REG - Kendrick Resources - Final Results
29/04/2024 18:30
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RNS Number : 4864M Kendrick Resources PLC 29 April 2024
29 April 2024
Kendrick Resources Plc
("Kendrick" or the "Company")
Final Results for period to 29 December 2023
Kendrick Resources Plc (LSE: KEN), the mineral exploration and development
company building vanadium, nickel and copper battery metal projects in
Scandinavia is pleased to announce its full year results for the year ended 29
December 2023.
The Annual Report and Financial Statements for the year ended 29 December 2023
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 information which, prior to its disclosure, was
inside information as stipulated under Regulation 11 of the Market Abuse
(Amendment) (EU Exit) Regulations 2019/310 (as amended).
For additional information please contact:
Kendrick Resources Plc: Tel: +44 2039 616 086
Chairman Colin Bird
Novum Securities Tel: +44 207 399 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
· £1.1m loss before tax (2022: £1.04m)
· Approximately £200K cash at bank at the period end (2022: £1.818m).
· The loss per share of 0.45 pence (2022: loss 0.68 pence) has been
calculated on the basis of the loss of £1,099,162 (2022: loss £1,043,466)
and on 242,565,645 (2022: 153,882,205) ordinary shares, being the weighted
average number of ordinary shares in issue during the year ended 29 December
2023.
· The net asset value as at period end was £4.58m (2022: £5.57m).
CHAIRMAN'S STATEMENT
Dear Shareholder,
The year under review has seen significant progress, with drilling work
carried out at our existing major Airijoki and Espedalen projects, and the
acquisition of the Mjovattnet and Njuggtraskliden nickel, copper and PGM
licences ("Swedish Nickel").
Results from an extension drill programme at the Airijoki Project in Northern
Sweden and the results suggested that we have the potential to at least double
the current 44million tonne resource at similar grades.
During the year, Wardell Armstrong carried out metallurgical test work with
the objectives of building on previous work on maintaining concentrate grade,
whilst increasing vanadium recovery. The work was very successful and the
results revealed much about the geo-metallurgy of the orebody, which we will
incorporate into future mine planning.
Global production of vanadium is currently just over 100,000 tonnes per year
with China and Russia responsible for about 65% and 20% of production
respectively. Steelmaking has been responsible for over 90% of vanadium
consumption and demand has been strong due to global adoption of higher
strength rebar specifications and increasing use of vanadium containing steel
by the automotive industry. The use of vanadium in REDOX vanadium storage
batteries is increasing with the focus on alternative energy sources. We
have no doubt that power storage will command much more importance as the
decade continues.
We mounted a significant drilling programme in Norway at our Espedalen nickel
complex, reporting good intersection of over 1% nickel, which will be
described in the operation section. The nickel complex is showing itself to
be highly prospective with at least 10 untested targets. The prognosis for
significant increase in nickel tonnage is very good and we intend to carry out
further drilling programmes during Q4 2024. In reviewing all historical
information available on the project, we identified a potentially significant
magnetic anomaly, which may represent the high-grade roots to the overall
system.
In July we acquired from EMX Royalties the Mjovattnet and Njuggtraskliden
nickel, copper and PGM licences ("Swedish Nickel"). A number of boreholes will
be reviewed in the operational review, but we are very pleased with this
acquisition based on its history and potential. Between the two projects, we
have some 25km potential strike to investigate. The geological environment
of the project is being likened to the Thompson Nickel belt in Manitoba,
Canada, which is a major nickel supplier in Canada. The acquisition is made
even more interesting by its proximity to battery manufacturing facilities and
the eastern coast of mid-Sweden, together with Boliden's nickel refinery,
which is some 100km by sea away.
The initial part of the reporting period was spent in establishing a
management team that is able to work within the cost regimes we are accustomed
to and, also previous experience of working the Scandinavian geological
environment.
Towards the end of the period, it became obvious that a new awareness was
emerging in Scandinavia and with high recognition that if the planet is free
from pollution, then critical mining has to take place. Indeed the southern
coast of Norway is becoming known as the "Battery Coast" by industry
pundits.
We believe that we have a good portfolio in the much sought after commodities
at a time when Scandinavia may well undergo a mining renaissance and are well
positioned among our peers.
I look forward to adding more value to our projects during the coming year and
give thanks to my fellow board members and management team, who have made an
excellent job of placing Kendrick in what might well be a rapidly evolving new
Scandinavian mining arena.
Results for the year
The Group reported a loss before taxation for the year of £1,099,162 (2022:
£1,043,466) mainly due to administrative costs of £580,287 (2022:
£418,294), including professional, consulting and directors' fees and an
impairment of £448,904 (2022: £Nil) against licences we relinquished to
focus on our Airijoki, Espedalen and Swedish Nickel projects. In 2022
listing related costs were £606,575. Net assets at 29 December 2023 amounted
to £4,577,999 (2022: £5,567,673) including exploration and evaluation assets
of £4,756,879 (2022: £3,932,973) and cash of £199,992 (2022: £1,817,706).
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
29 April 2024
Operational Financial Corporate and Strategy Reviews
INTRODUCTION
Kendrick Resources Plc was admitted to the Standard Segment of the Main Market
of the London Stock Exchange ("Admission") on 6 May 2022 and its principal
activity is that of mining exploration and development and it has nickel,
vanadium and copper projects in Norway, Sweden and Finland (the "Projects").
The Directors are required to provide a year-end report in accordance with the
Financial Conduct Authorities ("FCA") Disclosure Guidance and Transparency
Rules ("DTR"). The Directors consider this Financial, Corporate and
Operational Review along with the Chairman's Report, the Strategic Review and
the Director's Report provides details of the important events which have
occurred during the period and their impact on the financial statements as
well as the outlook for the Company going forward.
The Company's strategy is to build a top tier energy metals production
business focused on nickel, vanadium and copper mineral resources projects in
Scandinavia and its short to medium term strategic objectives are to enhance
the value of its mineral resource Projects through exploration and technical
studies conducted by the Company or through joint venture or other
arrangements with a view to establishing the Projects can be economically
mined for profit. With a positive outlook for energy metals in Europe and
energy security, the Directors believe that the Projects provide a base from
which the Company can help Europe enable its energy transformation.
Operational Review
Acquisition during the year
On 7 August 2023 the Company acquired EV Metals AB a Swedish company that owns
the Njuggtraskliden and Mjovattnet exploration licences (the "Swedish Nickel
Projects") hosting drill-defined magmatic nickel-copper-cobalt-platinum group
metal mineralisation along the Swedish Nickel Line (see note 13).
At the year end the Group decided that in light of the Group's exploration
commitment in relation to the Swedish nickel projects and their relative lack
of prospectivity not to continue with the Signal and Hosanger nickel
exploration projects in Norway. This decision does not affect the Group's
Espedalen Project, which has always been the Company's principal project in
Norway and currently contains the following two nickel deposits:
• _Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co and
classified as Inferred in accordance with JORC (2012); and
• _Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co and
classified as Inferred in accordance with JORC (2012).
During the year the Group as part of ongoing licence management, it was
decided not to renew the Kramsta 100 licence in Sweden and the Karhujupukka
North & Karhujupukka North licences in Finland which were assessed to have
relatively low prospectivity compared to the Group's remaining licences.
Technical review of Projects: Following Admission and having acquired its
projects in Sweden, Finland and exercised its option in relation to its
Norwegian projects, the Group commenced technical reviews and / or programmes
on its portfolio. The primary metal in the Swedish and Finnish projects is
vanadium and nickel for the Norwegian projects. The Group used this
information in 2023 to determine its exploration strategy in 2023.
Summary of Projects: The Projects are a portfolio of early to advanced stage
exploration projects covering a combined area of 658 km2 in Scandinavia. The
most advanced of these Projects are the Airijoki and Koitelainen vanadium
projects in Sweden and Finland respectively and the Espedalen nickel copper
project in Norway. The other projects are:
· Sweden - the Njuggtraskliden and Mjovattnet exploration ("Swedish
Nickel Projects")
· Sweden - the Kullberget, Simesvallen and Sumåssjön exploration
projects in Sweden (collectively the "Central Sweden Project")
The Airijoki vanadium copper project in Sweden comprising seven contiguous
exploration permits covering 39.41 km(2) and is supported by an Inferred
Mineral Resource comprising 44.3 Mt at an in-situ grade of 0.4% V(2)O(5),
containing 5.9 Mt of magnetite averaging 1.7% V(2)O(5) (in magnetite
concentrate) for 100,800 t of contained V(2)O(5) based on a 13.3% mass
recovery of magnetite concentrate and a 0.7% V(2)O(5) cut-off grade, on a 100%
equity basis (and net attributable basis).
