REG - Phoenix Copper Ltd - Final results for the year ended 31 December 2023
15/05/2024 17:00
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RNS Number : 6081O Phoenix Copper Limited 15 May 2024
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
15 May 2024
Phoenix Copper Limited
('Phoenix', the 'Company', or the 'Group')
Final audited results for the year ended 31 December 2023
Notice of Annual General Meeting ("AGM")
Phoenix Copper Ltd (AIM: PXC, OTCQX ADR: PXCLY), the AIM quoted USA focused
base and precious metals emerging producer and exploration company, is pleased
to announce its audited results for the year ended 31 December 2023. All
references to $ are United States dollars.
Highlights
Corporate & Financial
- Investment in Empire Mine increased to $38.43 million (2022:
$33.10 million)
- Group reports loss of $1.57 million (2022: loss of $1.57
million)
- Year-end Group net assets of $37.19 million (2022: $37.84
million)
- Company reports a profit of $0.51 million (2022: loss of $0.07
million)
- Company loans to Idaho operating subsidiaries increased to
$32.54 million (2022: $26.19 million)
- Placing, subscription and retail offer to raise $3.52 million
completed in January 2024
- $2 million unsecured short-term loan refinanced into 18 month
unsecured term loan in March 2024
- Subscription letter received to fully subscribe a minimum of $80
million of floating rate corporate copper bonds. Closing of bond issue subject
to resolutions being passed at the AGM
- Andre Cohen to retire as a director after the AGM and to join
the Advisory Board
Operational
- Empire open-pit mineral resources upgraded to mineral reserves.
Inaugural mineral reserve statement announced
- Proven & Probable mineral reserves of 10.1 million tonnes
containing 109,487,970 lbs of copper, 104,000 ounces of gold and 4,654,400
ounces of silver
- Mineral reserves estimated using assay data from 485 drill
holes, extensive geological modelling, metallurgical recovery test work,
geotechnical evaluation, and mine design
- Empire open-pit mine compliant Pre-Feasibility Study and related
economic model nearing completion
- 28 holes (3,300 metres) of drilling completed on 60-hole Navarre
Creek gold drilling programme
Annual General Meeting
The Company also announces that the Annual General Meeting ("AGM") will be
held at The Washington Hotel, 5 Curzon Street, London W1 5HE on 29 May 2024 at
11.00 BST.
The Notice of AGM and Forms of Proxy will be despatched to shareholders on 16
May 2024 and will be available on the Company's website at
https://phoenixcopperlimited.com (https://phoenixcopperlimited.com) from 15
May 2024.
The Company's Annual Report and Consolidated Financial Statements for the year
ended 31 December 2023 will also be available on the website from 15 May 2024.
CHAIRMAN'S STATEMENT
Dear Shareholders
As I write copper is trading close to the symbolic $10,000 per tonne, having
rallied strongly in recent weeks. Despite several delays and disappointments,
we are hopeful that our stars are finally aligning. Uncertainties over the
Chinese and US economies meant that it took longer for the drivers of
electrification and supply issues to reassert their influences on the copper
price. It now looks as if the penny has finally dropped. Several new catalysts
have appeared since my last statement, including the astonishing "own goal"
closure of First Quantum's Cobre Panama mine, which has removed approximately
350,000 tonnes per annum or 1.5% of global mined copper production from the
market; and the rapid rise of the AI sector. Commodity leviathan Trafigura
estimates that AI and data centre demand alone could add a further 1 million
tonnes per annum to overall copper demand by 2030 and forecast a 35% supply
gap by the end of the decade.
This is against a background of the long-term decline in copper grades at
existing mines, and several disappointments on the supply side. Previous
misdemeanours by the mining sector have ushered in an era in which the ESG
lobbies and NGOs have so lengthened the time it takes to put a new mine into
production that many companies and investors have given up funding new
projects. Antofagasta and Twin Metals invested several hundred million dollars
in the Maturi project in Minnesota, which did not receive a mining permit.
Similarly, the Pebble deposit in Alaska, one of the largest polymetallic
deposits on the planet, on which exploration work commenced in 1987,
containing over 30 million tonnes of copper, is unlikely ever to receive
permission to mine. As the BHP Group bid for Anglo American Plc shows, it is
more expedient to expand your copper reserves by buying somebody else's,
rather than developing your own. As in politics, investment decisions, however
beneficial in the long term, are seldom taken by people who may not be around
to see the rewards, yet suffer if there are any delays in execution. This all
points to a "higher for longer" scenario for the copper price which the Board
anticipates will be responsible for some 70% of the Company's predicted
revenues from the Empire open pit mine in Idaho, USA, a State with a proven
and ongoing reputation for permitting mining projects.
Although the UK stock market, and AIM in particular, was shunned by investors
for much of the year, I am delighted to report that our floating rate
corporate copper bond issue has been fully subscribed at a minimum of $80
million. Recently Blackrock estimated that a copper price of $12,000 per tonne
would be necessary to justify spending on new mines - this would equate to a
coupon of 11.3% on our bonds. I am glad to say that the bond finance, once
received, is expected to fully fund the Company into production and allow the
Company to substantially reduce both estimated capital expenditure and lead
times through the purchase of pre-owned equipment. As an example, our recent
purchase of two ball mills which we acquired at a significant discount to the
price of the same equipment when new, saved circa $6-7 million in capital and
sustaining costs. I would like to thank all of you who joined us in the recent
small equity raise which enabled the Company to buy this equipment while
awaiting the completion of the bond issue.
On the operational front I am grateful to Ryan and his team for producing a
mine plan and reserve which is both profitable and economic to mine at
trailing copper, gold and silver prices, as opposed to the $12,000 per tonne
copper price cited earlier as needed to stimulate spending on new mines. Our
consultants analyzed and tested several different processes and in the one we
have chosen they have managed to keep overall costs to pre-Covid / Ukraine war
levels. The new designs enable us to produce copper, gold and silver
simultaneously, largely on patented (owned by the Phoenix Group) land. This
should simplify the permitting process. In addition, the plant we propose to
use for the open-pit oxide ore will also be capable of processing the
underground sulphide ores. This will assist the Company as we embark upon our
next quest - proving up the existence of mineable sulphides below the open pit
oxide mine.
