Annual / Quarterly Financial Statement • Jun 8, 2022
Annual / Quarterly Financial Statement
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FOR THE YEAR ENDED 31 DECEMBER 2021
| Page | |
|---|---|
| Officers and professional advisers | 1 |
| Board of Directors | 2 |
| Chairman's Statement | 3 |
| Strategic Report | 7 |
| Directors' Report | 14 |
| Statement of Directors' Responsibilities |
18 |
| Corporate Governance Statement | 19 |
| Directors' Remuneration Report | 24 |
| Independent Auditor's Report | 28 |
| Consolidated Income Statement | 34 |
| Consolidated Statement of Comprehensive Income | 35 |
| Consolidated Statement of Financial Position | 36 |
| Company Statement of Financial Position | 37 |
| Consolidated Statement of Changes in Equity | 38 |
| Company Statement of Changes in Equity | 39 |
| Consolidated Cash Flow Statement | 40 |
| Company Cash Flow Statement | 41 |
| Notes to the Financial Statements | 42 |
Greg Hancock - Non-Executive Chairman Daniel Maling - Non-Executive Director David Clarke - Non-Executive Director
Ben Hodges
9th Floor 107 Cheapside London, EC2V 6DN
11170056 (England and Wales)
SI Capital Limited 46 Bridge Street Godalming Surrey, GU7 1HL
Peterhouse Capital Limited 80 Cheapside London, EC2V 6EE
PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus, Canary Wharf London, E41 4HD
Orrick, Herrington & Sutcliffe (UK) LLP 107 Cheapside London EC2V 6DN
National Australia Bank
Link Group 10th Floor, Central Square 29 Wellington Street, Leeds, LS1 4DL
The Directors of the Company at the end of the year are listed below. The Directors have held office for the entire year unless otherwise stated:
Greg Hancock has over 25 years' experience in capital markets and corporate finance. He has extensive experience in both Australia and the United Kingdom through his close links to the stockbroking and investment banking community. In this time, he has specialised in mining and natural resources and has had a background financing and management of small companies. He was a founding shareholder and first Chairman of Cooper Energy Ltd, an exploration and production oil and gas company. He is currently Chairman of AusQuest Limited, an Australian mining exploration company with projects in Peru and Australia, Chairman of BMG Resources Ltd, and Non-Executive Director of Zeta Petroleum Plc, King Island Scheelite Ltd and Golden State Mining Limited. Greg continues his close association with capital markets in Australia and the United Kingdom through his private investment company Hancock Corporate Investments Pty Ltd.
Daniel Maling is a member of the Chartered Accountants of Australia & New Zealand. He has over 20 years of senior corporate and commercial management experience primarily in the natural resource and technology sectors. He has worked with several AIM, ASX and TSX-listed companies providing corporate finance, business development and strategic advice. Daniel is a partner of Orana Corporate LLP, an accounting and corporate advisory boutique based in London.
David is a geologist with more than 50 years of professional experience and more than 25 years' experience as a director of Australian public companies. He was previously a senior geologist with the Commonwealth Department of the Interior and a Chief Geologist at Santos Limited. He was also the founder and Chairman of Australian Vintage Limited, a winemaking company based in the Riverland of South Australia. David was the founder, and remains a co-owner of, Thorn-Clarke Wines, a family-owned wine producer in the Barossa Valley of South Australia.
It is with great pleasure that I report on a year of considerable advancement for Cobra Resources - a year during which we discovered rare earth mineralisation proximal to and above gold mineralisation on our Wudinna Project, with highly desirable grades, mineralogy and intersect widths.
During the year, we took the strategic decision to relocate our technical offices from Perth in Western Australia to Adelaide in South Australia to further advance the Company's primary exploration project.
In the midst of another year of unprecedented global challenges, including the continued disruption caused by the COVID-19 pandemic, the team has executed a significant and safe field exploration programme consisting of lowcost regional pathfinder drilling, detailed ground geophysics and culminating in a Reverse Circulation (RC) drilling programme at the Clarke prospect. This programme has not only defined further gold mineralisation outside of existing gold resources but identified clay hosted rare earth mineralisation that is spatially complementary to gold mineralisation.
The rare earth discovery comes at a time of critical necessity for global decarbonisation. China produces approximately 90% of the world's rare earth metals and Europe depends on China for 98% of its rare earth magnet supply. Cobra is poised to expand on this discovery and grow a unique and complementary resource base, compelling in its potential to deliver sustainable and economically critical minerals and precious metals from a jurisdiction that has a first rate record of ethical and environmental mineral production.
Cobra Resources began life as a publicly listed company with the aim of finding suitable precious, base or other energy metals and mineralsprojects in Australia or Africa. During 2019, the Board identified several potentially suitable projects, which were reviewed in detail to evaluate their strengths, growth potential and long-term value to shareholders.
The Wudinna Project has been the Company's primary focus since acquiring earn-in rights to the project in 2019 through the negotiation of the "Wudinna Heads of Agreement". The primary objective of the Company's exploration focus to date has been to add to the existing 211,000oz JORC Mineral Resource Estimate. The articulated strategy to achieve this has been through refining resource extension opportunities, and defining nearresource targets through low-cost, high-value geochemical domaining of elementalsignatures reflective of existing gold mineralisation.
The 2021 field work proved highly successful, with the Company's staged approach to further progress its pipeline of high-value targets culminating in the November Reverse Circulation (RC) programme that continued the Group's success of defining gold mineralisation outside of the existing mineral resource at the Clarke prospect.
Further defined gold mineralisation outside of the existing mineral resource at the Clarke prospect, including:
CBRC0043: 96m at 0.55 g/t gold from 30m, including 20m at 1.5 g/t gold CBRC0050: 33m at 1.03 g/t gold from 65m, including 9m at 2.09 g/t gold CBRC0042: 19m at 0.79 g/t gold from 83m, including 5m at 2.62 g/t gold
These results demonstrate the considerable potential that the Clarke prospect has to contribute to the existing mineral resource estimate. Furthermore, the programme made the unique discovery of Rare Earth Element (REE) clay hosted mineralisation directly above the intercepted gold mineralisation. The rare earth results are exceptionally encouraging with grades and intersection widths comparable to highly valued Ion-Adsorption Clay (IAC) projects.
The occurrence of Rare Earth Oxides (REOs) directly above gold mineralisation is truly unique and provides a compelling growth opportunity for the Company to diversify its mineral resources.
These results demonstrated the strength of Cobra's approach and the potential of the Wudinna Project, providing the Company confidence to drive further shareholder value through continued exploration success and increasing ownership of the project by achieving Stages 1 and 2 and working towards Stage 3 of the "Wudinna Heads of Agreement," taking our project equity to 75%.
The Company has established a team with the core competencies required to deliver on its strategic objectives. During the course of 2021, the Company sought to strengthen its technical competency through two key new appointments:
On the back of the Company's maiden 2020 RC campaign, which demonstrated the potential build on existing gold resources, Cobra focused on:
Operational metrics are summarised below:
Calcrete infill sampling multi-element analysis of Barns and White Tank resources:
In total, 875 drill holes for 7,335m were drilled across eight priority targets where the chemistry of pathfinder elements enabled refinement and prioritisation of RC drilling targets. The results demonstrated at Clarke are attributable to this low-cost exploration technique as follow-up RC drilling in November 2021 focused on testing the anomalous pathfinder trends north of existing mineralisation.
In October, the Company engaged DaishSat Geosurveys to carry out a detailed ground gravity survey aimed at testing three discrete magnetic anomalies that occur proximal to a large Hiltaba Suite granitic intrusion. 276 stations at 250m spacings yielded encouraging results refining the targets summarised below:
IOCG Target 1: High intensity, bulls-eye gravity anomaly, proximal to but not directly associated with a coincident magnetic anomaly. The survey defined a high density contrast (0.69g/cc) supportive of an iron-rich, IOCG gravity signature.
IOCG Target 2: Near coincident gravity anomaly to a highly anomalous magnetic feature (0.22 SI). This anomaly is supported by elevated copper and pathfinder chemistry defined in the saprolite drilling programme.
IOCG Target 3: Moderate gravity anomaly (0.3g/cc density contrast) not directly associated to a magnetic feature located directly south.
The modelled depth to all targets are shallow for IOCG targets and present as compelling, high-value targets that will contribute to future exploration activities.
A total of 14 Reverse Circulation drillholes totalling 2,144m were drilled at the Clarke prospect in November. The results intersected gold mineralisation northwest of previous intersections and defined the potential for further mineralisation to the north. Additional to the significant gold intersections, this programme confirmed the occurrence of REEs within the kaolinised clay portion of the saprolite above gold mineralisation, where:
The rare earths discovery is an exciting addition that complements the Company's growth strategy. High-value minerals such as rare earths are critical to global de-carbonisation and the green energy transition and expose the Company to multiple high-value commodities.
The 2021 exploration activity saw the Stages 1 and 2 earn-in of the "Wudinna Heads of Agreement" being achieved in October, resulting in the Company owning 65% of the Wudinna Project.
On 11 January 2021, the Company issued a total of 32,383,152 new Ordinary shares pursuant to completion of Stage 1 earn-in of the Wudinna Gold Project, with 31,049,819 shares at 2.4 pence per share being issued in accordance with the acquisition agreement to the vendors of Lady Alice Trust and Lady Alice Mines Pty Ltd, and 1,333,333 shares at 1.5 pence per share issued to the Company's CEO in accordance with the terms of his service agreement.
On 28 January 2021, the Company issued 1,934,800 new Ordinary shares pursuant to the exercise of warrants, with 934,800 shares at a price of 3 pence per share and 1,000,000 shares at a price of 2 pence per share.
On 18 and 19 February 2021, the Company issued 2,333,334 new Ordinary shares and 1,666,667 new Ordinary shares respectively, at 2 pence per share, pursuant to the exercise of warrants.
On 29 April 2021, the Company issued a total of 7,110,053 new Ordinary shares, with 5,664,340 shares being issued at 1 pence per share to the vendors of Lady Alice Trust and Lady Alice Mines Pty Ltd in accordance with the acquisition agreement for the Wudinna Gold Project, and 1,445,713 shares at 2.3 pence per share to a drilling contractor in settlement of a contractual agreement in respect of the provision of services.
On 11 November 2021, the Company issued a total of 31,725,919 new Ordinary shares at 1 pence per share to the vendors of Lady Alice Trust and Lady Alice Mines Pty Ltd in accordance with the acquisition agreement for the Wudinna Gold Project and relating to the completion of Stage 2 of the agreement. A further 2,572,372 remain to be issued pursuant to the Stage 2 milestone.
On 16 February 2022, the Company issued a total of 63,000,000 new Ordinary shares when the Company exercised its available headroom to raise capital through a private placement. The shares were issued at a discounted price of 1.5 pence per share to raise £945,000 in order to fund 2022 exploration activities and provide sustaining capital. This will see the Company achieve Stage 3 of the Wudinna Agreement.
The outbreak of the global COVID-19 virus has resulted in business disruption and stock market volatility. The extent of the effect of the virus, including its long-term impact, remains uncertain. Cobra has implemented extensive business continuity procedures and contingency arrangements to ensure that it is able to continue to operate.
