REG - Xtract Resources plc - Final Results
30/06/2022 16:45
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RNS Number : 8958Q Xtract Resources plc 30 June 2022
For immediate release
30 June 2022
Xtract Resources Plc
("Xtract" or the "Company")
Audited results for the 12 months ended 31 December 2021
The Board of Xtract Resources Plc ("Xtract" or the "Company") announces its
audited financial results for the 12 months ended 31 December 2021. The 2021
Audited Annual Report and Accounts ("Accounts") are in the process of being
posted to shareholders and will be available together with this announcement
on the Company's website www.xtractresources.com
(http://www.xtractresources.com) .
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").The person who arranged the
release of this announcement on behalf of the Company was Joel Silberstein,
Director.
Enquiries:
Xtract Resources Plc Colin Bird, Executive Chairman +44 (0) 203 416 6471
Beaumont Cornish (Nominated Adviser & Joint Broker) Michael Cornish / Felicity Geidt +44 (0) 207 628 3369
Email: corpfin@b-cornish.co.uk (mailto:corpfin@b-cornish.co.uk)
Novum Securities (Joint Broker) Jon Bellis/Colin Rowbury +44 (0) 207 399 9427
Corporate & Operational highlights
· At Bushranger results from Phase-One drilling and an Induced
polarization (IP) MIMDAS survey have provided significant potential to upgrade
the known Inferred Mineral Resources at the Bushranger copper-gold project
within a world-class mining district in New South Wales, Australia
· The follow-up Phase-Two drilling programme succeeded in defining a
shallow high-grade 'crown' to the Racecourse deposit, which will be modelled
with a view to developing an open pit mine
· The Phase-Two drilling programme at Bushranger was also successful in
discovering a new deposit located to the south of Racecourse, named Ascot.
Initial holes and assays suggest that this deposit has a higher gold tenor
than Racecourse. Further drilling is in progress to test the new discovery
· At the Eureka copper project in Zambia completed drilling and
analysis of drill core confirmed the extension of the Eureka mineralised zone
to the north-west - beyond 300m and still open
· Trial pilot-scale mining is under way at Eureka to test copper
recoveries with a view to supplying ore to a local processor
· Total of £10.50 million (before expenses) raised through equity
placings
· During the 2nd half of 2021 all of the alluvial and small hard rock
operations achieved highest production levels since commencing mining in 2017
· Total of 43.83kg (equivalent to 1,404 ounces) of production
attributable to Explorator (2020: 19.38kg (equivalent to 620 ounces)
· Post year end the Company decided to withdraw from the Kalengwa
Project in Zambia and fully impair the carrying value with a consequent charge
to the income statement of £0.36 million
Financial highlights
· Cash of £5.39m (2020: £0.92m)
· Net assets of £11.93m (2019: £10.78m)
· Revenue from gold sales of £0.69m (2020: £1.73m)
· Administrative and operating expenses of £3.31m (2020: £2.09m)
Chairman's Statement
Dear Shareholder,
The period under review has again been positive for our group activities. Our
mission to work small scale mining operations and conduct major exploration
has advanced according to plan.
Starting with the Australian Lachlan Fold Belt project at Bushranger, I am
very pleased to report that in a short period we have advanced the exploration
to a much better understanding than we had at the time of writing last year's
report.
As of now, we have largely delineated the Racecourse project and are busy
modelling resource shape to determine tonnage and grade. The Racecourse
Project would most likely be planned to a surface mine, with a high-grade
component that can support mining for a number of years, with typical porphyry
ore grade thereafter. We intend to rework the conceptual model, with the
benefit of more definitive grades, metallurgical test work results and tonnage
disposition.
We conducted further geophysics, which better assisted our drilling programmes
and pointed towards the potential for another large-scale target towards the
south of Racecourse, also identifying other anomalous areas, with a similar
signature as at the Racecourse Project.
We drill tested a strong anomaly some 1.3km south of Racecourse and identified
large areas of mineralisation, with gold grades being generally higher than
Racecourse, as was the molybdenum. The different chemistry and mineralisation
distribution caused us to give the occurrence its own name, and we named the
area Ascot. We have drilled a further 8 holes into the area, with varying
results and our last hole assays, at the time of writing this report, had
minimal copper intersections, but had very significant gold intersections,
with higher than previously experienced molybdenum values. The lithology leads
us to the opinion that the true porphyry may be deeper, and we will therefore
drill a further hole to test this prognosis.
