REG - Pembridge Resources - Annual Financial Report
28/04/2023 07:00
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RNS Number : 7714X Pembridge Resources plc 28 April 2023
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER ARTICLE 7 OF THE MARKET
ABUSE REGULATION (EU) 596/2014 AS AMENDED BY REGULATION 11 OF THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS 2019/310.
28 April 2023
2022 Financial Statements Released
London, United Kingdom - Pembridge Resources plc (LSE: PERE) ("Pembridge" or
the "Company") announces that, on 27 April 2023, the Board of Directors of the
Company approved the Annual Report and Consolidated Financial Statements for
the year ended 31 December 2022.
Highlights
· Loss for the year of $8,013,000, driven mainly by mark-to-market
revaluation of the Company's investment in Minto Metals Corp ("Minto") (2021 -
profit of $20,580,000, being driven by exceptional non-cash gains)
· Basic loss per share of 8.3c (2021: earnings per share 24.4c)
· Net assets at 31 December 2022 of $3,232,000 (2021: $10,894,000)
· Loan from Chairman and CEO term extended from December 2022 until
December 2025
Post Year End
· Repayment of $3m convertible loan notes deferred from May 2023 until
May 2025
· Ongoing negotiations on timing of payment to Capstone of remaining
USD 5 million purchase price and timing of receipt from Minto of remaining
surety funding provided by Pembridge and accumulated interest
· Cost saving measures introduced
· Interest due on loan to Gati Al-Jebouri added to principal
Negotiations are ongoing between Capstone Copper Corp ("Capstone"), Minto
Metals Corp ("Minto") and Pembridge, involving the timing of both the $ 5
million final payment due to Capstone for the acquisition of the Minto mine
and of Minto repaying the last surety funding due to Pembridge, being the
remaining principal of CAD 1 million and accumulated interest including the
amount that was due on 31 March 2023. Pembridge's management expect these
negotiations to reach a constructive conclusion in the near term.
The Company has recently introduced cost saving measures, the main ones being
that its CEO and Chairman has agreed to defer his salary effective from March
until September 2023 and the company's CFO has agreed to move to a part-time
basis with a corresponding cost saving effective from 1 April.
In addition, because of Pembridge's presently limited cash resources, it has
agreed with Gati Al-Jebouri that the interest that became payable on its loan
from him on 31 March 2023 will be added to the loan principal.
The financial statements are available in pdf form on the Company's website
using the link below.
https://www.pembridgeresources.com/investors/financial-reports
(https://www.pembridgeresources.com/investors/financial-reports)
The Company's Annual General Meeting will be held on 28 June 2023.
Extracts from the consolidated financial statements follow.
Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board of
Pembridge said:
"The results of Pembridge for 2022 are affected by the challenges experienced
during the year by Minto, in which Pembridge holds a 11.1% investment, which
is reflected in the financial statements as the fall in the market value of
that investment and deferral of the remaining surety repayments and accrued
interest due to Pembridge from Minto.
In response to this, to improve the Company's solvency we have extended the
repayment term of our convertible loan notes by two years and of the loan from
myself by three years, and we have recently introduced measures to reduce our
operating costs, all of which is intended to preserve the value of the Company
for its investors.
We are negotiating with Minto and Capstone in respect of the timing of the $5m
payment due to Capstone and the remaining surety funding due to Pembridge from
Minto and we hope to announce a constructive outcome on these matters in the
near term."
