REG - Mila Resources Plc - Final Results
31/10/2022 07:00
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RNS Number : 5733E Mila Resources PLC 31 October 2022
Mila Resources Plc / Index: LSE / Epic: MILA / Sector: Natural Resources
31 October 2022
Mila Resources Plc
('Mila' or the 'Company')
Final Results
Mila Resources Plc (LSE:MILA), the post-discovery gold exploration
accelerator, is pleased to present its final results for the year ended 30
June 2022.
Highlights
· Acquisition of a 30% interest in the Kathleen Valley Project, a
proven gold asset located in a Tier One region in Western Australia
· Advancing a 13,500m drill campaign to deliver an enhanced resource.
· Focussed on the Coffey Deposit, one of three known deposits, with
drilling delivering exceptional results including 6.6m @ 14.86 g/t Au and
21.79 g/t Ag from 209.40m
· Results to-date give strong indication of an extensive mineralised
system with consistent commercial grades and widths
· Strong investor support: November 2021 raised £3.5m via capital
raise (net of costs) and post-period end in October 2022 raised £696k via
capital raise (net of costs).
· The Company made a loss for the financial year ended 30 June 2022 of
£1,011,445 (2021: £382,387). This loss includes a non-cash accounting charge
of £493,232 relating to the issuance of Warrants and Options as part of the
capital raise in November 2021 and as per the prospectus issued in October
2021.
Statement from the Board
Dear Shareholder
We have pleasure in presenting the financial statements for the year ended 30
June 2022. Mila has been off to a flying start since our readmission to
trading in November 2021, following the acquisition of an initial 30% interest
in the Kathleen Valley Gold Project in Western Australia. For further details
on the acquisition please see the sub-section titled "Acquisition of an
initial 30% interest in the Kathleen Valley Project" within the Directors
Report on page 15 of the annual report.
We wasted no time in getting on the ground and began a 13,500m drill campaign
within a fortnight of completing the transaction. This commitment to rapidly
turning initial discoveries into major new resources is at the core of our
investment philosophy, and we are delighted with the exploration successes we
have reported so far during our development.
The first hurdle to success is of course identifying the right asset. The
Kathleen Valley Project came to our attention in 2020, shortly after
ASX-listed Bellevue Gold made a discovery at its Government Well prospect,
which is on the western boundary of the Kathleen Valley licence area.
Further evidencing the prospectivity of the area, Kathleen Valley is located
in a Tier One region with proven production, including BHP's Mount Keith
nickel mine (~20km to the north), and Kathleen Valley Gold (to the north),
which in 2015 extracted 65,900 oz gold over an 18-month period. Kathleen
Valley certainly has the right geological postcode and the previous operator
had undertaken limited drilling at one of the three known targets which
resulted in a maiden JORC Inferred gold resource of 21,000oz @ 2.1g/t Au.
Given the calibre of the geological setting and the initial success from a
fairly modest drill campaign, the Mila team were confident that Kathleen
Valley had the potential to reveal a much larger resource.
The first phase of drilling commenced in December 2021, with first assays
being returned later that month. Drilling has continued intermittently since
December, and indeed, the newest phase of drilling commenced again in early
September 2022. This very comprehensive and targeted drilling has returned
some exceptional results and grades, but perhaps most importantly for
investors, has provided substantial evidence of consistent commercial grades
and widths at Kathleen Valley.
Drilling has also revealed quartz-sulphide veining, referred to now as
"Bellevue Style" mineralisation, which is significant. The presence of the
sulphides, particularly pyrrhotite, provides a strong geophysical response and
therefore responds very well to Down Hole Electro-magnetic surveys ("DHEM").
DHEM has worked extremely well at Bellevue, greatly assisting with their
discovery success rate. Mila will use the same DHEM geophysical methods to
test for extensions and accumulations of the sulphide mineralisation. The
drill holes have been polyvinyl chloride ("PVC") cased in preparation for the
DHEM surveying, which will highlight sulphide rich zones to further assist in
targeting and locating the mineralisation at depth.
Drilling to date has focussed on the Coffey Deposit, one of three identified
prospects in Kathleen Valley. Coffey is the most advanced target so far and
has returned some very significant intersections to date including 6.6m @
14.86 g/t Au and 21.79 g/t Ag from 209.40m, 5m @ 4.26 g/t Au & 13.35 g/t
Ag from 198m, 1m @ 13.45 g/t Au & 37.70 g/t Ag from 202m, and 10m @ 8.38
g/t Au & 13.96 g/t Ag, from 165m, 11.28 g/t Au & 33.48 g/t Ag from
173m.
Results from the Stage 1 drilling surpassed internal expectations and
importantly, demonstrated that the mineralisation at Coffey has improved in
grade and continuity down dip of the original pre-Mila resource zone,
confirming commercial grades over mineable widths. Our drilling has
substantially extended mineralisation, which is now defined over a zone 200m
long and 220m down dip, with the higher grades and multiple lodes having the
potential to add significant grade, tonnage and higher-grade ounces to the
Coffey Deposit once we complete a new resource estimate at the end of the
Stage 2 & 3 drilling campaigns. Notably, the potential silver credits
provide Mila with additional optionality over processing routes given the
economic advantage of silver as a co-product.
The next hole in the programme was stepped out 100m below the previous hole,
KVDD0035, and has the potential to extend the mineralised zone to 300m in
length down dip and to 300m below surface, presenting a significant expansion
in the footprint and tonnage of the Coffey Deposit. This drilling is
on-going, and we will report more intersections to the market as they become
available.