The Koitelainen vanadium copper project in Finland comprising a single granted
exploration licence covering 13.72 km2 with an Inferred Mineral Resource has
been defined at the Koitelainen Vosa Prospect comprising 116.4Mt, containing
5.8 million tonnes of magnetite @ 2.3% V2O5 (in magnetite concentrate), for
131,000 tonnes of V2O5 based on 5.0% Mass Recovery of magnetite concentrate
and a cut-off of 0.5% V. The Inferred Mineral Resource was estimated in
accordance with JORC (2012), utilising data from 3,784m of drilling from 27
historical drill holes.
The Espedalen nickel copper project in Norway comprising 16 contiguous
exploration permits covering a combined area of 139.89 km2 and currently
contains the following two nickel deposits with associated Mineral Resource
estimates together with other prospects and was the subject of a successful
drill programme during 2023:
· Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co
and classified as Inferred in accordance with JORC (2012)
· Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co and
classified as Inferred in accordance with JORC (2012)
Figure 1. Map showing location of Kendricks' Scandinavian license portfolio.
Norway Projects summary:
The Group's review has identified significant opportunities within the
Espedalen nickel project in Norway.
Our priority Norwegian nickel target, the Espedalen Project and more
specifically the Stormyra prospect (1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co)
was drilled in March 2023 with 19 holes completed for a total of 1,650 metres
of drilling over an initial 1,200m of strike length. The results of the
programme were announced on 20 April 2023, 4 May 2023 and 24 May 2023
including several drill intercept highlights:
· Hole ES2302 - 6.85% Ni Eq. over 1.25m from 38.20m
· Hole ES2303 - 2.64% Ni Eq. over 3.75m from 44.45m
o incl. 9.28% Ni Eq. over 0.75m from 47.45m
o and 1.53% Ni Eq. over 5.80m from 51.80m
o incl. 5.33% Ni Eq. over 0.9m from 56.7m
· Hole ES2305 - 1.30% Ni Eq. over 4.60m from 76.70m
o incl. 2.59% Ni Eq. over 2.10m from 79.20m
· Hole ES2306 - 0.71% Ni Eq. over 10.6m from 96.50m
o Incl. 2.18% Ni Eq. over 1.70m from 99.20m
§ and 1.03% Ni Eq. over 2.65m from 104.45m
§ Hole ESP2308 - 3.39% Ni Eq. over 11.60m from 52.40m including 5.80% Ni Eq
over 4.9m from 59.1m
· Hole ESP2307 - 2.59% Ni Eq. over 3.65m from 37.80m including
4.85% Ni Eq. over 1.80m from 38.50m
· Hole ESP2312 - 2.29% Ni Eq. over 4.15m from 92.35m
· Hole ESP2313 - 1.98% Ni Eq. over 3.55m from 79.60m including
3.86% Ni Eq. over 1.70m from 79.60m
· Hole ESP2317 - 2.18% Ni Eq. over 3.50m from 61.50m
· Hole ESP2318 - 0.41% Ni Eq. over 9.20m from 31.50m incl. 1.15% Ni
Eq. over 0.90m from 35.20m
· Hole ESP2319 - 2.43% Ni Eq. over 2.10m from 53.60m incl. 5.53% Ni
Eq. over 0.65m from 54.35m and 1.33% Ni Eq. over 2.70m from 62.20m
Geophysics and interpretation of drilling indicates a further extension to
known mineralisation of approximately 500m along the southern limit of the
current orebody which is expected to increase the Mineral Resource.
The drill programme over Stormyra was very successful with impressive peak
intercepts that provide all the motivation the Group needs to both test the
projected extension of the Stormyra mineralised trend and assess with
further drilling multiple other targets (some of which have been drilled and
intersected Ni mineralisation) across the Espedalen project area.
Thanks to our local team, we have managed to build a healthy relationship with
the local stakeholders and we will continue to communicate with interested and
affected parties and we are sufficiently confident of the continuity of
mineralisation to formally engage external engineering advice for the review
of future plant design.
Swedish & Finnish Projects summary:
The main field exploration focus during the year was a 1,500 metre exploration
drill program at the Airijoki vanadium copper project in Sweden with the
objective of significantly increasing the existing vanadium Mineral Resource;
completion of an ionic leach soil sampling programme over recently awarded
additional Airijoki licences where extensions to known vanadium and copper
mineralisation may occur; and the completion of an ionic leach soil sampling
programme over the recently acquired Mjovattnet Nickel-Copper-PGM licence.
In reviewing the Airijoki project in Sweden, significant copper anomalism has
been identified and will be tested as part of the ongoing technical review.
Where present, copper is considered a valid exploration target and may
complement any future vanadium mine development or could be a stand-alone
deposit in its own right. The Group has engaged Wardell Armstrong
International to carry out metallurgical test work in order to assess scope
for increased vanadium recoveries, whilst maintaining magnetite vanadium
grade. The Group is preparing plans to conduct further test work to advance
the processing to the end product vanadium electrolytes.
Post the year end on 8 February 2024 the Group announced the results of its
2023 drill programme at the Airijoki Vanadium project the highlights of which
included:
Highlights
· Results have been received for whole rock and vanadium magnetite
concentrates produced from eight holes drilled north of the existing Airijoki
vanadium JORC Mineral Resource containing 44.3 Mt @ 0.4% V(2)O(5), in-situ,
containing 5.9 Mt of magnetite averaging 1.7% V(2)O(5).
· Seven out of eight holes drilled intersected vanadium mineralisation.
· Notable intercepts included:
o 0.52% V(2)O(5) - whole rock (1.77% V(2)O(5) - magnetite concentrate) over
28.80m from 77.55m in hole AIR23-003, incl.
§ 0.72% V(2)O(5) - whole rock (2.15% V(2)O(5) - magnetite concentrate) over
12.00m from 89.50m
o 0.43% V(2)O(5) - whole rock (1.44% V(2)O(5) - magnetite concentrate) over
19.15m from 75.85m in hole AIR23-008
o 0.32% V(2)O(5) - whole rock (1.42% V(2)O(5) - magnetite concentrate) over
28.65m from 174.50m in AIR23-002
§ incl. 0.40% V(2)O(5) - whole rock (1.75% V(2)O(5) -magnetite concentrate)
over 12 m from 186.5m
· Endorsement by the Board of the development of a strategy aimed at
building a sustainable vanadium business in Scandinavia to deliver into future
vanadium demand for battery production.
· Drilling has now been undertaken on two of the Airijoki licences
within the greater land package of seven contiguous licences and the 5
remaining licences are prospective for both vanadium and copper.
During the period the Company acquired EV Metals AB and its two Swedish Nickel
Projects Mjovattnet and Njuggtraskliden highlights of which are:
Mjovattnet Licence
· 2 drill-defined zones of mineralisation (Mjovattnet and Brannorna
Prospects)
· 15km of prospective strike
· PGE value historically overlooked
· Mjovattnet in-house non-JORC compliant drill-defined resource of
0.17Mt @ 1.29% Ni, 0.19% Cu & 0.02% Co
· Open at depth
· Peak shallow drill intercepts for the Brannora Prospect include:
Hole From To Width Ni
(Brannorna) (m) (m) (m) (%)
BRA-75015 65.80 77.40 11.60 0.82
BRA-07001 59.00 84.73 25.73 0.58
BRA-77024 40.30 68.00 27.70 0.64
BRA-07002 29.30 105.48 76.18 0.60
Njuggtraskliden Licence
· Historic non-JORC compliant mineral Resource of 0 575 Mt @ 0.71% Ni,
0.26% Cu & 0.04% Co
· 10km of prospective strike
· Mineralised system remains open at depth
· Drill-defined nickel sulphide mineralisation developed along more
than 10km of strike extent
· Peak shallow drill intercepts at Njuggtraskliden include:
Hole From To Width Ni Cu Pt Pd Au
(m) (m) (m) (%) (%) (ppm) (ppm) (ppm)
NJU07001 63.40 87.75 24.35 1.01 0.51 1.08 0.56 0.14
NJU79016 15.90 21.69 5.79 1.06 0.31 0.11 0.11 0.05
NJU79031 66.55 89.56 23.01 1.04 0.60 0.51 0.23 0.02
NJU82003E 156.75 161.62 4.87 0.65 0.31 0.15 0.88 -
NJU90006 44.00 56.30 12.30 0.90 0.79 0.30 5.34 0.24
· Swedish Geological Survey report suggests extensions to
mineralisation at depth and along strike at all prospects on both licences
· Both prospects host significant massive sulphide mineralisation not
typical of other nickel deposits in the region indicating scope for further
accumulations of locally massive sulphide located in a nickel-rich district,
analogous to the Thompson nickel Belt in Manitoba, Canada
· 100km by sea from Boliden's Kokkola nickel smelter in Finland
Financial Review
Financial highlights:
· £1.1m loss before tax (2022: £1.04m)
· Approximately £200K cash at bank at the period end (2022: £1.818m).
· The loss per share of 0.45 pence (2022: loss 0.68 pence) has been
calculated on the basis of the loss of £1,099,162 (2022: loss £1,043,466)
and on 242,565,645 (2022: 153,882,205) ordinary shares, being the weighted
average number of ordinary shares in issue during the year ended 29 December
2023.
