REG - Phoenix Copper Ltd - Interim Results
26/09/2024 07:00
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RNS Number : 7119F Phoenix Copper Limited 26 September 2024
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
26 September 2024
Phoenix Copper Limited
("Phoenix" or the "Company", together with subsidiaries the "Group")
Interim Results
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 unaudited interim results for the six months ended 30 June
2024 (the "Period").
Year-to-date Highlights
Corporate & Financial
- Investment in Empire Mine increased to $42.11 million (2023:
$35.88 million)
- Group reports loss of $1.10 million (2023: loss of $0.63 million)
- Period-end Group net assets of $48.55 million (2023: $37.39
million)
- Company reports loss of $0.05 million (2023: profit of $0.31
million)
- Company loans to Idaho operating subsidiaries increased to $37.47
million (2023: $29.63 million)
- Placing, subscription, and retail offer to raise $3.52 million
(gross) completed in January 2024
- $2 million unsecured short-term loan refinanced into 18 month
unsecured term loan in March 2024
- $80 million floating rate corporate copper bond issue completed in
June 2024. Initial $5 million drawn down, with discussions ongoing with
strategic bond investor regarding the timing of future drawdowns (see below)
- Bonds listing on The International Stock Exchange ("TISE")
completed
- Andre Cohen retired as a director and joined the Advisory Board
- Paul de Gruchy, VP of Investor Relations, also joined the Advisory
Board
Operational
- Empire Mine open-pit mineral resources upgraded to mineral
reserves. Inaugural mineral reserve statement published
- Proven & Probable mineral reserves of 10.1 million tonnes
containing 109,487,970 pounds ("lbs") of copper, 104,000 ounces ("oz") of gold
and 4,654,400 oz of silver (66,467 tonnes of copper equivalent metal)
- Mineral reserves estimated using assay data from 485 drill holes,
extensive geological modelling, metallurgical recovery test work, geotechnical
evaluation, and mine design
- Empire Mine open-pit Pre-Feasibility Study ("PFS") published
post-Period. Pre-tax cumulative net free cash flow of $153 million over 8 year
mine life; total cash costs of $2.44 / lb
- Life of mine production of 40,424 tonnes copper, 40,161 oz gold
and 1.76 million oz silver
- Initial Empire Mine open-pit equipment delivered to site,
including two pre-owned ball mills and a fully equipped assay laboratory,
purchased at significant discounts to the price of the same equipment when new
- Areas of significant and consistent mineralisation identified at
the Navarre Creek gold claim block. 20 additional mining claims totalling 400
acres staked
- Earn-in Agreement on the Redcastle cobalt property renewed with
Electra Battery Materials
Chairman's Statement
It gives me great pleasure to report on the achievement of several important
milestones on the journey towards our first production at the Empire mine in
Idaho, USA.
I would like to thank Ryan and his team for delivering the PFS, which, despite
significant price increases in steel, diesel and processing chemicals, shows
attractive returns at current metal prices.
The anticipated capital expenditure required to build the mine of $62.6
million compares favourably with cumulative free cashflow, net of all capital
and sustaining capital costs, of $153 million over an 8 year mine life. The
metal prices used by our independent consultants are lower than prevailing
spot prices for copper, gold and silver. The PFS generates an internal rate of
return ("IRR") of 46.4% which is significantly higher than the 15% hurdle rate
used by mining majors, and our projected cash cost of production of $2.44 per
lb of copper would rank us 199(th) out of the 300 major copper mines in the S
& P rankings for 2024 - with cash costs well below several larger and
well-established mines in North America.
It is to the technical team's credit that they were able to redesign the mine
plan to take into account the challenges presented by the steep rises in
capital and operating costs. Our plant will process copper, gold and silver at
the same time, and without the need for copper ore to sit on leach pads for 90
days. The plant will also be sited next to the open pit, significantly
reducing transport costs and the environmental impact of the project.
Importantly, the plant will also be capable of processing both oxide and
sulphide ores. As a result, and resources permitting, we now plan to access
the underground deposit as early as next year by driving an adit into the
high-grade sulphide ores, in order to blend them with oxide ore to enhance
cashflow. In our recent drilling campaign we recovered sulphide core
containing over 8% copper, compared with a 0.66% grade in our oxide reserves,
and a global average of less than 0.5%.
Our records show that before the Empire mine closed in 1942, they were mining
6% to 8% copper and recovering 3.64%, as well as gold, silver and zinc. The
last underground shipment of ore also contained over 4% tungsten, which is
high on the list of critical metals, as indeed is antimony, which we have
discovered at our 4,070 acre Navarre Creek Gold exploration property.
