purchase agreement with Pursuit there will be additional
deferred contingent consideration based on two accretive value milestones
being achieved;
a) Milestone One which triggers a A$250,000 (approx. £136,000) payment in
cash, is the completion by the Company (or any successor or assignee) of a
Feasibility Study, as defined by the JORC Code (2012), on any individual
project area in the Nordic Projects, demonstrating an internal rate of return
of not less than 25%; and
b) Milestone Two which triggers a A$500,000 (approx. £272,000) payment in
cash is a decision to mine being made by the Company (or any successor or
assignee) in respect of any project area in the Nordic Projects.
No provision has been made in these accounts for the additional deferred
contingent consideration referred to above as the Company's Projects are in
the exploration phase and therefore it is not certain that a Feasibility Study
will be completed or a decision to mine be made in the next few years, or if
at all.
Acquisition of Caledonian Minerals AS
On 13 May 2022 to facilitate the smooth transfer of the Norwegian Project
Licences to the Company after the exercise of the EMX Option the Company
acquired Caledonian Minerals AS for £6,186 a Norwegian company
established by EMX as a clean special purpose vehicle on 8 November 2021 which
at the date of acquisition had not carried out any business and had no
assets or liabilities.
Consideration £
Cash consideration 6,186
Total consideration 6,186
Fair value of assets acquired
Exploration assets 6,186
6,186
-
14. INVESTMENT IN SUBSIDIARIES
Company Total
Investment Loans to Investment
in Subsidiaries Subsidiaries in Subsidiaries
29 Dec 2022 29 Dec 2022 29 Dec 2022
£ £ £
Acquisition of Northern X Group 2,449,126 2,449,126
Acquisition of Caledonian Minerals AS 6,186 6,186
Loans to Northern X Scandinavia AB 497,064 497,064
Loans to Northern X Finland OY 86,741 86,741
Loans to Caledonian Minerals AS 246,882 246,882
2,455,312 830,687 3,285,999
Movement in the Year Company Total
Investment Loans to Investment
in Subsidiaries Subsidiaries in Subsidiaries
29 Dec 2022 29 Dec 2022 29 Dec 2022
£ £ £
Brought forward - - -
Transfer from Investment in Nordic Projects 146,070 282,262 428,332
Movement in Year 78,056 554,611 632,667
Shares Issued in Year 2,225,000 - 2,225,000
Balance 29 December 2022 2,449,126 836,873 3,285,999
There were no subsidiaries as at 29 December 2021
which is why there is no comparative table for 2021. In 2021 the capitalised
Nordic Projects & Related Transactions costs were GBP673,755. On the
acquisition of the Northern X Group GBP428,332 of these costs were transferred
to the Company's investment in and loans to subsidiaries and on the
acquisition of the Norwegian Assets GBP28,886 was transferred to the Company's
exploration and evaluation asset in relation to the Norwegian projects
To facilitate the smooth transfer of the Project Licences the Company has per
note 13 for £6,186 acquired Caledonian Minerals AS a Norwegian company
established by EMX as a clean special purpose vehicle on13 May 2022 which at
that date had not carried out any business and had no assets of liabilities.
Investments in subsidiaries are recorded at cost, which is the fair value of
the consideration paid less impairment.
The Company conducted an impairment review and is satisfied that the carrying
value of £3,285,999 is reasonable and no impairment is necessary. (2021-
Nil).
Principal Subsidiaries
Name & registered office address Country of incorporation and residence Nature of business Proportion of equity shares held by Company
Northern X Scandinavia AB Hellstrom Advokatbyra KB, Box 7305, 103 90 Sweden Base Metals Exploration 100%
Stockholm Sweden
Finland Base Metals Exploration 100%
Northern X Finland Oy C/o Millar Ab, Storgatan 51, 972 31 Luleå Sweden,
Finnish business identity code 2892740-6
Caledonian Minerals AS c/o IM Ruud Regnskap AS, Smalgangen 3, 0188 Oslo, Norway Base Metals Exploration 100%
Norway
15. TRADE AND OTHER RECEIVABLES
Group &
Group Company Company
2022 2022 2021
£ £ £
Other receivables - - 890
Vat receivable 76,589 76,590 24,598
Prepayments 8,290 8,290 -
Other debtors 7,879 2,000 64,000
92,758 86,880 89,488
The fair value of trade and other receivables is not significantly different
from the carrying value and none of the balances are past due.