At the time of writing this report, we were embarking on a limited drilling
programme at the Footrot prospect to the south of Racecourse-Ascot to test the
veracity of the geophysics, which are also similar to Racecourse, and where
previous companies have had some indication of porphyry style lithology.
In general, our exploration activities in Australia have been extremely
encouraging and without a doubt we have discovered a major system, well beyond
our original expectations. As with all porphyries, however, a full
understanding requires much drilling to define the full potential and our
projects are no exception. The phase 2 exploration programme is about to be
completed and when we have modelled and evaluated all the raw information, we
will be well advanced on the value curve and able to position the project in
the global market.
Our alluvial gold production activities in Mozambique have continued to be
somewhat erratic, but no month has passed without producing a surplus of
income over expenditure. Towards the end of 2021 all of the alluvial and small
hard rock operations produced well and record results were achieved. The rains
of course, hampered operations, but nonetheless results were very
satisfactory, and the higher trend was maintained.
We expect alluvial and small gold operations to continue for the remainder of
the year and I am happy to report that the Fair Bride hard rock operation has
now commenced production. We expect a production build up during the 3rd
quarter 2022, with full commercial production being achieved during the 4th
quarter. On this basis we expect earnings from our Mozambique gold operations
to be significant, with the Fair Bride operation continuing for some five
years. We intend with our partners to test drill the area, since we are
convinced of further discovery potential and during next year will design
plant additions, which will allow us to treat all mineralisation gold types
found in the area.
In Zambia we have identified and modelled a potentially mineable resource at
Eureka and are carrying out trial mining. The initial trial mining produced a
very high-grade ore, but metallurgical testing proved to be very refractory.
Further drilling and test mining has shown this to be a local phenomenon and
we intend to commence operations during the 3rd quarter 2022.
The Company's aim is to identify small deposits of 1-5 years production
capability at a rate of about 50,000 tonnes per year. We have been working one
small deposit, known as Chongwe, to ascertain its size and potential
contribution. The projects have produced satisfactory ore for a nearby
processing capability, producing a surplus of income over expenditure. It is
however unlikely to be a long-life proposition and we continue our efforts to
identify other resources in relatively close proximity to processing
capability.
The Kalengwa Project has been subordinated to our other activities since it is
remote to processing capability and challenged by availability of power and
the Company has therefore impaired all costs relating to the project.
As a junior miner, we continue to be mindful of guarding the Company's cash
position. The awarding of options is considered a crucial element in the
Company's ability to incentivise the Company's employees and directors and
allows for the retention of services and expertise. In March 2021, the Company
awarded options to directors and employees which resulted in a share-based
payment accounting charge of £1.47 million which has been included in our
administration and overhead expense.
The company is examining a number of exciting opportunities in the small
copper and gold sector and look forward to reporting progress during the 3rd
quarter.
I would like to thank my fellow directors and management team for their
untiring efforts to advance the company during the year under review, against
intense competition and challenging circumstances.