· The net asset value as at period end was £4.58m (2022 (£5.57m).
Fundraisings and issues of shares and options
The Company did not undertake any fundraising during the year as it utilised
the balance of the £3,250,000 (before expenses) raised at Admission (the
"Fundraise").
During the period 4,144,395 ordinary shares were issued on 26 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
(see note 17).
On 4 August 2023 the Company issued 15 million 5 year options to EMX Royalty
Corporation in connection with the acquisition of EV Metals AB a Swedish
company that owns the Njuggtraskliden and Mjovattnet exploration licences (the
"Swedish Nickel Projects") hosting drill-defined magmatic
nickel-copper-cobalt-platinum group metal mineralisation along the Swedish
Nickel Line (see note 13).
22,550,000 options over ordinary shares expiring on 3 February 2031 with an
exercise price of 3.5 pence were granted on 2 February 2023 pursuant to the
Share Option Scheme approved at the AGM on 4 February 2021 ("Share Option
Scheme Options"). Of the 22,550,000 Share Option Scheme Options, 13,750,000
were 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 Share Option Scheme Options.
Executive Directors: No. of Options
Colin Bird Executive Chairman 6,000,000
Martyn Churchouse 5,000,000
Non Executive Directors:
Alex Borrelli 1,000,000
Evan Kirby 1,000,000
Kjeld Thygesen 750,000
Total Directors 13,750,000
The Company did not issue any warrants during the period.
Corporate Review
Company Board: The Board of the Company at the date of this report comprises
Colin Bird, Executive Chairman, Martyn Churchouse Managing Director and Non-
executive directors Kjeld Thygesen, Evan Kirby and Alex Borrelli.
Admission: The Company was admitted to the Official List (Standard Segment)
and commenced trading on the Main Market for listed securities of the London
Stock Exchange on 6 May 2022.
Corporate Acquisitions
On 12 August 2022 the Company announced that it has completed the acquisition
of the "Norwegian Projects" from EMX Scandinavia AB (previously named Eurasian
Minerals Sweden AB) ("EMX") by acquiring Caledonian Minerals AS. The
consideration paid to EMX for the exercise of the option was U$81,949 and the
issue of 20,226,757 Ordinary Shares ("EMX Option Shares") and further ordinary
shares were due to be issued to EMX by 27 April 2023 in relation to the
acquisition of the Norwegian Projects ("EMX 2023 Shares"). On 24 April 2023
the Company announced it had issued a further 4,144,395 ordinary shares in
relation to the acquisition of the Norwegian Projects to meet its obligation
to issue the EMX 2023 Shares.
On 4 August 2023 the Company signed a Share Sale and Purchase Agreement with
EMX Royalty Corporation (EMX) to acquire 100% of EV Metals AB a Swedish
company that owns the Njuggtraskliden and Mjovattnet exploration licences (the
"Swedish Nickel Projects") hosting drill-defined magmatic
nickel-copper-cobalt-platinum group metal mineralisation along the Swedish
"Nickel Line". The consideration paid to acquire EV Metals AB was SEK110,780
(approx. £8,200) and the issue of 15 million 5 year options to EMX to acquire
ordinary shares in the Company at 1.3 pence per ordinary share.
Lock Up and Orderly Market arrangements at IPO:
At Admission the Directors and their related parties, in aggregate, held
47,294,860 Ordinary Shares, representing 21.62% of the Enlarged Share Capital.
The Directors agreed with the Company and Novum Securities Limited ("Novum")
its Joint Broker, except for certain standard exceptions, not to dispose of
any interest in the Ordinary Shares held by them for a period of 12 months
following Admission (Lock-In Period) and then for the following 12 months
until 6 May 2024 not to dispose of their Ordinary Shares without first
consulting the Company and Novum in order to maintain an orderly market for
the Shares.
Strategy Review
The Group is looking to build a long-term energy metals business in
Scandinavia which delivers energy metals to Europe to help enable its
renewable energy transformation by building a top tier energy metals
production business focused on quality vanadium and nickel mineral resources
in Scandinavia. The Group's short to medium term strategic objectives are to
enhance the value of its mineral resource projects through exploration and
technical studies conducted by the Group or in conjunction with other parties
with a view to establishing these projects so they can be economically mined
for profit. With a positive global outlook for energy metals, the Directors
believe that its projects provide a base from which the Group will seek to add
significant value through the application of structured and disciplined
exploration.
The Group may in the future, if such opportunity arises, acquire other mineral
resource projects whose value can similarly be enhanced. Further projects may
be considered where assets in strategic commodities are either: (i)
geologically prospective but undervalued; (ii) where technical knowledge and
experience could be applied to add or unlock upside potential; (iii) where the
assets may be synergistic to the current portfolio; or (iv) where project
diversification will add strategic growth opportunities within an appropriate
time frame.
Outlook
There appears a new realisation that if clean energy targets are to be met
then critical mining has to take place. Indeed the southern coast of Norway
is becoming known as the "Battery Coast" by industry pundits and the Board
believes we have a good portfolio in the much sought after commodities at a
time when Scandinavia may well undergo a mining renaissance.
The Directors present their strategic report for the year ended 29 December
2023.
PRINCIPAL ACTIVITIES
The Company's principal activity is that of mining exploration and development
and the Company has nickel, vanadium and copper projects in Scandinavia via
its subsidiaries.
GOING CONCERN
As disclosed in Note 3, the Group 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 Group will require additional funds and/or
funding facilities in order to fully develop its business plan.
Ultimately the viability of the Group is dependent on future liquidity in the
exploration period and this, in turn, depends on the Group's ability to raise
funds to provide additional working capital to finance its ongoing activities.
Management has successfully raised funds in the past, but there is no
guarantee that adequate funds will be available when needed in the future.
As at 29 December 2023, the Group had net assets of £4.58m and cash and cash
equivalents of £200k. An operating loss is expected in the year subsequent to
the date of these financial statements and as a result the Group will need to
raise funding to provide additional working capital to finance its ongoing
activities.
On 22 April 2024 the Company announced it had entered into an unsecured
convertible loan funding facility (the "Facility") for £500,000 with
Sanderson Capital Partners Ltd (the "Lender"), a long term shareholder in the
Company. The Facility is convertible at 0.75 pence per ordinary share
("Shares") and can be drawn down in 4 tranches of £125,000 each ("Loan
Tranches"). The Facility is a standby facility as a potential additional
source of working capital for the Group in a period when the funding market
for junior exploration companies is subject to market volatility (see Note 22
for further details).
Based on its current reserves and the Board's assessment that the Group 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 Company and 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.
ENERGY CONSUMPTION
The Company consumed less than 40MWh during the period and as such is a Low
Energy User as defined in the Environmental Reporting Guidelines Including
streamlined energy and carbon reporting guidance March 2019 (Updated
Introduction and Chapters 1) and as such is not required to provide detailed
disclosures of energy and carbon information.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members, as required by s172 of
the Companies Act 2006 as detailed below.
The requirements of s172 are for the Directors to:
- Consider the likely consequences of any decision in the long term;
- Act fairly between the members of the Company;
- Maintain a reputation for high standards of business conduct;
- Consider the interests of the Company's employees;
- Foster the Company's relationships with suppliers, customers, and
others; and
- Consider the impact of the Company's operations on the community
and the environment.
Our Board of Directors remain aware of their responsibilities both within and
outside of the Group. Within the limitations of a Group with so few employees
we endeavour to follow these principles, and examples of the application of
the s172 are summarised and demonstrated below.
The Company operates as a mining exploration and development company which is
speculative in nature and at times may be dependent upon fund-raising for its
continued operation. The nature of the business is well understood by the
Company's members, employees and suppliers, and the Directors are transparent
about the cash position and funding requirements.
The Company is investing time in developing and fostering its relationships
with its key suppliers.
As a mining exploration company with future operations based in Scandinavia,
the Board takes seriously its ethical responsibilities to the communities
and environment in which it works.
The interests of future employees and consultants are a primary consideration
for the Board, and we have introduced an inclusive share-option programme
allowing them to share in the future success of the Company. Personal
development opportunities are encouraged and supported.
KEY PERFORMANCE INDICATORS
Key performance indicators for the Group as a measure of financial control are
as follows:
Year ended Year ended
29 December 2023 2022 29 December 2022
2023 2022
£ £
Total assets 5,006,709 5,851,611
Net assets 4,577,999 5,567,673
Cash and cash equivalents 199,992 1,817,706
Trade and other payables (428,710) (247,673)
Loss before tax for the year (1,099,162) (1,043,466)
PRINCIPAL RISKS AND UNCERTAINTIES
The Group is subject to various risks similar to all exploration companies
operating in overseas locations relating to political, economic, legal,
industry and financial conditions, not all of which are within its control.
The Group identifies and monitors the key risks and uncertainties affecting
the Group and runs its business in a way that minimises the impact of such
risks where possible.