Despite ongoing challenges associated with the COVID-19 pandemic, the Company has delivered a significant field programme that has achieved outstanding exploration success. This success places Cobra in the enviable position of defining an exclusive dual commodity approach as we work towards updating the defined gold mineral resource and providing a maiden REE resource estimation. I thank my fellow directors for their contribution throughout the year, Rupert Verco, our CEO, for his commitment, and our shareholders for their continued support. We look forward to the period of significant activity in front of us.
Greg Hancock Chairman 30 May 2022
The Directors present the Strategic Report for Cobra Resources plc (the "Company" or "Cobra", and collectively with its Subsidiary Companies, the "Group") for the year ended 31 December 2021. The information required by section 172 Companies Act 2006 are included within the Corporate Governance Statement.
This Strategic Report comprises a number of sections, namely: the Group's objectives, the Group's strategy and business model, a financial review, a review of the Group's business using key performance indicators, and the principal risks and uncertainties facing the business.
The Company's objective is to explore, develop and mine precious and base metal projects.
To achieve its objective, the Company has adopted a strategy that focuses on advanced resource exploration projects that have the potential, through the application of disciplined and structured exploration and analysis, to be progressed towards the development of a mining operation.
As a secondary focus, the Company will also review investment opportunities for exploration projects and nearproduction assets. For clarity:
With any of these types of investments, the Company commits to only investing in projects where the Board believes that it can add long-term value to all shareholders. This will be achieved through either applying alternative geological models based on experience with similar mineralised systems, advancing the project through structured and disciplined exploration analysis or by leveraging alternative geochemical or geophysical technologies.
Lady Alice Mines provides the Company with a project portfolio from which it aims to unlock embedded value and deliver shareholder returns through capital growth. It is the aim of the Company to explore and analyse the assets within this portfolio to the point that will, in the view of the Board, optimise the risk-reward value equation for its shareholders. This may include monetising or divesting assets at any stage up to and including the building of economically sustainable operations.
The Company does not intend to limit its asset reviews to particular geographic regions; however, the initial focus will be on projects located in Australia. If geologically and economically attractive project opportunities are identified in other countries, investments will only be considered in jurisdictions with established mining operations and regulation, and with acceptable levels of sovereign risk.
The operational review and outlook are set out in the Chairman's Statement.
During the year the Group made a loss of £1,677,511 (31 December 2020: £1,006,750 loss).
The Directors do not propose a dividend in respect of the year ended 31 December 2021 (31 December 2020: £nil).
Cash used in operations totalled £718,783 (31 December 2020: £1,026,971).
As at 31 December 2021, the Group had a cash balance of £264,480 (31 December 2020: £1,338,851).
The financial statements of a natural resource investing company can provide a moment in time snapshot of the financial health of the Group but do not provide a reliable guide to the performance of the Group or its Board.
At this stage in the Group's development the Directors regularly monitor key performance indicators associated with funding risk, being primarily projected cash flows associated with operational activities and general administrative expenses. Upon readmission to the main market, the Company has been able to raise the funds as needed to finance its activities.
KPIs are not appropriate as a means of assessing the value creation of a company which is involved in natural resource investment and which currently has no turnover. The Board considers that the detailed information in the Operational Review in the Chairman's Statement is the best guide to the Group's performance during the year.
The Group operates in an uncertain environment and is subject to a number of risk factors. The Directors have carried out a robust assessment of the principal risks facing the Group, including those that threaten its business model, future performance, solvency or liquidity. They consider the following risk factors are of particular relevance to the Group's activities and to any investment in the Group. It should be noted that the list is not exhaustive and that other risk factors not presently known or currently deemed immaterial may apply.
The risk factors are summarised below:
Mineral exploration and development operations generally involve a high degree of risk. The Group's operations are subject to all the hazards and risks normally encountered in the exploration, development and production of gold, base metals and other minerals, including unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability.
The Group's activities are directed towards the search for, evaluation of, and development of mineral deposits. There is no certainty that the expenditures to be made by the Group will result in discoveries of commercial quantities of minerals. There is aggressive competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The Group will compete with other interests, many of which have greater financial resources than the Company has for the opportunity to participate in promising projects. Significant capital investment is required to achieve commercial production from successful exploration efforts.
Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Group not receiving an adequate return on invested capital.
The mineral exploration and development activities which are undertaken by the Group is subject to various laws governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters.
Exploration and development activities may also be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on future exploration and production, price controls, export controls, currency availability, foreign exchange controls, income taxes, delays in obtaining or the inability to obtain necessary permits, opposition to mining from environmental and other non-governmental organisations, limitations on foreign ownership, expropriation of property, ownership of assets, environmental legislation, labour relations, limitations on repatriation of income and return of capital, limitations on mineral exports, high rates of inflation, increased financing costs, and site safety. This may affect both the Group's ability to undertake exploration and development activities in respect of its properties, as well as its ability to explore and operate those properties in which it currently holds an interest or in respect of which it obtains exploration and/or development rights in the future.
No assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail development or future potential production. Amendments to current laws and regulations governing operations and activities of mining and milling or more stringent implementation thereof could have a substantial adverse impact on the Group.
The Group's operations may be subject to receiving and maintaining permits from appropriate governmental authorities. There is no assurance that delays will not occur in connection with obtaining all necessary renewals of such permits for future operations. Management of the Group believes it has received the necessary permits for the current operations. Prior to any development on any properties, the Group must receive permits from appropriate governmental authorities. There can be no assurance that the Group will obtain and/or continue to hold all permits necessary to develop or continue operating at any particular property. See also "Exploration, Development and Operating Risks" above.
The event of a breach with any environmental or regulatory requirements may give rise to reputational, financial or other sanctions against the Group, and therefore the Board considers these risks seriously and designs, maintains and reviews its policies and processes so as to mitigate or avoid these risks. Whilst the Board has a good record of compliance, there is no assurance that the Group's activities will always be compliant.
The development of the Group's properties and its ability to earn into projects will require substantial additional financing. Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration, development or production on any or all of the Group's properties from time to time, or even a loss of property interest. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Group.
The price of the Ordinary Shares, the Company's financial results and exploration and development activities may in the future be significantly adversely affected by declines in the price of gold. The gold price fluctuates widely and is affected by numerous factors beyond the Group's control such as the sale or purchase of gold by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political and economic conditions of major gold-producing countries throughout the world.
The gold price is subject to fluctuations, and future serious price declines could cause development of any properties in which the Group may hold an interest from time to time to be impracticable. Future production from the Group's properties, if any, will be dependent upon, among other things, a gold price that is adequate to make these properties economic.
In addition to adversely affecting the Group's financial condition and exploration and development activities, a declining gold price can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.
Gold is regarded as a traditional safe-haven asset and has historically been used as a hedge against inflation. Geopolitical tensions and rising inflation support short term outlooks for a stable gold price. The role of gold in electronic and space technologies coupled with the commodity's traditional role in backing currency supports demand matching forecasts of market compound annual growth rate (CAGR) at 3.1% CAGR for 2021 – 2026.
Supply of Rare Earths is dominated by China who account for 80% of global supply. Projected rare earths market growth is reported to grow at 8% CAGR growth from 2020 production to meet market demands by 20301 . The effective doubling in demand is driven by global decarbonisation and the critical role of rare earths in the production of rare earth magnets for electric motors. China's dominant position in both production and downstream refining of rare earth metals has been recognised by western countries as a critical geopolitical risk, with particular exposure to rare earth supplies sustaining defence technologies.
Rare earth elements are not particularly rare in occurrence. Rare earth occurrences are amenable to low-cost extraction and low radioactivity and complete rare earth elemental partitioning. The 'weathered crust elutiondeposited rare earth' (also referred to as Ionic Clay Adsorbed Rare Earths) reserves of southern China contribute to approximately 35% of China's REE production, and advancements in recovery techniques and environmental management lend to this style of rare earth mineralisation significantly contributing to market growth.
In 2022, the Australian Government updated its critical minerals strategy to position Australia to meet the growing demand for critical minerals. Part of the strategy includes:
The Board considers market growth and the future development of downstream processing within Australia as a significant opportunity to define critical rare earth resources within an ethical and environmentally conscious mining jurisdiction. Instigating a dual approach to defining mineral resources in both gold and rare earths enables the Company to mitigate exposure to market volatility in a single commodity.
At the time of this report, no feasible clay hosted rare earths projects were in operation outside of China. Deposit mineralogy, chemistry and jurisdiction supply chain logistics play a critical role in the economic viability of rare earth projects. Downstream processing is a critical driver of rare earth value and vulnerability in accessing downstream processing may impact project viability. The feasibility of the projects rare earth mineralisation is susceptible to future resource estimations, metallurgical testing and process optimisation.
Fluctuations in currency exchange rates, principally between the British pound and Australian dollar can impact the Group's earnings and cash flows. If the value of the Australian dollar increases relative to the British pound, the Group's results of operations, financial condition and liquidity could be materially adversely affected.
Market conditions, including general economic conditions and their effect on exchange rates, interest rates and inflation rates, may impact the ultimate value of the Group regardless of its operating performance. The Group also faces competition from other organisations, some of which may have greater resources or be more established in a particular territory. The Board considers and reviews all market conditions to try and mitigate any risks that may arise from these.
The Company is quoted in the United Kingdom (UK) and operates in the UK and Australia. The Company may be subject to the impact of the UK's departure from the European Union. The Company continues to monitor matters and seek advice as to how to mitigate the risks arising.
The Group has a small management team and the loss of a key individual or the inability to attract suitably qualified personnel in the future could materially and adversely affect the Group's business.
The emergence of the COVID-19 pandemic has caused a severe adverse effect on the business environment on a global scale. The Group may be impacted by disruptions to its operations, particularly for the foreseeable future in light of government responses to the spread of COVID-19 or other potential pandemics. The Board is aware of the various risks that the pandemic presents that include, but are not limited to, financial, operational, staff and community health and safety, logistical challenges and government regulation. At present, the Group believes that there should be no significant material disruption to its operations in the near term, but the Board continues to monitor these risks and the Group's business continuity plans.
The conflict in Ukraine does not currently have any direct impact on Cobra's business as we have no operations or offices in Ukraine or Russia. There is potential for broader markets and supply chains to be affected and we are working with our partners and industry bodies to monitor the situation and prepare for any disruption.
Prices of oil, metal and other commodities have soared as fighting in Ukraine has intensified, adding to concerns that the rising prices will contribute to higher inflation rates, which are already at their highest in decades. The Group expects that costs of raw materials will increase over the next twelve months and will work to mitigate the effect of these increases as much as possible.
Cobra Resources adopts a strategic and innovative approach to its exploration activities, and the Company is actively seeking new technologies to assist in minimising or eliminating environmental impacts. Our commitment and proactive approach to rehabilitation ensures minimised disturbance and promotes positive environmental impacts. Cobra Resources in a mineral exploration and resource development company, not a mining company and therefore the environmental impact associated with its operations is minimal.
Cobra Resources is in the process of updating its Environmental, Sustainability and Governance framework. The Company aspires to overachieve baseline targets for ESG management and adopt an industry-leading approach to environmental management and reporting as the Group's operations grow.