Colin Bird
Executive Chairman
30 June 2022
Consolidated Income Statement
For the year ended 31 December 2021
Note Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
(Restated)
Continuing operations
Revenue from gold sales 692 1,725
Other operating income 189 -
Operating and administrative expenses
Direct operating (569) (1,006)
Other operating (85) (45)
Administration (2,657) (1,040)
(3,311) (2,091)
Project expenses
(432)
(96)
Operating loss (2,862) (462)
Other gains and (losses) 6 - (164)
Finance (cost)/income 11 (194) (181)
(Loss) before tax 8 (3,056) (807)
Taxation 12 (76) (107)
(Loss) for the period (3,132) (914)
Attributable to:
Equity holders of the parent (3,132) (914)
Net (loss) per share
Basic (pence) 13 (0.40) (0.20)
Diluted (pence) 13 (0.40) (0.20)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Group
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
(Loss) for the year (3,132) (914)
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss - -
Exchange differences on translation of foreign operations 242 (210)
Other comprehensive income/(loss) for the year 242 (210)
Total comprehensive (loss) for the year (2,890) (1,124)
Attributable to:
Equity holders of the parent (2,890) (1,124)
Consolidated and Company Statements of Financial Position
As at 31 December 2021 Group Company
Note As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Non-current assets
Intangible assets 14 16,752 11,978 828 438
Property, plant & equipment 15 25 19 - -
Loans to group companies - - 6,554 -
Investment in subsidiary 16 - - 9,823 9,823
Other financial assets - - - -
16,777 11,997 17,205 10,261
Current assets
Trade and other receivables 19 664 147 582 285
Loans receivable 18 - - - -
Inventories 20 177 8 - -
Loans to group companies - - 2,426
Cash and cash equivalents 5,389 919 4,205 253
6,230 1,074 4,787 2,964
Total assets 23,007 13,071 21,992 13,225
Current liabilities
Trade and other payables 22 2,226 1,051 396 362
Current tax payable 22 121 93 - -
Loans from group companies 22 - - - 11,483
2,347 1,144 396 11,845
Net current assets/(liabilities) 3,883 (70) 4,391 (8,881)
Non-current liabilities
Loans from group companies - - 11,518 -
Total liabilities 2,347 1,144 11,914 11,845
Net assets 20,660 11,927 10,078 1,380
Equity
Share capital 23 4,973 4,928 4,973 4,928
Share premium account 71,684 61,951 71,684 61,951
Warrant reserve 24 467 76 467 76
Share-based payments reserve 24 1,874 436 1,874 436
Fair Value reserve 24 - - - -
Foreign currency translation reserve 24 308 66 - -
Accumulated losses (58,646) (55,530) (68,920) (66,011)
Equity attributable to equity
holders of the parent 20,660 11,927 10,078 1,380
Total equity 20,660 11,927 10,078 1,380
The financial statements of Xtract Resources Plc, registered number 5267047,
were approved by the Board of Directors and authorised for issue. As permitted
by Section 408 of the Companies Act 2006, the income statement of the parent
company is not presented as part of these financial statements. The parent
company's profit for the financial year is disclosed in Note 3. It was signed
on behalf of the Company by:
Joel Silberstein
Director
30 June 2022
Consolidated Statement of Changes in Equity
Group
Share Capital Share premium account Warrant reserve Share based payments reserve Fair value Foreign currency translation reserve £'000 Accumulated losses Total Equity
£'000 £'000 £'000 £'000 reserve £'000 £'000
£'000
Note
As at 1 January 2020 4,892 59,884 54 397 - 276 (54,719) 10,784
As at 31 December 2016 3,355 -
Comprehensive income
Comprehensive income
Loss for the year - - - - - - (914) (914)
Forex currency translation
Differences - - - - - (210) - (210)
Total comprehensive
Total comprehensive
income for the year - - - - - (210) (914) (1,124)
Transactions with owners
Issue of shares 36 2,134 - - - - - 2,170
Issue of shares
Share issue costs - (67) - - - - - (67)
Expiry of share options - - - (103) - - 103 -
Issue of share options 24 - - - 142 - - - 142
Issue of warrants 24 - - 22 - - - - 22
As at 31 December 2020 4,928 61,951 76 436 - 66 (55,530) 11,927
As at 31 December 2016 4,955 -
Comprehensive income
Comprehensive income
Loss for the year - - - - - - (3,132) (3,132)
Forex currency
translation difference - - - - - 242 - 242
Total comprehensive
Total comprehensive
income for the year - - - - - 242 (3,132) (2,890)
Transactions with owners
Issue of shares 23 45 10,769 - - - - - 10,814
Issue of shares
Share issue costs - (664) - - - - - (664)
Issue of share options 24 - - - 1,473 - - - 1,473
Expiry of share options - - - (16) - - 16 -
Exercise of share options - 19 - (19) - - - -
