REG - Xtract Resources plc - Final Results
29/06/2023 16:30
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RNS Number : 4391E Xtract Resources plc 29 June 2023
For immediate release
29 June 2023
Xtract Resources Plc
("Xtract" or the "Company")
Audited results for the 12 months ended 31 December 2022
The Board of Xtract Resources Plc ("Xtract" or the "Company") announces its
audited financial results for the 12 months ended 31 December 2022. The 2022
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) Roland Cornish / 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
· The Phase Two drilling programme at the Bushranger copper-gold
porphyry project in New South Wales, Australia, was completed in July 2022,
for a total of 33,354m m of diamond drilling
· Mineral resources at the company's 100% owned Bushranger copper-gold
porphyry project have been upgraded to contain a total of 1.3Mt of copper
equivalent metal at the Racecourse and Ascot prospects
· An independent mining study completed on the Bushranger project has
shown the project is potentially profitable via open-pit mining methods to a
depth of 600m, which is inclusive of the higher-grade crown of the Racecourse
deposit
· A follow-up mining study achieves substantial rates of return at
mining rates of 20 to 25 mpta, which could see significant improvements from
pre-concentrate ore sorting, and a follow-up study is underway
· A metallurgical study has yielded copper recoveries of 89-90% from
samples analysed from the Racecourse & Ascot prospects, with a sample from
Ascot also returning payable levels of gold and silver
· The new Kakuyu acquisition in Zambia has seen operations on site
progress with a pushback to expose ore in the former open pit
· Initial soil geochemical surveys around the base of Kakuyu hill have
highlighted linear anomalies associated with brecciated carbonate rocks some
of which contain supergene mineralisation at depth. Two bulk samples of
high-grade ore have been dispatched to commercial concentrator operators for
assessment. Drilling is scheduled to test the extent of mineralisation and
the variability of ore with depth ahead of processing plant optimisation and
if appropriate, mine design
· Mining operations began at Manica Fairbride during 2022, with over
110kg of gold produced by year-end. Xtract has a 23% Net Profit share
· Production at Manica is increasing steadily with the new Carbon in
Leach plant processing approximately 40,000 tonnes of ore per month, with
proximal ore adding two years of mine life and potential to exploit the
considerable sulphide resource opportunity
· Post year end the company decided to withdraw from the Eureka project
in Zambia and fully impair the carrying value with a consequent charge to the
income statement of £938K
Financial highlights
· Cash of £0.19m (2021: £5.39m)
· Net assets of £19.68m (2021: £20.66m)
· Revenue from gold sales of £2.11m (2021: £0.69m)
· Administrative and operating expenses of £3.03m (2021: £3.31m)
Chairman's Statement
Dear Shareholder,
During the period under review all projects in the portfolio have been
particularly active.
The Bushranger Project completed a major drilling programme of over 30,000m,
which can be considered large for major mining companies and is quite unusual
for junior resource companies. We announced that the programme was completed
in early August 2022 and immediately commenced the modelling programme to
define the size of the two resources i.e., Racecourse and Ascot. At the end
of November, we announced that Racecourse contains some 512 million tonnes at
0.22% copper equivalent, resulting in a contained copper equivalent metal
content of 1.1 million tonnes and classified as indicated and inferred in
accordance with JORC (2012). On the 19th of December 2022 we announced a
maiden Inferred Mineral Resource estimate of some 87 million tonnes at 0.22%
copper equivalent. The combined copper equivalent of some 1.3 million tonnes
represents a considerable copper inventory.
Following this maiden resource we commenced a financial modelling programme,
managed independently by Optimal Mining. During the course of the study, it
became evident that significant benefit may be accrued by the introduction of
ore sorting and pre-concentration. We therefore paused the programme and
sent representative samples to Tomra Sorting Solutions for test work to
determine ore - waste separation characteristics. The results of this work
are expected in the 3rd Quarter of 2023 and once received will be incorporated
into the financial model. If the results are positive the potential for
reducing infrastructure size and direct operating cost are significant and
thus, we eagerly await the outcome of the test work.
The Manica gold project in which we have a 23% beneficial share, commenced
trial production in July 2022 and at the time of writing it is fully
operational with gold production for the month of April 2023 some 60kg. The
gold production month on month has increased despite experiencing atrocious
rains and two cyclones. The weather has significantly improved, and we are
looking at an increase of production and a steady dry season rate of not less
than 65kg per month.
Studies are on the way to define in-pit oxide feed material together with
general exploration aimed at identifying new additional oxide or sulphide
material. We are conducting test work to determine the overall recovery for
the transitional material and are optimistic that the cut-off between oxide
and refractory sulphide will not be night and day, but gradational.