Cobra Resources executes exploration activities in accordance to regulatory requirements and in adherence to the Company's approved Programme for Environmental Protection and Rehabilitation. Previous disturbance, progressive rehabilitation and programme planning is actively documented and communicated with all stakeholders.
As an exploration business, the Company's operations are campaign based and their environmental impact small when compared to operating mining companies. The Group is currently considered a low energy user, with energy consumption being below the minimum for disclosure. The Board recognises its responsibility and is committed to monitor its energy usage as its activities continue to scale. The Company shall collect, collate and openly disclose the Company's energy usage and impact to climate and environmental conditions.
The Board recognises its responsibility under UK corporate law to promote the success of the Group for the benefit of its members as a whole. The Board also understand that it has a responsibility towards employees, partners, suppliers and contractors and the local communities in which it operates.
The Group's financial instruments comprise investments, cash at bank and various items such as trade and other receivables, loans and creditors. The Group has not entered into derivative transactions nor does it trade financial instruments as a matter of policy.
The Group's credit risk arises primarily from cash at bank, trade and other receivables and the risk the counterparty fails to discharge its obligations.
The Company's credit risk primarily arises from inter-company debtors, which are considered to form part of the Company's investment in the subsidiaries (see Note 8 to the Financial Statements) and cash at bank and trade and other receivables, as per the Group. Should the subsidiaries' exploration activities not be successful, it is possible that these receivables may become irrecoverable.
Liquidity risk arises from the management of cash funds and working capital. The risk is that the Group will fail to meet its financial obligations as they fall due. The Group operates within the constraints of available funds and cash flow projections are produced and regularly reviewed by management.
The only financial assets (other than short term debtors) are cash at bank and in hand, which comprises money at call. The interest earned in the year was negligible. The Directors believe the fair value of the financial instruments is not materially different to the book value.
The Group has an Australian subsidiary which may affect the Group's Sterling denominated reported results as a consequence of movements in the Sterling/Australian dollar exchange rate. The Group also incurs costs denominated in foreign currencies which gives rise to short-term exchange risk. The Group does not currently hedge against these exposures as they are deemed immaterial and there is no material exposure as at the yearend (31 December 2020: - £nil).
The Group's objective when managing capital is to safeguard its ability to continue as a going concern and develop its mining and exploration activities to provide returns for shareholders. The Group's funding comprises equity and debt. The Directors consider the Company's capital and reserves to be capital. When considering the future capital requirements of the Group and the potential to fund specific project development via debt, the Directors consider the risk characteristics of all the underlying assets in assessing the optimal capital structure.
Greg Hancock Non-Executive Chairman 30 May 2022
The Directors are pleased to submit their annual report and audited financial statements for Cobra Resources Plc (the "Company" and collectively with its subsidiaries the "Group") for the year ended 31 December 2021.
The Chairman's Statement and Strategic Report contain details of the Group's principal activities and includes an Operational Review which provides detailed information on the development of the Group's businesses during the last 12 months, likely future developments and events that have occurred after the Balance Sheet date.
This Directors' Report includes the information required to be included under the Companies Act or, where provided elsewhere, an appropriate cross-reference is given. The Corporate Governance Statement, approved by the Board, is provided on pages 19 to 23 and is incorporated by reference herein.
The Group's principal activity is to explore, develop and mine precious and base metal projects.
The business of mineral exploration, evaluation and development has inherent risks. The Group's exposure to risks is explained in Risks and Uncertainties in the Strategic Report set out on pages 7 to 13 together with the policies of the Board for the review and management of those risks.
A review of the Group's projects and their performance during the financial period and details of future developments and an indication of the outlook for the future, are contained in the Chairman's Statement on pages 3 to 6.
The Board will continue with its strategic plans to generate growth in value for shareholders in line with its business model which is explained in the Strategic Report on page 7.
The directors of the Company during the year were as follows:
| Date Appointed | Date Resigned | |
|---|---|---|
| Greg Hancock | 1 March 2018 | - |
| Daniel Maling | 1 May 2020 |
- |
| David Clarke | 1 May 2020 | - |
| Craig Moulton | 26 March 2019 | 16 September 2021 |
The Directors who held office as 31 December 2021 had the following beneficial interests in the Ordinary shares of the Company at 31 December 2021 according to the register of directors' interests:
| Ordinary shares | ||||
|---|---|---|---|---|
| Number of | % of Issued | Number of | % of Issued | |
| Ordinary | Share Capital at | Ordinary | Share Capital | |
| shares at 31 | 31 Dec 2021 | Shares at 31 | at 31 Dec 2020 | |
| Dec 2021 | Dec 2020 | |||
| Greg Hancock | - | - | - | - |
| Daniel Maling | 675,000 | 0.24% | 675,000 | 0.24% |
| David Clarke | 35,107,335 | 9.75% | 12,293,976 | 4.34% |
Post year end on 16 February 2022 the following shares were issued to Directors:
• David Clarke acquired 6,338,041 shares at 1.5 pence per share pursuant to participation in a private placement.
As at 31 December 2021, the Directors held the following warrants and options over the Company's ordinary shares:
| Options | |||||
|---|---|---|---|---|---|
| Date of grant | Number of options at start of year |
Options granted or acquired during year |
Options lapsed during year |
Number of options at end of year |
|
| Greg Hancock | |||||
| 11 Feb 2019 | 672,336 | - | - | 672,336 | |
| 15 July 2020 | 5,000,000 | - | - | 5,000,000 | |
| TOTAL | 5,672,336 | - | - | 5,672,336 | |
| Daniel Maling | |||||
| 15 July 2020 | 5,000,000 | - | - | 5,000,000 | |
| TOTAL | 5,000,000 | - | - | 5,000,000 | |
| David Clarke | |||||
| 15 July 2020 | 5,000,000 | - | - | 5,000,000 | |
| TOTAL | 5,000,000 | - | - | 5,000,000 |
On 27 March 2018 the Company introduced a Share Option Plan with Non-Employee Sub-Plan to enable the issue of options as part of the remuneration of key management personnel and directors to enable them to purchase ordinary shares in the Company. However, the Share Option Plan was amended by the Board and re-entered into on 11 February 2019.
During the financial year, the Company maintained insurance cover for its Directors and Officers under a Directors' and Officers' liability insurance policy. The Company has not provided any qualifying third-party indemnity cover for the Directors.
The Board has the ability to seek independent professional advice although none was considered necessary in the year under review or in the previous financial year.
Details of the issued share capital, together with details of the movement in issued share capital during the year, are shown in note 15 to the Financial Statements.
At the date of approval of this report, the Company had been notified that of the following interests of 3% or more of the issued Ordinary share capital of the Company:
| Number of Ordinary | % of | |
|---|---|---|
| Shares | Share Capital | |
| Penn Nominees Pty Ltd | 43,619,290 | 10.31 |
| Mr Craig P Ball & Mrs Suzanne K Ball | 41,445,376 | 9.8 |
| Springton Trust | 41,445,376 | 9.8 |
No political or charitable donations have been made during the period under review (2021: £nil).
Events subsequent to year end are set out in the Chairman's Statement.
The Group's ability to meet operational objectives and general overheads is reliant on raising further capital in the near future.
The Group meets its working capital requirements from its cash and cash equivalents. The Company is pre-revenue, and to date the Company has raised finance for its activities through the issue of equity and debt.
The Group has £264,480 of cash and cash equivalents at 31 December 2021, and post year end raised £945,000 before costs through the issue of new Ordinary shares. The Group's and Company's ability to meet operational objectives and general overheads is reliant on raising further capital in the near future.
The Directors are confident that further funds can be raised and it is appropriate to prepare the financial statements on a going concern basis, however there can be no certainty that any fundraise will complete. These conditions indicate existence of a material uncertainty related to events or conditions that may cast significant doubt about the Group's ability to continue as a going concern, and, therefore, that it may be unable to realise its
assets and discharge its liabilities in the normal course of business. These financial statements do not include the adjustments that would be required if the Group could not continue as a going concern.
In the case of each person who was a Director at the time this report was approved:
This information is given and should be interpreted in accordance with the provisions of section 418 of Companies Act 2006.
A resolution to re-appoint the Company's Auditors, PKF Littlejohn LLP, will be proposed at the next Annual General Meeting of the Company, to be held on 30 June 2022.
Greg Hancock Non-Executive Chairman 30 May 2022
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the group and parent company financial statements in accordance with applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the group and of the profit or loss of the company and the group for that year.
In preparing those financial statements, the directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company, and enable them to ensure that the Financial Statements and the Directors Remuneration Report comply with the Companies Act 2006 and, as regards the group Financial Statements, international financial reporting standards. They are also responsible for safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
They are also responsible to make a statement that they consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced, and understandable and provides the information necessary for the shareholders to assess the Group and Company's position and performance, business model and strategy.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Legislation in England and Wales governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on page 1, confirm that, to the best of their knowledge and belief:
The Company recognises the importance of, and is committed to, high standards of corporate governance. At the date of this Annual Report, whilst the Company is not under an obligation to adopt a governance code on a 'comply or explain' basis given its status as a standard listed company on the Main Market for listed securities of the London Stock Exchange, the Directors have opted to observe the requirements of the UK Corporate Governance Code to the extent they consider appropriate in light of the Company's size, stage of development and resources. The ways in which the Company has applied the Code are explained below:
The Company is a small company with a modest resource base. The Company has a clear mandate to optimise the allocation of limited resources to support its development plans. As such, the Company strives to maintain a balance between conservation of limited resources and maintaining robust corporate governance practices. As the Company evolves, the Board is committed to enhancing the Company's corporate governance policies and practices deemed appropriate for the size and maturity of the organisation.
The Company will hold Board meetings periodically as issues arise which require the Board's attention. The Board will be responsible for the management of the business of the Company, setting its strategic direction, establishing its policies and appraising the making of all material investments. It will be the Board's responsibility to oversee the financial position of the Company and monitor the business and affairs of the Company on behalf of the shareholders, to whom the Directors are accountable. The primary duty of the Board will be to act in the best interests of the Company at all times. The Board will also address issues relating to internal control and the Company's approach to risk management.
Set out below are the Company's corporate governance practices for the year ended 31 December 2021.
The Company is headed by an effective Board which is collectively responsible for the long-term success of the Company.
The role of the Board – The Board sets the Company's strategy, ensuring that the necessary resources are in place to achieve the agreed strategic priorities, and reviews management and financial performance. It is accountable to shareholders for the creation and delivery of strong, sustainable financial performance and long-term shareholder value. To achieve this, the Board directs and monitors the Company's affairs within a framework of controls which enable risk to be assessed and managed effectively. The Board also has responsibility for setting the Company's core values and standards of business conduct and for ensuring that these, together with the Company's obligations to its stakeholders, are widely understood throughout the Company.
Board Meetings – The core activities of the Board are carried out in scheduled meetings of the Board. These meetings are timed to link to key events in the Company's corporate calendar and regular reviews of the business are conducted. Additional meetings and conference calls are arranged to consider matters which require decisions outside the scheduled meetings. During the year, the Board met on six occasions.