Issue of warrants 24 - (456) 456 - - - - -
Exercise of warrants - 65 (65) - - - - -
As at 31 December 2021 4,973 71,684 467 1,874 - 308 (58,646) (20,660)
As at 31 December 2016 4,955 -
Statement of Changes in Equity
Company
Share Capital Share premium account Warrant reserve Share based payments reserve Fair value reserve Foreign currency translation reserve £'000 Accumulated losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Note
As at 1 January 2020 4,892 59,884 54 397 - - (64,803) 424
Other Comprehensive income
Other Comprehensive income
Loss for the period - - - - - - (1,311) (1,311)
Other comprehensive income - - - - - - - -
Total comprehensive
Total comprehensive
income for the year - - - - - - (1,311) (1,311)
Issue of shares 36 2,134 - - - - - 2,170
Issue of shares
Share issue costs - (66) - - - - - (66)
Expiry of options 24 - - - (103) - - 103 -
Issue of share options - - - 142 - - - 142
Issue of warrants 24 - - 22 - - - - 22
As at 31 December 2020 4,928 61,951 76 436 - - (66,011) 1,380
As at 31 December 2016
Other Comprehensive income
Other Comprehensive income
Loss for the period - - - - - - (2,925) (2,925)
Other comprehensive income - - - - - - - -
Total comprehensive
Total comprehensive
income for the year - - - - - - (2,925) (2,925)
Issue of shares 23 45 10,769 - - - - - 10,814
Issue of shares
Share issue costs - (664) - - - - - (664)
Expiry of share options - - - (16) - - 16 -
Issue of share options 24 - - - 1,473 - - - 1,473
Exercise of share options - 19 - (19) - - - -
Issue of warrants 24 - (456) 456 - - - - -
Exercise of warrants - 65 (65) - - - - -
As at 31 December 2021 4,973 71,684 467 1,874 - - (68,920) 10,078
As at 31 December 2017
Consolidated and Company Cash Flow Statement
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2020 2021 2020
Note £'000 £'000 £'000 £'000
Net cash generated from/(used in) operating activities 25 (767) 189 (1,352) (234)
Investing activities
Acquisition of subsidiary undertaking - 36 - (9)
Acquisition of intangible fixed assets 14 (5,009) (287) (751) (176)
Acquisition of tangible fixed assets 15 (13) - - -
Loans advanced to group companies 19 - - (4,128) (213)
Net cash (used in)/from investing activities (5,022) (251) (4,879) (398)
Financing activities
Proceeds on issue of shares 10,149 636 10,149 636
Repayment of loans from group companies - - 34 33
Net cash (used in)/from financing activities 10,149 636 10,183 669
Net increase in cash and cash equivalents 4,360 574 3,952 37
Cash and cash equivalents at beginning of year 919 361 253 216
Effect of foreign exchange rate changes 110 (16) - -
Cash and cash equivalents at end of year 5,389 919 4,205 253
Significant Non Cash movements
Notes to the Financial Statements
Selected notes from the financial statements are set out below without
amendment to the note reference. The full notes are contained in the Audited
Annual Report and Accounts
1. General information
Xtract Resources Plc is a Public Company limited by shares incorporated in
England and Wales under the Companies Act 2006. The address of the registered
office is 7/8 Kendrick Mews, South Kensington, London, SW7 3HG. The nature of
the Group's operations and its principal activities are set out in the
Strategic Report on pages 4 to 36.
The financial statements are presented in pounds sterling (£) which is the
functional currency of the Company Foreign operations are included in
accordance with the policies set out in note 3. These annual financial
statements were approved by the board of directors on 30 June 2022.
2. Adoption of new and revised Standards
Basis of accounting
The consolidated annual financial statements have been prepared in accordance
with UK-adopted international accounting standards and in conformity with the
Companies Act 2006. The consolidated annual financial statements have been
prepared on the historical cost basis, as modified by financial assets
measured at fair value through other comprehensive income. The principal
accounting policies are set out below.
On 31 December 2020 IFRS as adopted by the European Union were brought into UK
law and became UK-adopted international accounting standards with future
changes being subject to endorsement by the UK Endorsement Board.
The financial statements of the Company have been prepared in accordance with
Financial Reporting Standard 101 "Reduced Disclosure Framework" ('FRS 101')
and the requirements of the Companies Act 2006. The Company will continue to
prepare its financial statements in accordance with FRS 101 on an ongoing
basis until such time as it notifies shareholders of any change to its chosen
accounting framework.