The following risks factors, which are not exhaustive, are particularly
relevant to the Group's current and future business activities:
Licensing and title risk
Governmental approvals, licences and permits are, as a practical matter,
subject to the discretion of the applicable governments or government
offices. The Group must generally and specifically in relation to future
projects comply with known standards, existing laws and regulations that may
entail greater or lesser costs and delays depending on the nature of the
activity to be permitted and the interpretation of the laws and regulations by
the permitting authorities. New laws and regulations, amendments to existing
laws and regulations, or more stringent enforcement could have a material
adverse impact on the Group's result of operations and financial condition.
The Group's exploration activities are dependent upon the grant of appropriate
licences, concessions, leases, permits and regulatory consents which may be
withdrawn or made subject to limitation.
There is a risk that negotiations with the relevant government in relation to
the renewal or extension of a licence may not result in the renewal or grant
taking effect prior to the expiry of the previous licence and there can be no
assurance as to the terms of any extension, renewal or grant. This is a risk
that all resource companies are subject to, particularly when their assets are
in emerging markets. The Group continually seeks to do everything within its
control to ensure that the terms of each licence are met and adhered to.
Dependency on key personnel
Kendrick's management comprises a small team of experienced and qualified
executives. The Directors believe that the loss of any key individuals in the
team or the inability to attract appropriate personnel could impact Kendrick's
performance.
Although Kendrick has entered into contractual arrangements to secure the
services of its key personnel, the retention of these services and the future
costs associated therewith cannot be guaranteed.
Royalty arrangement and the Kabwe plant
Prior to the Company Listing on 6 May 2022 and acquiring the Nordic Projects
the Company had an interest in the Kabwe Project which has been fully provided
against. As reported in the 2020 accounts Jubilee Metals Group PLC ("Jubilee")
is the sole operator of the Kabwe Project and has full control of the
execution methodology. In addition, Jubilee has agreed to fund the Kabwe
Project by way of debt finance without dilution to Kendrick's shareholding
which amounted to a fixed 11% and has been converted to an 11% royalty.
Jubilee is currently actively engaged in copper refining through its
purpose-designed refinery at Kabwe. The zinc price has been extremely volatile
and the zinc tailings at Kabwe may be metallurgically complex, giving way to
copper production, being the best alternative to the refinery. Against the
aforementioned, the Board has no expectation of any royalty income in the
midterm.
Legal risk
The legal systems in the countries in which Kendrick's operations are
currently and prospectively located are different to that of the UK. This
could result in risks such as: (i) potential difficulties in obtaining
effective legal redress in the courts of such jurisdictions, whether in
respect of a breach of law or regulation, or in an ownership dispute; (ii) a
higher degree of discretion on the part of governmental authorities; (iii) the
lack of judicial or administrative guidance on interpreting applicable rules
and regulations; (iv) inconsistencies or conflicts between and within various
laws, regulation, decrees, orders and resolutions; and (v) relative
inexperience of the judiciary and courts in such matters.
In certain jurisdictions the commitment of local business people, government
officials and agencies and the judicial system to abide by legal requirements
and negotiated agreements may be more uncertain. In particular, agreements in
place may be susceptible to revision or cancellation and legal redress may be
uncertain or delayed. There can be no assurance that joint ventures, licences,
licence applications or other legal arrangements will not be adversely
affected by the actions of government authorities or others and the
effectiveness of and enforcement of such arrangements in these jurisdictions
cannot be assured.
Liquidity and financing risk
Although the Directors consider that Kendrick has sufficient funding in place,
there can be no guarantee that further funding will be available and on terms
that are acceptable to Kendrick should additional costs or delays arise. Nor
can there be any guarantee that the additional funding will be available to
allow Kendrick to obtain and develop additional projects in the necessary
timeframe.
The Directors review Kendrick's funding requirements on a regular basis, and
take such action as may be necessary to either curtail expenditures and / or
raise additional funds from available sources including asset sales and the
issuance of debt or equity.
Governmental approvals, licences and permits
Governmental approvals, licences and permits are, as a practical matter,
subject to the discretion of the applicable governments or government offices.
Kendrick must comply with known standards and existing laws and regulations,
any of which may entail greater or lesser costs and delays depending on the
nature of the activity to be permitted and the interpretation of the laws and
regulations by the permitting authorities. Delays in granting such approvals,
licences and permits, new laws and regulations, amendments to existing laws
and regulations, or more stringent enforcement could have a material adverse
impact on Kendrick's result of operations and financial condition. Kendrick's
activities are dependent upon the grant of appropriate licences, concessions,
leases, permits and regulatory consents which may be withdrawn or made subject
to limitation.
There is a risk that negotiations with the relevant government in relation to
the renewal or extension of a licence may not result in the renewal or grant
taking effect prior to the expiry of the previous licence and there can be no
assurance as to the terms of any extension, renewal or grant.
Liability and insurance
The nature of Kendrick's business means that Kendrick may be exposed to
potentially substantial liability for environmental damages. There can be no
assurance that necessary insurance cover will be available to Kendrick at an
acceptable cost, if at all, nor that, in the event of any claim, the level of
insurance carried by Kendrick now or in the future will be adequate.
Kendrick's operations are also subject to environmental and safety laws and
regulations, including those governing the use of hazardous materials. The
cost of compliance with these and similar future regulations could be
substantial and the risk of accidental contamination or injury from hazardous
materials with which it works cannot be eliminated. If an accident or
contamination were to occur, Kendrick would likely incur significant costs
associated with civil damages and penalties or criminal fines and in complying
with environmental laws and regulations. Kendrick's insurance may not be
adequate to cover the damages, penalties and fines that could result from an
accident or contamination and Kendrick may not be able to obtain adequate
insurance at an acceptable cost or at all.
Currency risk
The Company expects to present its financial information in Sterling although
part or all of its business may be conducted in other currencies. As a result,
it will be subject to foreign currency exchange risk due to exchange rate
movements which will affect Kendrick's transaction costs and the translation
of its results. The majority of the payments were in Euros and SEK (Swedish
Korna), but while there were significant fluctuations in the year the payments
were not significant at this early stage as there were limited operations.
Economic, political, judicial, administrative, taxation or other regulatory
factors
Kendrick may be adversely affected by changes in economic, political,
judicial, administrative, taxation or other regulatory factors, in the
territories in which Kendrick will operate particularly in the Scandinavian
region.
Taxation
Any change in Kendrick's tax status or the tax applicable to holding Ordinary
Shares or in taxation legislation or its interpretation, could affect the
value of the investments or assets held by the Company, which in turn could
affect Kendrick's ability to provide returns to Shareholders and/or alter the
post-tax returns to Shareholders. Statements in this document concerning the
taxation of Kendrick and its investors are based upon current tax law and
practice which may be subject to change.
Approved by the Board of Directors and signed on behalf of the Board.
C Bird
Chairman
29 April 2024
GROUP STATEMENT OF COMPREHENSIVE INCOME
Notes Year to Year to
29 December 29 December
2023 2022
£ £
Administrative expenses (580,287) (418,294)
Share based option charge (59,758) -
Listing costs - (606,575)
Realised loss on disposal of investments - (10,872)
Loss in fair value of investment (6,376) (5,314)
Impairment charge on exploration and evaluation assets 12 (448,904) -
Operating loss 5 (1,095,325) (1,041,055)
Finance expense 5 (3,837) (2,411)
Loss before tax (1,099,162) (1,043,466)
Taxation 8 - -
Loss for the period (1,099,162) (1,043,466)
Other comprehensive loss:
Foreign currency difference on translation of foreign operations (27,035) (3,891)
Total comprehensive loss for the year (1,126,197) (1,047,357)
The notes on page 51 to 83 form part of these financial statements.
All amounts are derived from continuing operations.
GROUP STATEMENT OF FINANCIAL POSITION
Notes 29 December 29 December
2023 2022
£ £
Assets
Non-current assets
Property, plant and equipment 10 - -
Exploration and evaluation assets 12 4,756,879 3,932,973
4,756,879 3,932,973
Current assets
Current asset investment 11 1,798 8,174
Trade and other receivables 15 48,040 92,758
Cash and cash equivalents 199,992 1,817,706
249,830 1,918,638
Total assets 5,006,709 5,851,611
Liabilities
Current liabilities
Trade and other payables 16 428,710 247,673
Deferred Share Consideration 12 - 36,265
Total liabilities 428,710 283,938
Net assets 4,577,999 5,567,673
Equity
Share capital 17 22,999,551 22,998,307
Share premium 17 31,845,128 31,810,107
Share based payment reserve 100,258 -
Merger reserve 1,824,000 1,824,000
Translation reserve (27,035) -
Retained earnings (52,163,903) (51,064,741)
Total equity 4,577,999 5,567,673
COMPANY STATEMENT OF FINANCIAL POSITION
As at 29 December 2023
Notes 29 December 29 December
2023 2022
£ £
Assets
Non-current assets
Property, plant and equipment 10 - -
Exploration and evaluation assets 12 637,639 704,730
Investment in subsidiaries 14 4,333,226 3,285,999
4,970,865 3,990,729
Current assets
Current asset investment 11 1,798 8,174
Trade and other receivables 15 36,814 86,880
Cash and cash equivalents 39,953 1,769,719
78,565 1,864,773
Total assets 5,049,430 5,855,502
Liabilities
Current liabilities
Trade and other payables 16 428,589 247,673
Deferred Share Consideration 12 - 36,265
Total liabilities 428,589 283,938
Net assets 4,620,841 5,571,564
Equity
Share capital 17 22,999,551 22,998,307
Share premium 17 31,845,128 31,810,107
Share based payment reserve 100,258 -
Merger reserve 1,824,000 1,824,000
Accumulated losses (52,148,096) (51,060,850)
Total equity 4,620,841 5,571,564
The loss for the year for the Company was £1,087,246 (2022: £1,043,466).