Outside the scheduled meetings of the Board, the Directors maintain frequent contact with each other to discuss any issues of concern they may have relating to the Company or their areas of responsibility, and to keep them fully briefed on the Company's operations.
Summary of the Board's work in the year – During the year, the Board considered all relevant matters within its remit, but focused in particular on the execution and completion of the Lady Alice acquisition.
A table setting out the Directors' attendance at Board meetings during the year is set out below.
| Audit | Remuneration | |||
|---|---|---|---|---|
| Role | Board Meeting | Committee | Committee | |
| Greg Hancock | Non-Executive Chairman | 7/7 | 1/1 | 1/1 |
| Daniel Maling | Director | 5/5 | 1/1 | 1/1 |
| David Clarke | Director | 4/5 | N/A | 1/1 |
| Craig Moulton * |
Managing Director | 2/2 | N/A | N/A |
* Craig Moulton resigned from the Company on 16 September 2021.
Directors attended an extremely high number of Board meetings they were entitled to attend during the year. The Board is pleased with the high level of attendance and participation of Directors at Board and committee meetings.
Directors appointed by the Board are subject to election by shareholders at the Annual General Meeting of the Company following their appointment and thereafter are subject to re-election in accordance with the Company's Articles of Association.
The Non-Executive Director brings a broad range of business and commercial experience to the Company and have a particular responsibility to challenge independently and constructively the performance of the Executive management (where appointed) and to monitor the performance of the management team in the delivery of the agreed objectives and targets. Cobra has two Non-Executive Directors, Daniel Maling and David Clarke.
Non-Executive directors are initially appointed for an initial term of one year, which may, subject to satisfactory performance and re-election by shareholders, be extended by mutual agreement.
The Company has established Audit and Remuneration Committees.
The Audit Committee was established in 2020. The Committee has responsibility for, among other things, the monitoring of the integrity of the financial statements of the Company and its Enlarged Group and the involvement of the Group's auditors in that process. It focuses in particular on compliance with accounting policies and ensuring that an effective system of external audit and financial control is maintained, including considering the scope of the annual audit and the extent of the non-audit work undertaken by external auditors and advising on the appointment of external auditors. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly reports remains with the Board. The Audit Committee will meet at least two times a year at the appropriate times in the financial reporting and audit cycle.
The members of the Audit Committee are Daniel Maling, who acts as Chairman of the Committee, and Greg Hancock.
The Group's external auditor is PKF Littlejohn LLP who have served as external auditor for four years. The role of external auditor last went to tender in 2018. The Audit Committee closely monitors the level of audit and nonaudit services that they provide to the Company and Group.
Having assessed the performance, objectivity and independence of the auditors, the Committee will be recommending the reappointment of PKF Littlejohn LLP as auditors to the Company at the 2022 Annual General Meeting.
During the year to 31 December 2021 the Audit Committee considered the following key issues in relation to the Financial Statements:
| Issue | Action | |
|---|---|---|
| • | Accounting policies | The Committee reviewed and discussed the significant accounting policies with management and the external auditor and reached the conclusion that each policy was appropriate to the Group and Company. |
| • | Carrying value of investment in Lady Alice Mines |
The Committee reviewed the impairment assessment report prepared by management and agreed that given the reasonable expectation that the Group will achieve its milestone targets over the next 18 months that no impairment to the value of the investment in Lady Alice Mines was required as at 31 December 2021. |
| • | Going Concern review | The Committee considered the ability of the Group to operate as a Going Concern considering cash flow forecast for the next 12 months and operational milestone. It was determined by the Committee that the Group will need to raise funds within the next 12 months in order to achieve its 12 month operational objectives. Whilst there can be no certainty that funds will be received, the Committee formed the opinion that it was reasonable to expect that additional funds will be raised, and that it was appropriate for the |
| Issue | Action | |
|---|---|---|
| Financial Statements to be prepared on a going concern | ||
| basis. | ||
| • | Review of audit and non-audit services and fees |
The Committee reviewed the fees charged for the provision of audit and services and determined that they were in line with fees charged to companies of similar size and stage of development. The Committee considered and was satisfied the |
| external auditor's assessment of its own independence. There were no non-audit services provided during the year to 31 December 2021. |
The Remuneration Committee was established in 2020. The Committee has the responsibility of reviewing the performance of the Executive directors and make recommendations to the Board on matters relating to their remuneration and terms of employment. The Committee will also make recommendations to the Board on proposals for the granting of share awards and other equity incentives pursuant to any share award scheme or equity incentive scheme in operation from time to time. The Remuneration Committee will meet at least once a year. The aggregate remuneration of the directors is limited by the Company's Articles of Association and this aggregate amount can only be changed by the Company in general meeting.
The members of the Remuneration Committee are David Clarke, who acts as Chairman of the Committee, Greg Hancock and Daniel Maling.
The Board as a whole will be responsible for the appointment of executive and Non-Executive Directors. The Board does not currently believe it is necessary to have a separate nominations committee at this time. The requirement for a nominations committee will be considered on an ongoing basis.
The Board has adopted a share dealing code (the "Share Dealing Code") regulating trading in the Company's shares for the Directors and other persons discharging managerial responsibilities (and their persons closely associated) which contains provisions appropriate for a company whose shares are listed on the Official List and admitted to trading on the Main Market for listed securities of the London Stock Exchange (particularly relating to dealing during closed periods which will be in line with the Market Abuse Regulation). The Company will take all reasonable steps to ensure compliance by the Directors and any relevant employees with the terms of the Share Dealing Code.
The Company has not adopted a formal policy on diversity, however it is committed to a culture of equal opportunities for all, regardless of age, race or gender.
The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
The Company operates in the extractive industry to explore, develop and mine precious and base metal projects which is inherently speculative in nature and, whilst currently pre-revenue will be dependent upon fund-raising for its continued operations The nature of the business is well understood by the Company's members, employees and suppliers, and the Directors are as transparent about the cash position and funding requirements as is allowed under LSE regulations.
The application of the s172 requirements can be demonstrated in relation to some of the key decisions made during 2021
During the year, the Board assessed its current activities between the Board and its stakeholders, which demonstrated that the Board actively engages with its stakeholders and takes their various objectives into consideration when making decisions. Specifically, actions the Board has taken to engage with its stakeholders in 2021 include:
The Board believes that appropriate steps and considerations have been taken during the year so that each Director has an understanding of the various key stakeholders of the Company. The Board recognises its responsibility to contemplate all such stakeholder needs and concerns as part of its discussions, decision-making, and in the course of taking actions, and will continue to make stakeholder engagement a top priority in the coming years.
Greg Hancock Non-Executive Chairman 30 May 2022
The Company has established a Remuneration Committee which is responsible for reviewing, determining and recommending to the Board the future policy for the remuneration of the directors, the scale and structure of the directors' fees, taking into account the interests of shareholders and the performance of the Company and directors.
The items included in this report are unaudited unless otherwise stated.
As Chairman of the Remuneration Committee, I am pleased to introduce our Directors' Remuneration Report. The Directors' Remuneration Policy, which is set out on pages 24 to 27 of this report, will be submitted to shareholders for approval at our Annual General Meeting on 30 June 2022.
A key focus of the Directors' Remuneration Policy is to align the interests of the Directors to the long-term interests of the shareholders and it aims to support a high performance culture with appropriate reward for superior performance, without creating incentives that will encourage excessive risk taking or unsustainable company performance. This will be underpinned through the implementation and operation of incentive plans.
The Remuneration Committee which comprises myself as Chairman, and Greg Hancock and Daniel Maling, will meet at least once a year. Directors' remuneration is fixed although Board meetings are held where the remuneration of Directors is considered.
The key activities of the Remuneration Committee are:
The Company remunerates Directors in line with best market practice in the industry in which it operates. The components of Director remuneration that are considered by the Board for the remuneration of Directors consist of:
All such contracts impose certain restrictions as regards the use of confidential information and intellectual property and they impose restrictive covenants which apply following the termination of their agreements.
The Company does not currently have any annual or long-term incentive schemes or any other scheme interests in place for any of the Directors.
The Company has established a workplace pension scheme but it does not presently have any employees qualifying under the auto-enrolment pension rules who have not opted out of the scheme. It does not currently pay pension amounts in relation to Directors' remuneration. The Company has not paid out any excess retirement benefits to any Directors or past Directors.
Base salary levels take into account market data for the relevant role, internal relativities, their individual experience and their current base salary. Where an individual is recruited at below market norms, they may be realigned over time, subject to performance in the role. Benefits will generally be in accordance with the approved policy. For external and internal appointments, the Board may agree that the Company will meet certain relocation and/or incidental expenses as appropriate.
The Committee will honour Executive Directors' contractual entitlements. Service contracts do not contain liquidated damages clauses. If a service contract is to be terminated, the Company will determine such mitigation as it considers fair and reasonable in each case.
The Company reserves the right to make additional payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise of any claim arising in connection with the termination of an Executive Director's office or employment.
The terms of all the Directors' appointments are subject to their re-election by the Company's shareholders at Annual General Meetings at which certain of the Directors will retire on a rotational basis and offer themselves for re-election.
The Non-executive Directors of the Company do not have service agreements but are appointed by letters of appointment. Each Non-Executive Director's term of office runs for an initial period of one year and thereafter, with the approval of the Board, will continue subject to periodic retirement and re-election or termination or retirement in accordance with the terms of the letters of appointment.
The details of each Non-Executive Director's current terms are set out below:
| Name | Date of letter of appointment |
Current term (years) |
Notice period by Company (months) |
Notice period by Director (months) |
|---|---|---|---|---|
| Greg Hancock | 12 March 2018 |
> 3 |
1 month | 1 month |
| Daniel Maling | 1 May 2020 | > 1 |
1 month |
1 month |
| David Clarke | 1 May 2020 | > 1 |
1 month | 1 month |
The table below sets out the remuneration received by the Executive Director for the years ended 31 December 2021 and 2020:
| Remuneration | Fees | Share Based | Total | |
|---|---|---|---|---|
| 2021 | 2021 | 2021 | 2021 | |
| Name | £ | £ | £ | £ |
| Craig Moulton | 92,178 | - 20,000 |
112,178 | |
| Total | 92,178 | 20,000 | 112,178 | |
| Remuneration | Fees | Share Based | Total | |
| 2020 | 2020 | 2020 | 2020 | |
| Name | £ | £ | £ | £ |
| Craig Moulton | 128,539 | - | 51,188 | 179,727 |
| Rolf Gerritsen | - | 6,121 | 12,000 | 18,121 |
The table below sets out the remuneration received by each non-executive director during the years ended 31 December 2021 and 2020:
| Remuneration | Fees | Bonus | Severance | Total | |
|---|---|---|---|---|---|
| 2021 | 2021 | 2021 | 2021 | 2021 | |
| Name | £ | £ | £ | £ | £ |
| Greg Hancock | - | 38,422 | - | - | 38,422 |
| Daniel Maling | 24,000 | 227 | - | - | 24,227 |
| David Clarke | - | 31,066 | - | - | 31,066 |
| Total | 24,000 | 69,715 | - | - | 93,715 |
| Remuneration | Fees | Bonus | Severance | Total | |
|---|---|---|---|---|---|
| 2020 | 2020 | 2020 | 2020 | 2020 | |
| Name | £ | £ | £ | £ | £ |
| Greg Hancock | - | 22,167 | - | - | 22,167 |
| Daniel Maling | 10,584 | 3,000 | - | - | 13,584 |
| David Clarke | - | 13,667 | - | - | 13,667 |
| Total | 10,584 | 38,834 | - | - | 49,418 |
The Board considers shareholder feedback received and guidance from shareholder bodies. This feedback, plus any additional feedback received from time to time, is considered as part of the Company's annual policy on remuneration.
