REG - Pembridge Resources - Half-year Report
08/09/2022 10:45
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RNS Number : 7741Y Pembridge Resources plc 08 September 2022
8 September 2022
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.
Half Year Results for the six months ended 30 June 2022
London, United Kingdom - Pembridge Resources plc (LSE: PERE) ("Pembridge" or
the "Company") is pleased to announce its unaudited results for the six months
ended 30 June 2022.
Interim results:
The condensed interim financial statements of the Group, as set out in full
below, show a loss for the period of US$3.9m (H1 2021: loss US$3.8m, full year
2021: profit of US$20.6m) and net assets of US$7.3m (30 June 2021: net
liabilities US$13.4m, 31 December 2021: net assets US$10.9m). The loss for the
period is due primarily to the mark-to-market revaluation of the investment in
Minto Metals Corp, which gave a non-cash loss of US$3.0m. As at 30 June 2022
the Group had US$0.6m (30 June 2021: US$3.6m (of which US$0.4m was included in
assets held for sale), 31 December 2021: US$0.3m) in cash reserves. The Board
consider it appropriate to maintain the going concern basis in the preparation
of these financial statements as the Directors have a reasonable expectation
that the Group and Company will be able to continue in operational existence
for the foreseeable future.
Recent developments:
· The Company lent a total of CAD 4 million to Minto Metals Corp
("Minto"), to fund Minto's surety account, during 2019 and 2020. The loan
carries interest at 8% and is due to be repaid in full via quarterly
instalments each of CAD 1 million. Two instalments of CAD 1 million were
repaid by Minto in March and June 2022.
· On 17 January 2022, the Company announced its strategic plans for
the future. Following Minto's listing on the TSXV and C$31
million capital raise in 2021 and the publication of Minto's updated 43-101
Preliminary Economic Assessment Technical Report, the Company now believes
that Minto is in a robust financial position and that the Company is now in
a position to look for new projects to invest in. Accordingly, the Company
has approved a strategy of identifying new projects to invest in, that can
deliver further value to its shareholders. The Company sees a number of
opportunities in the de-carbonisation of the energy market. To that extent it
will review a wide range of projects that can range from mining of commodities
related to the de-carbonisation of the energy market through to renewable
energy projects. Since January, the Directors have focused on identifying
suitable projects and suitable business partners to join with in developing
them.
The approved strategy sets out key investment criteria guidance based on which
potential projects are to be evaluated. The Strategy sets out preference for
projects that are in production or close to production stage and
have technical reports confirming resources and/or reserves. The key
investment criteria approved in the Company's strategy are for equity stakes
acquired to be above 10% in projects with an IRR above 12% and preference for
projects with NPV(8%) above $30 million.
Share options
In recognition for their work in 2021, on 7 September 2022 the Company granted
new share options to its employees as set out below. These options vest with
immediate effect.
Person Number of shares under option Exercise price
Gati Al-Jebouri 1,000,000 5p
Frank McAllister 250,000 5p
Guy Le Bel 250,000 5p
David James 250,000 5p
Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board of
Pembridge said:
"We are pleased that the Company is now being repaid by Minto and with the
operational progress being made at the Minto mine. The mark-to-market
revaluation of our investment in Minto at the balance sheet date reflects the
recent fall in the copper price but does not reflect the ongoing exploration
work on the Minto site, which we expect to lead to an increase in the life of
the mine. We remain confident in the prospects for the Minto mine and that
it will give a good return on our investment in the next few years.
We are also excited by the prospect of expanding our asset portfolio. The
market for energy is growing worldwide and recent events mean that this is
particularly the case in Europe, where there is also a political as well as
social desire to move towards renewable energy. We are working on
identifying projects that are appropriate for our company and executing them
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
About Pembridge Resources plc
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.
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 Securities - United Kingdom: +44 (0)20 7100 5100
Jonathan Evans
Registered number: 07352056 (England and Wales)
Operations update:
The following is an overview of recent developments.
Minto repayments
The Company lent a total of CAD 4 million to Minto Metals Corp ("Minto"), to
fund Minto's surety account, during 2019 and 2020. The loan carries interest
at 8% and is due to be repaid in full via quarterly instalments each of CAD 1
million. Two instalments of CAD 1 million were repaid by Minto in March
and June 2022.