We are also conducting trials on drill core with a view to designing optimised
additional plant for sulphide/refractory ore, which will prolong mine life and
provide a sustainable operation for years to come. The board has decided
that the contribution of the alluvial deposits, compared to the potential
contribution of the Fairbride hard rock, is negligible and thus are winding
down on alluvial operations. In any event, this was inevitable since the
alluvial resources have almost reached the state of economic depletion.
In Zambia, we did trial mining at the Chongwe Mine, deriving limited
production and copper revenues. Post balance sheet, we acquired the Kakuyu
Project, near Mumbwa, on acquisition it was considered somewhat limited. Our
work to date suggests that project may be significantly larger, and we have
already identified 2.4km of strike based on soil geochemistry which may be
integrated into the pit mining programme. Unexpected is the presence of
random and variable amounts of cobalt, which we are investigating with a view
to selectively mining the higher-grade cobalt areas. We are scheduling
drilling to assess the ore composition at depth to facilitate an optimised
processing plant design and if appropriate a full mine design.
The Eureka Project has proved to be very variable in grade and thickness and
is also very close to a water source which complicates the mining. At this
stage we have minimal intention to continue the Eureka Project and the Company
has therefore impaired all costs relating to the project.
We are actively looking at a number of smaller scale copper mining
propositions in Zambia and Southern Africa in general, since we feel that such
assets will have a valuable role to play in the anticipated copper shortage
environment in 2024/5. The Company through its cashflow has avoided making
secondary placements, completing all of its activities with available cash and
cash generated from operations. We intend to maintain the profile if results
allow and only seek cash for new acquisitions, which have the potential to add
significant value to the Company for our shareholders.
The market recognition for small resource companies has been very slow and
thus, Xtract along with most of its peers has suffered significant share price
reduction. This is very disappointing when significant hurdles have been
jumped, but the headwinds facing smaller companies has been excessive and
prolonged. The thread of recession, the war in Ukraine, slow down in China
and other geopolitical uncertainty has led to a fear of investment in
companies which are not robust and generate significant amounts of cash, with
a history of so doing.
The sector has now been ignored by investors for a longer time than I have
ever experienced, but at the time of writing I see the green shoots of
recovery beginning to appear. The incentive for a potential market recovery
is the constant comment from all trade sources suggesting that 2024/5 and
beyond will reveal major deficits in the supply of copper and other strategic
New Age metals. We continue to look for opportunities and are pleased that
we commenced our copper search some years ago, since project demand has
increased at a rate I have not experienced previously. The effect of this
will be that in future projects will cost more to acquire and will generally
be of a lower quality.
Your company is well placed to take advantage of its current asset base and
shareholders can rest assured that management will not make hasty decisions to
acquire new inferior projects.
I would like to thank my fellow directors and management for their efforts
during the period under review and look forward to a buoyant progressive 2023.
Yours sincerely,
Colin Bird
29 June 2023
Consolidated Income Statement
For the year ended 31 December 2022
Note Year ended Year ended
31 December 31 December
2022 2021
£'000 £'000
Continuing operations
Revenue from gold sales 2,110 692
Other operating income 702 189
Operating and administrative expenses
Direct operating (1,686) (569)
Other operating (122) (85)
Administration (1,230) (2,657)
(3,038) (3,311)
Project expenses
(1,430)
(432)
Operating loss (1,656) (2,862)
Other gains and (losses) 6 - -
Finance (cost)/income 11 110 (194)
(Loss) before tax 7 (1,546) (3,056)
Taxation 12 (283) (76)
(Loss) for the period (1,829) (3,132)
Attributable to:
Equity holders of the parent (1,829) (3,132)
Net (loss) per share
Basic (pence) 13 (0.22) (0.40)
Diluted (pence) 13 (0.22) (0.40)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Group
Year ended Year ended
31 December 31 December
2022 2021
£'000 £'000
(Loss) for the year (1,829) (3,132)
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss - -
Exchange differences on translation of foreign operations 343 242
Other comprehensive income/(loss) for the year 343 242
Total comprehensive (loss) for the year (1,486) (2,890)