In accordance with FRS 101, the Company has taken advantage of the following
exemptions:
• Requirements of IAS 24, 'Related Party
Disclosures' to disclose related party transactions entered into between two
or more members of a group;
• the requirements of paragraphs 134(d) to 134(f)
and 135(c) to 135(e) of IAS 36 Impairments of Assets;
• the requirements of IFRS 7 Financial Instruments:
Disclosures;
• the requirements of paragraphs 10(d), 10(f), 16,
38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation of
Financial Statements;
• the requirements of paragraphs 134 to 136 of IAS 1
Presentation of Financial Statements;
• the requirements of paragraphs 30 and 31 of IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
New and amended standards adopted by the Group
The most significant new standards and interpretations adopted, none of which
are considered material to the Group, are as follows:
Application date of standards
Ref Title Summary (periods commencing)
IFRS9, IAS39 Interest Rate Benchmark Reform Phase 2 Amendments regarding measurement and classification
and IFRS7 1 January 2021
IFRS 17 Insurance contracts 1 January 2021
IFRS 4 Amendments to Insurance Contracts - deferral of IFRS 9 (issued on 25 June 1 January 2021
2020)
New standards and interpretations not yet adopted
Unless material the Group does not adopt new accounting standards and
interpretations which have been published and that are not mandatory for 31
December 2021 reporting periods.
No new standards or interpretations issued by the International Accounting
Standards Board ('IASB') or the IFRS Interpretations Committee ('IFRIC') have
led to any material changes in the Company's accounting policies or
disclosures during each reporting period.
The most significant new standards and interpretations to be adopted in the
future are as follows:
Application date of standards
Ref Title
Summary
(periods commencing)
IAS1 Presentation of Financial Statements
Amendments regarding the 1 January 2023
classification of liabilities
Amendments to defer effective 1 January 2023
date of the January 2020 amendments
There are no other IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Company.
The directors are evaluating the impact that these standards will have on the
financial statements of the Group.
3. Significant accounting policies
Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and entities controlled by the Company (its subsidiaries). These
consolidated financial statements are made up for the year ended 31 December
2021.
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 over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
The results of subsidiaries acquired or disposed of during the period are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with those used by the Group. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Business combinations
The group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquire and the equity interests issued by the group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date. The group recognises any non-controlling interest in the acquire on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
acquiree's identifiable net assets.
Where applicable, the consideration for the acquisition includes any asset or
liability resulting from a contingent consideration arrangement, measured at
its acquisition-date fair value. Subsequent changes in such fair values are
adjusted against the cost of acquisition where they qualify as measurement
period adjustments (see below). All other subsequent changes in the fair value
of contingent consideration classified as an asset or liability are accounted
for in accordance with relevant IFRSs. Contingent consideration is classified
either as equity or as a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value, with changes in
fair value recognised in profit or loss.
Where a business combination is achieved in stages, the Group's
previously-held interests in the acquired entity are re- measured to fair
value at the acquisition date (i.e. the date the Group attains control) and
the resulting gain or loss, if any, is recognised in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to
profit or loss, where such treatment would be appropriate if that interest
were disposed of.
The acquiree's identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3 (2008) as amended, are
recognised at their fair value at the acquisition date.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see
below), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts recognised as
of that date.
The measurement period is the period from the date of acquisition to the date
the Group obtains complete information about facts and circumstances that
existed as of the acquisition date and is subject to a maximum of one year.
Going concern
The operations of the Group have been financed through operating cash flows as well as through funds which have been raised from shareholders. As at 31 December 2021, the Group held cash balances of £5.39 million and an operating loss has been reported. Since November 2017, the Group has been generating revenues, from its Manica Alluvial operations, which have been covering the Manica operating costs and not the costs for the rest of the Group. The Directors anticipate net operating cash outflows for the Group for the next twelve months from the date of signing these financial statements.
The Directors have assessed the working capital requirements for the forthcoming twelve months and have undertaken assessments which have considered different scenarios based on exploration and mine development spend along with a number of production forecasts until June 2023.
Upon reviewing those cash flow projections for the forthcoming twelve months, the directors consider that the Company is not likely to require additional financial resources in the twelve-month period from the date of approval of these financial statements to enable the Company to fund its current operations and to meet its commitments. The Group will continue to monitor corporate overhead costs on an ongoing basis.
During 2019, the Company entered into a net profit share agreement for it Fair Bride hard rock gold project in Manica, Mozambique. The Company expects production build up during the 3rd quarter 2022, with full commercial production being achieved during the 4th quarter 2022. On this basis the Company expect earnings from the Mozambique gold operations to be significant, with the Fair Bride operation expected to continue for 3 years.
As is common with early producing companies, the Company raises finance for its activities in discrete tranches to finance its activities for limited periods only and further funding will be required from time to time to finance those activities.