16. TRADE AND OTHER PAYABLES
Group & Group & &&&Company
Company Company
2022 2021
£ £
Trade and other payables 169,173 263,299
Amount owed to director 41,500 143,750
Accruals 37,000 34,910
247,673 441,959
17. SHARE CAPITAL AND SHARE PREMIUM
2022 2021
Issued equity share capital Number £ Number £
Issued and fully paid
Ordinary shares of £0.0003 each 239,738,373 71,921 11,190,363 3,357
Deferred shares of £0.00999 each 335,710,863 3,353,752 335,710,863 3,353,752
Deferred shares of £0.009 each 1,346,853,817 12,121,684 1,346,853,817 12,121,684
Deferred shares of £0.01 each 19,579,925 195,799 19,579,925 195,799
Deferred shares of £0.04 each 181,378,766 7,255,151 181,378,766 7,255,151
22,998,307 22,929,743
29 December 2022
Group & Company Number of Ordinary shares Share Share Premium
capital
£ £
As at 1 January 2022 11,190,363 3,357 25,027,278
Shares issued during the year 228,548,010 68,564 6,992,528
Share issue costs - - (209,699)
As at 29 December 2022 239,738,373 71,921 31,810,107
Movement in shares issued during the period
Shares issued from placing on admission 92,857,143 27,857 3,222,143
Shares issued on acquisition on subsidiaries 77,857,142 23,357 2,201,643
Conversion of loans and share subscriptions 27,885,714 8,366 671,134
Advisers and director's fees settled by shares 9,721,254 2,916 337,327
Shares issued on acquisition of the Norwegian projects 20,226,757 6,068 560,281
Total 228,548,010 68,564 6,992,528
1) At the Annual General Meeting held on 4 February 2021, shareholders
approved that the 335,710,863Existing Ordinary Shares in issue be subdivided
each into one new ordinary share of £0.00001 ("New Ordinary Share") and one
deferred share of £0.00999 ("2020 Deferred Share) in the capital of the
Company. The New Ordinary Shares carry the same rights as attached to the
Existing Ordinary Shares (save for the reduction in their nominal value). The
2020 Deferred Shares have no voting rights and have no rights as to dividends
and only very limited rights on a return of capital. They will not be admitted
to trading or listed on any stock exchange and will not be freely
transferable. The holders of the 2020 Deferred Shares are not entitled to any
further right of participation in the assets of the Company. As such, the 2020
Deferred Shares effectively have no value.
2) At the Annual General Meeting held on 25 October 2021, shareholders
approved an ordinary resolution that for every thirty (30) issued and unissued
ordinary share of £0.00001 each in the share capital of the Company
("Existing Shares") be consolidated into one (1) ordinary share of £0.0003
each ("New Shares") such New Shares having the same rights and being subject
to the same restrictions, save as to nominal value, as the Existing Shares.
The deferred shares of £0.01 each and £0.009 each confer no rights to vote
at a general meeting of the Company or to a dividend. On a winding-up the
holders of the deferred shares are only entitled to the paid-up value of the
shares after the repayment of the capital paid on the ordinary shares and
£5,000,000 on each ordinary share.
The deferred shares of £0.04 each have no rights to vote or to participate in
dividends and carry limited rights on return of capital. No shares were issued
during the year.
There were no warrants in issue during 2020 at Admission the warrants in the
table below over ordinary shares in the issued share capital of the Company
were issued and at the period end had not been exercised.
Number of Warrants Exercise price (p) Expiry
Fundraising Warrants 92,857,143 6.0 6 May 2025
Broker Warrants 4,642,856 3.5 6 May 2025
Convertible Note Warrants 17,885,714 3.5 6 Nov 2023
Consultant Warrants 4,375,943 3.5 6 May 2025
18. SHARE OPTIONS
Share Options
The Company's previous share options scheme for directors and consultants
ceased on 12 June 2020 and no options were exercised prior to this date.