Cautionary Statement
This News Release includes certain "forward-looking statements" which are not
comprised of historical facts. Forward-looking statements include estimates
and statements that describe the Company's future plans, objectives or goals,
including words to the effect that the Company, or management, expects a
stated condition or result to occur. Forward-looking statements may be
identified by such terms as "believes", "anticipates", "expects", "estimates",
"may", "could", "would", "will", or "plan". Since forward-looking statements
are based on assumptions and address future events and conditions, by their
very nature they involve inherent risks and uncertainties. Although these
statements are based on information currently available to the Company, the
Company provides no assurance that actual results will meet management's
expectations. Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results, performance,
prospects and opportunities to differ materially from those expressed or
implied by such forward-looking information. Forward-looking information in
this news release includes, but is not limited to, the Company's intentions
regarding its objectives, goals or future plans and statements. Factors that
could cause actual results to differ materially from such forward-looking
information include, but are not limited to, the Company's ability to predict
or counteract the potential impact of COVID-19 coronavirus on factors relevant
to the Company's business, failure to identify additional mineral resources,
failure to convert estimated mineral resources to reserves with more advanced
studies, the inability to eventually complete a feasibility study which could
support a production decision, the preliminary nature of metallurgical test
results may not be representative of the deposit as a whole, delays in
obtaining or failures to obtain required governmental, environmental or other
project approvals, political risks, uncertainties relating to the availability
and costs of financing needed in the future, changes in equity markets,
inflation, changes in exchange rates, fluctuations in commodity prices, delays
in the development of projects, capital, operating and reclamation costs
varying significantly from estimates and the other risks involved in the
mineral exploration and development industry, and those risks set out in the
Company's public documents. Although the Company believes that the assumptions
and factors used in preparing the forward-looking information in this news
release are reasonable, undue reliance should not be placed on such
information, which only applies as of the date of this news release, and no
assurance can be given that such events will occur in the disclosed time
frames or at all. The Company disclaims any intention or obligation to update
or revise any forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by law.
ENDS
NOTES TO EDITORS
Pembridge is a mining company that is listed on the standard segment of the
Official List of the FCA and trading on the main market for listed securities
of London Stock Exchange plc. Pembridge has an investment in Minto Metals
Corp, a British Columbia incorporated business listed on the TSX Venture
Exchange under the symbol "MNTO" that operates the Minto mine in Yukon,
Canada.
About Minto Metals Corp
Minto Metals Corp operates the underground copper-gold-silver mine located in
central Yukon, approximately 240 kilometres north of the capital Whitehorse
along the Klondike Highway. In excess of US$350 million of capital expenditure
has been invested into Minto operations since site construction began in 2006.
The Minto mine was in continuous production between 2007 and 2018, when the
mine was placed onto temporary care and maintenance. Pembridge acquired the
Minto mine from Capstone Mining Corporation in June 2019 and restarted
operations in October 2019.
Enquiries:
Pembridge Resources plc:
+44 (0)7905 125740
Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board
David James, Chief Financial Officer
Tavira Financial Ltd:
+44 (0)20 7100 5100
Jonathan Evans
Consolidated Statement of Comprehensive Income
Year ended Year ended
31 December 2022 31 December 2021
US$'000 US$'000
Administrative, legal and professional expenses (1,309) (1,186)
Exceptional items
- revaluation of Capstone liability - (1,429)
- payment of Capstone liability by Minto in March 2021 - 5,000
- assumption of the Capstone liability by Minto Metals Corp - 15,000
- mark-to-market valuation of investment in Minto Metals Corp (6,215) 3,800
Foreign exchange gain 448 40
Operating (loss) / profit (7,076) 21,225
Finance income 200 274
Finance cost (1,137) (919)
(Loss) / Profit before income tax (8,013) 20,580
Income tax - -
(Loss) / profit for the year (8,013) 20,580
Other comprehensive income (2) -
Total comprehensive (loss) / income for the year (8,015) 20,580
(Loss) / profit is attributable to:
Non-controlling interest (10) -
Shareholders of the Company (8,003) 20,580
(Loss) / profit for the year (8,013) 20,580
Total comprehensive (loss) / income is attributable to:
Non-controlling interest (10) -
Shareholders of the Company (8,005) 20,580
Total comprehensive (loss) / income for the year (8,015) 20,580
Year ended Year ended
Earnings per share expressed in US cents 31 December 2022 31 December 2021
(Loss) / profit per share attributable to the equity holders of the Company
- Basic (8.3c) 24.4c
- Diluted (8.3c) 19.1c
All amounts relate to continuing activities.