GROUP STATEMENT OF CASH FLOW
Year to 29 December Year to 29 December
2023 2022
£ £
Cash flows from operating activities
Loss before tax (1,099,162) (1,043,466)
Adjustments to reconcile net losses to cash utilised :
Depreciation of property, plant and equipment 10 - 2,050
Impairment charge 12 448,904 -
Share based payment charge 59,758 -
Listing costs paid in previous year 12 - 216,537
Loss on disposal of investment shares - 10,872
Loss in fair value of investment at reporting date 6,376 5,314
Operating cash outflows before movements in working capital
(584,124) (808,693)
Changes in:
Trade and other receivables 44,719 (3,270)
Trade and other payables 181,036 (194,286)
Net cash outflow from operating activities (358,369) (1,006,249)
Investing activities
Proceeds on disposal of investments 11 - 78,573
Exploration & Evaluation assets 12 (1,232,310) (648,142)
Net cash outflow from investing activities: (1,232,310) (569,569)
Cash flows from financing activities
Proceeds from issue of shares, net of issue costs - 3,380,544
Net cash inflow from financing activities - 3,380,544
Net (decrease)/increase in cash and cash equivalents (1,590,679) 1,804,726
Effect of foreign exchange rate changes (27,035) (3,891)
Cash and cash equivalents at beginning of period 1,817,706 16,871
Cash and cash equivalents at end of period 199,992 1,817,706
COMPANY STATEMENT OF CASH FLOW
Year to 29 December Year to 29 December
2023 2022
£ £
Cash flows from operating activities
Loss before tax (1,087,246) (1,043,466)
Adjustments to reconcile net losses to cash utilised :
Depreciation of property, plant and equipment 10 - 2,050
Impairment charge 12 448,904 -
Listing costs paid in previous year 12 - 216,537
Share based payment charge 59,758 -
Loss on disposal of investments - 10,872
Loss in fair value of investment 6,376 5,314
Operating cash outflows before movements in working capital
(572,208) (808,693)
Changes in:
Trade and other receivables 50,066 2,609
Trade and other payables 180,916 (194,286)
Net cash outflow from operating activities (341,226) (1,000,370)
Investing activities
Proceeds of sale of Investment shares - 78,573
Investment in subsidiaries 14 (1,330,006) (632,669)
Exploration & Evaluation assets 12 (58,534) (73,230)
Net cash outflow from investing activities: (1,388,540) (627,326)
Cash flows from financing activities
Proceeds from issue of shares, net of issue costs - 3,380,544
Net cash inflow from financing activities - 3,380,544
Net (decrease)/increase in cash and cash equivalents (1,729,766) 1,752,848
Cash and cash equivalents at beginning of period 1,769,719 16,871
Cash and cash equivalents at end of period 39,953 1,769,719
GROUP STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Share based Merger Translation Retained earnings Total equity
Payment reserve reserve reserve
£ £ £ £ £ £ £
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)
- - -
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
Loss for the year - - - (1,099,162) (1,099,162)
- -
Other comprehensive income
Translation reserve - - - (27,035) - (27,035)
Total comprehensive loss for the year - - - - (27,035) (1,099,162) (1,126,197)
Issue of shares to settle share deferred consideration (note 17) 1,244 35,021 - - - - 36,265
Share based payment charge (note 17) - - 100,258 - - - 100,258
As at 29 December 2023 22,999,551 31,845,128 100,258 1,824,000 (27,035) (52,163,903) 4,577,999
=
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
Translation reserve - amounts arising on re-translating the net assets of
overseas operations into the presentational currency
Retained earnings - cumulative net gains and losses recognised in the
consolidated income statement
Share based payment reserve - amount arising on the issue of warrants and
share options which are exercisable at the statement of financial position
date.
COMPANY STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Share based payment reserve Merger Retained earnings Total equity
reserve
£ £ £ £ £ £
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)
- -
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
Total comprehensive loss for the year - - (1,087,246) (1,087,246)
- -
Other comprehensive income - - - - - -
Total comprehensive loss for the year - - - - (1,087,246) (1,087,246)
Issue of shares to settle Share deferred consideration (note 17) 1,244 35,021 - - - 36,265
Share based payment reserve (note 17) - - 100,258 - - 100,258
As at 29 December 2022 22,999,551 31,845,128 100,258 1,824,000 (52,148,096) 4,620,841
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
Retained earnings - cumulative net gains and losses recognised in the
consolidated income statement
Share based payment reserve - amount arising on the issue of warrants and
share options which are exercisable at the statement of financial position
date.
NOTES TO THE FINANCIAL STATEMENTS
Year ended 29 December 2023
1. GENERAL INFORMATION
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 2023. The comparative period is for the year to 29 December 2022.
The Group's business is the exploration of nickel, vanadium and copper mineral
resource projects in Scandinavia and it currently has projects in Norway,
Sweden and Finland. The exploration and evaluation assets held in these
countries is shown in note 12.
2. ADOPTION OF NEW AND REVISED STANDARDS
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective from 1 January 2023,
none of which have a material impact on these financial statements.
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the group has decided not to apply early.
The following amendments are effective for the period beginning 1 January 2024
• IAS 1 Presentation of Financial Statements (Amendment - Classification of
Liabilities as Current or Non-Current);
• IFRS 16 Leases (Amendment - Liability in a sale and leaseback); and
• IAS 7 and IFRS 7 (Amendment - Supplier Finance Arrangements).
It is not expected that the amendments listed above, once adopted, will have a
material impact on the financial statements.
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 Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own Statement of
Comprehensive Income in these financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
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 two executive Directors and three non-executive
Directors, and one consultant for, amongst other things, determining and
implementing strategy and managing operations.
The Group 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 Group will require additional funds and/or funding facilities in order to
fully develop its business plan.
Ultimately the viability of the Group 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 2023, the Group had net assets of £4.6m and cash and cash
equivalents of £200k. An operating loss is expected in the year subsequent to
the date of these financial statements and as a result the Group will need to
raise funding to provide additional working capital to finance its ongoing
activities.
On 22 April 2024 the Company announced it had entered into an unsecured
convertible loan funding facility (the "Facility") for £500,000 with
Sanderson Capital Partners Ltd (the "Lender"), a long term shareholder in the
Company. The Facility is convertible at 0.75 pence per ordinary share
("Shares") and can be drawn down in 4 tranches of £125,000 each ("Loan
Tranches"). The Facility is a standby facility as a potential additional
source of working capital for the Group in a period when the funding market
for junior exploration companies is subject to market volatility (see Note 22
for further details).
Based on its current reserves and the Board's assessment that the Group 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 Group's and 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
Group'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 Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
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 equipment and computers 25%
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 Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
De-recognition of financial assets and financial liabilities
The Group 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 Group neither transfers nor retains substantially all the risks
and rewards of ownership and continues to control the transferred asset, the
Group recognises its retained interest in the asset and an associated
liability for the amount it has to pay. If the Group retains substantially all
the risks and rewards of ownership of a transferred financial asset, the Group
continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received. The Group derecognises
financial liabilities when the Group'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 Group 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 Group 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 Group 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 Group applies IFRS 2 Share-based Payment for all grants of equity
instruments.
The Group 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 Group'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 Group 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 Group 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 Group. 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.
Foreign currency transactions and balances
(i) Functional and presentational currency
Items included in the Group's financial statements are measured using Pounds
Sterling ("£"), which is the currency of the primary economic environment in
which the Group operates ("the functional currency"). The financial statements
are presented in Pounds Sterling ("£"), which is the functional currency of
the Company and is the Group's presentational currency.
The individual financial statements of each Group company are presented in the
functional currency of the primary economic environment in which it operates.
(ii) Transactions 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 income
statement.
Transactions in the accounts of individual Group companies are recorded at the
rate of exchange ruling on the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the rates
ruling at the balance sheet date. All differences are taken to the income
statement.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the year. Exchange differences
arising recognised in other comprehensive income and transferred to the
Group's translation reserve within equity as 'Other reserves'. Upon disposal
of foreign operations, such translation differences are derecognised as an
income or as expenses in the year in which the operation is disposed of in
other comprehensive income.