It is our view that the true value of the Company will be underpinned by the
high grade underground deposit, which is open at depth and along strike,
potentially spread over many kilometres. It is really exciting to have the
opportunity to start unlocking this value a number of years earlier than
expected.
As a result of the subscription for our corporate copper bonds from NIU Invest
SE ("NIU Invest") in May, as well as the small equity placement we did earlier
in the year, we have been able to purchase good quality second- hand equipment
at prices which significantly improve the project economics, as well as
lowering lead times. This is an ongoing process as you can read in the CEO's
report, which will be optimized further as a result of the completion of the
PFS. Following the publication of the PFS, we are in discussions with NIU
Invest regarding a revised drawdown schedule for future tranches of copper
bonds.
We look forward to updating you with further progress on permitting, capital
expenditure on mine equipment and financing as the year unfolds and we move
ever closer to revenue generation.
Thank you, as always, for your continued support.
Marcus Edwards-Jones
Chairman
Chief Executive Officer's Report
The year to date has marked a significant and positive turning point for the
Company with the publication of an inaugural Proven and Probable mineral
reserve statement for the Empire open pit oxide deposit, which was followed-up
by the publication of the PFS. These publications are the culmination of
several seasons of resource drilling, extensive geological and economic
modelling, metallurgical test work, and thousands of hours of tireless data
evaluation and engineering. The PFS is available on the Company's website and
I recommend everyone take the time to read through it.
The Empire mineral reserves statement reports Proven & Probable reserves
of 10.1 million tonnes containing 109,487,970 lbs of copper, 104,000 ounces
("oz") of gold and 4,654,400 oz of silver, for a total of 66,467 copper
equivalent metric tonnes ("mt"). This is a considerable step forward because,
unlike mineral resources, mineral reserves meet the requirements of geological
certainty, accessibility, and economic viability.
Using the Empire mineral reserves as a basis, the Company's PFS highlights an
8-year mine life producing payable metal of 89,094,705 copper lbs (40,424 mt),
40,161 oz gold, and 1,759,717 oz silver, with an estimated $62.6 million capex
and total cash operating cost of $2.44/lb of copper equivalent metal, and
pre-tax economics of US$87.86 million discounted net present value at 7.5%
("NPV7.5"), a 46.4% internal rate of return ("IRR"), and cumulative net free
cashflow of US$152.98 million over the life of the mine.
The production highlighted in the PFS is made possible employing standard
open-pit mining methods and a newly designed crush-grind-flotation-tank leach
milling process engineered with a small enough footprint for siting on the
Company's patented mining claims near the open pit. The proximity of the
mill to the open pit reduces the haulage distance of the ore to the crusher,
which requires a smaller mining fleet in terms of truck count and size, and
thereby reduces both capital and operating costs. The mill will produce two
pay streams, a copper, gold, silver concentrate stream and a cementation
copper stream, both of which will be shipped to market without the need of
further processing or refining at the Empire site.
In addition to processing ore from the Empire open pit, the flotation circuit
will be capable of recovering copper, gold, and silver as a concentrate from
the high-grade sulphide vein material that exists below the open pit and was
mined extensively until the early 1940s. The Empire team is currently
finalizing a plan to advance the exploration of the deeper sulphide vein
system with an eye on augmenting the open pit ore with feed from the
higher-grade sulphide vein system below the pit. The planning includes driving
an adit toward known sulphide mineralization and developing underground
drilling stations along the length of the adit. Known sulphide mineralization
includes the 8.38% copper interval intercepted in the 2021 core drilling
program, which also assayed 1.31 grammes per tonne ("g/t") gold and 120 g/t
silver. Historically mined grades from the sulphide vein system below the open
pit were recorded as high as 8% copper, with smelter recoveries of the time
recorded as averaging 3.64% copper, 1.64 g/t gold, and 54 g/t silver.
Resources permitting, we hope to commence underground work during the
2024/2025 winter season.
The estimated capital requirements outlined in the PFS assume that the
majority of the hard assets, i.e. milling equipment, rolling stock, and
tankage, will be purchased as used or pre-owned, significantly reducing the
costs compared to purchasing all new assets. The Phoenix Copper team has
already purchased the grinding circuit, the mine assay laboratory equipment,
light duty rolling stock, disk filtration circuit, and numerous lesser
components, all in good, pre-owned condition. The Company has also invested in
a mine office, core logging facility, and an equipment storage facility in
Mackay, all of which will service the mine.