Consolidated Statement of Financial Position
31 December 2022 31 December 2021
US$'000 US$'000
Assets
Non-current assets
Investments in financial assets 9,854 16,036
Promissory note from Minto - 5,000
Total non-current assets 9,854 21,036
Current assets
Promissory note from Minto 5,000 -
Trade and other receivables 1,894 4,157
Cash and cash equivalents 617 280
Total current assets 7,511 4,437
Total assets 17,365 25,473
Non-Current liabilities
Borrowings (5,753) (3,000)
Deferred consideration due to Capstone - (5,000)
Total non-current liabilities (5,753) (8,000)
Current liabilities
Trade and other payables (380) (434)
Borrowings (3,000) (6,145)
Deferred consideration due to Capstone (5,000) -
Total current liabilities (8,380) (6,579)
Total liabilities (14,133) (14,579)
3,232 10,894
Net assets
Equity
Share capital 1,276 1,212
Share premium 10,246 10,000
Capital redemption reserve 1,011 1,011
Translation reserve (2) -
Other reserve 325 293
Retained deficit (9,625) (1,622)
Equity attributable to shareholders of the Company 3,231 10,894
Non-controlling interests 1 -
Total equity 3,232 10,894
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share capital Share premium Capital redemption reserve Other reserve Retained deficit Total Non-controlling interest Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2021 965 9,222 1,011 46 (22,202) (10,958) - (10,958)
Profit for the year - - - - 20,580 20,580 - 20,580
- - - - - - - -
Other comprehensive income for the year
Total comprehensive income for the year - - - - 20,580 20,580 - 20,580
Proceeds from shares issued 247 789 - - - 1,036 - 1,036
Direct cost of shares issued - (11) - - - (11) - (11)
Share based payments - - - 247 - 247 - 247
Total transactions with owners recognised directly in equity 247 778 - 247 - 1,272 - 1,272
Balance at 1 January 2022 1,212 10,000 1,011 293 (1,622) 10,894 - 10,894
Loss for the year - - - - (8,003) (8,003) (10) (8,013)
- - - (2) - (2) - (2)
Other comprehensive income for the year
Total comprehensive income for the year - - - (2) (8,003) (8,005) (10) (8,015)
Proceeds from shares issued 64 246 - - - 310 11 321
Share based payments - - - 32 - 32 - 32
Total transactions with owners recognised directly in equity 64 246 - 32 - 342 11 353
Balance at 31 December 2022 1,276 10,246 1,011 323 (9,625) 3,231 1 3,232
The following describes the nature and purpose of each reserve within owners'
equity:
Reserve Description and purpose
Share capital Nominal value of shares issued.
Share premium Amount subscribed for share capital in excess of nominal value, less share
issue costs.
Capital redemption reserve Reserve created on cancellation of deferred shares.
Other reserve Cumulative fair value of warrants and share options granted, together with the
equity element of the convertible loan.
Translation reserve Cumulative translation adjustment from retranslation of group undertakings
with functional currencies other than USD.
Retained deficit Cumulative net gains and losses recognised in the statement of comprehensive
income.
Non-controlling interest Non-controlling interests represent the portion of the equity of a subsidiary
not attributable either directly or indirectly to the parent company and are
presented separately in the Consolidated Statement of comprehensive income and
within equity in the Consolidated statement of financial position,
distinguished from parent company shareholders' equity.