Geographical segments
A segment is a distinguishable component of the Group that is engaged either
in providing products or services (business segment) or in providing products
or services within a particular economic environment (geographical segment),
which is subject to risk and rewards that are different from those of other
segments. The internal management reporting used by the chief operating
decision maker consists of one segment. Hence in the opinion of the directors,
no separate disclosures are required under IFRS 8. The Group's revenue in the
current and prior year is £Nil and consequently no geographical segment
information regarding revenue has been disclosed. In respect of non-current
assets the only two geographical areas are Scandinavia and the UK of which
the latter is £Nil.
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 Group'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 applied the concentration test and
determined that the fair value of the gross assets of EV Metals AB comprise
its exploration licences and that the acquisition of EV Metals AB should be
accounted for as an asset acquisition and not a business combination. The
Directors have assessed that the acquired company is not a business as it does
not generate outputs and does not have a substantive system to generate
outputs or an organised workforce to perform this process.
Going Concern
The Directors have considered the going concern basis of preperation and as
per note 3 no adjustments have been made in these financial statements which
are prepared on a going concern basis.
Contingent consideration
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.
5. OPERATING LOSS
The operating loss has been arrived at after charging:
2023 2022
£ £
Depreciation of property, plant and equipment (note - 2,050
10)
Staff costs (note 124,000 97,015
7)
Loss on disposal of - 10,872
investments
Loss in fair value of investment 6,376 5,313
Listing costs - 606,575
Finance charge 3,837 2,411
6. AUDITORS' REMUNERATION
The remuneration of the auditors can be
analysed as follows:
2023 2022
£ £
Fees payable to the company's auditor for the audit of the company's financial 55,000 37,000
statements
55,000 37,000
7. STAFF COSTS
2023 2022
Number Number
Directors 4 4
Consultants 1 1
The average monthly number of employees 5 5
Their aggregate remuneration comprised:- £ £
Fees 124,000 97,015
124,000 97,015
Included within staff costs £124,000 (2022: £97,015) relates to amounts in
respect of Directors. The highest paid director's emoluments was £48,000
(2022: £51,000).
8. TAXATION
No liability to corporation tax arose for the year ended 29 December 2023 and
year ended 29 December 2022, as a result of underlying losses brought forward.
Reconciliation of effective tax rate:
2023 2022
£ £
Loss before tax (1,099,162) (1,043,466)
Tax credit at the standard rate of tax in the UK 208,841 198,259
Tax effect of non-deductible expenses (97,216) (390)
Deferred tax not provided (111,625) (197,869)
Tax for the period - -
The standard rate of corporation tax in the UK applied during the year was 19%
(2022: 19%).
At 29 December 2023, the Company are carrying forward estimated tax losses of
£7.2m (2022: £6.6m) in respect of various activities over the years. No
deferred tax asset was recognised 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 2023 29 December 2022
(Loss) after tax for the purposes of earnings per share attributable to equity £(1,099,162) £(1,043,466)
shareholders
Weighted average number of shares 242,565,645 153,882,205
Basic (loss) per ordinary share (0.45) p (0.68) p
Diluted (loss) per ordinary share (0.45) p (0.68) 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 & Company
Office equipment and computer Total
£
£
COMPANY
Cost
At 29 December 2021 60,587 60,587
Additions - -
At 29 December 2022 60,587 60,587
Additions - -
At 29 December 2023 60,587 60,587
Accumulated depreciation
At 29 December 2021 (58,537) (58,537)
Charge for the period (2,050) (2,050)
At 29 December 2022 (60,587) (60,587)
Charge for the period - -
At 29 December 2023 (60,587) (60,587)
Carrying amount
At 29 December 2023 - -
At 29 December 2022 - -
11. CURRENT ASSET INVESTMENT
Group & Company
2023 2022
£ £
Balance as at 29 December 8,174 102,932
Disposals - (89,445)
Fair value through profit and loss (6,376) (5,313)
Balance as at 29 December 1,798 8,174
The investment represents the holding of
8,174,387 shares in Bezant Resources Plc, which were held at 29 December 2023.
12. EXPLORATION AND EVALUATION ASSETS
Exploration and Evaluation Assets - Group
Swedish Projects Finnish Projects Norwegian Projects
Total
£ £ £ £
Balance 29 December 2021 - - - -
Transfer from Investment in Nordic 165,754 36,169 109,225 311,148
Projects & Related Transactions Costs *
Additions in Year 273,556 50,572 171,481 495,609
Northern X Group Acquisition (Note 13)
Share consideration 1,357,473 703,990 163,537 2,225,000
Cash Consideration (2022 & 2021) * 136,739 70,913 16,473 224,125
Acquisition of Norwegian Projects (note 17) - - 566,349 566,349
Share consideration
Cash Consideration EMX Option - - 68,291 68,291
Cash Consideration Caledonian Minerals - - 6,186 6,186
EMX Deferred Share Consideration - - 36,265 36,265
Balance 29 December 2022 1,933,522 861,644 1,137,807 3,932,973
Additions in year 635,900 588 590,290 1,226,778
Acquisition of EV Metals (Note 13) 46,032 - - 46,032
Impairment Provision ** (56,033) (150,026) (242,845) (448,904)
Balance 29 December 2023 2,559,421 712,206 1,485,252 4,756,879
* In 2021 the capitalised Nordic Projects & Related Transaction costs
were £673,755. On the acquisition of the Northern X Group in 2022 £457,218
of these costs were transferred to Group Exploration and Evaluation assets
(£311,148 as Projects & Related Transaction Costs and £146,070 of cash
consideration paid in 2021 included in the Cash Consideration (2022 &
2021) of £224,125) the balance of £216,537 was included in the £606,575 of
listing & transaction costs charged in the 2022 Income Statement.
** The impairment provision relates to the Kramsta 100 licence in Sweden, the
Karhujupukka North & Karhujupukka North licences in Finland and the
Hosanger & Sigdal licences in Norway that it was decided not to renew as
part of the Group's ongoing licence management as they were assessed to have
relatively low prospectivity compared to the Group's remaining licences.
Exploration and Evaluation Assets - Company
Norwegian Projects Total
Balance at 29 December 2021 £ - £ -
Transfer from Investment in Nordic Projects 28,886 28,886
Movement in Year 73,230 73,230
EMX Deferred Consideration 36,265 36,265
Share consideration re Acquisition of 566,349 566,349
Norwegian projects (note 17)
Balance 29 December 2022 704,730 704,730
Additions 58,534 58,534 58,534
Impairment Provision * (125,625) (125,625)
Balance 29 December 2023 637,639 637,639
* The impairment provision relates to the Hosanger and Sigdal licences in
Norway where it was decided not to renew as part of the Group's ongoing
licence management as they were assessed to have relatively low prospectivity
compared to the Group's remaining licences.
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 in May 2021 with aggregated Inferred Mineral
Resources 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 658 km2 in Scandinavia. The
most advanced of these Projects are the Airijoki and Koitelainen vanadium
projects in Sweden and Finland respectively and the Espedalen nickel copper
project in Norway. Other projects include:
· Sweden - the Njuggtraskliden and Mjovattnet exploration ("Swedish
Nickel Projects")
· Sweden - the Kullberget, Simesvallen and Sumåssjön exploration
projects in Sweden (collectively the "Central Sweden Project")
The Airijoki vanadium copper project in Sweden comprising seven contiguous
exploration permits covering 39.41 km(2) and is supported by an Inferred
Mineral Resource comprising 44.3 Mt at an in-situ grade of 0.4% V(2)O(5),
containing 5.9 Mt of magnetite averaging 1.7% V(2)O(5) (in magnetite
concentrate) for 100,800 t of contained V(2)O(5) based on a 13.3% mass
recovery of magnetite concentrate and a 0.7% V(2)O(5) cut-off grade, on a 100%
equity basis (and net attributable basis).
The Koitelainen vanadium copper project in Finland comprising a single granted
exploration licence covering 13.72 km2 with an Inferred Mineral Resource has
been defined at the Koitelainen Vosa Prospect comprising 116.4Mt, containing
5.8 million tonnes of magnetite @ 2.3% V2O5 (in magnetite concentrate), for
131,000 tonnes of V2O5 based on 5.0% Mass Recovery of magnetite concentrate
and a cut-off of 0.5% V. The Inferred Mineral Resource was estimated in
accordance with JORC (2012), utilising data from 3,784m of drilling from 27
historical drill holes.
The Espedalen nickel copper project in Norway comprising 16 contiguous
exploration permits covering a combined area of 139.89 km2 and currently
contains the following two nickel deposits with associated Mineral Resource
estimates together with other prospects and was the subject of a successful
drill programme during 2023:
· Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co
and classified as Inferred in accordance with JORC (2012)
· Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co and
classified as Inferred in accordance with JORC (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 had 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 "Deferred Share Consideration")
. As the liability to pay the 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 note 17).