A new Executive Share Option Scheme for the directors, senior management,
consultants and employees was approved at the AGM on 4 February 2021, as
outlined in the Directors Report. No options were issued under the Executive
Share Option Scheme during the period but there was an issue of options post
the period end as disclosed in Note 23
19. CONVERTIBLE LOAN NOTES
On 30 December 2020, the Company executed a £210,000 unsecured convertible
loan note instrument and received subscriptions of £210,000 in January 2021
in respect of the December 2020 Convertible Loan Note from private investors.
The December 2020 Convertible Loan Note does not pay interest and was repaid
at Admission by the issue of 10,000,000 New Ordinary Shares at a 40% discount
to the Placing.
On 2 July 2021, the Company executed a £350,000 unsecured convertible loan
note instrument (the "July 2021 Convertible Loan Note") and has received
subscriptions of £350,000 in respect of the July 2021 Convertible Loan Note
from private investors and £30,000 from Kjeld Thygesen and £48,000 from
Colin Bird, who are directors of the Company. The July 2021 Convertible Loan
Note did not pay interest and was repaid at Admission by the issue of i)
13,333,333 New Ordinary Shares at a 25% discount to the Placing Price of which
1,142,857 was issued to Kjeld Thygesen and 1,828,571 to Colin Bird and ii) one
(1) warrant for each New Ordinary Share issued to the noteholders at a strike
price of the Placing Price. The 13,333,333 warrants will be valid for a period
of 18 months from Admission and 1,142,857 of the warrants will be issued to
Kjeld Thygesen and 1,828,571 to Colin Bird.
On 15 November 2021, the Company executed a £150,000 unsecured convertible
loan note instrument which was, with the consent of the noteholder,
subsequently increased to £150,000 (the "November 2021 Convertible Loan
Note") and has received subscriptions of £119,500 in respect of the November
2021 Convertible Loan Note from private investors including £37,000 from Lion
Mining Finance Ltd, a company controlled by Colin Bird, a director of the
Company. The November 2021 Convertible Loan Note did not pay interest and was
repaid at Admission by the issue of i) 4,552,381 New Ordinary Shares at a 25%
discount to the Placing Price of which 1,409,524 was issued to Lion Mining
Finance Ltd and ii) one (1) warrant for each New Ordinary Share issued to the
noteholders at a strike price of the Placing Price. The 4,552,381 warrants
will be valid for a period of 18 months from Admission and 1,409,524 of the
warrants will be issued to Lion Mining Finance Ltd.
Before conversion the Convertible loan notes as detailed in the three previous
paragraphs they were treated as liability as it closely resembles the
characteristics of a financial liability.
20. FINANCIAL INSTRUMENTS
Capital risk management
The Company manages its capital to ensure that it will be able to continue as
a going concern, while maximising the return to shareholders.
The capital resources of the Company comprises issued capital, reserves and
retained earnings as disclosed in the Statement of Changes in Equity. The
Company's primary objective is to provide a return to its equity shareholders
through capital growth. Going forward the Company will seek to maintain a
yearly ratio that balances risks and returns of an acceptable level and also
to maintain a sufficient funding base to the Company to meet its working
capital and strategic investment needs.
Categories of financial instruments
2022 2021
£ £
Financial assets
Current asset investment 8,174 102,932
Cash and cash equivalents 1,817,706 16,871
Other receivables 92,758 89,488
1,918,638 209,291
Financial liabilities classified as held at amortised cost
Trade and other payables 169,173 263,299
Convertible loan notes - 679,500
169,173 942,799
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could be exchanged in
an arm's length transaction between informed and willing parties, other than a
forced or liquidation sale and excludes accrued interest. Where available,
market values have been used to determine fair values.
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the
fair value of financial instruments which are measured at fair value by
valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or
liabilities
Level 2: Other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly;
Level 3: Techniques which use inputs that have a significant effect on the
recorded fair value that are not based on observable market data
Management assessed that the fair values of current asset investment, cash and
short-term deposits, other receivables, trade and other payables and other
current liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments.