Nevertheless, after making enquiries and considering the above and should the need arise the directors have a reasonable expectation that the Company has adequate ability to raise resources to continue in operational existence for the foreseeable future. The Directors therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Parent only income statement
Xtract Resources Plc has not presented its own income statement as permitted
by section 408 of the Companies Act 2006. The loss for the year ended 31
December 2021 was £2,925k (2020: loss £1,311k).
Foreign currencies
The individual financial statements of each Group Company are maintained in
the currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group Company are
expressed in Pound Sterling, which is the functional currency of the Company,
and the presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency are not
retranslated.
Foreign currency differences arising on retranslation into an entity's
functional currency are recognised in profit and loss.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates
at the date of transactions are used. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in equity.
On the disposal of a foreign operation (i.e. a disposal of the Group's entire
interest in a foreign operation, or a disposal involving loss of control over
a subsidiary that includes a foreign operation, loss of joint control over a
jointly controlled entity that includes a foreign operation, or loss of
significant influence over an associate that includes a foreign operation),
all of the accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. The Group has elected to treat goodwill and
fair value adjustments arising on acquisitions before the date of transition
to IFRSs as Sterling denominated assets and liabilities.
Taxation
The tax expense comprises current and deferred tax.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the Company's subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
year when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Intangible assets
Land acquisition rights and mine development costs
The costs of land acquisition rights in respect of mining projects and mine
development are capitalised as intangible assets. These costs are amortised
over the expected life of mine to their residual values using the
units-of-production method using estimated proven and probable mineral
reserves.
Intangible exploration and evaluation expenditure assets
The costs of exploration properties and leases, which include the cost of
acquiring prospective properties and exploration rights, are capitalised as
intangible assets. Exploration and evaluation expenditure is capitalised
within exploration and evaluation properties until such time that the
activities have reached a stage which permits a reasonable assessment of the
existence of commercially exploitable reserves. Once the Company has
determined the existence of commercially exploitable reserves and the Company
decides to proceed with the project, the full carrying value is transferred
from exploration and development costs to mining development.
Capitalised exploration and evaluation expenditure is assessed for impairment
in accordance with the indicators of impairment as set out in IFRS 6
Exploration for and Evaluation of Mineral Reserves. In circumstances where a
property is abandoned, the cumulative capitalised costs relating to the
property are written off in the year. Capitalised exploration costs are not
amortised.
Property, plant and equipment
Tangible fixed assets represent mining plant and equipment, office and
computer equipment and are recorded at cost, net of accumulated depreciation.
Depreciation is provided on all tangible fixed assets at rates calculated to
write off the cost or valuation of each asset on a straight-line basis over
its expected useful life, which is calculated on either a fixed period or the
expected life of mine using the unit of production method, as appropriate.
The average life in years is estimated as follows:
Office and computer equipment 3-10
Plant and machinery 7-15
Until they are brought into use, fixed assets and equipment to be installed
are included within assets under construction and are not depreciated.
The cost of maintenance, repairs and replacement of minor items of tangible
fixed assets are charged to the income statement as incurred. Renewals and
asset improvements are capitalised. Upon sale or retirement of tangible fixed
assets, the cost and related accumulated depreciation are eliminated from the
financial statements. Any resulting gains or losses are included in the income
statement.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of an impairment loss
is recognised as income immediately, unless the relevant asset is carried at a
revalue amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
Financial instruments
Classification
The Group classifies its financial assets in the following categories: at
amortised cost including trade receivables and other financial assets at
amortised cost, at fair value through other comprehensive income. The
classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets
at initial recognition.
Trade receivables
Trade receivables are amounts due from customers for goods sold or services
performed in the ordinary course of business. They are generally due for
settlement within 30 days and are therefore all classified as current. Trade
receivables are recognised initially at the amount of consideration that is
unconditional, unless they contain significant financing components, in which
case they are recognised at fair value. The group holds the trade receivables
with the objective of collecting the contractual cash flows, and so it
measures them subsequently at amortised cost using the effective interest
method.
Fair values of trade receivables
Due to the short-term nature of the current receivables, their carrying amount
is considered to be the same as their fair value.
Other financial assets at amortised cost
Classification of financial assets at amortised cost
The group and parent company classify its financial assets as at amortised
cost only if both of the following criteria are met:
· the asset is held within a business model whose objective is to
collect the contractual cash flows; and
· the contractual terms give rise to cash flows that are solely
payments of principle and interest.