The Norwegian Projects acquired comprised the Espedalen Project consisting of
16 contiguous exploration permits covering a combined area of 139.89 km2
currently contains two nickel deposits and the Sigdal and Hosanger projects
which at the year end the Group decided not to renew in light of the Group's
exploration commitment in relation to the Swedish nickel projects and their
low prospectivity compared to the Group's remaining projects. This decision
did not affect the Group's Espedalen Project, which has always been the
Group's principal project in Norway and currently contains the following two
nickel deposits:
· Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co
and classified as Inferred in accordance with JORC (2012)
· Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co and
classified as Inferred in accordance with JORC (2012).
Further commitments under Norwegian Projects Acquisition
· beginning on 13 May 2025 and ceasing on the date upon which the Group
commissions a Pre-Feasibility Study on any one of the Projects: the Group has
committed to one thousand meter drilling for the Espedalen Project ("Drilling
Commitment"); and
· upon attainment of each development milestone ((milestone 1) being
the completion of a preliminary 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 Group'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 Group'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 Group (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 Group (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 Group'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
-
Acquisition of EV Metals AB
On 4 August 2023 the Company signed a Share Sale and Purchase Agreement with
EMX Royalty Corporation (EMX) to acquire 100% of EV Metals AB a Swedish
company that owns the Njuggtraskliden and Mjovattnet exploration licences (the
"Swedish Nickel Projects") hosting drill-defined magmatic
nickel-copper-cobalt-platinum group metal mineralisation along the Swedish
"Nickel Line". The consideration paid to acquire EV Metals AB was SEK110,780
(approx. £8,200) and the issue of 15 Million 5 year options to EMX to acquire
ordinary shares in the Company at 1.3 pence per Kendrick Share.
Consideration £ £
Cash consideration 8,166
Fair value of share options issued 40,500
Total consideration 48,666
Cost of assets acquired
Exploration assets 46,032
Receivables 2,630
Cash and cash equivalents 4
48,666
-
Further commitments in relation to the Swedish Nickel Projects
· On or before 13 January 2024, the Company has to pay an annual
advanced royalty of US$30,000 per project to EMX which increases by US$5,000
annually per Project ceasing upon the Commencement of Commercial Production
("Advance Royalty");
· On or before 13 May 2024 the Company has committed to one thousand
meter drilling for each of the Swedish Nickel Projects and thereafter annually
ceasing for a project on the date upon which the Company commissions a
Pre-Feasibility Study on the project ("Drilling Commitment").
Royalty Agreement: At the closing of the Swedish Nickel 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 Swedish
Nickel 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 liability has been recognised in these financial statements for the further
commitments under the Swedish Nickel Projects Acquisition above in relation
to;
· the Drilling Commitment as the Group'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 Group's ongoing exploration activities on the Norwegian
Projects; and
· Production Royalty as the Swedish Nickel 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.
14. INVESTMENT IN SUBSIDIARIES
Loans to Subsidiaries
Company Northern X Northern X Caledonian EV Metals AB Total
Investment Scandinavia Finland Minerals Investment
in Subsidiaries AB OY AS in Subsidiaries
£ £ £ £ £ £
Balance 29 December 2021 - - - - - -
Acquisition of Northern X Group 2,449,126 - 2,449,126
- - -
Acquisition of Caledonian 6,186 - - - - 6,186
Minerals AS
Loans to Subsidiaries - 497,064 86,741 246,882 - 830,687
Balance 29 December 2022 2,455,312 497,064 86,741 246,882 - 3,285,999
Acquisition of EV Metals 48,666 - - - - 48,666
Loans to Subsidiaries - 803,509 1,084 517,008 239 1,321,840
Movement in the Year 48,666 803,509 1,084 517,008 239 1,370,506
Impairment Provision * (152,145) - (72,534) (98,600) - (323,279)
Balance 29 December 2023 2,351,833 1,300,573 15,291 665,290 239 4,333,226
* The impairment provision relates to the Kramsta 100 licence in Sweden, the
Karhujupukka North & Karhujupukka North licences in Finland and the
Hosanger & Sigdal licences in Norway that it was decided not to renew as
part of the Company's ongoing licence management as they were assessed to have
relatively low prospectivity compared to the Company's remaining licences.
In 2021 the capitalised Nordic Projects & Related Transactions costs were
£673,755. On the acquisition of the Northern X Group £428,332 of these costs
were transferred to the Company's investment in and loans to subsidiaries and
on the acquisition of the Norwegian Assets £28,886 was transferred to the
Company's exploration and evaluation asset in relation to the Norwegian
projects
To facilitate the smooth transfer of the Norwegian Project Licences the
Company as per note 13 for £6,186 acquired Caledonian Minerals AS a Norwegian
company established by EMX as a clean special purpose vehicle on 13 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 under IFRS 9 of the loans made to
subsidiaries and determined that as their recoverability is supported by the
exploration licences owned by the subsidiaries that i) loans made to
subsidiaries related to exploration licences that have been relinquished
should be assessed as stage 3 loans and ii) that loans made to subsidiaries
related to retained exploration licences should be assessed as stage 1 loans
with no provision against their carrying value.
Accordingly an impairment provision of £323,279 was made against the
Company's loans to subsidiaries assessed as stage 3. The Company is satisfied
that having made the provision of £323,279 the carrying value of the
Company's investment in Subsidiaries of £4,333,226 (2022:£3,285,999) is
reasonable and no further impairment is necessary.
Principal Subsidiaries (in 2022 and 2023 unless indicated to the contrary)
Name & registered Country of incorporation and residence Nature of business Company's Proportion of equity
office address
Northern X Scandinavia AB Hellstrom Advokatbyra KB, Box 7305, 103 90 Sweden Base Metals Exploration 100%
Stockholm Sweden
Northern X Finland Oy C/o Millar Ab, Storgatan 51, 972 31 Luleå Sweden, Finland Base Metals Exploration 100%
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 (acquired 13 May 22)
EV Metals AB c/o Nordfors Consulting AB, Box 528, 101 30 Stockholm (acquired 4 Sweden Base Metals Exploration 100%
August 23)
15. TRADE AND OTHER RECEIVABLES
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
Vat receivable 9,099 76,589 8,624 76,590
Prepayments 26,190 8,290 26,190 8,290
Other debtors 12,751 7,879 2,000 2,000
48,040 92,758 36,814 86,880
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
2023 2022 2023 2022
£ £ £ £
Trade and other payables 238,704 169,173 238,704 169,173
Amount owed to directors 77,819 41,500 77,819 41,500
Accruals 108,534 37,000 108,534 37,000
Other payables 3,653 - 3,532 -
428,710 247,673 428,589 247,673
17. SHARE CAPITAL AND SHARE PREMIUM
2023 2022
Issued and fully paid Number £ Number £
equity share capital
Ordinary shares of £0.0003 each 243,882,767 73,165 239,738,373 71,921
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
22,999,551 22,998,307
Group & Company Number of Ordinary shares Share Share Premium
capital
£ £
As at 1 January 2022 11,190,362 3,357 25,027,278
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 Shares issued during the year 228,548,010 68,564 6,992,528
Shares issue costs - - (209,699)
As at 29 December 2022 239,738,372 71,921 31,810,107
Shares issued on acquisition of the Norwegian projects 4,144,395 1,244 35,021
As at 29 December 2023 243,882,767 73,165 31,845,128
On 24 April 2023 the Company issued 4,144,395 ordinary shares to settle the
share consideration, which was 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.
At the Annual General Meeting held on 4 February 2021, shareholders approved
that the 335,710,863 Existing 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.
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.
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
119,761,656
A warrant reserve was not created in relation to the warrants as they were all
issued in relation to raising funds for the Company's Listing in May 2022.
18. SHARE OPTIONS
A new 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.
On 2 February 2023 the Company issued 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 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 pursuant to the Share Option Plan.
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
All the Options have an exercise price of 3.5 pence per Ordinary Share and
vested on issue. To incentivise and retain directors, officers, consultants
and employees critical to enhancing the future market value of the Company.
The options expire on 3 February 2031 being the date one day prior to the
tenth anniversary of the AGM at which the Share Option Plan was approved. The
Options can be exercised any time after vesting and prior to their scheduled
expiry and must be exercised within 6 months of an option holder leaving the
Company or within 12 months of the death of an option holder. The Company's
mid-market closing share price on 2 February 2023, being the latest
practicable date prior to the issue of the options, was 0.93 pence.
As a result of this the fair value of the share options was determined at the
date of the grant using the Black Scholes model, using the following inputs:
Share price at the date of
issue
0.93p
Strike
price
3.5p
Volatility
50%
Expected
life
2,920 days (8 years)
Risk free
rate
4%
The resultant fair value of the share options as at 29 March 2023 was
determined to be £59,758. The share-based payment charge for these options
was taken in its entirety in the amount of £59,758 in the year to 29 December
2023 and has been taken to the share-based payment reserve.
As detailed in note 13 in addition to the consideration paid to acquire EV
Metals AB on 7 August 2023, the Company issued 15 million 5 year options to
EMX to acquire ordinary shares in the Company at 1.3 pence per Kendrick Share.