Activities outside of the core Empire Mine property, which includes the
Navarre Creek gold exploration property and the Redcastle and Bighorn cobalt
exploration properties, are still progressing, albeit more slowly due to the
workload required of the Empire mineral reserves statement and the PFS. Follow
up drillhole targeting from the 2023 Navarre Creek drilling program was
completed over the summer and included further evaluation of the 2023 drilling
results, as well as field evaluation of the additional 400 acres of mining
claims filed as a result of last year's drilling results. A second phase of
drilling at Navarre Creek will be conducted as resources permit. The earn-in
agreement with Electra Battery Materials on the Company's Redcastle cobalt
project was also renewed and extended earlier this year.
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 mt of copper,
104,000 oz of gold, and 4,654,400 oz of silver, for a combined 66,467 mt 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 ("NSR") cut-off of $22.59/tonne
Classification Tonnes Copper Gold Silver Copper Equivalent
(x1000) % lb (x1000) gpt oz (x1000) gpt oz (x1000) % lbs (x1000) tonnes
Proven 7,515 0.49 81,070.56 0.38 90.9 14.42 3,483.70 0.68 111,995.19 50,814
Probable 2,582 0.5 28,417.41 0.16 13.2 14.1 1,170.70 0.61 34,498.69 15,652
Proven + Probable 10,097 0.49 109,487.97 0.32 104 14.34 4,654.40 0.66 146,493.89 66,467
The mineral reserves reported herein for the Empire project have been
estimated in a manner consistent with the NI 43-101 Committee of Mineral
Reserves International Reporting Standards ("CRIRSCO"), of which both
the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") and
Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (the "JORC Code") are members.
PFS - Summary of Economic Results
The economic analysis of the base case scenario for the Empire open-pit mine
uses metal prices of $4.45/lb for copper, $2,325/oz for gold and $27.25/oz for
silver. The economic model shows a pre-tax NPV7.5 of $87.86 million using a
$22.59/tonne NSR cut-off, as well as a pre-tax IRR of 46.4%. Table 1
summarises the projected cashflow, NPV at varying rates, IRR, years of
positive cash flows to repay the negative cash flow ("Payback Period"), and
multiple of positive cash flows compared to the maximum negative cash flow
("Payback Multiple") on both after-tax and before-tax bases.
Project Evaluation Overview After Tax Before Tax
Cumulative Net Cashflow $132.44 $152.98
NPV @ 5.0%; (millions) $89.55 $105.44
NPV @ 7.5%; (millions) $73.75 $87.86
NPV @ 10.0%; (millions) $60.71 $73.29
Internal Rate of Return 40.2% 46.4%
Payback Period 1.66 1.41
Payback Multiple 2.92 3.21
Benefit Cost Ratio 7.61 8.87
Initial Capital $62.60 $62.60
Max. Neg. Cashflow (millions) -$69.09 -$69.09
PFS - Metallurgy and Process Design
3,502 feet (1,067 metres) of core from the Empire copper oxide deposit was
sampled and evaluated for the metallurgical recovery of copper, gold, and
silver. The results of the metallurgical test work, as presented in the PFS,
show that a crush-grind-flotation-tank leach milling process provides the
optimum metal recoveries for the cost. The flotation-leaching circuit that has
been designed for the Empire open pit ore has a much smaller footprint than a
classic heap leach design, allowing for the processing plant to be sited on
the Company's patented (private) mining claims near 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 and 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 $0.02
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
Outlook
While the copper price has come down from its spring 2024 high above $5.00/lb,
it has managed to maintain a price above $4.00 despite the recent
recalibration of the futures market. Whether this is a result of the change
in interest rates or in recent demand, it is clear that the long-term demand
for copper will only increase as the world continues to demand sources of
clean green energy, which requires the red metal at every turn in the process,
from generation to distribution to end user commodities. Achieving a green
economy is simply not possible without a growing supply of copper.
Perhaps as important to the Empire Mine project as the copper price is the
price of both gold and silver. The processing circuit designed to recover
copper at Empire is also designed to recover the gold and silver ounces hosted
in the Empire reserves. At today's spot prices of $2,647/oz gold and $31.50/oz
silver, the gross revenue of the anticipated precious metal recovery at Empire
is roughly $161,000,000. The price of gold has steadily increased over 34% in
the past 12 months and silver has increased 28% in the same period. The
importance of the new processing design at Empire that enables the recovery of
precious metals should not be underestimated.
Now that we have developed Proven and Probable mineral reserves, our focus is
on completing all of the necessary detailed 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, further demonstrating how
ESG considerations are 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. We
will also be stepping up the exploration and development of the Empire
sulphide vein system, now that we have a milling design capable of processing
that material.