Approved on behalf of the Board of Directors.
David Clarke Chairman of the Remuneration Committee 30 May 2022
We have audited the financial statements of Cobra Resources Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We draw attention to note 1 in the financial statements, which indicates that the group and parent company will need to raise additional funds during the going concern period to fund exploration expenditure and working capital requirements.
As stated in note 1, these events or conditions, along with the other matters as set forth in note 1, indicate that a material uncertainty exists that may cast significant doubt on the group's and parent company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's and parent company's ability to continue to adopt the going concern basis of accounting included:
• Obtaining management's base case cash flow forecast for the period to 31 December 2023 and tested the accuracy of the model, including the accuracy of the underlying assumptions;
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Materiality applied to the group financial statements was £52,000 (2020: £50,800) with performance materiality set at £33,800 (2020: £33,020). This amount was based upon 2.5% of the group's net assets. Our determination was considered appropriate based upon the carrying value and recoverability of exploration assets being the key area for the group, and the benchmark most relevant to shareholders for an entity undertaking exploration and evaluation activities.
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatement. At the planning stage materiality is used to determine the financial statement areas that are included within the scope of our audit.
Component materiality was £51,000 (2020: £35,700) based upon 2.5% net assets and having regard to the size and risk profile of the group's components, with performance materiality set at £33,150 (2020: £23,205).
We agreed with the audit committee that we would report all individual audit differences identified for the group during the course of our audit in excess of £2,600 (2020: £2,540). We also agreed to report any other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
Materiality applied to the parent company's financial statements was £19,000 (2020: £37,400). The benchmark for determining materiality of the parent company was 5% of adjusted loss before tax in order to obtain appropriate coverage of parent company expenditure during the audit. We agreed with the audit committee that we would report all individual audit differences identified for the parent company during the course of our audit in excess of £950 (2020: £1,870) together with any other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
In designing our audit, we determined materiality, as above, and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors and considered future events that are inherently uncertain. This included the recoverability of the exploration and evaluation intangible asset at a group level. Our group audit scope focused on the principal areas of operation, being Australia and the UK. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Exploration and evaluation activities take place within the subsidiaries based in Australia and this is also the location of the accounting function.
The audit was performed by us as group auditors based in London. Each component within the group was assessed as to whether they were significant or not significant to the group by either their size or risk. The parent company and the subsidiary were considered to be significant due to identified risk and size. A full scope audit was completed on both components.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report.
| Key Audit Matter | How our scope addressed this matter |
|---|---|
| Valuation and recoverability of exploration intangible assets (refer note 9) |
|
| The carrying value of intangible assets as at 31 December 2021 amounted to £2,012,406 (2020: £1,495,519). Intangible assets comprise exploration costs together with the fair value of intangible assets acquired under the business combination in 2019. There is a risk that the intangible assets are impaired and are overstated within the financial statements. The intangible assets are subject to annual impairment reviews which, for early stage exploration projects, requires judgements and estimates by management in conjunction with an assessment of the indicators of impairment contained within IFRS 6. Costs capitalised within intangible assets are required to satisfy the eligibility criteria under IFRS 6. |
Our work in this area included but was not restricted to: • Tests of detail on additions to intangible assets during the year; • Critically assessing whether impairment indicators exist in line with IFRS 6; • Checking good title to project licences and that any minimum expenditure terms therein have been adequately met or are expected to be met over the licence period; • Assessing progress and results of exploration activities at the individual projects during the accounting period and subsequent to the year-end; • Checking the associated disclosures within the financial statements; • Discussing with management and the Board their plans regarding future exploration on the license areas; and • Reviewing independently prepared reports on the project and assessing the qualifications of the preparer. Key Observation The Directors' judgements in their assessment of impairment are reasonable and our work did not identify any impairment indicators regarding the carrying value and recoverability of intangible assets. |
| Recoverability of investment in subsidiary and intragroup receivable balance (notes 8 and 11) |
The investment in subsidiary and intragroup receivable balances amounted to £432,260 and £2,000,064 as at 31 December 2021.
The subsidiaries are not currently revenue generating, are loss-making and recoverability is directly linked to the recoverability of the exploration projects.
Our work in this area included but was not restricted to:
The Directors' judgements in their assessment of impairment are reasonable and our work, in conjunction with that performed on the recoverability of intangible assets, did not identify any impairment indicators.
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
override of controls, that the impairment assessment of intangible assets and recoverability of amounts due from subsidiary undertakings represented the highest risk of management bias. Please refer to the key audit matters section above.
• We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities.This description forms part of our auditor's report.
We were appointed by the Directors on 28 February 2019 to audit the financial statements for the period ending 31 December 2018 and subsequent financial periods. Our total uninterrupted period of engagement is 4 years, covering the periods ending 31 December 2018 to 31 December 2021.
The non-audit services prohibited by the FRC's Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting our audit.
No non-audit services in addition to the audit were carried out by us.
Our audit opinion is consistent with the additional report to the audit committee.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor) 15 Westferry Circus For and on behalf of PKF Littlejohn LLP Canary Wharf Statutory Auditor London E14 4HD
Date: 30 May 2022
| Notes | 31 December | 31 December |
|---|---|---|
| 2021 | 2020 | |
| £ | £ | |
| - | 50,280 | |
| 2 | (567,213) | (855,929) |
| (567,213) | (805,649) | |
| 3 | (1,110,298) | (39,755) |
| (1,677,511) | (845,404) | |
| 14 | - | (161,346) |
| (1,677,511) | (1,006,750) | |
| 6 | - | - |
| (1,677,511) | (1,006,750) | |
| 7 | (£0.0073) | (£0.0054) |
| Basic and diluted loss per share attributable to owners |
All operations are considered to be continuing.
The accompanying notes are an integral part of these financial statements.
| 31 December | 31 December | |
|---|---|---|
| 2021 | 2020 | |
| £ | £ | |
| Loss for the year | (1,677,511) | (1,006,750) |
| Other Comprehensive income | ||
| Items that may subsequently be reclassified to profit or loss: |
||
| - Exchange differences on translation of foreign operations |
(81,246) | 66,916 |
| Total comprehensive loss attributable to equity holders of the Parent Company |
(1,758,757) | (939,834) |
The accompanying notes are an integral part of these financial statements.
| Notes | |||
|---|---|---|---|
| 2021 | 2020 | ||
| £ | £ | ||
| Non-current assets | |||
| Intangible Fixed Assets | 9 | 2,012,405 | 1,495,519 |
| Property, plant and equipment | 10 | 1,680 | 2,400 |
| Total non-current assets | 2,014,085 | 1,497,919 | |
| Current assets | |||
| Trade and other receivables | 11 | 36,891 | 69,408 |
| Cash and cash equivalents | 12 | 264,480 | 1,338,851 |
| Total current assets | 301,371 | 1,408,259 | |
| Non-current liabilities | |||
| Contingent consideration | 14 | - | (322,691) |
| Current liabilities | |||
| Trade and other payables | 13 | (50,336) | (169,314) |
| Contingent consideration | 14 | (187,500) | (188,721) |
| Total current liabilities | (237,836) | (358,035) | |
| Net assets/(liabilities) | 2,077,620 | 2,225,452 | |
| Capital and reserves | |||
| Share capital | 15 | 3,601,104 | 2,829,566 |
| Share premium account | 1,378,561 | 564,173 | |
| Share based payment reserve | 962,201 | 1,006,239 | |
| Retained losses | (3,848,456) | (2,239,982) | |
| Foreign currency reserve | (15,790) | 65,456 | |
| Total equity | 2,077,620 | 2,225,452 |
The accompanying notes are an integral part of these financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 30 May 2022.
Signed on behalf of the Board of Directors Greg Hancock, Non-Executive Chairman, Company No. 11170056
| Notes | |||
|---|---|---|---|
| 2021 | 2020 | ||
| £ | £ | ||
| Non-current assets | |||
| Investment in subsidiary |
8 | 432,260 | 432,260 |
| Property, plant and equipment | 10 | 1,680 | 2,400 |
| Intangible Fixed Assets | 9 | 33,251 | 33,251 |
| Total non-current assets | 467,190 | 467,911 | |
| Current assets | |||
| Trade and other receivables | 11 | 2,009,103 | 1,636,477 |
| Cash and cash equivalents | 12 | 200,088 | 834,164 |
| Total current assets | 2,209,191 | 2,470,641 | |
| Non-current liabilities | |||
| Contingent consideration | 14 | - | (322,691) |
| Total Non-current liabilities | 2,470,641- | (322,691 243,267) |
|
| Current liabilities | |||
| Trade and other payables | 13 | (31,960) | (95,636) |
| Contingent consideration | 14 | (187,500) | (188,721) |
| Total current liabilities | (219,460) | (284,357) | |
| Net assets/(liabilities) | 2,456,921 | 2,331,503 | |
| Capital and reserves | |||
| Share capital | 15 | 3,601,104 | 2,829,566 |
| Share premium account | 1,378,561 | 564,173 | |
| Share based payment reserve | 962,201 | 1,006,239 | |
| Retained losses | (3,484,945) | (2,068,475) | |
| Equity shareholders' funds | 2,456,921 | 2,331,503 |
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not included its own income statement and statement of comprehensive income in these financial statements. The Company's loss for the period amounted to £1,485,507 (2020: £878,753 loss).
The accompanying notes are an integral part of these financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 30 May 2022.