Gold and silver prices have also risen considerably since my last statement.
Precious metals are currently estimated to contribute 30% of the revenue
stream from the Empire open-pit mine. The bond funding will also enable us to
conduct further exploration within our mineralized district at Empire,
including our Navarre Creek gold exploration project and our high-grade
lead-silver deposit at Red Star.
The ESG team has had a busy year, with several meetings of the Mackay,
Idaho-based KCAT committee of representatives of local interests have taken
place. This is a valuable sounding board and has enabled our local operating
company to deal with potential issues, such as access roads, before they
arise. We have taken on board many of their suggestions. We believe the
citizens of Mackay are very largely in favour of the development of the Empire
mine and we thank them for their support, particularly as the currently
proposed mine plan will reduce further the environmental impact of our
operations on the local area and community.
In this respect, we have recently retained our overall rating of "A" in the
annual Digbee ESG survey of mining companies, including a score of "AA" for
the Empire mine project operations, as reported in the Company's 2023
Sustainability Report being published alongside these annual accounts.
Regarding board matters, Andre Cohen, our senior independent non-executive
director since our IPO in 2017, will retire from the board at the end of our
forthcoming Annual General Meeting in order to spend more time pursuing
opportunities in the transportation finance sector whilst scaling down on
other professional activities. The Company and the Board have all benefitted
from his considerable knowledge of financial and legal matters, and his
attention to detail, and we are pleased that he will remain with us on
Phoenix's advisory board. We wish him well and thank him for his contribution
to date.
Finally, I thank all of you shareholders who have continued to support the
Company, in often challenging circumstances. Now that we have our bond
financing being finalised, an economic and profitable project in a
mining-friendly jurisdiction, and a path to production, we look forward to
sharing with you the benefits of a rerating of the Company's shares as Phoenix
makes the move from a junior mining development company to a mining producer.
Marcus Edwards-Jones
Executive Chairman
14 May 2024
CHIEF EXECUTIVE OFFICER'S REPORT
2023 was an exceptionally busy year as the Company focused on the technical
aspects required to move the Empire open pit mine closer to production. We
achieved a major milestone in this complex process with the estimation of the
Company's first Proven and Probable mineral reserves, which include copper,
gold, and silver. Mineral reserves meet the requirements of geologic
certainty, accessibility, and economic viability, and are estimated after
allowing for mining dilution, and thus represent the recoverable contained
metal that will be delivered to the processing plant. I am pleased to report
that the Company's mineral reserves within the open pit project amount to
66,467 tonnes of copper equivalent.
I appreciate that some of the shareholders have been frustrated with a
perceived lack of news, but I can assure them that this did not reflect a lack
of complex engineering or solid progress. Developing a plan to bring a mine
into production is a lengthy and complex engineering process involving
numerous consultants and contractors gathering and synthesizing large volumes
of data and exploring numerous optimization scenarios. Each optimization step
is iterative, with the results of one building on another, and on another, and
so on. Once a preferred option is identified, the emphasis then moves to
finding as many incremental improvements as possible, then testing and
assessing them before finally settling on a final plan.
Over the past year the prices of all three of our contained metals have been
volatile but generally moving on an upwards trajectory. Many commentators
believe that copper in particular is at the beginning of a long-term bull
market and are predicting prices to rise over the coming years which would
improve the economics of the Empire Mine project significantly. However, our
aim has been to design a project that will be as robust and profitable as
possible, and economically attractive using prices below current levels and in
order to report a NI 43-101 compliant economic model.
Empire Proven and Probable Mineral Reserves
A proven and probable reserve estimate was completed by Hardrock Consulting in
April 2024 and reported for the polymetallic Empire Mine open pit oxide
deposit. The estimate reports Proven and Probable reserves in the Empire
open-pit oxide deposit of 10,097,000 tonnes containing 49,677 tonnes of
copper, 104,000 ounces of gold, and 4,654,400 ounces of silver, for a combined
66,467 tonnes of copper equivalent metal. It was estimated using assay data
from 485 drill holes, extensive geological modelling, metallurgical recovery
test work, geotechnical evaluation, and mine design.
Mineral Reserve Statement for Empire Mine, after Hard Rock Consulting April
2024
Fully diluted tonnes at a Net Smelter Return cut-off of $22.59 / tonne
Classification Tonnes Copper Gold Silver Copper Equiv.
(x1000) % lb (x1000) gpt oz (x1000) gpt oz (x1000) % lb (x1000)
Proven 7,515 0.49 81,070.56 0.38 90.9 14.42 3,483.7 0.68 111,995.19
Probable 2,582 0.50 28,417.41 0.16 13.2 14.10 1,170.7 0.61 34,498.69
Proven + Probable 10,097 0.49 109,487.97 0.32 104.0 14.34 4,654.4 0.66 146,493.89
Metallurgy and Process Design
In 2022, 3,502 feet (1,067 metres) of core was drilled in the oxide portion of
the Empire copper deposit for the purpose of collecting representative samples
of the copper, gold, and silver mineralization within the boundaries of the
resource pit. Initially, the metallurgical work was intended to further
develop a commercial leaching design using only ammonium thiosulfate ("ATS")
as the primary reagent for recovering copper, gold and silver. Following the
initial test work, our metallurgists determined that adding a flotation step
upstream of the leaching circuit and generating a saleable concentrate stream
containing all three of the metals would provide an immediate revenue stream,
reduce the quantity of ore feeding the downstream leaching circuit, and
therefore reduce the total quantity of leaching reagent used. The reduction in
reagent usage equates to lower overall processing costs. The
flotation-leaching circuit has a much smaller footprint than a classic heap
leach, allowing for the processing plant to be sited on the Group's patented
(private) mining claims nearer the open pit. The proximity of the plant to
the open pit will reduce overall operating costs by reducing the ore haulage
distance. The improved haulage cycle-time gained from the shortened haulage
distance also allows for the use of smaller, less expensive haul trucks.