Updated Strategy
On 17 January 2022, the Company announced its strategic plans for the
future. Following Minto's listing on the TSXV and C$31 million capital
raise in 2021 and the publication of Minto's updated 43-101 Preliminary
Economic Assessment Technical Report, the Company now believes that Minto is
in a robust financial position and that the Company is in a position to look
for new projects to invest in. Accordingly, the Company has approved a
strategy of identifying new projects to invest in, that can deliver further
value to its shareholders. The Company see a number of opportunities in the
de-carbonisation of the energy market. To that extent it will review a wide
range of projects that can range from mining of commodities related to the
de-carbonisation of the energy market through to renewable energy projects.
Since January, the Directors have focused on suitable projects and suitable
business partners to join with in developing them.
The approved strategy sets out key investment criteria guidance based on which
potential projects are to be evaluated. The Strategy sets out preference for
projects that are in production or close to production stage and
have technical reports confirming resources and/or reserves. The key
investment criteria approved in the Company's strategy are for equity stakes
acquired to be above 10% in projects with IRR above 12% and preference for
projects with NPV(8%) above $30 million.
Changes in group structure
The revised share structure linked to listing Minto Metals Corp in November
2021 meant that, effective from the year end accounts to 31 December 2021,
Pembridge no longer accounted for Minto as a subsidiary and, having no
subsidiaries as at 31 December 2021, presented its accounts on a company only
basis.
On 6 April 2022, a new subsidiary was formed in Bulgaria, called Pembridge
Resources Bulgaria LLC. This company acts as a regional office to evaluate
possible local projects. It is owned 80% by Pembridge Resources plc and its
results since formation are included in these half year results. The new
subsidiary had one employee at 30 June 2022.
Changes to Risk in 2022
The Board believes that there has been no material change to the Group's
principal risks and uncertainties, as set out in its 2021 Annual Report,
during the year.
Responsibility Statement
We confirm that to the best of our knowledge:
· The condensed interim financial statements have been prepared in
accordance with International Accounting Standard 34, Interim Financial
Reporting, as contained in UK-adopted IFRS (UK-adopted international
accounting standards);
· This interim report includes a fair review of the information
required by:
o DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the set of condensed interim financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the year; and
o DTR 4.2.8R of the Disclosure and Transparency Rules, being related
parties' transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position of the Group during that period, and any changes in the related
parties' transactions described in the last annual report that could do so.
The names and functions of the Directors of Pembridge Resources plc are as
follows:
Gati Al-Jebouri CEO and Chairman of the Board
Frank McAllister Non-executive Director
Guy Le Bel Non-executive Director
On behalf of the Board
Gati Al-Jebouri
CEO & Chairman of the Board
7 September, 2022
Consolidated statement of comprehensive income
for the period 1 January to 30 June 2022
6 months 6 months Year ended
ended ended 31 December 2021
30 June 2022 30 June 2021
Note US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Administrative, legal and professional expenses (790) (606) (1,186)
Exceptional items
- revaluation of Capstone liability - (1,429) (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 (3,045) - 3,800
Foreign exchange gain / (loss) 389 (94) 40
Operating profit / (loss) (3,446) (2,129) 21,225
Finance income 126 - 274
Finance cost 4 (562) (360) (919)
Profit / (loss) before taxation (3,882) (2,489) 20,580
Income tax 5 - - -
Profit / (loss) from continuing operations (3,882) (2,489) 20,580
Profit / (loss) from discontinued operations 9 - (1,360) -
Loss for the period (3,882) (3,849) 20,580
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translation differences (2) 155 -
Total comprehensive income for the period (3,884) (3,694) 20,580
Profit / (loss) attributable to non-controlling interest (5) (1,331) -
Profit / (loss) attributable to equity holders of the parent (3,877) (2,518) 20,580
Total comprehensive income attributable to non-controlling interest (5) (1,193) -
Total comprehensive income attributable to equity holders of the company (3,879) (2,501) 20,580
6 months 6 months Year ended
ended ended 31 December 2021
30 June 2022 30 June 2021
Note US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Earnings per share attributable to the equity holders of the company, 6
expressed in cents
Basic
- Continuing operations (4.1c) (3.1c) 24.4c
- Discontinued operations - (0.1c) -
- Total (4.1c) (3.2c) 24.4c
Diluted
- Continuing operations (4.1c) (3.1c) 19.1c
- Discontinued operations - (0.1c) -
- Total (4.1c) (3.2c) 19.1c
For the periods to 30 June 2021 and to 30 June 2022, the basic and dilutive
loss per share are the same because the effect of the exercise of share
options and warrants would be anti-dilutive.