Financial risk management objectives
Management provides services to the business, co-ordinates access to domestic
and international financial markets, monitors and manages the financial risks
relating to the operations of the Company through internal risks reports which
analyse exposures by degree and magnitude of risks. These risks include
foreign currency risk, credit risk, liquidity risk and cash f low interest
rate risk. The Company does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
As the Company has no committed borrowings, the Company is not exposed to any
risks associated with fluctuations in interest rates on loans. Fluctuation in
interest rates applied to cash balances held at the balance sheet date would
have minimal impact on the Company.
Foreign exchange risk and foreign currency risk management
Foreign currency exposures are monitored on a monthly basis. Funds are
transferred between the Sterling and US Dollar accounts in order to minimise
foreign exchange risk. The Company holds the majority of its funds in
Sterling.
The carrying amounts of the Company's foreign currency denominated financial
assets and monetary liabilities at the reporting date are as follows:
Financial liabilities Financial assets
2022 2021 2022 2021
£ £ £ £
US Dollars - - 389 167
Swedish Krona 133,836 118,342 - -
Euros 4,617 1,387 - -
Australian Dollars - 1,846 - -
Credit risk management
Credit risk refers to the risk that a counter party will default on its
contractual obligations resulting in financial loss to the Company. The
Company does not have any significant credit risk exposure on trade
receivables. The Company makes allowances for impairment of receivables where
there is an identified event which, based on previous experience, is evidence
of a reduction in the recoverability of cash flows.
The credit risk on liquid funds (cash) is considered to be limited because the
counterparties are financial institutions with high credit ratings assigned by
international credit-rating agencies.
The carrying amount of financial assets recorded in the financial statements
represents the Company's maximum exposure to credit risk.
Liquidity risk management
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due. Management monitor forecasts of the
Company's liquidity reserve, comprising cash and cash equivalent, on the basis
of expected cash flow. At 29 December 2022, the Group held cash and cash
equivalent of £1,817,706 (2021: £16,871) and the directors assess the
liquidity risk as part of their going concern assessment (see note 3).
The maturity of the Company's financial liabilities at the statement of
financial position date, based on the contracted undiscounted payments as
disclosed in note 14, falls within one year and payable on demand.
The Company aim to maintain appropriate cash balances in order to meet its
liabilities as they fall due.
Maturity analysis
Company Between Between Between
2022 On In 1 and 6 6 and 12 1 and 3
Total demand 1 month months months years
£ £ £ £ £ £
Trade and other payables 247,673 - 125,836 121,827 - -
Company
2021 Between Between Between
On In 1 and 6 6 and 12 1 and 3
Total demand 1 month months months years
£ £ £ £ £ £
Trade and other payables
441,959 - 219,669 222,290 - -
Convertible loan notes 679,500 - - 679,500 - -
21. RELATED PARTY TRANSACTIONS
Remuneration of key management personnel
The key management personnel of the Company are considered to be the
Directors. Details of their remuneration are covered in note 7.
The shareholdings of the Directors in the issued share capital of the Company
was as follows:
29 December 2022 29 December 2021
Director Number of Ordinary Shares Percentage of issued ordinary share capital Number of Ordinary Shares Percentage of issued ordinary share capital
Colin Bird* 45,069,227 18.80% 16,875 0.15%
Kjeld Thygesen 2,142,857 0.89% - -
Alex Borrelli 82,777 0.03% 82,777 0.74%
Evan Kirby - - - -
Martyn Churchouse - - - -
* Includes 3,695,238 shares held by Lion Mining Finance Ltd and 33,428,571
shares held by Camden Park Trading Ltd, companies controlled by Colin Bird
1. Issue of shares at the IPO as disclosed in the Prospectus
(a) On 20 January 2021, the Company was assigned the Binding
Sales Agreement by Lion Mining Finance Ltd and Camden Park Trading FZE-LLC,
companies controlled by Colin Bird, (the "Assignment Agreement"). The
Assignment Agreement was conditional on the completion of the Binding Sales
Agreement and at the IPO the consideration due under the Assignment Agreement
was £802,000 of which £52,000 is to be settled in cash and £750,000 was
settled by the issue of 35,714,285 Ordinary Shares in the Company at an issue
price of 2.1 pence per Ordinary Share (2,285,714 Ordinary Shares to Lion
Mining Finance Ltd and 33,428,571 Ordinary Shares to Camden Park Trading
FZE-LLC).