In addition to the cost benefits of a smaller footprint plant sited on private
land, the flotation-leaching circuit will be capable of processing sulphide
material currently being explored elsewhere on the Empire property. From an
environmental permitting standpoint, siting the processing plant on private
land should help to simplify the overall permitting process.
The flotation + leaching metallurgical recovery results and reserve pit
optimization parameters are shown in the table below. Optimization of the
processing circuit is ongoing.
Reserve Pit Optimization Parameters (Metric tons) Units Cu Au Ag
Commodity Prices $/oz or $/lb $4.00 $1,788 $24.00
Flotation Process Recoveries
Flotation _ Cu Concentrate % 33.0% 50.0% 36.0%
Concentrate (Payables)
Flotation_ Cu Concentrate (Au Payable based on grade) % 95.0% 90-97% 95.0%
Cementation Process Recoveries
Cementation (Total Copper Recovery after Flotation) % 90.0% 0.0% 0.0%
Treatment/Refining Charges
Copper Con. Refining Ag $/oz 0.40
Copper Con. Refining Au $/oz 4.00
Copper Con. Trucking & Shipping $/t conc wet $80.00
Copper Con. Treatment $/t conc wet $90.00
Copper Cementation Shipping $/lb Cu $/lb $0.04
Copper Cementation Shipping $/lb Cu $/lb $0.02
Operating Costs
Mining Cost - Surface $/t mined $2.56
Mining Cost - Incremental Increase for each 20ft depth $/t mined $0.018
Processing Cost $/t milled $18.74
G&A $/t milled $2.20
Total Ore cost $/t milled $/t milled $20.94
Pit Slope Assumptions Five sectors were modelled based on core logging with inter-ramp angles
ranging from 42º to 45º
Red Star - Exploration
Red Star is a high-angle silver-lead vein system hosted in andradite-magnetite
and located 330-metres north-northwest of the Empire oxide pit. Red Star was
identified from a 20-metre wide surface outcrop across a skarn structure.
The year began with the receipt of assay results from our 2022 drilling season
at Red Star. That drilling campaign had been shorter than initially
anticipated due to limited drill rig availability, the third consecutive year
of disruption. The shortages of equipment, supply chain weaknesses and delays
that resulted from Covid appear now to have thankfully passed.
875 feet of reverse-circulation drilling was completed that tested the
magnetic anomalies identified during the ground magnetics survey. Assay
results from the 2022 drilling program were received in Q2 2023. The assay
values for copper, silver, lead, and zinc were consistent with previous
drilling programs. Of particular interest are the results from drill hole
RS22-02, which tested the western margin of a strong magnetic anomaly,
assaying 7.62 metres of 142.7 grammes/tonne ("g/t") silver, 2.94% lead, and
1.54% zinc. Additionally, drill hole RS22-04 assayed 9.15 metres of 1.56 g/t
gold and 0.62% copper, including 1.52 metres averaging 7.59 g/t gold and 0.58%
copper. While our primary focus is on the engineering and development of the
Empire Open-Pit Mine, further exploration and the delineation of additional
drilling targets will continue at Red Star in 2024.
Red Star - High-grade Silver Inferred Resource
In early May 2019, the Company announced a small maiden Inferred sulphide
resource of 103,500 tonnes, containing 577,000 ounces of silver, 3,988 tonnes
of lead, 957 tonnes of zinc, 338 tonnes of copper, and 2,800 ounces of gold,
as summarized in the table below.
Class Tons Ag Ag Au Au Pb Pb Zn Zn Cu Cu
(x1000) g/t oz g/t oz % lb % lb % lb
(x1000) (x1000) (x1000) (x1000) (x1000) % (x1000)
Inferred 114.13 173.4 577.3 0.851 2.8 3.85 8,791.20 0.92 2,108.80 0.33 745
2023 Navarre Creek Drilling Program
During the summer of 2023, we completed a short drilling campaign on the
Navarre Creek gold property. Similar to the results from Red Star that were
received in April 2023, the initial assays from Navarre Creek showed low-grade
mineralization worthy of further investigation. As a result, we staked a
further 400 acres to the south-west of the Lehman Creek fault target,
expanding our Navarre Creek claim block to 197 unpatented claims covering
4,070 acres. While our attention remains firmly focused on engineering and
design of the Empire open-pit reserves, we will continue exploration and drill
target development at Navarre Creek in 2024.
While there is no guarantee that future Navarre Creek exploratory programs
will result in the discovery of a viable ore deposit, the geology, mineralogy,
and geochemistry of Navarre Creek fits all the criteria necessary for a
potentially significant gold bearing system.
Empire Mine Expansion - Horseshoe, Whiteknob, and Windy Devil
The Horseshoe, Whiteknob, and Windy Devil claim blocks, located immediately
north of the Empire Mine project, are situated within the core of the Empire
mineralization and remain attractive exploration targets. The core Empire
claim group has grown to 8,434 acres (34.13 sq kms) by expanding north to the
former Horseshoe and Whiteknob Mines and onto Windy Devil. This expansion
covers approximately 30 historic adits, shafts and prospects, which exhibit
geology and mineralogy similar to Red Star, and which will be the subject of
further exploration going forward.
Idaho Cobalt Belt - Redcastle and Bighorn Projects
The Company owns two strategically located properties on the Idaho Cobalt Belt
in Lemhi County, Idaho - Redcastle and Bighorn. The Redcastle property is
held by Borah Resources, our 100% owned, Idaho registered subsidiary. In May
2021, the Redcastle holding was signed to an earn-in agreement with Electra
Battery Materials Corporation (formerly First Cobalt Corporation), the
Toronto-based owner of the Iron Creek Cobalt Mine, which shares a common
border with the Redcastle property.