Consolidated statement of financial position
as at 30 June 2022
30 June 2022 30 June 2021 31 December 2021
Note US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Investments in financial assets 13,024 - 16,036
Promissory note from Minto to pay Capstone liability - - 5,000
Total non-current assets 13,024 - 21,036
Current assets
Trade and other receivables 2,732 42 4,157
Promissory note from Minto to pay Capstone liability 5,000 - -
Cash and cash equivalents 575 3,217 280
Assets held for sale 9 - 79,109 -
Total current assets 8,307 82,368 4,437
Total assets 21,331 82,368 25,473
Non-current liabilities
Borrowings 10 - (8,606) (3,000)
Deferred consideration due to Capstone - - (5,000)
Total non-current liabilities - (8,606) (8,000)
Current liabilities
Trade and other payables (267) (140) (434)
Borrowings 10 (8,733) - (6,145)
Deferred consideration due to Capstone (5,000) (15,000) -
Liabilities held for sale 9 - (72,070) -
Total current liabilities (14,000) (87,210) (6,579)
Total liabilities (14,000) (95,816) (14,579)
Net assets / (liabilities) 7,331 (13,448) 10,894
Equity
Share capital 7 1,276 1,169 1,212
Share premium 7 10,246 9,839 10,000
Capital redemption reserve 1,011 1,011 1,011
Translation reserve (2) 156 -
Other reserve 293 293 293
Retained deficit (5,499) (28,584) (1,622)
Equity attributable to shareholders of the parent company 7,325 (16,116) 10,894
Non-controlling interests 12 6 2,668 -
Total equity 7,331 (13,448) 10,894
Consolidated Statement of changes in equity
for the period 1 January to 30 June 2022
Share capital Share premium Capital Redemption Reserve Translation Retained deficit Total Non-controlling interest Total
/ Other reserve Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Six months to 30 June 2022
At 1 January 2022 1,212 10,000 1,011 293 (1,622) 10,894 - 10,894
Loss for the period - - - - (3,877) (3,877) (5) (3,882)
Other comprehensive income - exchange difference on translation - - - (2) - (2) - (2)
Total comprehensive income for the period - - - (2) (3,877) (3.879) (5) (3,884)
Proceeds from shares issued 64 246 - - - 310 11 321
Share-based payments - - - - - - - -
Total transactions with owners recognised directly in equity 64 246 - - - 310 11 321
At 30 June 2022 1,276 10,246 1,011 291 (5,499) 7,325 6 7,331
Year to 31 December 2021
At 1 January 2021 965 9,222 1,011 46 (22,202) (10,958) - (10,958)
Profit for the period - - - - 20,580 20,580 - 20,580
Other comprehensive income - exchange difference on translation - - - - - - - -
Total comprehensive income for the period - - - - 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
At 31 December 2021 1,212 10,000 1,011 293 (1,622) 10,894 - 10,894
Consolidated Statement of changes in equity (continued)
for the period 1 January to 30 June 2022
Share capital Share premium Capital Redemption Reserve Translation Retained deficit Total Non-controlling interest Total
/ Other reserve Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Six months to 30 June 2021
At 1 January 2021 965 9,222 1,011 185 (30,516) (19,133) 8,311 (10,822)
Loss for the period - - - - (2,518) (2,518) (1,331) (3,849)
Other comprehensive income - exchange difference on translation - - - 17 - 17 138 155
Total comprehensive income for the period - - - 17 (2,518) (2,501) (1,193) (3,694)
Proceeds from shares issued 204 617 - - - 821 - 821
Reduction in Minto share capital - - - - 4,450 4,450 (4,450) -
Share-based payments - - - 247 - 247 - 247
Total transactions with owners recognised directly in equity 204 617 - 247 4,450 5,518 (4,450) 1,068
At 30 June 2021 1,169 9,839 1,011 449 (28,584) (16,116) 2,668 (13,448)
The following describes the nature and purpose of each reserve within 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 - included with other reserve in the
table above.