Signed on behalf of the Board of Directors Greg Hancock, Non-Executive Chairman, Company No. 11170056
| Share capital |
Share premium |
Share based payment reserve |
Retained losses |
Foreign currency reserve |
Total | |
|---|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | £ | |
| As at 1 January 2020 | 672,335 | 160,992 | 69,038 | (1,242,232) | (1,461) | (341,328) |
| Loss for the year | - | - | - | (1,006,750) | - | (1,006,750) |
| Translation differences | - | - | - | - | 66,917 | 66,917 |
| Comprehensive loss for the year |
- | - | - | (1,006,750) | 66,917 | (939,833) |
| Shares issued | 2,157,231 | 1,537,142 | - | - | - | 3,694,373 |
| Share based payment expired |
- | - | (3,833) | 3,833 | - | - |
| Exercise of options & warrants |
- | - | (17,967) | 5,167 | - | (12,800) |
| Cost of share issue | - | (1,133,961) | - | - | - | (1,133,961) |
| Share warrant charge | - | - | 947,000 | - | - | 947,000 |
| Share option charge | - | - | 12,000 | - | - | 12,000 |
| At 31 December 2020 |
2,829,566 | 564,173 | 1,006,238 | (2,239,982) | 65,456 | 2,225,451 |
| Loss for the year | - | - | - | (1,677,511) | - | (1,677,511) |
| Translation differences | - | - | - | - | (81,246) | (81,246) |
| Comprehensive loss for the year |
- | - | - | (1,677,511) | (81,246) | (1,758,757) |
| Shares issued | 771,538 | 814,388 | - | - | - | 1,585,926 |
| Lapsed warrants | - | - | (69,037) | 69,037 | - | - |
| Share option charge | - | - | 25,000 | - | - | 25,000 |
| At 31 December 2021 |
3,601,104 | 1,378,561 | 962,201 | (3,848,456) | (15,790) | 2,077,620 |
The following describes the nature and purpose of each reserve within equity:
| Share capital: | Nominal value of shares issued |
|---|---|
| Share premium: | Amount subscribed for share capital in excess of nominal value, less share issue costs |
| Share based payment reserve: | Cumulative fair value of warrants and options granted |
| Retained losses: | Cumulative net gains and losses, recognised in the statement of comprehensive income |
| Foreign currency reserve: | Gains/losses arising on translation of foreign controlled entities into pounds sterling. |
The accompanying notes are an integral part of these financial statements.
| Share capital |
Share premium |
Share based payment reserve |
Retained losses |
Total | |
|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | |
| At 1 January 2020 Loss for the year |
672,335 - |
160,992 - |
69,038 - |
(1,211,522) (878,753) |
(309,157) (878,753) |
| Comprehensive loss for the year |
- | - | - | (878,753) | (878,753) |
| Shares issued | 2,157,231 | 1,537,142 | - | - | 3,694,373 |
| Share based payment expired |
- | - | (3,833) | 3,833 | - |
| Exercise of options & warrants |
- | - | (17,967) | 17,967 | - |
| Cost of share issue | - | (1,133,961) | - | - | (1,133,961) |
| Share warrant charge | - | - | 947,000 | - | 947,000 |
| Share option charge | - | - | 12,000 | - | 12,000 |
| At 31 December 2020 | 2,829,566 | 564,173 | 1,006,238 | (2,068,475) | 2,331,502 |
| Loss for the year | - | - | - | (1,485,507) | (1,485,507) |
| Comprehensive loss for the year |
- | - | - | (1,485,507) (1,485,507) | |
| Shares issued | 771,538 | 814,388 | - | - | 1,585,926 |
| Lapsed warrants | - | - | (69,037) | 69,037 | - |
| Cost of share issue | - | - | - | - | - |
| Share warrant charge | - | - | - | - | - |
| Share option charge | - | - | 25,000 | - | 25,000 |
| At 31 December 2021 | 3,601,104 | 1,378,561 | 962,201 | (3,484,945) | 2,456,921 |
The following describes the nature and purpose of each reserve within equity:
| Share capital: | Nominal value of shares issued |
|---|---|
| Share premium: | Amount subscribed for share capital in excess of nominal value, less share issue costs |
| Share based payment reserve: | Cumulative fair value of warrants and options granted |
| Retained losses: | Cumulative net gains and losses, recognised in the statement of comprehensive income |
The accompanying notes are an integral part of these financial statements.
| Notes | 31 December | 31 December | |
|---|---|---|---|
| 2021 | 2020 | ||
| £ | £ | ||
| Cash flows from operating activities | |||
| Loss before tax |
(1,677,511) | (1,006,750) | |
| Equity settled share based payments | 45,000 | 265,189 | |
| Loss on derecognition of financial liability | 1,077,607 | - | |
| Depreciation | 10 | 719 | 1,028 |
| Foreign exchange | (78,137) | 66,916 | |
| Change in estimate of contingent consideration | 14 | - | 161,346 |
| Increase / (decrease) in trade and other receivables |
11 | 32,517 | (31,975) |
| (Decrease) in trade and other payables |
13 | (118,978) | (482,725) |
| Shares issued in lieu of cash | 33,251 | - | |
| Net cash used in operating activities | (685,532) | (1,026,971) | |
| Cash flows from investing activities | |||
| Payments for exploration and evaluation activities | 9 | (516,886) | (883,277) |
| Net cash used in investing activities | (516,886) | (883,277) | |
| Cash flows from financing activities | |||
| Proceeds from the issue of shares | 128,044 | 3,428,384 | |
| Cost of shares issued | - | (186,961) | |
| Net cash generated from financing activities | 128,044 | 3,241,423 | |
| Net (decrease) / increase in cash and cash equivalents | (1,074,371) | 1,331,176 | |
| Cash and cash equivalents at beginning of year | 1,338,851 | 7,675 | |
| Cash and cash equivalents at end of year | 12 | 264,480 | 1,338,851 |
• During the year, Shares worth £33,251 were issued to Suppliers in Lieu of cash.
The accompanying notes are an integral part of these financial statements
| Notes | 31 December | 31 December | ||
|---|---|---|---|---|
| 2021 | 2020 | |||
| £ | £ | |||
| Cash flows from operating activities | ||||
| Loss before tax | (1,485,505) | (878,753) | ||
| Equity settled share based payments | 45,000 | 265,189 | ||
| Loss on derecognition of financial liability | 1,077,607 | |||
| Depreciation | 10 | 719 | 1,028 | |
| Foreign exchange loss/gain | 3,110 | 12,801 | ||
| Change in estimate of contingent consideration | 14 | - | 161,346 | |
| (Increase) in trade and other receivables |
11 | (9,897) | (1,394,958) | |
| (Decrease) in trade and other payables | 13 | (63,676) | (542,410) | |
| Shares issued in lieu of cash | 33,251 | - | ||
| Net cash used in operating activities | (399,391) | (2,375,757) | ||
| Cash flows from investing activities | ||||
| Payments for Intangible fixed assets | - | (33,251) | ||
| Loan to Subsidiary | 11 | (362,729) | - | |
| Net cash used in investing activities | (362,729) | (33,251) | ||
| Cash flows from financing activities | ||||
| Proceeds from the issue of shares | 128,044 | 3,428,384 | ||
| Cost of shares issued | - | (186,961) | ||
| Net cash (used in)/generated from financing activities | 128,044 | 3,241,423 | ||
| Net (decrease) / increase in cash and cash equivalents | (634,076) | 832,415 | ||
| Cash and cash equivalents at beginning of year | 834,164 | 1,749 | ||
| Cash and cash equivalents at end of year | 12 | 200,088 | 834,164 |
• During the year, Shares worth £33,251 were issued to Suppliers in Lieu of cash.
The Company is a public company limited by shares which is incorporated in England. The registered office of the Company is 9th Floor, 107 Cheapside, London, EC2V 6DN, United Kingdom. The registered number of the Company is 11170056.
The principal activity of the Group is to objective is to explore, develop and mine precious and base metal projects.
The principal accounting policies applied in the preparation of these Financial Statements are set out below ('Accounting Policies' or 'Policies'). These Policies have been consistently applied to all the periods presented, unless otherwise stated.
The Group and Company Financial Statements have been prepared in accordance with UK-adopted international accounting standards. The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the United Kingdom applicable to companies under IFRS. The Group and Company Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on an asset acquisition.
The Financial Statements are presented in pounds sterling, which is the functional currency of the Parent Company. The functional currency of Lady Alice Mines Pty Ltd is Australian Dollars.
The preparation of the Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Board to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 1.
i) New and amended standards adopted by the Group and Company
The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 31 December 2021 but did not result in any material changes to the financial statements of the Group or Company.
Of the other IFRS and IFRIC amendments, none are expected to have a material effect on the future Group or Company Financial Statements.
ii) New standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
| Standard | Impact on initial application | Effective date |
|---|---|---|
| IFRS 16 (Amendments) | Property, plant and equipment | 1 January 2022 |
| IAS 1 (Amendments) | Classification of Liabilities as Current or Non-Current | 1 January 2022 |
| Annual Improvements | 2018 – 2020 Cycle |
1 January 2022 |
| IAS 37 (Amendments) | Provisions, contingent liabilities and contingent assets | 1 January 2022 |
| IAS 8 (Amendments) | Accounting estimates | 1 January 2022 |
None are expected to have a material effect on the Group or Company Financial Statements.
The Financial Statements have been prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, the Directors have taken into account all relevant available information about the current and future position of the Group and Company, including the current level of resources and the required level of spending on exploration and evaluation activities. As part of their assessment, the Directors have also taken into account the ability to raise additional funding whilst maintaining sufficient cash resources to meet all commitments.
The Group meets its working capital requirements from its cash and cash equivalents. The Company is pre-revenue, and to date the Company has raised finance for its activities through the issue of equity and debt.
The Group has £264,480 of cash and cash equivalents at 31 December 2021, and post year end raised £945,000 before costs through the issue of new Ordinary shares. The Group's and Company's ability to meet operational objectives and general overheads is reliant on raising further capital in the near future.
The Directors are confident that further funds can be raised and it is appropriate to prepare the financial statements on a going concern basis, however there can be no certainty that any fundraise will complete. These conditions indicate existence of a material uncertainty related to events or conditions that may cast significant doubt about the Group's and Company's ability to continue as a going concern, and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. These financial statements do not include the adjustments that would be required if the Group and Company could not continue as a going concern.
The consolidated financial statements incorporate the financial statements of the Parent Company and companies controlled by the Parent Company, the Subsidiary Companies, drawn up to 31 December each year.
Control is recognised where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities, and is exposed to, or has rights to, variable returns from its involvement in the subsidiary. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, where 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.
The Group applies the acquisition method of accounting 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 acquiree 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.
Acquisition-related costs are expensed as incurred unless they result from the issuance of shares, in which case they are offset against the premium on those shares within equity.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Investments in subsidiaries are accounted for at cost less impairment.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
The Group's operations are located Australia with the head office located in the United Kingdom. The main tangible assets of the Group, cash and cash equivalents, are held in the United Kingdom and Australia. The Board ensures that adequate amounts are transferred internally to allow all companies to carry out their operational on a timely basis.
The Directors are of the opinion that the Group is engaged in a single segment of business being the exploration of gold in Australia. The Group currently has two geographical reportable segments – United Kingdom and Australia.
For the purposes of the consolidated financial statements, the results and financial position of each Group entity are expressed in pounds sterling, which is the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the reporting date. Exchange differences arising are included in the profit or loss for the period.
For the purposes of preparing consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period. Gains and losses from exchange differences so arising are shown through the Consolidated Statement of Changes in Equity.
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates: Office Equipment: 33.33% per annum
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains' in the Statement of Comprehensive Income.
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets.
Exploration and evaluation assets comprises all costs which are directly attributable to the exploration of a project area. The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.
Exploration assets which are acquired are recognised at fair value. When an acquisition of an entity whose only significant assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value of the exploration asset.
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in profit or loss for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Early stage exploration projects are assessed for impairment using the methods specified in IFRS 6.
(a) Classification and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an instrument level.
The Group's and Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
For purposes of subsequent measurement, financial assets are classified in four categories:
This category is the most relevant to the Group and Company. The Group and Company measure financial assets at amortised cost if both of the following conditions are met:
• the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate ("EIR") method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group's and Company's financial assets at amortised cost include trade and other receivables (not subject to provisional pricing) and cash and cash equivalents.