(b) Colin Bird pursuant to the Fundraising at the IPO subscribed
for 1,571,400 Ordinary Shares at the Placing Price and was also issued at the
1,571,400 Placing Warrants.
(c) Colin Bird was at the IPO issued 4,528,571 Ordinary Shares
at the Placing Price to settle £158,500 of accrued unpaid fees.
(d) Colin Bird was at the IPO issued 1,828,571 Ordinary Shares
and 1,828,571 Convertible Note Warrants arising from his participation in the
July 2021 Convertible Loan Note.
(e) Kjeld Thygesen pursuant to the Fundraising at the IPO
subscribed for 1,000,000 Ordinary Shares at the Placing Price and was issued
1,000,000 Placing Warrants.
(f) Kjeld Thygesen was at the IPO issued 1,142,857 Ordinary
Shares and 1,142,857 Convertible Note Warrants arising from his participation
in the July 2021 Convertible Loan Note.
(g) Lion Mining Finance Limited (a company controlled by Colin
Bird) at the IPO was issued 1,409,524 Ordinary Shares and 1,409,524
Convertible Note Warrants arising from its
participation in the November 2021 Convertible Loan Note
No warrants were issued to Directors in 2021, at Admission the warrants in the
table below over ordinary shares in the issued share capital of the Company
were issued to directors and at the period end had not been exercised:
Director Number of Warrants Exercise price (p) Expiry
Colin Bird
Fundraising Warrants 1,571,400
Convertible Note Warrants * 3,238,095 3.5 6 Nov 2023
Kjeld Thygesen -
Fundraising Warrants 1,000,000
Convertible Note Warrants 1,142,857 3.5 pence 6 Nov 2023
Alex Borrelli - - -
Evan Kirby - - -
Martyn Churchouse - - -
* Includes 1,409,524 Convertible Note Warrants issued to Lion Mining Finance
Limited a company controlled by Colin Bird
Included in the £350,000 in respect of the July 2021 Convertible Loan Notes
subscriptions received was £30,000 from Kjeld Thygesen and £48,000 from
Colin Bird, both directors of the Company. Included in the £150,000 in
respect of the November 2021 Convertible Loan Notes subscriptions received was
£37,000 from Lion Mining Finance Limited, a company controlled by Colin Bird,
a director of the Company. These subscriptions by Colin Bird, Kjeld Thygesen
and Lion Mining Finance Limited were on the same terms as the other
subscribers to these convertible loan notes which are detailed in Note 17.
Colin Bird was non-executive chairman of Jubilee Metals Group Plc (he resigned
on 26 May 2022) which at Admission had an interest of 1.48% in the Company.
There were no transactions with Jubilee during the year.
The Company entered into a licence agreement dated 1 February 2022 with Lion
Mining Finance Limited (a company controlled by Colin Bird, a director of the
Company). Pursuant to this agreement, the Company has been granted a licence
to use the premises at 7-8 Kendrick Mews, London SW7 for a period of 12 months
with effect from 1 December 2021 for a licence fee of £1,500 per month. In
addition, Lion Mining Finance Limited provides basic administrative and
support services as required by the Company from time-to-time.
Directors' Letters of Appointment and Service Agreements as disclosed in the
Prospectus.
(a) Pursuant to an agreement dated 29 April 2022 the Company renewed the
appointment of Colin Bird as a Director. The appointment continues unless
terminated by either party giving to the other three months' notice in
writing. Colin Bird is entitled to director's fees of £18,000 per annum for
being a director of the Company plus reasonable and properly documented
expenses incurred during the performance of his duties. Colin Bird is not
entitled to any pension, medical or similar employee benefits. The agreement
replaces all previous agreements with Colin Bird in relation to his
appointment as a director of the Company.