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
for the period 1 January to 30 June 2022 6 months ended 6 months ended Year ended 31
30 June 2022 30 June 2021 December 2021
US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Cash flows from operating activities
Profit / (loss) for the period (3,882) (3,849) 20,580
Adjusted for:
Net finance costs 436 1,555 645
Unrealised FX on debt included in administrative expenses (657) (104) (31)
Depreciation - 5,192 -
Tax charge / (credit) - (221) -
Share based payments - 247 247
Revaluation of Capstone liability - 1,429 (3,571)
Assumption of the Capstone liability by Minto Metals Corp - - (15,000)
Mark-to-market valuation of investment in Minto Metals Corp 3,045 - (3,800)
Movement in fair value of derivatives 167 - (26)
(891) 4,249 (956)
Movements in working capital
(Increase) / decrease in inventories - 2,108 -
(Increase) / decrease in trade and other receivables 1,525 (5,852) -
Increase / (decrease) in trade and other payables (520) 1,654 (55)
Net cash generated from / (used in) operating activities 114 2,159 (1,011)
Cash flows used in investing activities
Payments into long-term deposits - (1,350) -
Purchase of property, plant and equipment - (1,766) -
Purchase of investments (33) - (3,034)
Net cash used in investing activities (33) (3,116) (3,034)
Cash flows used in financing activities
Interest payments - (640) -
Repayment of borrowings (107) (1,377) (20)
Proceeds from borrowings - 8,000 3,304
Lease payments - (2,629) -
Proceeds from issuance of shares 321 821 1,025
Net cash generated from financing activities 214 4,175 4,309
Net increase / (decrease) in cash and cash equivalents 295 3,218 264
Cash and cash equivalents at the beginning of the period 280 415 16
Impact of exchange rates on cash balances - 10 -
Cash and cash equivalents at the end of the period 575 3,643 280
Comprised of:
Cash and cash equivalents at the end of the period 575 3,217 280
Cash and cash equivalents included in assets held for sale at the end of the - 426 -
period
575 3,643 280
Notes to the condensed consolidated financial statements
for the period 1 January to 30 June 2022
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
The principal activity of Pembridge Resources plc is that of a mining company.
The Company has an investment in the Minto copper-gold-silver mine in Yukon,
Canada.
Pembridge Resources plc is incorporated and domiciled in England. The address
of Pembridge Resources plc's registered office is 38-43 Lincoln's Inn Fields,
London WC2A 3PE. Pembridge Resources plc's shares are admitted to the Standard
Segment on the Official List of the London Stock Exchange.
Pembridge Resources plc's financial statements are presented in United States
dollars (US$), which is also the functional currency of the Company.
These condensed interim unaudited consolidated financial statements for the
six-month period ended 30 June 2022 comprise the Company and its subsidiaries
(together referred to as the "Group"). At 31 December 2021, the Company did
not have any subsidiaries so the year end accounts prepared to that date were
prepared on a company only basis.
These condensed interim financial statements were approved for issue by the
Board of Directors on 7 September 2022.
These condensed interim financial statements for the six months ended 30 June
2022 do not comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006.
2. Basis of preparation
The unaudited condensed consolidated interim financial statements have been
prepared in accordance with UK-adopted International Accounting Standard 34
'Interim Financial Reporting' and the Disclosure and Transparency Rules of the
UK Financial Conduct Authority.
These Condensed Group Financial Statements have been prepared using the same
accounting policies as used in the preparation of the Group's annual financial
statements for the year ended 31 December 2021, except for taxes on income in
the interim period which are accrued using the tax rate that would be
applicable to the expected total annual profit or loss. The assessment of the
Group's critical accounting estimates and judgements remain consistent with
the 2021 Annual Report and Financial Statements. The Group's Annual report
and financial statements for the year ended 31 December 2021 were prepared in
accordance with UK-adopted international accounting standards (IFRS) and the
requirements of the Companies Act 2006.
The Condensed Group Financial Statements do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group for the
year ended 31 December 2021. The financial information presented in this
document is unaudited.
The comparative figures for the financial year ended 31 December 2021 are not
the Group's statutory accounts for that financial year but have been extracted
from those accounts. Those accounts have been reported on by the Company's
auditor and delivered to Companies House. The report of the auditor was
unqualified, did not include reference to any matters to which the auditor
drew attention by way of emphasis without qualifying its report and did not
contain a statement under section 498(2) or (3) of the Companies Act 2006.
These sections address whether proper accounting records have been kept,
whether the Company's accounts are in agreement with those records and whether
the auditor has obtained all the information and explanations necessary for
the purposes of its audit.
2. Basis of preparation (continued)
Basis of consolidation
The Condensed Group Financial Statements incorporate the financial statements
of the Company and entities controlled by the Company (its "subsidiaries").
Control exists when the Company has the power to direct the relevant
activities of an entity that significantly affect the entity's return so as to
have rights to the variable return from its activities. In assessing whether
control exists, potential voting rights that are currently exercisable are
taken into account. The results of subsidiaries acquired or disposed of during
the year are included in the Condensed Group Income Statement from the
effective date of acquisition or up to the effective date of disposal, as
appropriate.