The Bighorn property, located on the northern end of the Idaho Cobalt Belt, is
held by Salmon Canyon Resources, another 100% owned, Idaho registered
subsidiary. Bighorn is situated east of the historic Salmon Canyon copper
cobalt underground mine and shares a common border with New World Resources'
Colson cobalt-copper project.
In addition to copper, cobalt is a critical metal for electric vehicles and
global electrification projects. Cobalt deposits are rare, particularly in
first world jurisdictions. The Company's cobalt projects are located in the
USA's only prospective cobalt region, the Idaho Cobalt Belt, approximately 100
miles north of the Empire Mine. In 2018 we announced the results of our 2017
reconnaissance program of 46 surface grab samples which gave cobalt values
ranging from 2 ppm to 0.31% cobalt.
Other Business
The Company spent significant time and resources in 2023 and early-2024
locating and procuring pre-owned capital equipment in advance of mine
construction. Included in the purchases to date are all of the laboratory
assets from the former AuRIC Metallurgical Laboratories which include the
analytical equipment and supplies necessary for the onsite laboratory that
will service the Empire Mine once it is in operation, two grinding mills (ball
mills), and a disk filtration circuit for filtration and dewatering of process
tails. The Company believes that the purchase of this equipment at a
significant discount to the price of the same equipment when new, should have
a material positive impact on the Empire mine project economics, as well as
reducing the time required to purchase these long lead-time items.
Outlook
The commodities market has started 2024 strongly, and there appears to be
growing consensus that the long-term lack of investment in new mining projects
has caused a shortfall at precisely the time that the world requires more
copper than ever to meet the electrification targets that have been adopted
globally. With its location in one of the most stable, mining friendly
locations in the world, the Empire Mine is well placed to take advantage of
this supportive environment.
Now that we have developed proven and probable mineral reserves, our focus is
on completing all of the necessary feasibility level engineering required to
successfully permit and construct the open pit mine. As our process design
includes the siting of the plant on private, patented mining claims, we will
reduce the operational footprint on public lands and place ESG considerations
at the heart of our operation. As the regulatory authorities looked closely at
our operating plan application two years ago, I am confident that in due
course the plan will be approved.
In the meantime, we will complete the necessary engineering and continue to
source the plant and equipment required to bring the mine into production. As
with the ball mills we recently acquired, we believe there are many additional
opportunities to reduce the cost of capital significantly through the sourcing
of quality, pre-owned equipment.
We will also continue exploration activities on the Empire sulphide vein
system, Red Star, and Navarre Creek. It is important to remember that these
projects provide an attractive and varied pipeline of opportunities to the
Company.
It is an exciting time to be involved in this project, and I look forward with
confidence and optimism to the rest of the year.
Key Performance Indicators ("KPIs")
To date, the Group has focused on the delivery of the project evaluation work
programs to assess the available mineral reserves and resources and the
extraction methods to apply, each within the available financial budgets. This
work will continue until the relevant feasibility studies are completed, and
construction commences.
At that stage, the Group will consider and implement appropriate operational
performance measures and related KPIs as the objective of recommencing
commercial production at the Empire Mine nears fruition.
Conclusion
As metal prices continue to rise, so does the demand for global
electrification and the raw materials needed to meet that demand. We
continue to perform the steps necessary for Phoenix to become one of the next
domestic US producers of metals vital to the transportation, manufacturing and
energy sectors in the US and abroad. Our team of engineers, geoscientists,
and industry consultants are completing the engineering necessary to develop
the Empire Mine into a producer of copper, gold, and silver in a stable,
mining friendly jurisdiction.
The Company endeavors to meet the timelines it develops for itself and
shareholders. It is of particular importance to me that everyone understands
that the nature of the studies we undertake to generate the best mining and
production outcomes can be time-consuming and not always predictable. I
appreciate everyone's patience as we complete each step of the engineering
required to ensure that we build the most robust operation possible. Mining is
a long-term, capital-intensive business, and we believe the time spent on
optimizing the mine plan and processing design at this stage can bring
significant financial benefits to the project over the life of the mine.
As always, I want to thank all of our staff, consultants and advisors, all of
whom work tirelessly to accomplish our common goal of metal production. And
I would like to thank our community liaisons, shareholders, and directors for
their considerable support. I look forward to reporting further positive
news as we continue our exploration and development programs during 2024.
Ryan McDermott
Chief Executive Officer
14 May 2024
Consolidated income statement Year Year
Ended Ended
31 December 31 December
2023 2022
Continuing operations Note $ $
Revenue 4 - -
Exploration & evaluation expenditure (28,839) -
Gross loss (28,839) -
Administrative expenses (1,564,759) (1,568,475)
Other operating expenses (14,372) (37,777)
Loss from operations (1,607,970) (1,606,252)
Finance income 34,196 32,104
Finance costs - -
Loss before taxation (1,573,774) (1,574,148)
Tax on loss on ordinary activities - -
Loss for the year (1,573,774) (1,574,148)
Loss attributable to:
Owners of the parent (1,535,494) (1,546,827)
Non-controlling interests (38,280) (27,321)
(1,573,774) (1,574,148)
Loss per share attributable to owners of the parent:
Basic and diluted EPS expressed in US cents per share 5 (1.24) (1.27)
Consolidated statement of comprehensive income Year Year
Ended Ended
31 December 31 December
2023 2022
$ $
Loss for the year (1,573,774) (1,574,148)
Total comprehensive income attributable to:
Owners of the parent (1,535,494) (1,546,827)
Non-controlling interests (38,280) (27,321)
(1,573,774) (1,574,148)
Consolidated statement of financial position
31 December 31 December
2023 2022
Note $ $
Non-current assets
Property, plant and equipment - mining property 6 38,432,522 33,104,230
Intangible assets 7 356,805 347,000
38,789,327 33,451,230
Current assets
Trade and other receivables 8 1,434,280 1,534,507
Financial assets 9 4,191 18,563
Cash and cash equivalents 283,721 4,664,233
1,722,192 6,217,303
Total assets 40,511,519 39,668,533
Current liabilities
Trade and other payables 10 426,723 572,470
Borrowings and other liabilities 11 2,238,501 500,000
2,665,224 1,072,470
Non-current liabilities
Provisions for other liabilities 12 657,702 757,702
657,702 757,702
Total liabilities 3,322,926 1,830,172
Net assets 37,188,593 37,838,361
Equity
Ordinary shares 13 - -
Share Premium 45,390,217 44,878,927
Retained loss (8,209,258) (7,086,480)
Foreign exchange translation reserve (18,588) (18,588)
Equity attributable to owners of the parent 37,162,371 37,773,859
Non-controlling interests 26,222 64,502
Total equity 37,188,593 37,838,361
The financial statements were approved by the Board of Directors and
authorized for issue on 14 May 2024.