(b) Pursuant to a consultancy agreement dated 29 April 2022, the Company
has, with effect from the date of the IPO, appointed Colin Bird as a
consultant to provide technical advisory services in relation to its current
and future projects including, but not limited to, assessing existing
geological data and studies, existing mine development studies and developing
exploration programs and defining the framework of future geological and mine
study reports (the "Colin Bird Services"). The appointment continues unless
terminated by either party giving to the other three months' notice in
writing. Colin Bird is entitled to fees of £2,500 per month for being a
consultant to the Company plus reasonable and properly documents expenses
incurred during the performance of the Colin Bird Services.
(c) Pursuant to an agreement dated 29 April 2022, renewed the appointment of
Kjeld Thygesen as a non-executive Director. The appointment continues unless
terminated by either party giving to the other three months' notice in
writing. Kjeld Thygesen is entitled to director's fees of £18,000 per annum
for being a director of the Company plus reasonable and properly documented
expenses incurred during the performance of his duties. Kjeld Thygesen is not
entitled to any pension, medical or similar employee benefits.
(d) Pursuant to an agreement dated 29 April 2022, Alex Borrelli was
appointed as a nonexecutive Director. The appointment continues unless
terminated by either party giving to the other three months' notice in
writing. Alex Borrelli is entitled to director's fees of £18,000 per annum
for being a director of the Company plus reasonable and properly documented
expenses incurred during the performance of his duties. Alex Borrelli is not
entitled to any pension, medical or similar employee benefits.
(e) Pursuant to an agreement dated 29 April 2022, Evan Kirby was appointed
as a non-executive Director. The appointment continues unless terminated by
either party giving to the other three months' notice in writing. Evan Kirby
is entitled to director's fees of £18,000 per annum for being a director of
the Company plus reasonable and properly documented expenses incurred during
the performance of his duties. Evan Kirby is not entitled to any pension,
medical or similar employee benefits.
Loans to Subsidiaries
2022 2021
Loans to Northern X Scandinavia AB 497,064 -
Loans to Northern X Finland OY 86,741 -
Loans to Caledonian Minerals AS 253,068 -
836,873 -
All intra-group loans are interest-free and form part of the Company's
investment in subsidiaries
22. NET DEBT
Group &
Group Company Company
2022 2022 2021
£ £ £
Cash and cash equivalent 1,817,706 1,769,719 16,871
Net debt 1,817,706 1,769,719 16,871
Net debt as at 29 December 16,871 16,871 9,496
Cash flow from operations (620,102) (610,332) (70,809)
Proceeds from issue of shares, net of costs 3,340,318 3,340,318 -
Proceeds from convertible loan notes - - 679,500
Investment in Exploration and evaluation costs (997,953) (1,055,710) (673,755)
Cash flow from sale of Investment shares 78,572 78,572 72,439
Net debt 1,817,706 1,769,719 16,871
Net debt is calculated as total borrowings (including "current and non-current
borrowings" as shown in the statement of financial position) less cash and
cash equivalents.
23. EVENTS AFTER THE REPORTING DATE
On 2 February 2023 the Company announced that in aggregate, 22,550,000 options
over ordinary shares of £0.0003 par value in the capital of the Company
("Ordinary Shares") have been granted fully vested pursuant to the Executive
Share Option Scheme (the "Options"). Of the 22,550,000 Options, 13,750,000
have been awarded to directors of the Company, as detailed further below and
the balance of 8,800,000 to other eligible participants. The Company has not
previously issued any Options.
Directors No. of Options
Colin Bird Executive Chairman 6,000,000
Martyn Churchouse 5,000,000
Alex Borrelli 1,000,000
Evan Kirby 1,000,000
Kjeld Thygesen 750,000
Total Directors 13,750,000
On 24 April 2023 the Company announced it had issued 4,144,395 new ordinary
shares to settle the share consideration due to be issued on or before 27
April 2023 in relation to the Company's acquisition of the Espedalen,
Hosanger, and Sigdal nickel-copper-cobalt exploration projects in Norway from
EMX Scandinavia AB. 50% of these shares are subject to a three-month voluntary
escrow and the balance of 50% subject to a six-month voluntary escrow.
3,683,906 of the new ordinary shares will be issued to EMX Scandinavia AB
which will increase the combined shareholding of EMX Scandinavia AB and EMX
Royalty Corporation to 21,663,284 shares representing 8.9% of the enlarged
share capital on the Company.
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