As referred to above, Coffey is only one of three known identified prospects
at Kathleen Valley, and drilling at two new major targets is expected when the
Company is ready to take a break from drilling at Coffey and once the Heritage
Surveys over these prospects are completed. The Sturrock Prospect is located
~3.5km to the NNW of Coffey, on a sheared contact between mafic and ultramafic
rocks which hosts the historical Main Road Au Pit, 2km along strike to the
NE. Auger soil sampling completed in 2019 highlighted a 700m x 250m zone of
anomalous gold in soils and shallow historical aircore drilling returned zones
of highly anomalous gold grades of between 0.1-1.1g/t Au. 12 Reverse
Circulation ("RC") holes totalling 2,400m with downhole-electromagnetic
surveying of the deeper holes are planned to test the anomaly to depth in an
optimal direction to the shears.
The Powell Prospect is located 3.1km NNE of Coffey and 2km ESE of Sturrock in
the northeast portion of the tenement. The auger soil sampling highlighted a
500m x 500m "X" shaped zone of anomalous gold in soils where it appears that
two shear zones intersect. Field work located an historical shallow shaft and
pit which has been dug in the area and further investigative work is required
prior to drill testing.
Outlook
I am extremely optimistic about our ability to demonstrate Kathleen Valley's
commercial value to the market as we look to materially expand our JORC
Resource inventory over the coming months. With the injection of £696,000
new capital (before expenses) post period end, Mila is well positioned to move
forward with confidence in its objective to rapidly transition gold
discoveries into significant resources, with Kathleen Valley as our first
success story. Further funding will be needed to ensure that the exploration
and evaluation activities can continue, and the project continues towards
reaching its ultimate potential.
I would like to take this opportunity to thank our exploration and technical
team on the ground at Kathleen Valley, together with the wider Mila team, and
of course I would like to extend my sincere thanks to our shareholders - both
new and old - for their continued support and vision.
Fund Raise - post year end
Post year end, on 6 October 2022, the Company announced that it had raised
£696,000 (before expenses) through a Placing of 23,199,984 New Ordinary
Shares of GBP0.01 each ("Placing Shares") at a price of 3 pence per Placing
Share (the "Placing"). Investors in the Placing will also receive one
warrant per Placing Share to subscribe for one new ordinary share at a cost of
4.8p per share ("Investor Warrants"). The Company has also issued 524,000
broker warrants that are exercisable at 3p for a period of 3 years ("Broker
Warrants").
The Investor Warrants and Broker Warrants are conditional on the publication
of a Prospectus by the Company, which it anticipates filing as soon as
practicable, and shareholder approval to increase the Company's share
authorities.
Mark Stephenson
Executive Director
28 October 2022
Statement of Comprehensive Income
For the year ended 30 June 2022
Year ended Year ended
30 June 2022 30 June 2021
£
£
Notes
Administrative expenses 5 (518,213) (421,440)
Share warrant and options expense 16 (493,232) -
Operating loss (1,011,445) (421,440)
Other income 4 - 37,500
Interest receivable 8 - 1,553
Loss on ordinary activities before taxation 5 (1,011,445) (382,387)
Income tax expense 9 - -
Loss and total comprehensive income for the period attributable to the owners (1,011,445) (382,387)
of the company
Earnings per share (basic and diluted) attributable to the equity holders 10 (0.52) (1.65)
(pence)
Statement of Financial Position
For the year ended 30 June 2022
Year ended Year ended
30 June 2022 30 June 2021
£
£
Notes
NON-CURRENT ASSETS
Exploration and evaluation assets 11 4,698,625 -
4,698,625 -
CURRENT ASSETS
Trade and other receivables 12 22,568 24,185
Cash and cash equivalents 13 1,096,084 329,628
1,118,652 353,813
TOTAL ASSETS 5,817,277 353,813
CURRENT LIABILITIES
Trade and other payables 14 210,760 178,309
Convertible Loan Notes - 348,692
TOTAL LIABILITIES 210,760 527,001
NET ASSETS 5,606,517 (173,188)
EQUITY
Share capital 15 3,065,511 232,000
Share premium 15 4,267,846 849,300
Share based payment reserve 16 543,813 4,720
Retained loss (2,270,653) (1,259,208)
TOTAL EQUITY 5,606,517 (173,188)
Statement of Cashflows
For the year ended 30 June 2022
12 months to 30 June 12 months to 30 June
2022 2021
£ £
Cash flows from operating activities
Loss for the period (1,011,445) (382,387)
Adjustments for:
Warrants / Options expense (non-cash) 493,232 -
Operating cashflow before working capital movements (518,213) (382,387)
Decrease / (Increase) in trade and other receivables 1,616 (480)
Increase in trade and other payables 4,427 91,638
Shares issued for services 30,000 -
Interest income - (1,553)
Interest expense 3,801 8,692
Net cash flow from operating activities (478,369) (284,090)
Cash flow from investing activities
Acquisition of Kathleen Valley - cash component (300,000) -
Acquisition costs (336,732) -
Funds used for drilling and exploration (1,408,108) -
Repayment of loan from E-Tech - 85,849
Interest Income received - 1,553
Net cash (outflow) / inflow from investing activities (2,044,840) 87,402
Cash flow from financing activities
Proceeds from share issues 3,358,740 -
Issue costs paid in cash (69,075) -
Convertible Loan Notes - 340,000
Net cash inflow from financing activities 3,289,665 340,000
Net Increase in cash and cash equivalents 766,456 143,312
Cash and cash equivalents at beginning of the period 329,628 186,316
Cash and cash equivalents at end of the period 1,096,084 329,628
Statement of Changes in Equity
For the year ended 30 June 2022
Share Capital Share Premium Share Based Payment Reserve Retained Loss Total
£ £ £ £ £
Balance at 1 July 2020 232,000 849,300 4,720 (876,821) 209,199
Total comprehensive income for the year - - - (382,387) (382,387)
Balance at 30 June 2021 232,000 849,300 4,720 (1,259,208) (173,188)
Total comprehensive income for the year - - - (1,011,445) (1,011,445)
Capital Raising - Issue of shares 1,458,333 2,041,667 - - 3,500,000
Capital Raising - Issue of shares in lieu of fees 59,792 83,708 - - 143,500
Capital Raising - Issue Costs - (221,135) - - (221,135)
Acquisition of Kathleen Valley 835,432 1,169,605 - - 2,005,037
Conversion of convertible loan notes 477,754 382,203 - - 859,957
Conversion of warrants 2,200 8,360 - - 10,560
Share warrants and options expense - (45,861) 539,093 - 493,232
Balance at 30 June 2022 3,065,511 4,267,846 543,813 (2,270,653) 5,606,517
Notes to the Financial Statements
For the year ended 30 June 2022
1 GENERAL INFORMATION
Mila Resources Plc (the "Company'') was listed on the London Stock Exchange in
2016 with a view to acquiring projects in the natural resources sector that
have a significant innate value that could be unlocked without excessive
capital. In November 2021, the Company acquired an interest in a gold
exploration project in Western Australia.