Conclusion
The Company's focus thus far in 2024 has been clearly aimed at completing the
Empire mineral reserve statement and the PFS. Both reports were the
culmination of extensive geological and engineering efforts by the Phoenix
team. The result of that extensive effort is an economically feasible and
environmentally conscious mine plan and processing circuit that not only
allows for the production of metals from the Company's open pit reserve, but
also from future high-grade sulphide mineralization below the open pit. The
design elements in the PFS move the Company many steps forward to becoming a
US-based producer of metals vital to life as we know it. Our team of
engineers, geoscientists, and industry consultants have done an admirable job
in completing work necessary to move the Company into the next stage of
development.
As I have said before, and will continue to say, thank you to all of our
professional 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 am truly grateful to work with such a diverse and remarkably
talented group of individuals.
Ryan McDermott
Chief Executive Officer
ESG & Sustainability Committee Chairman's Report
It is a pleasure to provide an update on the activities of our Environmental,
Social & Governance ("ESG") & Sustainability team. We last reported
shortly after receiving the results of our second Digbee ESG submission for
the Empire Mine, once again receiving an overarching score of 'A', a
combination of a corporate score of 'BB' with the Empire Mine Exploration
Project achieving a score of 'A'. We use the Digbee questionnaire as a
framework for building our own internal protocols for auditing our operations
as they expand. In this way, we can more proactively measure our ESG
performance targets, and ensure they are met. One of our aims is to
investigate ways to link certain KPIs to remuneration. We want to do this in a
practical way that genuinely rewards employees and teams that contribute
towards our long-term strategic goals.
Our Company culture is focused on environmental stewardship and social
responsibility and in communicating clearly with our stakeholders. To this
end, we continue to work closely with the Konnex Community Advisory Team
("KCAT"), a team of independent individuals with diverse experience who act as
liaison between the Company and the community. Amongst their responsibilities,
the KCAT review applications for community funding and decide how the annual
Phoenix Copper community budget is spent. So far this year we have provided
sponsorship for several community activities and awarded funds to high school
graduates to assist with college fees.
Ahead of hiring and relocating a large work force to Mackay, we have held
meetings with representatives from the City of Mackay, Custer County, local
Economic Development and the Department of Commerce in relation to
housing. Our goal is to build better cities and protect the surrounding
agricultural community. We have multiple options that will require thought
and preparation. We are working with the local municipalities to identify
opportunities to improve city infrastructure, particularly water and sewage,
as these will need to be updated to support development within city
limits. There are several ways in which this can be achieved, including
applying for local and federal grants.
We have maintained and built our relationship with Caterpillar, who offer a
mechanical programme to current and future employees. We have recently
supported the local school in implementing a similar programme for high school
students. In May, the school held a groundbreaking event for a new diesel
mechanic and animal science building which will offer new career paths to
current and future students. Of particular value to Phoenix is the early
training of future mechanics.
We have updated several of our Company policies to ease the due diligence
process for external investors. In addition, we continue to improve Company
practices, such as strengthening cyber security.
We look forward to providing further updates on our activities in the
future. All comments and suggestions to our ESG team are welcomed:
esg@phoenixcopper.com (mailto:esg@phoenixcopper.com) .
Catherine Evans
Non-Executive Director
Financial Overview
The Group reports a loss for the Period of $1.10 million (2023: loss of $0.63
million). This includes a non-cash foreign exchange loss on sterling
denominated assets of $4,128 (2023: foreign exchange gain of $96,172), and a
charge of $34,239 (2023: $18,991) relating to non-cash share based payments
attributable to warrants or options extended or amended during the Period, and
which amount is simultaneously credited back to the retained deficit. Net
assets at 30 June 2024 totalled $48.55 million (2023: $37.39 million),
including $42.11 million (2023: $35.88 million) relating to the Empire Mine,
and $2.72 million (2023: $2.75 million) in cash.
The Company reports a loss for the Period of $47,220 (2023: profit of
$309,759), and net assets of $55.16 million (2023: $41.81 million). During the
Period, the Company charged its operating subsidiaries $450,000 (2023:
$450,000) in respect of management services provided, and $910,196 (2023:
$837,108) in respect of interest on its inter-company loans, the latter
eliminating on consolidation. At 30 June 2024, the Company's loan to Konnex
Resources Inc ("Konnex"), owner of the Empire Mine, stood at $31.20 million
(2023: $27.03 million), and the loan to KPX Holdings Inc ("KPX"), the
Company's Idaho registered intermediate holding company, stood at $6.27
million (2023: $2.60 million). These loans will be repaid from operating cash
flows in due course and are intended, together with royalties receivable from
Konnex, to form a platform for a future proposed dividend policy to return
money to shareholders.