Attributable to:
Equity holders of the parent (1,486) (2,890)
Consolidated and Company Statements of Financial Position
As at 31 December 2022 Group Company
Note As at As at As at As at
31 December 31 December 31 December 31 December
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Non-current assets
Intangible assets 14 19,418 16,752 80 828
Property, plant & equipment 15 40 25 - -
Loans to group companies - - 9,637 6,554
Investment in subsidiary 16 - - 9,823 9,823
Other financial assets - - - -
19,458 16,777 19,540 17,205
Current assets
Trade and other receivables 18 1,342 664 1,443 582
Inventories 19 123 177 - -
Loans to group companies - - - -
Cash and cash equivalents 192 5,389 51 4,205
1,657 6,230 1,494 4,787
Total assets 21,115 23,007 21,034 21,992
Current liabilities
Trade and other payables 21 759 2,226 183 396
Other loans 21 50 - 50 -
Current tax payable 21 312 121 - -
1,121 2,347 233 396
Net current assets/(liabilities) 536 3,883 1,261 4,391
Non-current liabilities
Environmental rehabilitation provision 22 312 - - -
Loans from group companies 21 - - 11,553 11,518
Total liabilities 1,433 2,347 11,786 11,914
Net assets 19,682 20,660 9,248 10,078
Equity
Share capital 23 4,975 4,973 4,975 4,973
Share premium account 71,978 71,684 71,978 71,684
Warrant reserve 24 304 467 304 467
Share-based payments reserve 24 2,121 1,874 2,121 1,874
Fair Value reserve 24 - - - -
Foreign currency translation reserve 24 651 308 - -
Accumulated losses (60,347) (58,646) (70,130) (68,920)
Equity attributable to equity
holders of the parent 19,682 20,660 9,248 10,078
Total equity 19,682 20,660 9,248 10,078
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 loss for the financial year is disclosed in Note 3. It was signed on
behalf of the Company by:
Joel Silberstein
Director
29 June 2023
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 2021 4,928 61,951 76 436 - 66 (55,530) 11,927
As at 31 December 2016 3,355 -
Comprehensive income
Comprehensive income
Loss for the year - - - - - - (3,132) (3,132)
Forex currency translation
Differences - - - - - 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 -
Comprehensive income
Comprehensive income
Loss for the year - - - - - - (1,829) (1,829)
Forex currency
translation difference - - - - - 343 - 343
Total comprehensive
Total comprehensive
income for the year - - - - - 343 (1,829) (1,486)
Transactions with owners
Issue of shares 23 2 259 - - - - - 261
Issue of shares
Share issue costs - - - - - - - -
Issue of share options 24 - - - 247 - - - ,247
Expiry of warrants - - (128) - - - 128 -
Exercise of warrants - 35 (35) - - - - -
As at 31 December 2022 4,975 71,978 304 2,121 - 651 (60,347) (19,682)
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 2021 4,928 61,951 76 436 - - (66,011) 1,380
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 2016
Other Comprehensive income
Other Comprehensive income
Loss for the period - - - - - - (1,338) (1,338)
Other comprehensive income - - - - - - - -
Total comprehensive
Total comprehensive
income for the year - - - - - - (1,338) (1,338)
Issue of shares 23 2 259 - - - - - 261
Issue of shares
Share issue costs - - - - - - - -
Issue of share options 24 - - - 247 - - - 247
Expiry of warrants - - (128) - - - 128 -
Exercise of warrants - 35 (35) - - - - -
As at 31 December 2022 4,975 71,978 304 2,121 - - (70,130) 9,248
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
2022 2021 2022 2021
Note £'000 £'000 £'000 £'000
Net cash generated from/(used in) operating activities 25 (2,530) (767) (948) (1,352)
Investing activities
Acquisition of subsidiary undertaking - - - -
Acquisition of intangible fixed assets 14 (2,868) (5,009) (191) (751)
Acquisition of tangible fixed assets 15 (27) (13) - -
Loans advanced to group companies - - - (3,360) (4,128)
Net cash used in investing activities (2,895) (5,022) (3,551) (4,879)
Financing activities
Proceeds on issue of shares 261 10,149 261 10,149
Repayment of loans from group companies - - 34 34
Proceeds from borrowings 50 - 50 -
Net cash from financing activities 311 10,149 345 10,183
Net increase/(decrease) in cash and cash equivalents (5,114) 4,360 (4,154) 3,952
Cash and cash equivalents at beginning of year 5,389 919 4,205 253
Effect of foreign exchange rate changes (83) 110 - -
Cash and cash equivalents at end of year 192 5,389 51 4,205
Significant Non Cash movements
Notes to the Financial Statements
The financial information set out in this announcement does not constitute the
Company's statutory is derived from the financial statements for the year
ended 31 December 2022 and period ended 31 December 2021.
Financial statements for the year ended 31 December 2022 and period ended 31
December 2021 will be delivered in due course. The auditors have reported on
those accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006 in respect of the
accounts for 2021.