The Company is domiciled in the United Kingdom and incorporated and registered
in England and Wales, with registration number 09620350.
2 ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements have been prepared on a going concern basis using the
historical cost convention and in accordance with the UK-Adopted International
Accounting Standards, and in accordance with the provisions of the Companies
Act 2006.
The Company's financial statements for the year ended 30 June 2022 were
authorised for issue by the Board of Directors on 28 October 2022 and were
signed on the Board's behalf by Mr L Daniels.
The Company's financial statements are presented in pounds Sterling and
presented to the nearest pound.
2.2 Business Combinations
Acquisitions of business are accounted for using the acquisition method. At
the acquisition date, the identifiable assets acquired, and the liabilities
assumed are recognised at their fair value.
Consideration is also measured at fair value at the acquisition date. This is
calculated as the sum of the fair values of assets transferred less the fair
value of the liabilities incurred by the Company.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non‑controlling interests in the acquiree,
and the fair value of the acquirers previously held equity interest in the
acquiree (if any) over the net of the acquisition‑date amounts of the
identifiable assets acquired, and the liabilities assumed. If, after
reassessment, the net of the acquisition‑date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non‑controlling interests in the acquiree and
the fair value of the acquirers previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
Acquisition‑related costs are recognised in profit or loss as incurred.
2.3 Going concern
The Financial Statements have been prepared under the going concern
assumption, which presumes that the Company will be able to meet its
obligations as they fall due for at least the next 12 months from the date of
the signing of the Financial Statements.
The Company had a net cash inflow for the year of £766,456(2021: £143,312)
and at 30 June 2022 had cash and cash equivalents balance of £1,096,084
(2021: £329,628).
An operating loss of £1,011,445 has been made and although the Company was in
a net current asset position of £907,892 at 30 June 2022 and has raised
£696,000 (before expenses) post year-end, the directors are aware the
Company's ability to fund its forecasted expenditure and thus remain a going
concern for at least 12 months from the approval of these financial statements
is dependent on the raising of further equity and/or debt finance. Whilst the
directors acknowledge this is uncertain, they have a reasonable expectation
that necessary funds will be raised as required over this period.
The Directors have made enquires and assessed the potential impact of the
COVID-19 virus on the Company. As such, whilst they acknowledge that COVID-19
could continue to have long lasting and significant impacts on the global
economy, the Directors believe that the Company has sufficient finance to meet
their obligations as they fall due for a period of at least 12 months from the
date of approval of the financial statements.
2.4 Standards, amendments and interpretations to existing standards
that are not yet effective and have not been early adopted by the Company
New standards, amendments to standards and interpretations:
No new standards, amendments or interpretations, effective for the first time
for the financial year beginning on or after 1 January 2021 have had a
material impact on the Company.
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the following
standards and interpretations relevant to the Company and which have not been
applied in these financial statements, were in issue but were not yet
effective.
Standard Impact on initial application Effective date
IAS 1 Amendments - presentation and classification of liabilities as current or non TBC
current
IFRS 3 (amendments) Business combinations 01 January 2022
IAS 37 (amendments) Onerous contracts 01 January 2022
IAS 16 (amendments) Proceeds before intended use 01 January 2022
IAS 8 Amendments - Definition e of accounting policies 01 January 2023
IAS 1 Amendments - Disclosure of accounting policies 01 January 2023
IFRS 17 Insurance Contracts 01 January 2023
IFRS 17 (amendments) Insurance contracts 01 January 2023
The directors do not consider that these standards will impact the financial
statements of the Company.
2.5 Business Combinations
Acquisitions of business are accounted for using the acquisition method.
At the acquisition date, the identifiable assets acquired, and the liabilities
assumed are recognised at their fair value.
Consideration is also measured at fair value at the acquisition date. This is
calculated as the sum of the fair values of assets transferred less the fair
value of the liabilities incurred by the Company.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non‑controlling interests in the acquiree,
and the fair value of the acquirers previously held equity interest in the
acquiree (if any) over the net of the acquisition‑date amounts of the
identifiable assets acquired, and the liabilities assumed. If, after
reassessment, the net of the acquisition‑date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non‑controlling interests in the acquiree and
the fair value of the acquirers previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
Acquisition‑related costs are recognised in profit or loss as incurred.
2.6 Asset acquisition
Where an acquisition transaction constitutes the acquisition of an asset and
not a business, the consideration paid is allocated to assets and liabilities
acquired based on their relative fair values, with transaction costs
capitalised. No gain or loss is recognised.