During the Period, the Company issued 60,030,345 ordinary shares of no par
value ("Ordinary Shares"), raising $8.9 million, pursuant to a placing
subscription and retail offer, subscription for 10-year corporate bonds,
partial conversion of borrowings, and warrant exercises. Since the Period-end
a further 3,081,137 Ordinary Shares have been issued, raising $0.63 million,
pursuant to the partial conversion of borrowings. The outstanding share
capital of the Company is currently 188,040,104 Ordinary Shares.
On 27 December 2023 the Company created a class of corporate copper bonds
("Bonds") in an authorised amount of $300 million. $110 million in principal
value of Bonds were issued and deposited with The Bank of New York Mellon
("BNYM") as Settlement Agent, pending onward transfer to Bonds investors.
During the Period the Company received an initial subscription for $80 million
of Bonds from NIU Invest, $5 million of which were drawn down. Despite
instructing BNYM to issue the second tranche of bonds totalling $5 million in
early July, these bonds were not drawn down due to ongoing discussions with
NIU Invest regarding the Company's updated economic model, prepared in
association with the Company's PFS.
Following the publication of the PFS on 19 September 2024, the Company has
recommenced discussions with NIU Invest regarding the Company's cash flow
requirements of the PFS's economic model, and a revised drawdown schedule for
future tranches of copper bonds. Further draw downs will be announced as
appropriate.
The Bonds have a final maturity of 10 years, are not convertible, are secured
on the Group's interests in the Empire Mine, and are listed on The
International Stock Exchange in the Channel Islands ("TISE"), under the ticker
PHCOUSDN. The Bonds pay a floating rate coupon 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.
On 2 March 2024 the Company refinanced a $2 million short-term unsecured
funding arrangement 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 is potentially convertible into
approximately 10.5 million Ordinary Shares.
The Company's shares are listed on AIM, operated by the London Stock Exchange
under the ticker PXC, and are also admitted to trading on New York's OTCQX
Market under the ticker PXCLF, and in the form of American Depositary Receipts
("ADRs") under the ticker PXCLY, with each ADR comprising 10 Ordinary Shares.
BNYM sponsored the ADR Program and acts as ADR depositary, custodian and
registrar.
The Directors recognise the importance of sound corporate governance and have
applied the Quoted Companies Alliance's Corporate Governance Code 2018. The
Company's Corporate Governance Statement dated 2024, and the Company's 2023
Sustainability Report, can be viewed on the Company's website at
https://phoenixcopperlimited.com (https://phoenixcopperlimited.com) .
Richard Wilkins
Chief Financial Officer
Condensed consolidated income statement Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2024 2023 2023
Note $ $ $
Continuing operations
Revenue 3 - - -
-
Exploration and evaluation expenditure - (28,839) (28,839)
Gross loss - (28,839) (28,839)
Administrative expenses 4 (1,098,146) (617,788) (1,564,759)
Other operating expenses 9 - - (14,372)
Loss from operations (1,098,146) (646,627) (1,607,970)
Finance income 5,321 21,258 34,196
Finance expenses (7,913) - -
Loss before taxation (1,100,738) (625,369) (1,573,774)
Taxation - - -
Loss for the period (1,100,738) (625,369) (1,573,774)
Loss attributable to:
- Owners of the parent company (1,072,109) (612,262) (1,535,494)
- Non-controlling interests (28,629) (13,107) (38,280)
(1,100,738) (625,369) (1,573,774)
Basic and diluted loss per share - US cents 5 (0.71) (0.50) (1.24)
The revenue, expenditures and operating result for each period is derived from
acquired and continuing operations in North America and the United Kingdom.