Other receivables
These amounts generally arise from transactions outside the usual operating
activities of the group. Interest could be charged at commercial rates where
the terms of repayment exceed six months. Collateral is not normally obtained.
The non-current other receivables are due and repayable within three years
from the end of the reporting period.
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
These are initially and subsequently recorded at fair value.
Financial assets at fair value through other comprehensive income
Classification of financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI)
comprise an investment held. These are carried in the statement of financial
position at fair value. Subsequent to initial recognition, changes in fair
value are recognised in the statement of other comprehensive income.
Financial liabilities
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Loans to/(from) Group companies
These include loans to and from subsidiaries are recognised initially at fair
value plus direct transaction costs.
Loans to Group companies are classified as financial assets at amortised cost.
Loans from Group companies are classified as financial liabilities measured at
amortised cost.
Inter-company loans are interest bearing.
Cash and Cash Equivalents
Cash and cash equivalents in the statement of financial position comprise
cash at banks and on hand and short term highly liquid deposits with a
maturity of three months or less.
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the
Statement of Financial Position when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously. The
legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the company or the counterparty.
Invetory
Inventories consist of the Company's share of gold dore bars produced by the
Alluvial Mining Contractors, which have been smelted and are available for
further processing. All inventories are valued at the lower of cost of
operations and net realisable value. Costs include cost, which are closely
related to the overall alluvial operations including monitoring and
compensation costs. Net Realisable value is the estimated future sales price
of the product the Company is expected to realise after the product is
processed and sold less costs to bring the product to sale. Where inventories
have been written down to net realisable value, a new assessment is made in
the following period. In instances where there has been change in
circumstances which demonstrates an increase in the net realisable value, the
amount written down will be reversed.
Share-based payments
Goods or services received or acquired in a share-based payment transaction
are recognised when the goods or as the services are received. A corresponding
increase in equity is recognised if the goods or services were received in an
equity-settled share-based payment transaction or a liability if the goods or
services were acquired in a cash-settled share based payment transaction.
When the goods or services received or acquired in a share-based payment
transaction do not qualify for recognition as assets, they are recognised as
expenses.
For equity-settled share-based payment transactions the goods or services
received and the corresponding increase in equity are measured, directly, at
the fair value of the goods or services received provided that the fair value
can be estimated reliably.
If the fair value of the goods or services received cannot be estimated
reliably, or if the services received are employee services, their value and
the corresponding increase in equity, are measured, indirectly, by reference
to the fair value of the equity instruments granted.
Vesting conditions, which are not market, related (i.e. service conditions and
non-market related performance conditions) are not taken into consideration
when determining the fair value of the equity instruments granted. Instead,
vesting conditions which are not market related shall be taken into account by
adjusting the number of equity instruments included in the measurement of the
transaction amount so that, ultimately, the amount recognised for goods or
services received as consideration for the equity instruments granted shall be
based on the number of equity instruments that eventually vest. Market
conditions, such as a target share price, are taken into account when
estimating the fair value of the equity instruments granted. The number of
equity instruments are not adjusted to reflect equity instruments which are
not expected to vest or do not vest because the market condition is not
achieved.
If the share-based payments granted do not vest until the counterparty
completes a specified period of service, Group accounts for those services as
they are rendered by the counterparty during the vesting period, (or on a
straight- line basis over the vesting period).
If the share-based payments vest immediately the services received are
recognised in full.
Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within 12 months
after the service is rendered, such as paid vacation leave and sick leave,
bonuses, and non-monetary benefits such as medical care), are recognised in
the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the
employees render services that increase their entitlement or, in the case of
non- accumulating absences, when the absence occurs.
The expected cost of profit sharing and bonus payments is recognised as an
expense when there is a legal or constructive obligation to make such payments
as a result of past performance.
Share-capital and equity
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Incremental costs
directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Share Capital
Share capital represents the amount subscribed for shares at nominal value.
Share Premium
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative amount which has
been expensed in the statement of comprehensive income in connection with
share-based payments, less any amounts transferred to retained earnings on the
exercise of share options.
Warrant Reserve
The warrant reserve presents the proceeds from issuance of warrants, net of
issue costs. Warrant reserve is non-distributable and will be transferred to
share premium account upon exercise of warrants.