On behalf of the Board
Richard V L Wilkins
Director
Consolidated statement of changes in equity Ordinary shares Share premium Retained loss Foreign exchange Total Non-controlling interest Total equity
translation reserve
$ $ $ $ $ $ $
At 1 January 2022 - 43,460,747 (5,751,359) (18,588) 37,690,800 91,823 37,782,623
Loss for the year - - (1,546,827) - (1,546,827) (27,321) (1,574,148)
Total comprehensive income for the year - - (1,546,827) - (1,546,827) (27,321) (1,574,148)
Shares issued in the period - 1,418,180 - - 1,418,180 - 1,418,180
Share issue expenses - - - - - - -
Share-based payments - - 211,706 - 211,706 - 211,706
Total transactions with owners - 1,418,180 211,706 - 1,629,886 - 1,629,886
At 31 December 2022 - 44,878,927 (7,086,480) (18,588) 37,773,859 64,502 37,838,361
At 1 January 2023 - 44,878,927 (7,086,480) (18,588) 37,773,859 64,502 37,838,361
Loss for the year - - (1,535,494) - (1,535,494) (38,280) (1,573,774)
Total comprehensive income for the year - - (1,535,494) - (1,535,494) (38,280) (1,573,774)
Shares issued in the period - 511,290 - - 511,290 - 511,290
Share issue expenses - - - - - - -
Share-based payments - - 412,716 - 412,716 - 412,716
Total transactions with owners - 511,290 412,716 - 924,006 - 924,006
At 31 December 2023 - 45,390,217 (8,209,258) (18,588) 37,162,371 26,222 37,188,593
Consolidated statement of cash flows 31 December 31 December
2023 2022
$ $
Cash flows from operating activities
Loss before tax (1,573,774) (1,574,148)
Adjustments for:
Share-based payments 18,991 67,818
Fair value adjustment to financial asset 14,372 37,777
(1,540,411) (1,468,553)
Decrease/(increase) in trade and other receivables 100,226 (58,563)
Decrease in trade and other payables (97,245) (310,726)
Net cash used in operating activities (1,537,430) (1,837,842)
Cash flows from investing activities
Purchase of intangible assets (9,805) (16,156)
Purchase of property, plant and equipment (5,034,567) (6,836,312)
Net cash used in investing activities (5,044,372) (6,852,468)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares 511,290 1,418,180
Preliminary bond-issue expenses - (1,110,166)
Proceeds from borrowings 2,000,000 -
Repayment of deferred liability (310,000) -
Net cash generated from financing activities 2,201,290 308,014
Net decrease in cash and cash equivalents (4,380,512) (8,382,296)
Cash and cash equivalents at the beginning of the year 4,664,233 13,046,529
Cash and cash equivalents at the end of the year 283,721 4,664,233
Significant non-cash transactions:
During the year an amount of $412,716 (2022: $143,888) was credited to the
retained loss in respect of the charge for share-based payments, of which
$393,725 has been capitalised into mining property. Additionally, the
provision for site restoration of $100,000 has been released and mining
property has been credited with this amount.
The loss before taxation includes a foreign exchange gain of $82,634 (2022
loss of: $564,353), of which $73,216 (2022: loss of $547,374) related to
sterling denominated cash balances.
1 General information
Phoenix Copper Limited (the "Company") and its subsidiary undertakings (the
"Group") are engaged in exploration and mining activities, primarily precious
and base metals, primarily in North America. The Company is domiciled and
incorporated in the British Virgin Islands on 19 September 2013 (registered
number 1791533). The address of its registered office is OMC Chambers,
Wickhams Cay 1, Road Town, Tortola VG1110, British Virgin Islands. The Company
is quoted on London's AIM (ticker: PXC) and trades on New York's OTCQX Market
(ticker: PXCLF; ADR ticker PXCLY).
The subsidiaries of the Company are:
Incorporated in the United States of America
KPX Holdings Inc (100% equity holding)
Subsidiaries of KPX Holdings Inc:
Konnex Recourses Inc (80% equity holding)
Borah Resources Inc (100% equity holding)
Lost River Resources Inc (100% equity holding)
Salmon Canyon Resources Inc (100% equity holding)
2 Going concern
The Group currently has no income and meets its working capital requirements
through raising development finance. In common with many businesses engaged in
exploration and evaluation activities prior to production and sale of minerals
the Group requires funding in order to fully develop its business plan. The
directors believe that the proceeds of the Bond issue now fully subscribed
will be sufficient to pay the construction costs for the Empire open pit mine,
which will enable the Group to commence production and generation of income.
The Company is required to issue certain securities that the Company has
agreed to grant the Bond investors by way of fees, which is conditional on
shareholder approval. As there is no certainty the shareholders will approve,
this condition indicates the existence of a material uncertainty which may
cast significant doubt about the Group's ability to continue as a going
concern.
During the year the Company raised $0.51 million by way of the exercise of
warrants. Subsequent to the year end, the Company raised $3.52 million from
the placement of new shares and refinanced the short-term loan facility into
an 18 month term loan.
The directors have prepared annual budgets and forecasts for the period
through to 30 June 2025 in order to ensure that they have sufficient liquidity
in place and that they comply with the terms and conditions of their
obligations in relation to the ongoing development of the mining assets and
the Group's environmental and other commitments.