Condensed consolidated statement of comprehensive income Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2024 2023 2023
$ $ $
Loss for the period and total comprehensive income for the period (1,100,738) (625,369) (1,573,774)
Total comprehensive income for the period attributable to:
Owners of the parent company (1,072,109) (612,262) (1,535,494)
Non-controlling interests (28,629) (13,107) (38,280)
(1,100,738) (625,369) (1,573,774)
Condensed consolidated statement of Unaudited Unaudited Audited
financial position
Note 30 June 30 June 31 December 2023
2024 2023
$ $ $
Non-current assets
Property, plant and equipment - mining property 6 42,105,065 35,876,914 38,432,522
Intangible assets 7 356,805 347,000 356,805
Total non-current assets 42,461,870 36,223,914 38,789,327
Current assets
Trade and other receivables 8 10,991,243 1,433,783 1,434,280
Finance assets 9 4,191 18,563 4,191
Cash and cash equivalents 2,717,492 2,749,407 283,721
Total current assets 13,712,926 4,201,753 1,722,192
Total assets 56,174,796 40,425,667 40,511,519
Current liabilities
Trade and other payables 10 149,488 35,321 426,723
Borrowings and other liabilities 11 2,682,525 2,240,000 2,238,501
Total current liabilities 2,832,013 2,275,321 2,665,224
Non-current liabilities
Borrowings 12 4,139,884 - -
Provisions 13 657,702 757,702 657,702
Total non-current liabilities 4,797,586 757,702 657,702
Total liabilities 7,629,599 3,033,023 3,322,926
Net assets 48,545,197 37,392,644 37,188,593
Equity
Share capital 14 - - -
Share premium account 53,770,810 44,889,817 45,390,217
Retained deficit (5,204,618) (7,529,980) (8,209,258)
Translation reserve (18,588) (18,588) (18,588)
Capital and reserves attributable to owners of the parent company 48,547,604 37,341,249 37,162,371
Non-controlling interests (2,407) 51,395 26,222
Total equity 48,545,197 37,392,644 37,188,593
Condensed 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 2023 - 44,878,927 (7,086,480) (18,588) 37,773,859 64,502 37,838,361
Loss for the period - - (612,262) - (612,262) (13,107) (625,369)
Total comprehensive income for the period - - (612,262) - (612,262) (13,107) (625,369)
Shares issued in the period - 10,890 - - 10,890 - 10,890
Share issue expenses - - - - - - -
Share-based payments - - 168,762 - 168,762 - 168,762
Total transactions with owners - 10,890 168,762 - 179,652 - 179,652
At 30 June 2023 - 44,889,817 (7,529,980) (18,588) 37,341,249 51,395 37,392,644
Loss for the period - - (923,232) - (923,232) (25,173) (948,405)
Total comprehensive income for the period - - (923,232) - (923,232) (25,173) (948,405)
Shares issued in the period - 500,400 - - 500,400 - 500,400
Share issue expenses - - - - - - -
Share-based payments - - 243,954 - 243,954 - 243,954
Total transactions with owners - 500,400 243,954 - 744,354 - 744,354
At 31 December 2023 - 45,390,217 (8,209,258) (18,588) 37,162,371 26,222 37,188,593
Loss for the period - - (1,072,109) - (1,072,109) (28,629) (1,100,738)
Total comprehensive income for the period - - (1,072,109) - (1,072,109) (28,629) (1,100,738)
Shares issued in the period - 8,869,790 - - 8,869,790 - 8,869,790
Share issue expenses - (489,197) - - (489,197) - (489,197)
Share-based payments - - 4,076,749 - 4,076,749 - 4,076,749
Total transactions with owners - 8,380,593 4,076,749 - 12,457,342 - 12,457,342
At 30 June 2024 - 53,770,810 (5,204,618) (18,588) 48,547,604 2,407 48,545,197
Condensed consolidated statement of cash flows Unaudited Unaudited Audited
6 months to 6 months to 12 months to 31 December 2023
30 June 30 June
2024 2023
$ $ $
Loss before taxation (1,100,738) (625,369) (1,573,774)
Adjustments for:
Share-based payments 34,239 18,991 18,991
Finance costs 32,340 - -
Fair value adjustment to financial asset - - 14,372
(1,034,159) (606,378) (1,540,411)
Changes in working capital
(Increase)/decrease in trade and other receivables (1,967,328) 172,175 100,226)
(Decrease) in trade and other payables (277,234) (537,148) (97,245)
Cash (used in)/generated from operating activities (3,278,721) (971,351) (1,537,430)
Investing activities
Purchase of intangible assets - - (9,805)
Purchase of property, plant and (2,625,118) (2,622,914) (5,034,567)
equipment
Net cash outflow from investing activities (2,625,118) (2,622,914) (5,044,372)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares 3,559,994 10,890 511,290
Share-issue expenses (489,198) - -
Preliminary bond-issue expenses - (71,451) -
Proceeds from the issue of 10-year bonds 4,750,000 - -
Proceeds from new short-term loans 899,553 2,000,000 2,000,000
Repayment of short-term loans (138,212) - -
Payment of interest (54,527) - -
Repayment of deferred liability (190,000) (260,000) (310,000)
Net cash inflow from financing activities 8,337,610 1,679,439 2,201,290
Net increase/(decrease) in cash and cash equivalents 2,433,771 (1,914,826) (4,380,512)
Cash and cash equivalents at the beginning of the period 283,721 4,664,233 4,664,233
Cash and cash equivalents at the end of the period 2,717,492 2,749,407 283,721
An amount of $720,215, (30 June 2023: $149,770; 31 December 2023: $412,716) in
respect of the charge for share-based payments was capitalised into mining
property. An amount of $327,210 of loan arrangement fees and interest has been
capitalised into mining property (30 June 2023: $nil; 31 December 2023: $nil).