The principal accounting policies applied in the preparation of these
Condensed Group Financial Statements are set out in the Notes. These policies
have been consistently applied to all of the years presented, unless otherwise
stated. Where necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with those detailed
herein to ensure that the Condensed Group Financial Statements are prepared on
a consistent basis. All intra-Group transactions, balances, income and
expenses are eliminated on consolidation. Non-controlling interests in the net
assets of consolidated subsidiaries are identified separately from the Group's
interest therein.
Non-controlling interests consist of the amount of those interests at the date
of the original business combination together with the non-controlling
interests' share of profit or loss and each component of other comprehensive
income less their dividends since the date of the combination. Their share of
comprehensive income/(loss) is attributed to the non-controlling interests
even if this results in the noncontrolling interests having a deficit balance.
New and Revised IFRS
Certain new accounting standards and interpretations have been published that
are applicable for periods commencing 1 January 2022 and others that are not
mandatory for reporting periods commencing on 1 January 2022 and have not been
early adopted by the Group. The Group's assessment of the impact of these new
standards and interpretations is that they are not expected to have a
significant impact on the Group's financial position, performance, cash flows
and disclosures.
Going concern
The condensed interim 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 has a planning, budgeting and forecasting process to determine the
funds required to support their operations and expansionary plans. The
budget for 2022 assumes that Pembridge starts to receive C$1m quarterly
repayments of its C$4m loan from Minto, the first two of which were received
in March and June 2022. The remaining instalments of C$1m and interest
thereon (expected to be nearly C$1m, to be received in March 2023) will be
available to fund the Company's operating costs, to fund new ventures or to
start repaying the Company's US$5.7m loan (including interest accrued to 30
June 2022) from Gati Al-Jebouri. Minto's dividend policy is not controlled
by Pembridge, although Pembridge has one of the seven seats on Minto's
Board. However, it is likely that Minto will start to distribute some of its
profits in the future which would continue the inflow of cash to Pembridge.
Pembridge does not presently plan to sell its 11.2% 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 30 June 2022, Pembridge could sell only 30% of its shares, but that
restriction will lift in the following stages so that it would be possible to
sell further shares if the cash proceeds were needed.
10% - no restriction
20% - restriction ends 25 May 2022
30% - restriction ends 25 November 2022
40% - restriction ends 25 May 2023
2. Basis of preparation (continued)
Having prepared forecasts based on current resources, assessing methods of
obtaining additional finance and assessing the possible impact of COVID-19,
the Directors believe the Company has sufficient resources to meet its
obligations for a period of 12 months from the date of approval of these
Interim Financial Statements. Taking these matters into consideration, the
Directors continue to adopt the going concern basis of accounting in preparing
these Interim Financial Statements. The Interim Financial Statements do not
include the adjustments that would be required should the going concern basis
of preparation no longer be appropriate.
Risks and uncertainties
As at 30 June 2022 the key risks that could affect the Company in the medium
term and the factors that mitigate those risks have not substantially changed
from those set out in the Annual Report and Financial Statements for the year
ended 31 December 2021.
Segment reporting
In the opinion of the directors the operations of the Company currently
represent one segment, and are treated as such, when evaluating its
performance. The chief operating decision maker is the Board of Directors. The
Board of Directors reviews management accounts prepared for the Company when
assessing performance.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
6 months 6 months Year ended
ended ended 31 December
30 June 2022 30 June 2021 2021
US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Copper - 47,380 -
Gold - 4,664 -
Silver - 247 -
Total gross revenue - 52,291 -
Less: treatment and selling costs - (3,945) -
Revenue - 48,346 -
All revenue reported in the six months to 30 June 2021 comprised the sale of
metal concentrate to one customer by Minto, hence was in discontinued
activities. From December 2021, Minto's results are not consolidated in
Pembridge's results.
When considering the recognition of revenue, IFRS 15 requires preparers to go
through five steps which will determine the timing and quantum of the revenue
recognised at a given time.
Identify contract with a customer
Since acquisition, Minto sells its concentrate to its only end customer, which
is Sumitomo, under an offtake agreement. Sales of copper are made direct to
Sumitomo and sale of gold and silver are made to Sumitomo via Wheaton, hence
the valuation of the gold and silver revenues is determined by Minto's
contract with Wheaton but timing of revenue recognition for them is the same
as for copper.