At the date of approval of these financial statements, the directors are
confident that shareholder approval will be obtained and therefore have a
reasonable expectation that the Group will have adequate resources to continue
in operational existence for at least 12 months from the date of approval of
these financial statements. Accordingly, the directors believe it
appropriate to adopt the going concern basis of accounting in preparing the
financial statements.
The financial statements do not include the adjustments that would result if
the Group was unable to continue as a going concern.
3 Basis of preparation
This preliminary information does not comprise full financial statements. The
significant accounting policies and other information contained within this
preliminary announcement has been extracted from the Group's audited financial
statements a copy of which is available on the Company's website:
www.pgmining.com.
The financial information is presented in US dollars.
4 Revenue
The Group is not yet producing revenues from its mineral exploration and
mining activities. The Company charged its subsidiary entities $900,000 (2022:
$930,000) in respect of management services provided.
5 Loss per share 31 December 31 December
2023 2022
$ $
Loss attributable to the parent used in calculating basic and diluted loss per (1,535,494) (1,546,827)
Share
Number of shares
Weighted average number of shares for the purpose of basic earnings 123,483,143 121,794,101
per share
Weighted average number of shares for the purpose of diluted earnings 123,483,143 121,794,101
per share
Basic loss per share (US cents per share) (1.24) (1.27)
Diluted loss per share (US cents per share) (1.24) (1.27)
Basic earnings per share amounts are calculated by dividing net loss for the
year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Where the Group has incurred a loss in a year the diluted earnings per share
is the same as the basic earnings per share.
The Company has potentially issuable shares of 20,350,158 (2022: 13,746,457)
all of which relate to the potential dilution in respect of warrants and share
options issued by the Company.
6 Non-current assets Mining
property
$
At 1 January 2022 26,124,030
Additions 6,980,200
At 31 December 2022 33,104,230
At 1 January 2023 33,104,230
Additions 5,328,292
At 31 December 2023 38,432,522
Net book value
At 1 January 2022 26,124,030
At 31 December 2022 33,104,230
At 31 December 2023 38,432,522
Mining property assets relate to the past producing Empire Mine copper - gold
- silver - zinc project in Idaho, USA. The Empire Mine has not yet recommenced
production and no depreciation has been charged in the statement of
comprehensive income. There has been no impairment charged in any period due
to the early stage in the Group's project to reactivate the mine.
7 Intangible assets
Exploration
and evaluation expenditure
$
At 1 January 2022 330,844
Additions 16,156
At 31 December 2022 347,000
At 1 January 2023 347,000
Additions 9,805
At 31 December 2023 356,805
Net book value
At 1 January 2022 330,844
At 31 December 2022 347,000
At 31 December 2023 356,805
Exploration and evaluation expenditure relates to the Bighorn and Redcastle
properties on the Idaho Cobalt Belt in Idaho, USA. The Bighorn property is
owned by Salmon Canyon Resources Inc. The Redcastle property is owned by Borah
Resources Inc. Both companies are wholly owned subsidiaries of KPX Holdings
Inc, a wholly owned subsidiary of the parent entity, and each of which are
registered and domiciled in Idaho. The Redcastle property is subject to an
Earn-In Agreement with First Cobalt Idaho, a wholly owned subsidiary of
Electra Battery Materials Corporation of Toronto, Canada.
8 Trade and other receivables
31 December 31 December 2022
2023
$ $
Other receivables 382,179 181,072
Preliminary bond issue expenses 882,814 1,110,166
Prepaid expenses 169,287 243,269
1,434,280 1,534,507
There were no receivables that were past due or considered to be impaired.
There is no significant difference between the fair value of the other
receivables and the values stated above. The preliminary bond issue expenses
relate to the corporate copper bonds, and will be deducted from the proceeds
of the bonds and amortised to finance expenses over the expected life of the
bonds.
9 Financial assets
31 December 31 December
2023 2022
$ $
Quoted investments 4,191 18,563
Quoted investments represent 11,111 shares in Toronto-based Electra Battery
Materials Corporation. The shares have been valued at market price as at 31
December 2023. A fair value adjustment of $14,372 (2022: $37,777) has been
charged to other operating expenses.
10 Trade and other payables
31 December 31 December 2022
2023
$ $
Trade payables 410,448 569,864
Other payables 16,275 2,606
426,723 572,470
All trade and other payables are payable on demand or have payment terms of
less than 90 days. The Group is not exposed to any significant currency risk
in respect of its payables.
11 Borrowings and other liabilities
31 December 31 December 2022
2023
$ $
Current liabilities
Short-term borrowings 2,048,501 -
Deferred consideration 190,000 500,000
2,238,501 500,000
During the year the Group entered a short-term unsecured funding arrangement
of $2,000,000, with an initial fixed 4% coupon. Under the terms of the
agreement the term of the loan was extended to 23 March 2024, at an interest
rate of 1% per month. On 2 March 2024 the Company refinanced the facility into
an 18 month term loan, repayable over 15 months following an initial 90 day
repayment holiday, unless the Company redeems the loan earlier. The loan
remains unsecured and attracts interest at 15% per annum. The loan is
potentially convertible into approximately 8.7 million new ordinary shares in
the Company.
In April 2021 the Group entered into an agreement with Mackay LLC to acquire
1% of the 2.5% net smelter royalty payable on mining leases on the Empire Mine
in Idaho, USA. Total consideration payable to Mackay LLC was $800,000, of
which $610,000 has been paid.
12 Provisions
31 December 31 December 2022
2023
$ $
Rehabilitation provision - 100,000
Royalties payable 657,702 657,702
657,702 757,702
The provision of $100,000 for decommissioning the Empire Mine was released in
the year. All current environmental reclamation and rehabilitation costs are
now covered by insurance bonds and other deposits contracted in the United
States by Konnex Resources as and when required. During the year $140,100
(2022: $38,970) of such costs have been capitalised into mining property.