An amount of $3,322,295 (30 June 2023: $nil; 31 December 2023: $nil) in
respect of the charge for share-based payments was taken to bond issue
expenses arising from the issue of a 10-year bonds.
An amount of $4,909,796 (30 June 2023: $nil; 31 December 2023: $nil) arising
from the issue of share capital was taken to bond issue expenses. An amount of
$400,000 (30 June 2023: $nil; 31 December 2023: $nil) of share capital was
issued in respect of partial conversion of borrowings. An amount of $642,456
of bond issue expenses was deducted from the 10-year bond liability.
The loss before taxation includes a foreign exchange loss of $4,128 (30 June
2023: a gain of $96,172; 31 December 2023: a gain of $82,634) related to
sterling denominated cash balances.
1. Basis of preparation and principal accounting policies
This condensed consolidated interim financial information was approved for
issue by the Board on 25 September 2024.
This condensed consolidated interim financial information has not been audited
and does not include all of the information required for full annual financial
statements. While the financial figures included within this interim report
have been computed in accordance with IFRS applicable to interim periods, this
report does not contain sufficient information to constitute an interim
financial report as set out in International Accounting Standard 34: Interim
Financial Reporting.
Basis of consolidation
Principles of consolidation
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated on the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases.
The acquisition method of accounting is used to account for business
combinations by the Group.
Intercompany transactions, balances and unrealised gains of transactions
between Group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment to the transferred
asset.
Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown
separately in the consolidated income statement, consolidated statement of
comprehensive income, statement of changes in equity and consolidated
statement of financial position respectively.
2. Information on the Group
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).
3. Revenue
The Group is not yet producing revenues from its mineral exploration and
mining activities. During the period the Company charged its subsidiary
entities $450,000 (30 June 2023: $450,000; 31 December 2023: $900,000) in
respect of management services provided.
4. Administrative expenses
Administrative expenses include a foreign exchange loss of $4,128 (30 June
2023: a gain of $96,172; 31 December 2023: a gain of $82,634).
Administrative expenses also include share-based payments of $34,239 (30 June
2023: $18,991; 31 December 2023: $18,991). The related credits to equity are
taken to the retained loss.
5. Loss per share Unaudited Unaudited Audited
6 months to 6 months to 12 months to 31 December 2023
30 June 30 June
2024 2023
$ $ $
Loss for the period attributable to equity holders of the parent company (1,072,109) (612,262) (1,535,494)
Number Number Number
Weighted average number of ordinary shares for the purposes of basic and 123,483,143
diluted loss per share
150,687,794 122,668,401
Loss per share - basic and diluted (US cents) (0.71) (0.50) (1.24)
Non-current assets
6. Property, plant and equipment - mining property
Mining Property
$
Cost or valuation
At 1 January 2023 33,104,230
Additions 2,772,684
At 30 June 2023 35,876,914
Additions 2,555,608
At 31 December 2023 38,432,522
Additions 3,672,543
At 30 June 2024 42,105,065
Depreciation
At 30 June 2023, 31 December 2023 and 30 June 2024 -
Net book value:
30 June 2023 35,876,914
31 December 2023 38,432,522
30 June 2024 42,105,065
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
$
Cost or valuation
At 1 January 2023 347,000
Additions -
At 30 June 2023 347,000
Additions 9,805
At 31 December 2023 356,805
Additions -
At 30 June 2024 356,805
Net book value:
30 June 2023 347,000
31 December 2023 356,805
30 June 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 Unaudited Unaudited Audited
30 June 30 June 31 December 2023
2024 2023
$ $ $
Other receivables 1,304,561 193,952 382,179
Preliminary bond issue expenses 9,636,852 1,181,617 882,814
Prepaid expenses 49,830 58,214 169,287
10,991,243 1,433,783 1,434,280
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 issue of 10-year 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 (see also note 12).
9. Financial assets Unaudited Unaudited Audited
6 months to 6 months to 12 months to 31 December
30 June 30 June 2023
2024 2023
$ $ $
Quoted investments 4,191 18,563 4,191
Quoted investments represent 11,111 shares in Toronto-based Electra Battery
Materials Corporation. The shares have been valued at market price as at 30
June 2024. A fair value adjustment of $nil (30 June 2023: $nil; 31 December
2023: $14,372) has been charged to other operating expenses.