Whilst the financial statements from which this preliminary announcement has
been derived are prepared in accordance with International Financial Reporting
Standards ("IFRS") and applicable law, this announcement does not itself
contain sufficient information to comply with IFRS. The Annual Report,
containing full financial statements that comply with IFRS, are in the process
of being sent out to shareholders.
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 5 to 30.
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 29 June 2023.
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)
IFRS 3 Business Combinations Updates certain references to the Conceptual Framework for Financial Reporting 1 January 2022
without changing the accounting requirements for business combinations.
IAS 16 Property, Plant and Equipment Requires amounts received from selling items produced while the company is 1 January 2022
preparing the asset for its intended use to be recognised in profit or loss,
and not as an adjustment to the cost of the asset.
Annual Improvements to IFRS Standards 2018-2020 Cycle Minor amendments to IFRS 1, IFRS 9 and IAS 41. 1 January 2022
Amendment to Illustrative Examples accompanying IFRS 16.
IAS 37 Onerous Contracts Specifies which costs to include when assessing whether a contract will be 1 January 2022
loss-making.
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 2022 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:
Ref Title Summary Application date
of standards
(periods commencing)
IFRS 17 Insurance Contracts Establishes new principles for the recognition, measurement, presentation and Annual periods beginning on or after 1 January 2023.
disclosure of insurance contracts issued, reinsurance contracts held and
qualifying investment contracts with discretionary participation features
issued.
IFRS 16 Lease Liability in a Sale and Leaseback Specifies requirements relating to measuring the lease liability in a sale and Annual periods beginning on or after 1 January 2024.
leaseback transaction after the date of the transaction.
IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Introduces an exception to clarify that the 'initial recognition exemption' Annual periods beginning on or after 1 January 2023.
Transaction does not apply to transactions that give rise to equal taxable and deductible
timing differences.
IAS 8 Changes in Accounting Estimates and Errors: Definition of Accounting estimates Clarifies how to distinguish changes in accounting policies from changes in Annual periods beginning on or after 1 January 2023.
accounting estimates.
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 - Changes requirements from disclosing 'significant' to 'material' accounting Annual periods beginning on or after 1 January 2024.
Disclosure of Accounting Policies policies and provides explanations and guidance on how to identify material
accounting policies.
IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current Clarifies that only those covenants with which an entity must comply on or Annual periods beginning on or after 1 January 2024.
or Non-Current and Non-Current Liabilities with Covenants Date before the end of the reporting period affect the classification of a
liability as current or non-current.
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
2022.
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 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 previously been raised from shareholders. As
at 31 December 2022, the Group held cash balances of £0.19 million and an
operating loss has been reported. Since November 2017, the Group generated
revenues, from its Manica Alluvial operations, which have been covering the
Manica operating costs and not the costs for the rest of the Group.
During 2019, the Company entered into a net profit share agreement for it Fair
Bride hard rock gold project in Manica, Mozambique. Full commercial production
commenced during the 4th quarter of 2022. On this basis the Company expect
earnings from the Mozambique gold operations to be significant.
The Directors anticipate net operating cash inflows 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 2024.
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.
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 2022 was £1,338k (2021: loss £2,925k).
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 2022 Year ended 31 December 2021
Note £'000 £'000
Depreciation of property, plant and equipment 15 14 11
Amortisation of intangible fixed assets 14 - -
Inventory 53 (160)
Auditors remuneration 9 30 41
Directors remuneration 10 350 1,317
Share-based payments expense (non-directors) 130 525
13. (Loss) per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Year ended 31 December 2022 Year ended 31 December 2021
£'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 (1,829) (3,132)
holders of the parent
(1,829) (3,132)
Number of shares Number of shares
Weighted average number of ordinary shares for purposes of basic EPS 849,532,192 805,203,295
Effect of dilutive potential ordinary shares-options and warrants - -
Weighted average number of ordinary shares for purposes of diluted EPS 849,532,192 805,203,295
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.
21. Trade and other payables
Current Group Company
As at As at As at As at
31 December 2022 31 December 2021 31 December 2022 31 December 2021
£'000 £'000 £'000 £'000
Trade creditors and accruals 759 2,226 183 396
Other loans 50 - 50 -
Current tax payable 312 121 - -
1,121 2,347 233 396
Non-Current Group Company
As at As at As at As at
31 December 2022 31 December 2021 31 December 2022 31 December 2021
£'000 £'000 £'000 £'000
Loans from group companies - - 11,553 11,518
- - 11,553 11,518
30. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
31. Events after the balance sheet date
There were no significant events
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 document.
ENDS
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