The other provision of $657,702 arises from a business combination in 2017 and
comprises potential royalties payable in respect of future production at the
Empire Mine. This liability will only be payable if the Empire Mine is
successfully restored to production and will be deducted from the royalties
payable. The amount of the provision will be reassessed as exploration work
continues and also on commencement of commercial production.
13 Share capital
Group and Company Group and Company
Number Number
2023 2022
Number of ordinary shares of no par value
At the beginning of the year 122,628,622 117,415,680
Issued in the year 2,300,000 5,212,942
At the end of the year 124,928,622 122,628,622
The Company does not have an authorised capital and is authorised to issue an
unlimited number of no-par value shares of a single class.
In the year the Company issued 2,300,000 ordinary shares at an average issue
price of $0.22 per share to raise $0.51 million in respect of warrants
exercised. All shares are issued fully paid.
Since the year-end the Company has issued a further 24,141,373 ordinary shares
at $0.15 per share from a placing, subscription and retail offer. The Company
currently has 149,069,995 ordinary shares in issue.
The ordinary shares in the Company have no par value. All ordinary shares have
equal voting rights in respect of shareholder meetings. All ordinary shares
have equal rights to dividends and the assets of the Company.
The Company has issued warrants to subscribe for additional shares. Each
warrant provides the right to the holder to convert one warrant into one
ordinary share of no-par value at exercise prices ranging from £0.18 to
£0.50. At 31 December 2023 the number of warrants in issue was 9,221,457
(2022: 7,521,457).
The Company has issued options to subscribe for additional shares to the
directors and senior employees of the Group. Each option provides the right to
the holder to subscribe for one ordinary share of no par-value, subject to the
vesting conditions, at exercise prices ranging from £0.17 to £0.50. On 31
December 2023 the number of options in issue was 6,225,000 (2022: 6,225,000).
Since the year end a further 4,903,701 warrants have been issued at exercise
prices ranging from £0.115 to £0.20
14 Share-based payments
The Company has issued 9,221,457 (2022: 7,521,457) warrants to subscribe for
additional share capital of the Company. Each warrant entitles the holder to
subscribe for one ordinary equity share in the Company. The right to convert
each warrant is unconditional.
Additionally, the Company has issued 6,225,000 (2022: 6,225,000) share options
to directors and senior employees of the Group. Each share option entitles the
holder to subscribe for one ordinary equity share in the Company once the
vesting conditions have been satisfied. No new share options were issued or
amended in the year ended 31 December 2023.
In the periods presented the Company has operated an equity-settled share
based incentivisation schemes for employees.
Equity-settled share-based payments are measured at fair-value (excluding the
effect of non-market-based vesting conditions) as determined through use of
the Black-Scholes technique, at the date of issue. The warrants were issued as
exercisable from the date they were issued and there are no further vesting
conditions applicable.
Warrants issued Weighted 31 December 31 December
Average 2023 2022
Exercise price Number Number
At the beginning of the year £0.40 7,521,457 12,577,920
Issued in the year £0.35 - 707,500
Issued in the year £0.50 - 1,570,455
Issued in the year £0.42 2,000,000 -
Issued in the year £0.18 2,000,000 -
Exercised prior year - average exercise price £0.30 (5,212,942)
Exercised in the year - average exercise price £0.18 (2,300,000) -
Lapsed £0.42 - (2,121,476)
Modification of warrant exercise price £0.12 - -
At the end of the year £0.38 9,221,457 7,521,457
Share options issued Weighted 31 December 31 December
average 2023 2022
Exercise price Number Number
At the beginning of the year £0.34 6,225,000 6,025,000
Issued in the year £0.30 - 200,000
At the end of the year £0.34 6,225,000 6,225,000
The total share-based payment charge for all warrants and options in the year
was $412,716 of which $18,191 has been charged to profit and loss and $393,725
allocated to Mining Property (2022: $211,706, $67,818 and $143,888
respectively). The share-based payment charge was calculated using the
Black-Scholes model. All warrants issued vest immediately on issue. Share
options vest up to a 36-month period from the date of issue, or on the
achievement of certain vesting milestones.
Volatility for the calculation of the share-based payment charge in respect of
both the warrants and the share options issued was determined by reference to
movements in the Company's quoted share price on AIM.
The inputs into the Black-Scholes model for the warrants and share options
issued were as follows:
31 December 31 December
2023 2023
Warrants issued Share options issued
Weighted average share price at grant date £0.30 -
Weighted average exercise prices £0.33 -
Weighted average expected volatility 116.5% -
Expected life in years 1.00 -
Weighted average contractual life in years 1.00 -
Risk-free interest rate 3.5% -
Expected dividend yield - -
Fair-value of warrants granted (pence) £0.065 -
On 23 March 2023 the Company issued 2,000,000 warrants with an exercise price
of £0.42, the share price on the date of issue was £0.23 and the fair-value
of each warrant was £0.05. On 25 September 2023 the exercise price of these
warrants was amended to £0.30. This amendment has been valued as a modified
instrument with a fair-value of £0.01.
On 14 September 2023 the Company issued 2,000,000 warrants with an exercise
price of £0.18, the share price at the date of issue was £0.20 and the
fair-value of each warrant was £0.08.
The warrants issued are all exercisable from the date of issue. The average
volatility for the warrants issued was 116.5%.
No share options were issued or amended in the year. The number of outstanding
share options are exercisable between £0.30 to £0.34.
The expected life of the outstanding warrants and options is up to 1 year.
Share-based payments allocation of charge 31 December 31 December
2023 2022
$ $
Share options 54,262 169,843
Warrants including modification 358,454 41,863
Total charge 412,716 211,706
Allocation:
Mining property 393,725 143,888
Administrative expenses 18,991 67,818
412,716 211,706
The share- based payment charge has been simultaneously credited to retained
deficit.
15 Events after the reporting date
On 31 January 2024 the Company completed a placing, subscription and retail
offer to raise $3.52 million before issue expenses.