10. Trade and other payables Unaudited Unaudited Audited
30 June 30 June 31 December 2023
2024 2023
$ $ $
Trade payables 126,777 19,175 410,448
Other payables 22,712 16,146 16,275
149,489 35,321 426,723
11. Borrowings and other liabilities Unaudited Unaudited Audited
30 June 30 June 31 December 2023
2024 2023
$ $ $
Current liabilities
Short-term borrowings 2,682,525 2,000,000 2,048,501
Deferred consideration - 240,000 190,000
2,682,525 2,240,000 2,238,501
In 2023 the Company entered a short-term unsecured funding arrangement of
$2,000,000, with an initial fixed 4% coupon, which was subsequently modified
on several occasions. 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 10.5 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. Consideration payable to Mackay LLC was $nil (30 June 2023:
$240,000; 31 December 2023: $190,000).
12. Borrowings Unaudited Unaudited Audited
30 June 30 June 31 December 2023
2024 2023
$ $ $
Non-Current liabilities
Corporate Copper Bonds (Secured)
Value of 10-year bonds issued 5,000,000 - -
Discount on initial subscription (250,000) - -
Bond issue expenses (642,456) - -
Effective interest rate 32,340 - -
4,139,884 - -
On 27 December 2023 the Company created a class of corporate copper bonds
("Bonds") in an authorised amount of $300 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 Bonds investors.
During the period the Company received an initial subscription for $80 million
of Bonds from NIU Invest SE. The Company paid the Bonds investor an
arrangement fee by way of an issue of 33.88 million new ordinary shares of
no-par value in the Company, and a drawdown fee by way of warrants to
subscribe at no cost for a further 22.59 million of new ordinary shares. The
warrants will vest over drawdown of the first $30 million of Bonds, the
principal value of which will also be discounted by 5%. As of 30 June 2024, $5
million of Bonds have been drawn down and transferred to the Bonds investor
and discussions regarding the timing of future drawdowns remain ongoing. $9.6
million of bond issue expenses will be amortised against the value of further
Bonds as and when drawn down (see Note 8).
The Bonds are not convertible, are secured on the Group's interests in the
Empire open pit mine, and are listed on The International Stock Exchange in
the Channel Islands ("TISE"), under the ticker PHCOUSDN. The Bonds have a
final maturity of 10 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. The Bonds
will remain listed on TISE until the earlier of redemption or maturity.
The Bonds 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 is
only payable on the principal value of Bonds drawn down.
13. Provisions Unaudited Unaudited Audited
30 June 30 June 31 December 2023
2024 2023
$ $ $
Decommissioning provision - 100,000 -
Royalties payable 657,702 657,702 657,702
657,702 757,702 657,702
The provision for royalties payable 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 when commercial production commences.
The provision of $100,000 for decommissioning the Empire Mine was released in
2023. 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.
14. Share capital Unaudited Unaudited Audited
30 June 30 June 31 December 2022
2023 2023
Number Number Number
Allotted and issued
Ordinary shares with no par value 184,958,967 122,678,622 124,928,622
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 period Company issued 60,030,345 ordinary shares at an average issue
price of $0.148 per share to raise $8.9 million in respect of a placing,
subscription and retail offer, subscription for 10-year corporate bonds (see
also Notes 8 and 12), partial conversion of borrowings, and warrants
exercised.
Since the period end a further 3,081,137 ordinary shares have been issued
pursuant to the partial conversion of borrowings raising $0.63 million and
with an average issue cost of $0.204 per share.
15. Events after the reporting date
In July 2024 the Company renewed its Earn-in Agreement in respect of the
Redcastle cobalt property with First Cobalt Idaho, a wholly owned subsidiary
of Electra Battery Materials (TSX.V: ELBM; NASDAQ: ELBM). The renewal extends
the two main exploration expenditure commitments totalling $3 million by two
years, to 2026 and 2028 respectively.
Environmental, Social, and Corporate Governance
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
Environmental, Social, and Corporate Governance ("ESG") platform, overseen by
the Company's ESG & Sustainability Committee. The Company has recently
published its inaugural Sustainability Report, 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
Paul de Gruchy Tel: +44 7484 203720
Richard Wilkins Tel: +44 7590 216 657
SP Angel Corporate Finance LLP (Nominated Adviser) David Hignell / Caroline Rowe / Devik Mehta Tel: +44 20 3470 0470
Tavira Financial Limited (Joint Broker) Jonathan Evans / Oliver Stansfield Tel: +44 20 7100 5100
Zeus Capital Limited (Joint Broker) Harry Ansell / Katy Mitchell Tel: +44 20 7220 1666
Panmure Liberum Limited (Joint Broker) Mark Murphy / Kieron Hodgson 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
specialising 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 and Probable mineral reserves are 10.1 million
tonnes containing 109,487,970 lbs of copper, 104,000 oz of gold and 4,654,400
oz 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. The reserve represents a combined
66,467 tonnes of copper equivalent metal.
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 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 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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