Consideration paid in the form of equity instruments is measured by reference
to the fair value of the asset acquired. The fair value of the assets acquired
would be measured at the point control is obtained.
The Group recognises the fair value of contingent consideration in respect to
an asset acquisition, where it is probable that a liability has been incurred,
and the amount of that liability can be reasonably estimated. Such contingent
consideration is recognized at the time control of the underlying asset is
obtained, and such an amount is included in the initial measurement of the
cost of the acquired assets.
The Group recognises contingent consideration in the form of cash, and
contingent consideration in the form of equity instruments. Contingent
consideration in the form of cash is recognised as a liability, and contingent
consideration in the form of equity instruments is recognised in the
contingent share reserve.
For contingent cash consideration milestones, the Group estimates a
probability for the likelihood of completion to estimate the total liability
for the expected variable payments. The probability estimated for the
likelihood of completion is considered at each reporting period. Movements in
the fair value of contingent cash consideration payable is capitalised as part
of the asset.
For contingent share consideration milestones, the Group estimates a
probability for the likelihood of completion to estimate the total contingent
share consideration payable. The probability estimated for the likelihood of
completion is not reassessed in subsequent reporting periods.
Deferred tax is not recognised upon an asset acquisition.
2.7 Foreign currency translation
The financial information is presented in Sterling which is the Company's
functional and presentational currency.
Transactions in currencies other than the functional currency are recognised
at the rates of exchange on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities are retranslated at the rates
prevailing at the balance sheet date with differences recognised in the
Statement of comprehensive income in the period in which they arise.
2.8 Financial instruments
Initial recognition
A financial asset or financial liability is recognised in the statement of
financial position of the Company when it arises or when the Company becomes
part of the contractual terms of the financial instrument.
Classification
Financial assets at amortised cost
The Company measures financial assets at amortised cost if both of the
following conditions are met:
(1) the asset is held within a business model whose objective is to collect
contractual cash flows; and
(2) the contractual terms of the financial asset generating cash flows at
specified dates only pertain to capital and interest payments on the balance
of the initial capital.
Financial assets which are measured at amortised cost, are measured using the
Effective Interest Rate Method (EIR) and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is de-recognised,
modified or impaired.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the effective interest
rate method include current borrowings and trade and other payables that are
short term in nature. Financial liabilities are derecognised if the Company's
obligations specified in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective
interest rate ("EIR"). The EIR amortisation is included as finance costs in
profit or loss. Trade payables other payables are non-interest bearing and are
stated at amortised cost using the effective interest method.
Derecognition
A financial asset is de-recognised when:
(1) the rights to receive cash flows from the asset have expired, or
(2) the Company has transferred its rights to receive cash flows from the
asset or has undertaken the commitment to fully pay the cash flows received
without significant delay to a third party under an arrangement and has either
(a) transferred substantially all the risks and the assets of the asset or (b
has neither transferred nor held substantially all the risks and estimates of
the asset but has transferred the control of the asset.
Impairment
The Company recognises a provision for impairment for expected credit losses
regarding all financial assets. Expected credit losses are based on the
balance between all the payable contractual cash flows and all discounted cash
flows that the Company expects to receive. Regarding trade receivables, the
Company applies the IFRS 9 simplified approach in order to calculate expected
credit losses. Therefore, at every reporting date, provision for losses
regarding a financial instrument is measured at an amount equal to the
expected credit losses over its lifetime without monitoring changes in credit
risk. To measure expected credit losses, trade receivables and contract assets
have been grouped based on shared risk characteristics.
Trade and other receivables
Trade and other receivables are initially recognised at fair value when
related amounts are invoiced then carried at this amount less any allowances
for doubtful debts or provision made for impairment of these receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and are subject to
an insignificant risk of changes in value.
Trade payables
These financial liabilities are all non-interest bearing and are initially
recognised at the fair value of the consideration payable.
2.9 Equity
Share capital is determined using the nominal value of shares that have been
issued.
The Share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the Share premium account, net of any
related income tax benefits.
Equity-settled share-based payments are credited to a share-based payment
reserve as a component of equity until related options or warrants are
exercised or lapse.
Retained losses includes all current and prior period results as disclosed in
the statement of comprehensive income.
2.10 Share-based payments
The Company records charges for share-based payments.
For warrant-based or option-based share-based payments, to determine the value
of the warrants or options, management estimate certain factors used in the
Black Scholes Pricing Model, including volatility, vesting date exercise date
of the warrants or option and the number likely to vest. At each reporting
date during the vesting period management estimate the number of shares that
will vest after considering the vesting criteria. If these estimates vary from
actual occurrence, this will impact on the value of the equity carried in
reserves.
2.11 Taxation
Tax currently payable is based on taxable profit for the period. Taxable
profit differs from profit as reported in the income statement because it
excludes items of income and expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on 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 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 taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and
liabilities on a net basis.
2.9 Intangible assets - Exploration and evaluation expenditures
(E&E) Development expenditure
The Company applies the successful efforts method of accounting, having regard
to the requirements of IFRS 6 'Exploration for and Evaluation of Mineral
Resources'. Costs incurred prior to obtaining the legal rights to explore an
area are expensed immediately to the Statement of Comprehensive Income.
Expenditure incurred on the acquisition of a licence interest is initially
capitalised within intangible assets on a licence-by-licence basis. Costs are
held, unamortised, until such time as the exploration phase of the field area
is complete or commercial reserves have been discovered. The cost of the
licence is subsequently transferred into property, plant and equipment and
depreciated over its estimated useful economic life.