Identify performance obligation
The performance obligation is the sale of copper, gold and silver concentrate
to Sumitomo, including its transportation to a location specified by them in
Japan. At the end of each month, under the offtake agreement, Minto weighs
and assays the concentrate it has produced and Sumitomo takes title to it,
paying Minto a provisional payment of 90% of its value. Minto must keep the
concentrate separate from any other product in a location approved by Sumitomo
and may not sell it to any other party. From this point, Minto has control
over the concentrate and, if it is still physically in Minto's care, Minto is
acting as its custodian for Sumitomo.
Determine the transaction price
The Company's metal concentrates are sold under a pricing arrangement where
final prices are determined by quoted market prices in a period subsequent to
the date of sale. Until prices are final, revenues are recorded based on
forward market prices for the expected period of final settlement.
Subsequent variations in the final determination of the metal concentrate
weight and assay are recognised as revenue adjustments as they occur until
finalised. Subsequent variations in the final determination of the price are
treated as a remeasurement of a financial asset under IFRS 9 and are
recognised as revenue adjustments as they occur until finalised.
Allocate price to each performance obligation
There is one overarching performance obligation, which is the delivery of
metal concentrates to Sumitomo. This includes the production of the
concentrates and their transportation to Japan. Their transportation does
not carry significant risks or rewards and its cost can be estimated in
advance, so the revenue is recognised net of that cost until it is delivered.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS (continued)
Recognise revenue when the performance obligation is satisfied by transferring
good or service to customer (i.e. the customer obtains control)
Because Sumitomo gains control over the concentrate at the end of each month,
even if it is on the Minto site, and its subsequent transportation does not
carry significant risks or rewards, the main obligation is satisfied when
Sumitomo takes title and the revenue is booked at this time, net of costs such
as transportation and refining which will be incurred in completing the
transaction.
4. FINANCE COSTS
6 months 6 months Year ended
ended ended 31 December
30 June 2022 30 June 2021 2021
US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Interest on loans - 819 -
Discount unwind on provision - 120 -
Interest from leases - 261 -
Total Minto (discontinued operations) - 1,200 -
Pembridge - Loan from Director 352 360 674
Pembridge - Convertible loan notes 210 - 245
562 1,560 919
5. INCOME TAX
The income tax credit of US$ 221,000 in the period to 30 June 2021 was payable
to the Yukon government under the Quartz Mining Act and was included in
results from discontinued operations in the results to 30 June 2021. There
was no income tax charge or credit for the period to 30 June 2022 or for the
year to 31 December 2021.
6. EARNINGS PER SHARE
The calculation of the earning per share is based on the loss attributable to
ordinary shareholders divided by the weighted average number of shares in
issue during the period.
6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 2021
US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
US cents US cents US cents
Basic EPS
- Continuing operations (4.1c) (3.1c) 24.4c
- Discontinued operations - (0.1c) -
- Total (4.1c) (3.2c) 24.4c
Diluted EPS
- Continuing operations (4.1c) (3.1c) 19.1c
- Discontinued operations - (0.1c) -
- Total (4.1c) (3.2c) 19.1c
Gain/(Loss) for the period US$'000 US$'000 US$'000
- Continuing operations (3,877) (2,489) 20,580
- Discontinued operations - (29) -
- Total (3,877) (2,518) 20,580
Weighted average number of shares - basic 95,135,682 79,698,864 84,449,176
- diluted 130,379,666 91,859,985 107,884,498
The basic and diluted loss per share been calculated using the loss
attributable to shareholders of the Company as the numerator, i.e. no
adjustment to loss was necessary. For the periods to 30 June 2021 and to 30
June 2022, the basic and dilutive loss per share are the same because the
effect of the exercise of share options and warrants would be anti-dilutive.
7. SHARE CAPITAL AND PREMIUM
Allotted, called up and fully paid Number of ordinary shares Share Capital - ordinary shares Share premium Total
US$000 US$000 US$000
92,165,516 1,212 10,000 11,212
At 1 January 2022
Proceeds from shares issued 4,800,000 64 246 310
At 30 June 2022 96,965,516 1,276 10,246 11,522
Further to an equity raise announced on 17 December 2021, the Company issued
3,200,000 shares on 25 January 2022 and a further 1,600,000 shares on 6 June
2022. These shares were issued at a price of 5p per share and the proceeds
from these two issues were £240,000.
Ordinary shares have attached to them full voting, dividend and capital
distribution rights (including on a winding up).
8. RELATED PARTY TRANSACTIONS
The Company has paid remuneration of US$295,000 to its Directors for the six
months ending June 30, 2022 (six months to 30 June 2021: US$87,520, year to 31
December 2021: US$286,000).