A financial asset is primarily derecognised when:
The Group and Company recognise an allowance for expected credit losses ("ECLs") for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group and Company expect to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
After initial recognition, trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
The Company considers any cash on short-term deposits and other short-term investments to be cash and cash equivalents.
The Company's Ordinary shares of nominal value £0.01 each ("Ordinary Shares") are recorded at such nominal value and proceeds received in excess of the nominal value of Ordinary Shares issued, if any, are accounted for as share premium. Both share capital and share premium are classified as equity. Costs incurred directly to the issue of Ordinary Shares are accounted for as a deduction from share premium, otherwise they are charged to the
income statement.
Tax represents income tax and deferred tax. Income tax is based on profit or loss for the year. Taxable profit or loss differs from the loss for the year as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items of income or expense that are never taxable or deductible. The liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Historical Financial Information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the 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.
Deferred tax assets and liabilities are offset where 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 intention is to settle current tax assets and liabilities on a net basis.
The fair value of services received in exchange for the grant of share warrants is recognised as an expense in share premium or profit or loss, in accordance with thenature of the service provided. A corresponding increase is recognised in equity.
The preparation of the Financial Statements in conformity with IFRS requires the directors to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Accounting estimates and assumptions are made concerning the future and, by their nature, may not accurately reflect the related actual outcome. Share options and warrants are measured at fair value at the date of grant. The fair value is calculated using the Black Scholes method for both options and warrants as the management views the Black Scholes method as providing the most reliable measure of valuation.
Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. The determination of fair value is based on key assumptions involving estimation of the probability of meeting each performance target and the timing thereof. As part of the acquisition of Lady Alice Mines Pty Ltd, contingent consideration with an estimated fair value of £296,536 was recognised at the acquisition date. See note 17 for further details. The Group is required to remeasure the contingent liability at fair value at each reporting date with changes in fair value recognised in accordance with IFRS 9. Therefore, as at 31 December 2021, the contingent consideration reflects an estimated fair value of £187,500.
| 31 December | 31 December | |
|---|---|---|
| 2021 | 2020 | |
| £ | £ | |
| Administrative expense | 73,819 | 93,170 |
| Corporate expense | 191,230 | 488,450 |
| 567,213 | 855,929 | |
|---|---|---|
| Wages & Salaries expense | 301,204 | 271,476 |
| Professional fees | 960 | 2,833 |
| 31 December 2021 |
31 December 2020 |
|
|---|---|---|
| £ | £ | |
| Loss on settlement of settlement of financial liability |
1,077,607 | - |
| Other finance costs | 32,691 | 39,755 |
| 1,110,298 | 39,755 |
The Group's prime business segment is mineral exploration.
The Group operates within two geographical segments, the United Kingdom and Australia. The UK sector consists of the parent company which provides administrative and management services to the subsidiary undertaking based in Australia.
The following tables present expenditure and certain asset information regarding the Group's geographical segments for the years ended 31 December 2021 and 2020:
| Operational Results | 31 December | 31 December |
|---|---|---|
| 2021 | 2020 | |
| £ | £ | |
| Revenue | - | - |
| Loss after taxation | ||
| - United Kingdom |
(1,485,507) | (878,753) |
| - Australia |
(192,004) | (127,997) |
| Total | (1,677,511) | (1,006,750) |
| 2021 | Australia | United Kingdom | Total |
|---|---|---|---|
| £ | £ | £ | |
| Non-current assets | 1,797,043 | 1,680 | 1,798,723 |
| Current assets | 92,244 | 209,127 | 301,371 |
| Total liabilities | (18,376) | (219,460) | (237,836) |
| Non-current assets | 1,495,519 | 2,400 | 1,497,919 |
|---|---|---|---|
| Current assets | 574,953 | 833,306 | 1,408,259 |
| Total liabilities | (73,678) | (607,048) | (680,726) |
There were no employees during the period apart from the directors, who are the key management personnel. No directors had benefits accruing under money purchase pension schemes.
| Share Based |
|||||
|---|---|---|---|---|---|
| Remuneration | Fees | Bonus | payment | Total | |
| Year ended 31 December 2021 | £ | £ | £ | £ | £ |
| C Moulton | 92,178 | - | - | 20,000 | 112,178 |
| G Hancock | - | 38,422 | - | 8,143 | 46,565 |
| D Maling | 24,000 | 227 | - | 8,714 | 32,941 |
| D Clarke | - | 31,066 | - | 8,143 | 39,209 |
| 116,178 | 69,715 | - | 45,000 | 230,893 |
• During the year £112,178 (2020: £179,727) was paid to Craig Moulton in respect of Wages & Salaries and Share based payments. The share based payments include £20,000 for 1,333,333 shares per his employment contract.
• During the year £38,422 (2020: £22,167) was paid to Hancock Corporate Investments Pty Ltd, a company in which Greg Hancock is a Director, in respect of Directors fees and consultancy services.
| Remuneration | Fees | Bonus | Share Based payment |
Total | |
|---|---|---|---|---|---|
| Year ended 31 December 2020 | £ | £ | £ | £ | £ |
| C Moulton | 128,539 | - | - | 51,188 | 179,727 |
| R Gerritsen | - | 6,121 | - | 12,000 | 18,121 |
| G Hancock | - | 22,167 | - | - | 22,167 |
| D Maling | 10,584 | 3,000 | - | - | 13,584 |
| D Clarke | - | 13,667 | - | - | 13,667 |
| 139,123 | 44,955 | - | 63,188 | 247,266 |
| 31 December | 31 December | |
|---|---|---|
| 2021 | 2020 | |
| £ | £ | |
| Current tax |
- | - |
| Deferred taxation | - | - |
| - | - |
The tax assessed on the loss on ordinary activities for the period differs from the standard rate of corporation tax in the UK of 19% (2020: 19%) and Australia of 25% (2020: 26%). The differences are explained below:
| 31 December | 31 December | |
|---|---|---|
| 2021 | 2020 | |
| £ | £ | |
| Loss on ordinary activities before tax | (1,677,511) | (1,006,750) |
| Loss multiplied by weighted average applicable rate of tax |
(332,167) | (234,069) |
| Effects of: | ||
| Expenses not deductible for tax | 225,471 | 108,708 |
| Losses carried forward not recognised as deferred tax assets | 106,696 | 125,361 |
| - | - |
The weighted average applicable tax rate of 19.8% (2020: 23.25%) used is a combination of the standard rate of corporation tax rate for entities in the United Kingdom of 19% (2020: 19%), and 25% (2020: 26%)in Australia.
Basic and diluted loss per share is calculated by dividing the loss attributed to ordinary shareholders of £1,677,511 (2020: £1,006,750 loss) by the weighted average number of shares of 360,110,510 (2020: 282,956,585) in issue during the year.
The basic and dilutive loss per share are the same as the effect of the exercise of share warrants and options would be anti-dilutive.
| Investments | Loans | Total | |
|---|---|---|---|
| Company | £ | £ | £ |
| At 1 January 2021 |
432,260 | - | 432,260 |
| At 31 December 2021 |
432,260 | - | 432,260 |
Investments in Group undertakings are stated at cost less impairment. In 2019 the Company acquired 100% of the issued share capital of Lady Alice Mines Pty Ltd and in turn, 100% of the units in the Lady Alice Trust which is wholly owned by Lady Alice Mines Pty Ltd.
At 31 December 2021 the Company held the following interests in subsidiary undertakings, which are included in the consolidated financial statements and are unlisted.
| Name of company | Registered office address Level 2, 40 Kings Park Road, West |
Proportion held | Business |
|---|---|---|---|
| Lady Alice Mines Pty Ltd |
Perth, WA, Australia | 100% | Mining |
| Lady Alice Mines Unit Trust1 | Level 2, 40 Kings Park Road, West Perth, WA, Australia |
100% | Mining |
1 Lady Alice Mines Unite Trust is a wholly owned entity of Lady Alice Mines Pty Ltd.
Intangible assets comprise exploration and evaluation costs. Exploration and evaluation assets are all internally generated except for those acquired at fair value as part of a business combination.
| Total | |
|---|---|
| Group | £ |
| At 1 January 2020 | 612,242 |
| Additions | 883,277 |
| At 1 January 2021 |
1,495,519 |
| Additions | 516,886 |
| At 31 December 2021 | 2,012,406 |
| Total | |
|---|---|
| Company | £ |
| At 1 January 2020 | - |
| Additions | 33,251 |
| At 1 January 2021 | 33,251 |
| Additions | - |
| At 31 December 2021 | 33,251 |
The Directors undertook an assessment of the following areas and circumstances that could indicate the existence of impairment:
• The Group's right to explore in an area has expired, or will expire in the near future without renewal;
• No further exploration or evaluation is planned or budgeted for;
• A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; or
• Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.
Following their assessment, the Directors concluded that no impairment charge was necessary for the year ended 31 December 2021.
| Office Equipment | Total | |
|---|---|---|
| 2021 | ||
| Cost | £ | £ |
| At 31 December 2020 | 4,407 | 4,407 |
| Additions during the year |
- | - |
| At 31 December 2021 | 4,407 | 4,407 |
| Depreciation | ||
| At 31 December 2020 | (2,007) | (2,007) |
| Charge for the year | (720) | (720) |
| At 31 December 2021 | (2,727) | (2,727) |
| Net book value | ||
| At 31 December 2021 | 1,680 | 1,680 |
| Office Equipment | Total | |
|---|---|---|
| 2020 | ||
| Cost | £ | £ |
| At 31 December 2019 | 4,407 | 4,407 |
| Additions during the year |
- | - |
| At 31 December 2020 | 4,407 | 4,407 |
| Depreciation | ||
| At 31 December 2019 | (979) | (979) |
| Charge for the year | (1,028) | (1,028) |
| At 31 December 2020 | (2,007) | (2,007) |
| Net book value | ||
| At 31 December 2020 | 2,400 | 2,400 |
| Group 31 Dec 2021 |
Group 31 Dec 2020 |
Company 31 Dec 2021 |
Company 31 Dec 2020 |
|
|---|---|---|---|---|
| Current | £ | £ | £ | £ |
| Prepayments | - | - | - | - |
| Intercompany debtors | - | - | 2,000,064 | 1,637,335 |
| Goods & Services Tax | 27,852 | 70,266 | - | - |
| Other debtors | 9,039 | (858) | 9,039 | (858) |
| 36,891 | 69,408 | 2,009,103 | 1,636,477 |
The fair value of trade and other receivables approximates to their book value. Other classes of financial assets included within trade and other receivables do not contain impaired assets.
The carrying amounts of the Group and Company's trade and other receivables are denominated in the following currencies:
| Group 31 Dec 2021 |
Group 31 Dec 2020 |
Company 31 Dec 2021 |
Company 31 Dec 2020 |
|
|---|---|---|---|---|
| £ | £ | £ | £ | |
| UK pounds | 9,039 | (858) | 2,009,103 | 1,636,477 |
| Australian dollars | 27,852 | 70,266 | - | - |
| 36,891 | 69,408 | 2,009,103 | 1,636,477 |
| Group 31 Dec 2021 |
Group 31 Dec 2020 |
Company 31 Dec 2021 |
Company 31 Dec 2020 |
|
|---|---|---|---|---|
| £ | £ | £ | £ | |
| Cash at bank and in hand | 264,480 | 1,338,851 | 200,088 | 834,164 |
| 264,480 | 1,338,851 | 200,088 | 834,164 |
The fair value of cash at bank is the same as its carrying value.