Exploration expenditure incurred in the process of determining exploration
targets is capitalised initially within intangible assets as drilling costs.
Drilling costs are initially capitalised on a licence-by-licence basis until
the success or otherwise has been established. Drilling costs are written off
unless the results indicate that reserves exist and there is a reasonable
prospect that these reserves are commercially viable. Drilling costs are
subsequently transferred into 'Drilling expenditure' within property, plant
and equipment and depreciated over their estimated useful economic life.
2.10 Impairment of Exploration and Evaluation assets
The Company assesses at each reporting date whether there is an indication
that an asset may be impaired. This includes consideration of the IFRS 6
impairment indicators for any intangible exploration and evaluation
expenditure capitalised as intangible assets. Examples of indicators of
impairment include whether:
(a) the period for which the entity has the right to explore in the specific
area has expired during the period or will expire in the near future and is
not expected to be renewed.
(b) substantive expenditure on further exploration for and evaluation of
mineral resources in the specific area is neither budgeted nor planned.
(c) exploration for and evaluation of mineral resources in the specific area
have not led to the discovery of commercially viable quantities of mineral
resources and the entity has decided to discontinue such activities in the
specific area.
(d) sufficient data exist to indicate that, although a development in the
specific area is likely to proceed, the carrying amount of the exploration and
evaluation asset is unlikely to be recovered in full from successful
development or by sale.
If any such indication exists, or when annual impairment testing for an asset
is required, the Group makes an estimate of the asset's recoverable amount,
which is the higher of its fair value less costs to sell and its value in use.
Any impairment identified is recorded in the statement of comprehensive
income.
2.11 Critical accounting judgements and key sources of uncertainty
In the process of applying the entity's accounting policies, management makes
estimates and assumptions that have an effect on the amounts recognised in the
financial information. Although these estimates are based on management's best
knowledge of current events and actions, actual results may ultimately differ
from those estimates.
The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are as
follows:
Impairment of intangible assets
The first stage of the impairment process is the identification of an
indication of impairment. Such indications can include significant geological
or geophysical information which may negatively impact the existing assessment
of a project's potential for recoverability, significant reductions in
estimates of resources, significant falls in commodity prices, a significant
revision of the Company Strategy, operational issues which may require
significant capital expenditure, political or regulatory impacts and others.
This list is not exhaustive and management judgement is required to decide if
an indicator of impairment exists. The Company regularly assesses the
non-tangible assets for indicators of impairment. When an impairment indicator
exists an impairment test is performed; the recoverable amount of the asset,
being the higher of the asset's fair value less costs to sell and value in
use, is compared to the asset's carrying value. Any excess of the asset's
carrying value over its recoverable amount is expensed to the income
statement.
Share-based payments
When issuing warrant, options or other share based payment instruments that
fall under the scope of IFRS 2, management are required to determine the value
of the warrants or options. To calculate a fair value for such instrument,
Management use the black scholes valuation model and must therefore estimate
certain factors used in the option pricing model, including volatility,
expected life of the option and the risk free rate. At each reporting date
during the vesting period management estimate the number of shares that will
vest after considering the vesting criteria. If these estimates vary from
actual occurrence, this will impact on the value of the equity carried in the
reserves. For further detail see note 16, in the notes to the financial
statements.
2.12 Earnings per share
Basic earnings per share is calculated as profit or loss attributable to
equity holders of the Company for the period, adjusted to exclude any costs of
servicing equity (other than dividends), divided by the weighted average
number of ordinary shares, adjusted for any bonus element. The diluted profit
per share has been is the same as the basic profit per share for 2022 because,
although certain warrants and options in issue were in the money as at the
year end, the Company reported a loss, hence including the additional dilution
would have resulted in a reduction of the loss per share.
2.13 Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been
identified as the Board as a whole.
All operations and information are reviewed together therefore at present
there is only one reportable operating segment.
3. SEGMENT REPORTING
The Companies strategy is to act as a post discovery accelerator, where the
Company identifies target(s) that have already had an early-stage geological
discovery. To date the Company has identified and invested on one target,
namely the Kathleen Valley Project. Hence at the moment there is only one
reportable operating segment. In the prior year the sole operating segment was
that of searching for a potential acquisition target.
4. OTHER INCOME
For the year ending 30 June 2022 this was £nil (2021: £37,500).
5. OPERATING LOSS
This is stated after charging:
2022 2021
£
£
Auditor's remuneration
Audit of the Company 30,000 16,500
Other services 2,000 -
Directors' remuneration 266,585 80,356
Stock exchange and regulatory expenses 47,486 55,597
Share warrant and options expense ((1)) 493,232 -
Other expenses 172,142 268,987
Operating expenses 1,011,445 421,440
(1) This is a non-cash accounting expense for the issue of share warrants
and options.
6. AUDITOR'S REUMERATION
2022 2021
£
£
Fees payable to the Company's current auditor: 16,500
- audit of the Company's financial statements
30,000
-
- other services 2,000
7. DIRECTORS AND STAFF COSTS
During the year the only staff of the Company were the Directors and as such
key management personnel. Management remuneration, other benefits supplied and
social security costs to the Directors during the year was as follows below.
For Directors costs see the Directors remuneration report on page 27 of the
annual report.