Consolidated Cash flow statement
Year Ended Year Ended
31 December 2022 31 December 2021
US$'000 US$'000
Cash flows from operating activities
(Loss) / profit for the year (8,013) 20,580
Adjusted for:
Net finance costs 937 645
Unrealised FX on debt included in administrative expenses (668) (31)
Share based payments 32 247
Revaluation of Capstone liability - (3,571)
Assumption of the Capstone liability by Minto Metals Corp - (15,000)
Mark-to-market valuation of investment in Minto Metals Corp 6,215 (3,800)
Movement in fair value of derivatives 56 (26)
(1,441) (956)
Movements in working capital
Decrease in trade and other receivables 2,451 -
Decrease in trade and other payables (101) (55)
Cash generated / (used) by operations 909 (1,011)
Income taxes recovered / (paid) - -
Net cash generated from / (used in) operating activities 909 (1,011)
Cash flows from investing activities
Purchase of investments (33) (3,034)
Net cash used in investing activities (33) (3,034)
Cash flows from financing activities
Interest payments (420) -
Repayment of borrowings (333) (20)
Proceeds from borrowings - 3,304
Proceeds from issuance of shares 214 1,025
Net cash (used in) / generated from financing activities (539) 4,309
Net increase in cash and cash equivalents 337 264
Cash and cash equivalents at beginning of year 280 16
Cash and cash equivalents at end of year 617 280
BASIS OF PREPARATION
The Financial Statements have been prepared in accordance with UK-adopted
international accounting standards.
The Financial Statements have been prepared under the historical cost
convention, except as modified for assets and liabilities recognised at fair
value on a business combination and contingent consideration measured at fair
value.
The preparation of Financial Statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Company's accounting
policies. The areas involving a high degree of judgement or complexity, or
areas where assumptions and estimates are significant to the Financial
Statements, are disclosed in Note 4.
Going concern
The Financial Statements have been prepared on a going concern basis, which
assumes that the Company will continue operating in the foreseeable future and
will be able to service its debt obligations, realise its assets and discharge
its liabilities as they fall due.
The Company and Group have a planning, budgeting and forecasting process to
determine the funds required to support their operations and expansionary
plans. The budget for 2023 assumes repayments from Minto during 2023 and
cost saving measures that are mentioned in the Strategic Report.
Negotiations are ongoing between Capstone Copper Corp ("Capstone"), Minto and
Pembridge in respect of the timing of both the USD 5 million final payment due
to Capstone and of Minto repaying the last surety funding due to Pembridge,
being the remaining principal of CAD 1 million and accumulated interest
including the amount that was due on 31 March 2023. The Group's ability to
continue as a going concern is dependent on the outcome of these
negotiations. Pembridge's management expect these negotiations to reach a
constructive conclusion but, because there can be no assurance of their
outcome, a material uncertainty exists which may cast doubt on the Group's
ability to continue as a going concern.
In June 2021 Pembridge raised debt of USD 3 million using 14% Convertible Loan
Notes, which was used exclusively for the purchase of additional newly issued
shares in Minto Metals Corp. ("Minto") when it became listed on the Toronto
Stock Exchange at the IPO price of CAD 2.60 per share, giving Pembridge an
overall equity stake in Minto of 11.1%. The Convertible Loan Notes had a
maturity date of 31 May 2023. Since 31 December 2022, Pembridge has reached
agreement with the Convertible Loan Note holders to extend the repayment
period to May 2025, with interest payments being made at the same 14% per
annum each year on or around 31 May of each year, with Pembridge having the
right to defer payment of interest until May 2025 if the cash position of
Pembridge does not permit the payment of interest. In return, Pembridge has
agreed that the accrued interest up to 31 January 2023 is to be settled at
the time of the new terms being accepted by each Convertible Loan Note
investor and for the conversion price to be reduced from £0.08 to £0.0375
per share, expressed as 4.65 USD cents at the exchange rate of GBP1:USD1.24
when the arrangement was proposed.
Pembridge does not presently plan to sell its holding in Minto, but Minto is
now a publicly listed company so this can be done if necessary to raise
funds. A restriction on pre-existing owners selling shares means that, as at
31 December 2022, Pembridge could sell 60% of its shares, with the restriction
on the remaining 40% lifting on 25 May 2023, so that it would be possible to
sell these shares if the cash proceeds were needed.
Having prepared forecasts based on current resources, assessing methods of
obtaining additional finance, the Directors believe the Company and Group has
sufficient resources to meet its obligations for a period of 12 months from
the date of approval of these Financial Statements. Taking these matters
into consideration, the Directors continue to adopt the going concern basis of
accounting in preparing these Financial Statements. The Financial Statements
do not include the adjustments that would be required should the going concern
basis of preparation no longer be appropriate.
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