The Company has a loan facility with Gati Al-Jebouri, to be repaid by 31
December 2022 and carrying interest at an annual rate of 10%. The Company
also pays an arrangement fee in the amount of 6% of the amounts drawn down
under the Loan. Under this facility, £3.4m had been borrowed at 30 June
2022.
In June 2021, the Company issued convertible loan notes with a value of USD 3
million, with an interest rate of 14%, redeemable after two years, in order
that it could participate in Minto's capital raise. The loan notes may be
converted into Ordinary Shares in the Company at any time from 1 June
2022 until 31 May 2023 at an exercise price of $0.113 (8p at an exchange
rate of £1 - $1.415). Gati Al-Jebouri has invested USD 500,000 in the
convertible loan notes.
9. DISCONTINUED OPERATIONS (six months to 30 June 2021)
Pembridge announced on 16 June 2021 that Minto was entering into a reverse
take-over ("RTO") agreement with a publicly listed corporation 1246778 B.C.
Ltd, which is a reporting issuer in Canada, to form a listed issuer to be
renamed Minto Metals Corp. ("Minto Metals"), and would file an application to
the TSXV to list the shares of this company on the TSX Venture Exchange (TSXV)
and, concurrently, raise funds from a private placement. As part of the RTO
process, Pembridge's shares in Minto would be replaced in a share-for-share
exchange whereby all existing Minto shareholders received voting shares in
Minto Metals. Because this would mean that Pembridge no longer held all of
the voting shares in Minto, it would no longer have legal control of Minto
and, with effect from date of listing on TSXV, would no longer treat Minto as
a subsidiary in its consolidated financial statements. When the half year
results to 30 June 2021 were released on 24 September, the capital raise had
closed and the Board considered it virtually certain that the RTO would be
completed. However, on 30 June 2021, Pembridge did control the Board of
Minto and so included Minto in its consolidated reporting as at that date.
The decision that Minto would become a publicly listed company, and that
Pembridge would no longer control it, was taken and announced before 30 June
2021. Therefore, in the condensed interim financial statements to 30 June
2021, Pembridge showed Minto's results as being from discontinued operations
and restated the results of comparative periods accordingly, and its assets
and liabilities as 30 June 2021 were classified as assets and liabilities held
for sale.
The RTO completed on 19 November 2021 with the result that, from that date,
Pembridge's 11.2% holding does not give the Company control or substantial
influence over Minto Metals. As a result, starting from its reporting for
the year to 31 December 2021, Pembridge now accounts for its investment in
Minto Metals not as a subsidiary but as a financial asset, which is revalued
on a mark-to-market basis. The following information is the last information
from Minto that was included in Pembridge's consolidated results.
Results of Minto discontinued operations
6 months ended
30 June 2021
Note US$'000
Revenue 3 48,346
Production costs (40,819)
Royalties (1,708)
Depreciation and amortisation (5,192)
Administrative, legal and professional expenses (691)
Gain / (loss) on disposal of fixed assets (154)
Gain / (loss) on fair valuation of concentrate receivable (117)
Foreign exchange gain / (loss) (51)
Operating loss (386)
Finance income 5
Finance cost 4 (1,200)
Loss before taxation (1,581)
Income tax 5 221
Loss for the period (1,360)
Loss attributable to non-controlling interest (1,331)
Loss attributable to equity holders of the parent (29)
Earnings per share expressed in cents
Basic and diluted earnings per share attributable to the equity holders of the 6 (0.1c)
company
9. DISCONTINUED OPERATIONS (CONTINUED)
Cash flows from Minto discontinued operations
6 months
ended
30 June 2021
US$'000
Cash flows from operating activities 7,815
Cash flows from investing activities (8,116)
Cash flows from financing activities 318
Net increase in cash and cash equivalents 17
Effect of the disposal group on the financial position of the Group
30 June 2021
Note US$'000
Non-current assets
Property, plant and equipment 56,017
Long term deposits 8,603
Total non-current assets 64,620
Current assets
Inventory 2,398
Trade and other receivables 11,665
Cash and cash equivalents 426
Total current assets 14,489
Total assets held for sale 79,109
Non-current liabilities
Borrowings 10 (9,062)
Lease liabilities (2,103)
Reclamation and closure cost provision (26,431)
Deferred tax liability (176)
Total non-current liabilities (37,772)
Current liabilities
Trade and other payables (23,421)
Borrowings 10 (6,600)
Lease liabilities (4,277)
Total current liabilities (34,298)
Total liabilities held for sale (72,070)
Net assets held for sale 7,039
10. BORROWINGS
Pembridge
As described in note 8, the Company has a loan facility with Gati
Al-Jebouri. Under this facility, £3.4 million had been borrowed at 30 June
2022. It is expected that this loan arrangement will be renewed in the
second half of the year.