2022 2021
£
£
Salaries 266,585 80,356
Social security costs 29,016 2,901
Share based payments 59,658 -
355,259 83,257
8. INTEREST RECEIVABLE
2022 2021
£
£
Interest due on Loans - 1,553
9. TAXATION
2022 2021
£
£
The charge / credit for the year is made up as follows:
Current tax - -
Deferred tax - -
Taxation charge / credit for the year - -
A reconciliation of the tax charge / credit appearing in the income statement
to the tax that would result from applying the standard rate of tax to the
results for the year is:
Loss per accounts (1,011,445) (382,387)
Tax credit at the standard rate of corporation tax in the UK of 19% (2021: (192,175) (72,654)
19%)
Impact of costs disallowed for tax purposes 17,919 -
Deferred tax in respect of temporary differences - -
Impact of unrelieved tax losses carried forward 174,256 72,654
- -
Estimated tax losses of £2,116,641 (2021: £1,199,505) are available for
relief against future profits and a deferred tax asset of £402,162 (2021:
£227,906) has not been provided for in the accounts due to the uncertainty of
future profits.
Factors affecting the future tax charge
The standard rate of corporation tax in the UK is 19%. Accordingly, the
Company's effective tax rate for the period was 19% (2021: 19%). As announced
post the unsuccessful Mini-budget in September 2022, the rate of corporation
tax will increase to 25% from April 2023.
Deferred taxation
No deferred tax asset has been recognised by the Company due to the
uncertainty of generating sufficient future profits and tax liability against
which to offset the tax losses. Note 9 above sets out the estimated tax losses
carried forward.
10. EARNINGS PER SHARE
The calculation of the earnings per share is based on the loss for the
financial period after taxation of £1,011,445 (2021: loss £382,387) and on
the weighted average of 193,873,021 (2021: 23,200,000) ordinary shares in
issue during the period.
The diluted profit per share is the same as the basic profit per share
because, although certain warrants and options in issue were in the money as
at 30 June 2022, the Company reported a loss, hence including the additional
dilution would have resulted in a reduction of the loss per share.
Earnings Weighted average number of shares Per-share amount
£ unit pence
30 June 2022: Loss per share attributed to ordinary shareholders (1,011,445) 193,873,021 (0.52)
30 June 2021: Loss per share attributed to ordinary shareholders (382,387) 23,200,000 (1.65)
11. EXPLORATION AND EVALUATION ASSETS
At 30 At 30
June 2022 June 2021
£ £
Opening balance - -
Cost of acquisition including transaction costs 3,290,517 -
Exploration costs capitalised in the year 1,408,108 -
Net book value 4,698,625 -
In November 2021, the Company acquired a 30% interest in the Kathleen Valley
(Gold) Project for £2,812,500. The consideration was £300,000 in cash and
the balance in new Mila shares. Transaction costs of £478,017 have also been
capitalised. The principal assets are leases with rights to exploration of
those leases in Western Australia. At the period end the capitalised
exploration and evaluation assets totalled £4.7m (2021: £nil). All
Exploration costs capitalised in the year relate to the Kathleen Valley
Project.
Exploration and evaluation assets are regularly reviewed for indicators of
impairment. If an indicator of impairment is found an impairment test is
required, where the carrying value of the asset is compared with its
recoverable amount. The recoverable amount is the higher of the assets fair
value less costs to sell and value in use. The Directors are satisfied that no
impairments are required for the current year.
12. TRADE AND OTHER RECEIVABLES
2022 2021
£
£
Prepayments and other receivables 22,568 24,185
22,568 24,185
The Directors consider that the carrying value amount of trade and other
receivables approximates to their fair value.
13. CASH AND CASH EQUIVALENTS
2022 2021
£
£
Cash at bank 1,096,084 329,628
1,096,084 329,628
Cash at bank comprises balances held by the Company in current bank accounts.
The carrying value of these approximates to their fair value.
14. TRADE AND OTHER PAYABLES
2022 2021
£
£
Trade payables 36,722 43,038
Accruals and other payables 174,038 135,272
210,760 178,309
15. SHARE CAPITAL / SHARE PREMIUM
Number of shares on issue Share capital £ Share premium £ Total £
Balance as at 1 July 2020 23,200,000 232,000 849,300 1,081,300
Balance as at 30 June 2021 23,200,000 232,000 849,300 1,081,300
Capital Raising 151,812,495 1,518,125 1,904,240 3,422,365
Acquisition of Kathleen Valley 83,543,197 835,432 1,169,605 2,005,037
Conversion of convertible loan notes 47,775,365 477,754 382,203 859,957
Conversion of warrants 220,000 2,200 8,360 10,560
Warrants issued in lieu of share issue costs - - (45,861) (45,861)
Balance as at 30 June 2022 306,551,057 3,065,511 4,267,846 7,333,357
The Company issued a total of 283,351,057 new fully paid ordinary shares
during the year.
In November 2021, the Company completed a placing of 145,833,329 new fully
paid ordinary shares with a nominal value of £0.01, raising gross proceeds of
£3.5m before expenses. 5,979,166 ordinary shares were issued directors and
certain advisors as set out in the Prospectus dated 29 October 2021.
In November 2021, the Company acquired an initial 30% interest in the Kathleen
Valley Gold Project in Western Australia. As part of the purchase
consideration the Company issued 83,543,197 ordinary shares.
In November 2021, the Company converted the outstanding convertible loan notes
by issuing 47,775,365 ordinary shares in order to settle the outstanding loan
notes.
In May 2022, the received a Warrant conversion request and subsequently
converted 220,000 outstanding warrants to 220,000 new ordinary shares.
The Directors held the following warrants at the beginning and end of the
year:
Director At 30 June 2021 Granted during the year ((1)) At 30 June 2022 Exercise price Earliest date of exercise Last date of exercise
M. Stephenson - 7,500,000 7,500,000 £0.024 22 Nov 2021 31 Dec 2026
L. Daniels - 7,500,000 7,500,000 £0.024 22 Nov 2021 31 Dec 2026
N. Hutchison - 5,000,000 5,000,000 £0.024 22 Nov 2021 31 Dec 2026
L. Mair - 2,000,000 2,000,000 £0.024 22 Nov 2021 31 Dec 2026
22,000,000 22,000,000
(1) as outlined in the prospectus dated 29 October 2021("Prospectus").