Finance Income
Finance income comprises interest income. Interest income is recognised as it
accrues in profit or loss, using the effective interest method.
Revenue recognition
Revenue is recognised to the extent it is probable that the economic benefits
will flow to the Group and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received or receivable,
excluding discounts, rebates and sales tax or duty. Revenue from sales of gold
dore bars, is recognised when control of the products has transferred, that
is, when the products are delivered to the customer. A receivable is
recognised when the goods are delivered, since this is the point in time that
the consideration is unconditional because only the passage of time is
required before the payment is due.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Executive Chairman who is responsible for allocating
resources and assessing performance of the operating segments.
4.Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in
note 3, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The following are the critical judgements that the Directors have made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the financial statements.
Financial Assets Fair Value through Comprehensive Income
The Group reviews the fair value of its unquoted equity instruments at each
statement of financial position date. This requires management to make an
estimate of the fair value of the unquoted securities in the absence of an
active market, which has mainly been established by use of recent arm's length
transactions, as adjusted by a discount, where required. Uncertainty also
exists due to the early stage of development of corporate level investments in
subsidiaries.
Impairment of intangible assets
The assessment of intangible assets for any indications involves judgement.
Such assets have an indefinite useful life as the Company has a right to renew
exploration licences and the asset is only amortised once extraction of the
resource commences. Management tests for impairment annually whether
exploration projects have future economic value in accordance with the
accounting policy stated in Note 14. Each exploration project is subject to an
annual review by either a consultant or a geologist to determine if the
exploration results returned during the period warrant further exploration
expenditure and have the potential to result in an economic discovery. This
review takes into consideration long term metal prices, anticipated resource
volumes and supply and demand outlook. In the event that a project does not
represent an economic exploration target and results indicate there is no
additional upside a decision will be made to discontinue exploration; an
impairment charge will then be recognised in the Income Statement.
Share-based payments
The estimation of share-based payment costs requires the selection of an
appropriate valuation model and consideration as to the inputs necessary for
the valuation model chosen. The Group has made estimates as to the volatility
of its own shares, the probable life of options granted and the time of
exercise of those options. The model used by the Group is the Black-Scholes
model.
8. Expenses by nature
Profit / (loss) from continuing operations and discontinued operations for the
year has been arrived at after charging the following under administrative and
operating expenses:
Year ended 31 December 2021 Year ended 31 December 2020
Note £'000 £'000
Depreciation of property, plant and equipment 15 11 -
Amortisation of intangible fixed assets 14 - -
Inventory (160) 97
Auditors remuneration 9 41 29
Directors remuneration 10 1,317 309
Share-based payments expense 26 1,473 122
13. (Loss) per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
(Loss) for the purposes of basic and diluted earnings per share (EPS) being:
Net (loss) for the year from continuing operation attributable to equity (3,132) (914)
holders of the parent
(3,132) (914)
Number of shares Number of shares
Weighted average number of ordinary shares for purposes of basic EPS 805,203,295 487,748,658
Effect of dilutive potential ordinary shares-options and warrants - -
Weighted average number of ordinary shares for purposes of diluted EPS 805,203,295 487,748,658
In accordance with IAS 33, the share options and warrants do not have a
dilutive impact on earnings per share, which are set out in the consolidated
income statement.
22. Trade and other payables
Group Company
As at As at As at As at
31 December 2021 31 December 2020 31 December 2021 31 December 2020
£'000 £'000 £'000 £'000
Trade creditors and accruals 2,226 1,051 396 362
Amounts due to subsidiaries - - - 11,483
Current tax payable 121 93 - -
2,347 1,144 396 11,845
31. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
32. Events after the balance sheet date
Issue of Equity
On 22 April 2022, the Company received notice to exercise warrants over
4,416,665 ordinary shares of 0.02p each in the Company at an exercise price of
1.20p per Ordinary Share, and a further 833,333 Ordinary Shares at an exercise
price of 1.85p per Ordinary Share.
Qualified Person
In accordance with AIM Note for Mining and Oil & Gas Companies, June 2009
("Guidance Note"), Colin Bird, CC.ENG, FIMMM, South African and UK Certified
Mine Manager and Director of Xtract Resources plc, with more than 40 years
experience mainly in hard rock mining, is the qualified person as defined in
the Guidance Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.
ENDS
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