In June 2021, the Company issued convertible loan notes with a value of USD 3
million, with an interest rate of 14%, redeemable after two years. The loan
notes may be converted into Ordinary Shares in the Company at any time from 1
June 2022 until 31 May 2023 at an exercise price of $0.113 (8p at an
exchange rate of £1 - $1.415).
Minto (at 30 June 2021)
The Company and Copper Holdings, LLC, a New York based private equity group
and Cedro Holdings I, LLC, an entity managed by Lion Point Capital, L.P.
(together, the ''Investor Consortium'') entered into the Investor Consortium
Financing Agreement on 3 June 2019, pursuant to which the Investor Consortium
advanced US$10 million to Minto to finance the recommencement of operations.
The Investor Consortium shall be entitled to be repaid from all free
cash-flows and realisations arising from Minto until the holders of the loan
note (i.e., the Investment Consortium, their assignors and successors) have
received US$10,000,000 plus interest at a rate of 8% per annum. The Investor
Consortium have been granted security over the assets of Minto until such time
as the holders of the loan note have been repaid.
On 8 September 2020, Minto entered into a Prepayment Facility Agreement with
Sumitomo Canada Limited, the purchaser of its copper under an offtake
agreement, under which Sumitomo has security over Minto's assets. The
facility limit is US$12.5 million and may be drawn against at any time giving
notice in increments of US$1 million. Interest is calculated quarterly on
the outstanding balance at LIBOR for the applicable period. The balance is
repayable over the remaining life of the related offtake agreement. Under
this facility, US$8 million had been borrowed at 30 June 2021.
6 months 6 months Year ended
ended 30 June 2022 ended 30 June 2021 31 December 2021
US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Pembridge
Convertible Loan notes - 3,000 3,000
Loans from directors - non-current - 5,606 -
Pembridge borrowings - non-current - 8,606 3,000
Convertible Loan notes 3,000
Loans from directors - current 5,733 - 6,145
Pembridge borrowings - current 8,733 - 6,145
Pembridge borrowings - total 8,733 8,606 9,145
Minto
Loan notes - non-current - 9,062 -
Prepayment funding - current - 6,600 -
Minto borrowings (included in liabilities held for sale) - 15,662 -
Total borrowings 8,733 24,268 9,145
11. RECONCILIATION OF MOVEMENT IN NET DEBT
Six months ended 30 June 2022 At 1 January New borrowing Interest added to debt Debt repaid Other flows Foreign exchange At 30 June
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cash at bank and in hand 280 - - (107) 402 - 575
Borrowings (9,145) - (352) 107 - 657 (8,733)
Net debt (8,865) - (352) - 402 657 (8,158)
12. NON-CONTROLLING INTEREST
The Company considered that, as at 30 June 2021, it had control over Minto
through holding 100% of voting rights and having control of the Minto Board,
which means that it was able to control the day-to-day operations of the mine.
On this basis it consolidated the results of Minto in those condensed
interim financial statements. Movements in the non-controlling interest in
the period to 30 June 2021 are set out below and summarised financial
information for Minto in six months to 30 June 2021 is set out in note 9.
The revised share structure linked to listing Minto Metals Corp in November
2021 meant that, effective from that date, Pembridge did not control Minto so
no longer accounted for Minto as a subsidiary in its year end accounts to 31
December 2021, meaning that they did not include any non-controlling interest.
On 6 April 2022, a new subsidiary was formed in Bulgaria, called Pembridge
Resources Bulgaria LLC. This is owned 80% by Pembridge Resources plc and
movements in this non-controlling interest are included below.
6 months 6 months
ended ended
30 June 2022 30 June 2021
US$'000 US$'000
Balance at start of period - 8,311
Investment by non-controlling interest in subsidiary share capital 11 -
Reduction in Minto share capital - (4,450)
Share of loss for the period (5) (1,331)
Share of exchange difference on translation - 138
Balance at end of period 6 2,668
13. POST BALANCE SHEET DATE EVENTS
In recognition of their work in 2021, on 7 September 2022 the Company granted
new share options to its employees as set out below. These options vest with
immediate effect.
Person Number of shares under option Exercise price
Gati Al-Jebouri 1,000,000 5p
Frank McAllister 250,000 5p
Guy Le Bel 250,000 5p
David James 250,000 5p
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