The Directors held the following EMI Options at the beginning and end of the
year:
Director At 30 June 2021 Granted during the year At 30 June 2022 Exercise price Earliest date of exercise Last date of exercise
M. Stephenson - 3,500,000 3,500,000 £0.024 10 Dec 2021 10 Dec 2026
L. Daniels - 2,500,000 2,500,000 £0.024 10 Dec 2021 10 Dec 2026
6,000,000 6,000,000
16. SHARE BASED PAYMENT RESERVE AND SHARE BASED PAYMENTS
SHARE BASED PAYMENT RESERVE
2022 2021
£
£
At 1 July 4,720 4,720
Issue of Warrants per prospectus 479,435 -
Issue of EMI Options per prospectus 59,658 -
At 30 June 543,813 4,720
Warrants and Options in Issue Number of Options in Issue Number of Warrants in Issue Weighted average exercise price Expiry date
At 1 July 2020 ((1)) - 15,825,000 £0.048
Expired during the year - 4,400,000
Balance at 30 June 2021 ((2)) - 11,425,000 £0.048 31 Dec 2022
Warrants issued during the year - per the prospectus - 242,264,111 £0.0432 31 Dec 2026
EMI options scheme issued during the year - per the prospectus 6,000,000 - £0.024 10 Dec 2026
Warrants exercised during the year - (220,000)
At 30 June 2022 6,000,000 253,469,111 £0.0429
1. On 4 December 2020 the expiration date of the Series 2 warrants
(350,000 warrants) and the IPO Investor warrants (11,075,000 warrants) was
extended to the 31(st) of December 2022. The 4,400,000 founder warrants
expired on 31 December 2020
2. The strike price for all of the remaining warrants at 30 June 2021,
namely the Series 2 warrants and the IPO Investor warrants, was reduced from
10 pence to 4.8 pence.
The market price of the shares at year end was £0.032 per share.
During the year, the minimum and maximum prices were £0.026 and £0.062 per
share respectively.
SHARE BASED PAYMENTS - WARRANTS AND OPTIONS
The Warrants below were issued or amended during the period
Issued Exercisable from Expiry Date Number outstanding Exercise price Share Based Payment Charge
Warrants - 12 September 2016((1)) From date of issue 31 December 2022 350,000 4.8 pence £ 60
Warrants - 26 September 2016((2)) 7 October 2016 31 December 2022 10,855,000 4.8 pence -
Warrants - 22 November 2021 22 November 2021 31 December 2026 193,608,694 4.8 pence -
Warrants - 22 November 2021((3)) 22 November 2021 31 December 2026 48,655,417 2.4 pence £ 433,514
253,469,111 £ 433,574
1. The warrants were issued conditionally upon the Ordinary Shares being
admitted to trading on the London Stock Exchange's main market for listed
securities which occurred on 7 October 2016. On 23 November 2021 the strike
price for these warrants was reduced from 10 pence to 4.8 pence. The warrants
are fully vested and expire on the 31(st) of December 2022. The Share Warrant
expense charge to the Statement of Comprehensive income for the year ending 30
June 2022 was £60; this was calculated using the Black Scholes model
utilising the inputs listed below:
i. Number of warrants amended 0.35m
ii. Date of Amendment - 23 Nov 2021
iii. Expected Date of Exercise - 31 Dec 2022
iv. Exercise price 4.8 pence
v. Expiry - 31 December 2022
vi. Risk free rate .930%
vii. Volatility 66.24% (Historical Annualised Volatility). As
the entity has been suspended periodically throughout its life we have
selected exploration companies in the similar space to obtain our annual
sample volatility.
viii. Share price at measurement date 2.4 pence. This is the
fair value of shares based on initial re-listing price
ix. Dividend Yield 0%
x. Expected life 1.10 years
2. On 23 November 2021 the strike price for these warrants was reduced
from 10 pence to 4.8 pence.
3. On 23 November 2021, the Company granted 48,655,417 warrants, on the
terms and set out in the Prospectus dated 29 October 2021 to brokers, certain
advisors, and directors. The warrants are fully vested and expire on the
31(st) of December 2026. The Share Warrant expense charge to the Statement of
Comprehensive income for the year ending 30 June 2022 was £433,514; this was
calculated using the Black Scholes model utilising the inputs listed below:
i. Number of warrants issued 48.6m
ii. Date of Grant - 23 Nov 2021
iii. Expected Date of Exercise - 12 June 2024
iv. Exercise price 2.4 pence
v. Expiry - 31 December 2026
vi. Risk free rate .930%
vii. Volatility 66.24% (Historical Annualised Volatility). As
the entity has been suspended periodically throughout its life we have
selected exploration companies in the similar space to obtain our annual
sample volatility.
viii. Share price at measurement date 2.4 pence. This is the
fair value of shares based on initial re-listing price
ix. Dividend Yield 0%
x. Expected life 2.55 years
The Options below were issued during the period
Issued Exercisable from Expiry Date Number outstanding Exercise price Share Based Payment Charge
Options - 10 December 2021((4)) 10 December 2021 10 December 2026 6,000,000 2.4 pence £ 59,658
6,000,000 £ 59,658
4. Issued under the Company's EMI Scheme established on the 10th of
December 2021, as set out in the Prospectus dated 29 October 2021. The options
are fully vested and expire on the 10(th) of December 2026. The options
expense charge to the Statement of Comprehensive income for the year ending 30
June 2022 was £59,658; this was calculated using the Black Scholes model
utilising the inputs listed below:
i. Number of options issued 6m
ii. Date of Grant - 9 Dec 2021
iii. Expected Date of Exercise - 9 June 2024
iv. Exercise price 2.4 pence
v. Expiry - 10 December 2026
vi. Risk free rate .810%
vii. Volatility 65.12% (Historical Annualised Volatility). As
the entity has been suspended periodically throughout its life we have
selected exploration companies in the similar space to obtain our annual
sample volatility.
viii. Share price at measurement date 2.45 pence.
ix. Dividend Yield 0%
x. Expected life 2.50 years
17. CAPITAL COMMITMENTS
There were no capital commitments at 30 June 2021 and 30 June 2022.
18. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 June 2021 and 30 June 2022.
19. COMMITMENTS UNDER LEASES
There were no commitments under operating leases at 30 June 2021 and 30 June
2022.
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company's financial instruments comprise primarily cash and various items
such as trade debtors and trade payables which arise directly from operations.
The main purpose of these financial instruments is to provide working capital
for the Company's operations. The Company does not utilise complex financial
instruments or hedging mechanisms.
Financial assets by category
2022 2021
£
£
Current Assets:
Cash and cash equivalents 1,096,084 329,628
Trade and other receivables 11,520 9,297
Categorised as financial assets at amortised cost 1,107,604 338,925
Financial liabilities by category
2022 2021
£
£
Current Liabilities:
Trade and other payables 210,760 166,355
Convertible Loan Notes - 348,692
Categorised as financial liabilities measured at amortised cost 210,760 391,789
All amounts are short term and payable in 0 to 6 months.
Credit risk
The maximum exposure to credit risk at the reporting date by class of
financial asset was:
2022 2021
£
£
Trade and other receivables 11,520 9,297
- -
Capital management
The Company considers its capital to be equal to the sum of its total equity.
The Company monitors its capital using a number of key performance indicators
including cash flow projections, working capital ratios, the cost to achieve
development milestones and potential revenue from partnerships and ongoing
licensing activities.
The Company's objective when managing its capital is to ensure it obtains
sufficient funding for continuing as a going concern. The Company funds its
capital requirements through the issue of new shares to investors.
Interest rate risk
The maximum exposure to interest rate risk at the reporting date by class of
financial asset was:
2022 2021
£
£
Bank balances 1,096,084 329,628
The Company is not financially dependent on the income earned on these
resources and therefore the risk of interest rate fluctuations is not
significant to the business and the Directors have not performed a detailed
sensitivity analysis.
All deposits are placed with main clearing banks, with 'A' ratings, to
restrict both credit risk and liquidity risk. The deposits are placed for the
short term, between one and three months, to provide flexibility and access to
the funds.
Credit and liquidity risk
Credit risk is managed on a Company basis. Funds are deposited with financial
institutions with a credit rating equivalent to, or above, the main UK
clearing banks. The Company's liquid resources are invested having regard to
the timing of payment to be made in the ordinary course of the Company's
activities. All financial liabilities are payable in the short term (between 0
to 3 months) and the Company maintains adequate bank balances to meet those
liabilities.
Currency risk
The Company operates in a global market with income and costs possibly arising
in a number of currencies. The Company's strategic aim of acquiring asset(s)
or business(es) acting as a post discovery accelerator, is not limited to any
specific geo-political area or jurisdiction. Currently the majority of the
Company's overhead costs are incurred in £GBP. The Kathleen Valley Project is
located in Western Australia, and hence the majority of the exploration and
evaluation costs relating to this project are incurred in $AUD. The Company
has not hedged against any currency depreciation but continues to keep the
matter under review. The Company did not have foreign currency exposure at
year end.
21. RELATED PARTY TRANSACTIONS
Key management personnel compensation
The Directors are considered to be key management personnel. Detailed
remuneration disclosures are provided in the remuneration report on pages 23 -
25 of the annual report.
Amounts due from/to related parties
There were no amounts due to directors as at 30 June 2022 (2021: £11,954). No
amounts were due from directors as at 30 June 2022 (2021: £Nil).
In the prior year, Mark Stephenson, subscribed to £50,000 of the convertible
loan notes disclosed in note 15. As at 30 June 2022 the balance due, to Mark
Stephenson, in relation to this convertible loan note, including the accrued
interest, was £Nil (2021: £51,192)
There were no other related party transactions.
22. EVENTS SUBESQUENT TO YEAR END
Fund Raise - post year end
Post year end, the Company announced on the 6(th) of October 2022 that it
raised £696,000 (before expenses) through a Placing of 23,199,984 New
Ordinary Shares of GBP0.01 each ("Placing Shares") at a price of 3 pence per
Placing Share (the "Placing"). Investors in the Placing will also receive
one three year warrant per Placing Share to subscribe for one new ordinary
share at a cost of 4.8p per share ("Investor Warrants"). The Company has
also issued 524,000 broker warrants that are exercisable at 3p for a period of
3 years ("Broker Warrants").
The Investor Warrants and Broker Warrants are conditional on the publication
of a Prospectus by the Company, which it anticipates filing as soon as
practicable, and shareholder approval to increase the Company's share
authorities.
23. CONTROL
In the opinion of the Directors there is no single ultimate controlling party.
**ENDS**
For more information visit www.milaresources.com or contact:
Mark Stephenson info@milaresources.com
Mila Resources Plc
Jonathan Evans +44 (0) 20 7100 5100
Tavira Financial
Nick Emerson +44 (0) 20 3143 0600
SI Capital
Susie Geliher / Max Bennett +44 (0) 20 7236 1177
St Brides Partners Limited
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