On 2 March 2024 the Company refinanced its short-term loan facility (see also
note 19) into an 18 month term loan, repayable over 15 months following an
initial 90 day repayment holiday, unless the Company redeems the loan earlier.
The loan is unsecured and attracts interest at 15% per annum. The loan is
potentially convertible into approximately 8.7 million new ordinary shares in
the Company. It is the intention of the Company to repay this loan from the
proceeds of its corporate copper bond issue (see below).
On 27 December 2023 the Company created a class of corporate copper bonds
("Bonds") in an authorised amount of $300 million, in anticipation of closing
an initial tranche of $80 million. $110 million in principal value of Bonds
were issued and deposited with The Bank of New York Mellon as Settlement
Agent, pending onward transfer to bond investors.
Since the year-end the Company has received subscription agreements to
complete a fully subscribed initial Bond issue for a principal value of a
minimum $80 million before issue expenses. The Bonds will pay a floating
rate coupon subject to a minimum of 8.5% per annum and a maximum of 20%. The
coupon is calculated as to the higher of a copper price coupon linked to the
copper price on the London Metal Exchange, or an interest rate coupon linked
to the US Federal Discount Rate. The coupon will only be payable on the
principal value of Bonds drawn down.
The Bonds are not convertible, are secured on the Group's interests in the
Empire open pit mine, will be listed on a recognised European stock exchange,
and have a final maturity of ten years with Bond investor option to request
redemption at principal value after six years, and the Company's option to
offer early redemption at a 10% premium to principal value after five years.
M&G Trustee Company are acting as Security Trustee and Escrow Agent, and
The Bank of New York Mellon as Custodian and Transfer, Paying and Settlement
Agent.
The Company has agreed to pay the Bond investors fees which will be satisfied
by the grant of certain securities relating to the Company's shares.
Shareholder approval will be required for the issue and exercise of such
securities.
Environmental, Social, and Corporate Governance ("ESG")
Phoenix is committed to meeting and exceeding the environmental standards
required by law as a core value of the Company. The baseline environmental
data collected to date will be used to further the permitting process, but as
importantly, will be used as the building blocks for the Company's ongoing ESG
platform, overseen by the Company's ESG & Sustainability Committee. The
Company also publishes annual Sustainability Reports, which can be viewed on
the Company's website.
Market Abuse Regulation ("MAR") Disclosure
The Company deems the information contained within this announcement to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014, which has been incorporated into UK law by the European
Union (Withdrawal) Act 2018. Upon the publication of this announcement via the
Regulatory Information Service, this inside information is now considered to
be in the public domain.
Contacts
For further information please visit https://phoenixcopperlimited.com
(https://phoenixcopperlimited.com/) , or contact:
Phoenix Copper Limited Ryan McDermott Tel: +1 208 954 7039
Brittany Lock Tel: +1 208 794 8033
Richard Wilkins Tel: +44 7590 216 657
SP Angel Corporate Finance LLP (Nominated Adviser) David Hignell / Caroline Rowe/ Kasia Brzozowska Tel: +44 20 3470 0470
Tavira Financial Limited (Joint Broker) Jonathan Evans / Oliver Stansfield Tel: +44 20 7100 5100
WH Ireland (Joint Broker) Harry Ansell / Katy Mitchell Tel: +44 20 7220 1666
Panmure Gordon (UK) Limited (Joint Broker) Mark Murphy / Will Goode / Joseph Tan Tel: +44 20 7886 2500
EAS Advisors (US Corporate Adviser) Matt Bonner / Rogier de la Rambelje Tel: +1 (646) 495-2225
BlytheRay Tim Blythe / Megan Ray Tel: +44 20 7138 3204
(Financial PR)
Notes
Phoenix Copper Limited is an emerging producer and exploration company
specializing in base and precious metals, with an initial focus on copper,
gold, and silver extraction from an open-pit mining operation within the
United States.
Located in the historic Alder Creek mining district near Mackay, Idaho,
Phoenix's flagship asset is the Empire Mine, in which the Company holds an 80%
ownership stake. The historic Empire underground mine, located beneath the
surface of the Company's proposed open pit, boasts a rich history of producing
high-grade copper, gold, silver, zinc, and tungsten.
Since 2017, Phoenix has executed extensive drilling initiatives, resulting in
an expansion of the Empire Open-Pit resource by over 200%. In May 2024 the
Company published its inaugural mineral reserve statement for the Empire
Open-Pit mine. Proven & Probable mineral reserves are 10.1 million tonnes
containing 109,487,970 lbs of copper, 104,000 ounces of gold and 4,654,400
ounces of silver. This reserve was estimated using assay data from 485 drill
holes, extensive geological modelling, metallurgical recovery test work,
geotechnical evaluation, and mine design.
In addition to the Empire Mine, Phoenix's holdings in the district also
encompass the Horseshoe, White Knob, and Blue Bird Mines, all of which have
been producers of copper, gold, silver, zinc, lead, and tungsten from
underground operations, a new high-grade silver and lead orebody at Red Star,
and the Navarre Creek gold exploration project, which was first drilled in
2023. The Company's land package at Empire spans 8,434 acres (34.13 sq km).
Phoenix also owns two cobalt properties situated along the Idaho Cobalt Belt
to the north of Empire. An Earn-In Agreement has been established with Electra
Battery Materials, Toronto, concerning one of these properties.
Phoenix is listed on London's AIM (PXC), and trades on New York's OTCQX
Market (PXCLF and PXCLY (ADRs)). More details on the Company, its assets and
its objectives can be found on PXC's website
at https://phoenixcopperlimited.com/
(https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fphoenixcopperlimited.com%2F&data=05%7C02%7Cpaul.degruchy%40phoenixcopper.com%7Cd3c94638cd2a404fd97908dc4457be72%7C0ab43313efbd470e8b202b53ae10513d%7C0%7C0%7C638460390942473879%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=zDJLf9dFwaNJhQmfkjPJtPnIxiqtCJb%2F1IuX1s1r7kQ%3D&reserved=0)
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