The Options can be exercised any time after vesting and prior to their
scheduled expiry and the Company's mid-market closing share price on 4 August
2023, being the latest practicable date prior to the issue of the options, was
0.775 pence.
As a result of this the fair value of the share options was determined at the
date of the grant using the Black Scholes model, using the following inputs:
Share price at the date of
issue
0.775p
Strike
price
1.3p
Volatility
50%
Expected
life
1,825 days (5 years)
Risk free
rate
5%
The resultant fair value of the options applicable to the year to 29 December
2023 was determined to be £40,500 and the full option value was taken in the
year of issue as all the options are fully vested and this amount was
incorporated into the acquisition cost of EV Metals and has been taken to the
share-based payment reserve.
19. 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
2023 2022
£ £
Financial assets
Current asset investment 1,798 8,174
Cash and cash equivalents 199,992 1,817,706
Other receivables 48,039 92,758
249,829 1,918,638
Financial liabilities classified as held at amortised cost
Trade and other payables 238,704 169,173
238,704 169,173
All financial assets are held at amortised costs except current asset
investments as detailed below.
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. The current asset
investment is Level 1 in the fair value hierarchy and is held at fair value.
Fair value hierarchy
The Group 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; and
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 Group 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 flow interest rate
risk. The Group does not enter into or trade financial instruments, including
derivative financial instruments, for speculative purposes.
As the Group has no committed borrowings, the Group 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 Group.
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 Group holds the majority of its funds in Sterling.
The carrying amounts of the Group's foreign currency denominated financial
assets and monetary liabilities at the reporting date are as follows:
Financial liabilities Financial assets
2023 2022 2023 2022
£ £ £ £
US Dollars 16 - 19 389
Swedish Krona 113,579 133,836 160,050 -
Euros - 4,617 - -
Norwegian Krona 52,534 - - -
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 Group. The Group
does not have any significant credit risk exposure on trade receivables. The
Group 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 directors consider the
foreign exchange risk exposure is limited.
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 2023, the Group held cash and cash
equivalent of £199,992 (2022: £1,817,706) 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
Group Between Between Between
2023 On In 1 and 6 6 and 12 1 and 3
Total demand 1 month months months years
£ £ £ £ £ £
Trade and other payables 428,710 - 82,971 345,739 - -
Group
2022 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
247,673 - 125,836 121,827 - -
20. 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 2023 29 December 2022
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 18.48% 45,069,227 18.80%
Kjeld Thygesen 2,142,857 0.88% 2,142,857 0.89%
Alex Borrelli 82,777 0.03% 82,777 0.03%
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
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) which was amended with effect from 1 June 2022. Pursuant to this
agreement, the Company has been granted a licence to use the premises at 7-8
Kendrick Mews, London SW7 for a licence fee of £1,500 per month (ex VAT)
which can be terminated on 2 months notice as the initial 12 month term of the
agreement has already expired. 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
2023 2022
£ £
Loans to Northern X Scandinavia AB 1,300,573 497,064
Loans to Northern X Finland OY 15,291 86,741
Loans to Caledonian Minerals AS 665,290 253,068
Loans to EV Metals 239 -
1,981,393 836,873
All intra-group loans are interest-free and form part of the Company's
investment in subsidiaries. The loans are net of the impairments detailed in
note 14.
21. NET DEBT
Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Cash and cash equivalent 199,992 39,953 1,817,706 1,769,719
Net debt 199,992 39,953 1,817,706 1,769,719
Net debt as at 29 December 2022 1,817,706 1,769,719 16,871 16,871
Cash flow from operations (317,868) (300,725) (620,102) (610,332)
Proceeds from issue of shares, net of costs - - 3,340,318 3,340,318
Investment in Exploration and evaluation costs (1,272,810) (1,403,413) (997,953) (1,055,710)
Cash flow from sale of Investment shares - - 78,572 78,572
Other non-cash movement (27,036) (25,628) - -
Net debt as at 29 December 2023 199,992 39,953 1,817,706 1,769,719
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.
22. EVENTS AFTER THE REPORTING DATE
On 22 April 2024 the Company announced it had entered into an unsecured
convertible loan funding facility (the "Facility") for £500,000 with
Sanderson Capital Partners Ltd (the "Lender"), a long term shareholder in the
Company. The Facility is convertible at 0.75 pence per ordinary share
("Shares") and can be drawn down in 4 tranches of £125,000 each ("Loan
Tranches"). The Facility is a standby facility as a potential additional
source of working capital for the Company in a period when the funding market
for junior exploration companies is subject to market volatility.
Working Capital Facility Agreement
The Facility is for £500,000 in total, is unsecured, interest free and can be
drawn down in four tranches as follows:
· £125,000 to be drawn down within 6 months of 7 May 2024 ("Tranche
One");
· £125,000 to be drawn down within 6 months of 7 July 2024 ("Tranche
Two");
· £125,000 to be drawn down within 6 months of 7 September 2024
("Tranche Three"); and
· £125,000 to be drawn down within 6 months of 7 November 2024
("Tranche Four").
The Company will provide a Loan drawdown notice if and when it requires a
drawdown. The Company has the option but not the obligation to drawdown on
part or all of the Facility.
Repayment and Conversion
Repayment
Unless otherwise converted, the Company must repay each Loan Tranche on the
first anniversary of the advance by the Lender of the applicable Loan Tranche
("Maturity Date"). The Company may prepay the whole or part of the Facility on
any day prior to the Maturity Date for a Loan Tranche upon giving not less
than 14 days' prior written notice to the Lender and paying in cash a
prepayment fee of 5% of the amount which the Company prepays in cash before
the Maturity Date. The Lender can during the 14 days' notice period make an
election for all or part of the Loan subject to a prepayment notice to be
repaid in Shares in which case the 5% fee shall not apply to that proportion
of the Loan repaid in Shares.
Conversion of Loan Tranche by Lender
The Lender may at any time during the Facility Period elect to convert all or
part of any drawn down amount into such number of new Shares equal to the
amount of the Loan Tranche that is to be repaid at the date of the election,
divided by the 0.75 pence ("Conversion Price") (the "Conversion Shares"). The
Conversion Price of 0.75 pence per Share represents a 87% premium to the
closing share price of 0.4 pence on 19 April 2024, being the latest
practicable date prior to this announcement.
Conversion of Loan by the Company
The Company may at any time during the Loan Period elect to convert all or
part of Tranche One to Tranche Four if the Share price exceeds 1 pence
("Target Conversion Price") for a period of five or more business days.
Conversion Adjustment
If the Company before i) the Maturity Date for a Loan Tranche and before ii)
the Loan Tranche has been repaid issues Shares for cash consideration ("Issue
Price") at a discount to 0.75 pence per Share (the "Base Issue Price") then
the Conversion Price and the Target Conversion Price in respect of that Loan
Tranche shall be multiplied by a fraction, the numerator of which will be the
Issue Price and the denominator of which will be 0.75 pence.
Interest and Fees
The Loan is interest free. The Lender shall be paid an arrangement fee of 10%
of the amount of the Facility to be settled by the issue of 11,764,706 new
Shares ("Facility Fee Shares") credited as fully paid by at an issue price of
0.425p per Share (being the Five Day VWAP on the date of this announcement)
with the Facility Fee Shares to be issued on or before 31 December 2024 or
such other date agreed by the parties.
On the drawdown of any Loan Tranche the Lender shall be paid a further fee of
2% of the amount of the relevant Loan Tranche which is to be settled by the
issue of new Shares credited as fully paid at the five-day VWAP on the date of
the relevant Loan drawdown notice ("Drawdown Fee Shares") with the Drawdown
Fee Shares to be issued on or before 31 December 2024 or such other date
agreed by the parties.
Option to Extend Facility
If the Company draws down in full or in part against Tranche One, Tranche Two,
Tranche Three and Tranche Four then it has the option to elect to be able to
drawdown up to an additional GBP250,000 ("Optional Loan Tranche") This must be
made in writing within 30 days of the date the Company has made a drawdown in
full or in part against Tranche One, Tranche Two, Tranche Three and Tranche
Four.
Warrants
On the drawdown of any Loan Tranche, the Lender shall be issued three year
warrants over Shares ("Warrants") with a face value equal to 50% of the amount
drawn down under the Loan Tranche. The exercise price for the Warrants
applicable to each of the tranches are as follows:
· 1.5 pence per share for the drawdown of Tranche One to Tranche
Four; and
· 2 pence per share for the drawdown of the Optional Loan Tranche;
If there are no drawdowns under two or more of the Loan Tranches then at 7 May
2025 which is 6 months after the Tranche Four Drawdown Date of 7 November
2024, the Company will issue a three year warrant to the Lender for an amount
equal to 25% of the Facility that has not been drawn down with an exercise
price of 1 pence per share.
Other that these matters, no significant events have occurred subsequent to
the reporting date that would have a material impact on the consolidated
financial statements.
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