The carrying amounts of the Group and Company's cash and cash equivalents are denominated in the following currencies:
| Group 31 Dec |
Group 31 Dec |
Company 31 Dec |
Company 31 Dec |
|
|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |
| £ | £ | £ | £ | |
| UK pounds | 200,088 | 834,164 | 200,088 | 834,164 |
| Australian dollars | 64,392 | 504,687 | - | - |
| 264,480 | 1,338,851 | 200,088 | 834,164 |
| Group 31 Dec 2021 |
Group 31 Dec 2020 |
Company 31 Dec 2021 |
Company 31 Dec 2020 |
|
|---|---|---|---|---|
| Current | £ | £ | £ | £ |
| Trade creditors | 20,642 | 94,985 | 9,360 | 35,960 |
| GST collected | - | 4,437 | - | - |
| Accruals and deferred income | 22,600 | 59,676 | 22,600 | 59,676 |
| Other payables | 7,094 | 10,215 | - | - |
| 50,336 | 169,314 | 31,960 | 95,636 |
The fair value of trade and other payables approximates to their book value.
The carrying amounts of the Group and Company's trade and other payables are denominated in the following currencies:
| Group 31 Dec 2021 |
Group 31 Dec 2020 |
Company 31 Dec 2021 |
Company 31 Dec 2020 |
|
|---|---|---|---|---|
| UK pounds | £ 31,960 |
£ 95,636 |
£ 31,960 |
£ 95,636 |
| Australian dollars | 18,376 | 73,677 | - | - |
| 50,336 | 169,314 | 31,960 | 95,636 |
| 2020 | Total |
|---|---|
| Group and Company Amounts payable under business combination |
£ |
| At 31 December 2020 | 511,412 |
| Categorised as: | |
| Current liabilities | 188,721 |
| Non-current liabilities | 322,691 |
| Refer to note 18 for further detail. |
|
| 2021 | Total |
| Group and Company Amounts payable under business combination |
£ |
| At 31 December 2021 | 187,500 |
| Categorised as: | |
| Current liabilities | 187,500 |
| Non-current liabilities | - |
During the year 2021, there has been a movement in the Contingent Consideration of £323,912 arising from the issue of a total of 68,440,078 ordinary shares issued to previous Lady Alice Mines unit holders upon achievement of stages 1 and 2 earn-in in the Wudinna Gold Project. The contingent consideration was initially measured at the time of acquisition, and subsequently at each reporting date the value of contingent consideration updated based on a revision to the underlying assumptions used in determining estimated value. The Contingent Consideration as at 31 December 2021 of £187,500, reflects the amount still outstanding.
| Movements for the year | Total |
|---|---|
| £ | |
| At 31 December 2020 | 511,412 |
| Additional consideration | 1,077,607 |
| Consideration paid during the year | (1,401,519) |
| At 31 December 2021 | 187,500 |
Refer to note 18 for further detail.
| Dec 2021 Number |
Dec 2021 | Dec 2020 Number |
Dec 2020 | |
|---|---|---|---|---|
| of shares | £ | of shares | £ | |
| Issued, called up and fully paid | ||||
| Ordinary shares of £0.01 | ||||
| As at the start of the year | 282,956,585 | 2,829,566 | 67,233,532 | 672,335 |
| Issued in the year | 77,153,925 | 771,538 | 215,723,053 | 2,157,231 |
| Total | 360,110,510 | 3,601,104 | 282,956,585 | 2,829,566 |
On 11 January 2021, 31,049,819 Ordinary shares were issued to former LAM owners at 2.4p each, and 1,333,333 Ordinary shares were issued to CEO Craig Moulton at 1.5p each, upon reaching stage-1 earn-in at the Wudinna Gold Project.
On 28 January 2021, 934,000 Ordinary shares were issued at 3p each, and 1,000,000 Ordinary shares issued at 2p each, pursuant to the exercise of warrants.
On 18 February 2021, 2,333,334 Ordinary shares were issued at 2p each pursuant to the exercise of warrants.
On 21 February 2021, 1,666,667 Ordinary shares were issued at 2p each pursuant to the exercise of warrants.
On 14 April 2021, 1,445,713 Ordinary shares were issuedat a price of 2.3p each to a third party supplier for drilling services undertaken. On 14 April 2021, and 4 May 2021, a total of 5,664,340 Ordinary shares were issued to former LAM owners at 1p each, in settlement of 12 month payment obligations in accordance with the SPA for the LAM Unit Trust.
On 5 May 2021,
On 11 November 2021, 31,725,919 Ordinary shares were issued to former LAM owners at 1.9p each, upon reaching stage-2 earn-in at the Wudinna Gold Project.
As at 31 December 2021 the Company had 67,543,461 warrants outstanding (2020: 127,796,891).
Each Ordinary share is entitled to one vote in any circumstances. Each Ordinary share is entitled pari passu to dividend payments or any other distribution and to participate in a distribution arising from a winding up of the Company.
| Weighted average |
||
|---|---|---|
| Warrants | exercise | |
| Number | price | |
| Warrants at 31 December 2020 |
127,796,891 | 0.02p |
| Granted during year | - | - |
| Exercised during year | (5,934,801) | 0.02p |
| Lapsed during year |
(54,318,629) | 0.02p |
| Warrants at 31 December 2021 | 67,543,461 | 0.03p |
| Exercisable at year end | 67,543,461 | 0.03p |
At 31 December 2021 the weighted average remaining contractual life of the warrants outstanding was 0.82 years.
| Weighted | ||
|---|---|---|
| average | ||
| Warrants Number |
exercise price |
|
| Warrants at 31 December 2019 |
63,351,916 | 0.02p |
| Granted during year | 109,374,168 | 0.03p |
| Exercised during year | (29,812,693) | 0.02p |
| Lapsed during year |
(15,116,500) | 0.02p |
| Warrants at 31 December 2020 | 127,796,891 | 0.02p |
| Exercisable at year end | 127,796,891 | 0.02p |
At 31 December 2020 the weighted average remaining contractual life of the warrants outstanding was 1.39 years.
Options
| Weighted average |
||
|---|---|---|
| Options Number |
exercise price |
|
| Options at 31 December 2020 |
15,672,336 | 0.033p |
| Issued during the period | - | - |
| Exercised during the year | - | - |
| Options at 31 December 2021 | 15,672,336 | 0.033p |
| Exercisable at year end | 672,336 | 0.015p |
At 31 December 2021 the weighted average remaining contractual life of the options outstanding was 3.43 years.
2020
Options
| Weighted | ||
|---|---|---|
| Options | average exercise |
|
| Number | price | |
| Options at 31 December 2019 |
1,344,672 | 0.015p |
| Issued during the period | 15,000,000 | 0.033p |
| Exercised during the year | (672,336) | 0.015p |
| Options at 31 December 2020 |
15,672,336 | 0.033p |
| Exercisable at year end | 672,336 | 0.015p |
At 31 December 2020 the weighted average remaining contractual life of the options outstanding was 4.43 years.
The fair value of equity settled share options and warrants granted is estimated at the date of grant using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model:
| Options | Warrants | Warrants | |
|---|---|---|---|
| Date of grant | 14 July 2020 | 16 January 2020 | 29 October 2020 |
| Expected volatility | 94.59% | 23.39% | 108.75% |
| Expected life | 5 | 2 | 2 |
| Risk-free interest rate | 0.10% | 0.75% | 0.10% |
| Expected dividend yield | 0.00% | 0.00% | 0.00% |
| Fair value per | |||
| option/warrant | £0.008 | £0.0003 | £0.014 |
| Group 31 Dec 2021 |
Group 31 Dec 2020 |
Company 31 Dec 2021 |
Company 31 Dec 2020 |
|
|---|---|---|---|---|
| £ | £ | £ | £ | |
| Financial assets at amortised cost |
||||
| Trade and other receivables excluding prepayments | 36,891 | 69,408 | 2,009,103 | 1,636,477 |
| Cash and cash equivalents | 264,480 | 1,338,851 | 200,088 | 834,164 |
| 301,371 | 1,408,259 | 2,209,191 | 2,470,641 | |
| Financial liabilities | ||||
| Trade and other payables (at amortised cost) |
(27,736) | (109,638) | (9,360) | (35,960) |
| Deferred consideration (at FVPL) | (187,500) | (511,412) | (187,500) | (511,412) |
| (215,236) | (621,050) | (196,860) | (547,372) |
On 7 March 2019, the Company acquired 100% of the share capital of Lady Alice Mines Pty Ltd ('LAM') and its wholly owned subsidiary The Lady Alice Trust (the 'Trust'), for total consideration of £432,260 which is to be satisfied via a mix of cash and share consideration which is shown below. In addition, the Company agreed to settle existing liabilities due to unitholders of the Trust of up to A\$250,000. The share based payment consideration was settled on 16 January 2020 upon the successful re-admission to the London's Stock Exchange Main Market. 10,815,297 shares were issued at a close price of 1.25p.
The Trust has an entitlement to earn a 75% equity interest in tenements near Wudinna in South Australia for gold exploration (the 'Wudinna Agreement'), and is also the sole owner of the right, title and interest in the Prince Alfred Licence, a formerly producing copper mine.
The principal terms of the Wudinna Agreement are as follows:
The contingent consideration is due to the unitholders on satisfying the following project milestones:
The Directors have calculated the consideration payable on a probability basis of satisfying the project milestones in accordance with IFRS 3 Business Combinations. The Directors have also estimated the number of shares to be issued at each milestone and the share price. This has been fixed at the number of consideration shares issued at the time of the RTO and the share price at that time. Management believe this is a best estimate.
Save as disclosed below there were no related party transactions during the year other than remuneration to Directors disclosed in note 5.
During the year, the Group paid £54,497 to Rupert Verco, Chief Executive Officer of the Company Mr Verco was appointed as CEO with effect from 12 July 2021.
During the year, the Group paid £3,407 in respect of rent to AusQuest, a company in which Gregory Hancock is a Director.
As at 31 December 2021, included in the other receivables is £2,000,064 due from Lady Alice Mines Pty Ltd, a subsidiary company. The loan is interest free and repayable on demand.
The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Risk management is carried out by executive management.
The Group is exposed to market risk, primarily relating to foreign exchange and commodity prices. The Group does not hedge against market risks as the exposure is not deemed sufficient to enter into forward contracts. The Company has not sensitised the figures for fluctuations in foreign exchange or commodity prices as the Directors are of the opinion that these fluctuations would not have a significant impact on the Financial Statements at the present time. The Directors will continue to assess the effect of movements in market risks on the Group's financial operations and initiate suitable risk management measures where necessary.
Credit risk arises from cash and cash equivalents as well as outstanding receivables. To manage this risk, the Group periodically assesses the financial reliability of customers and counterparties.
The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The Company will only keep its holdings of cash with institutions which have a minimum credit rating of 'A'.
The Company's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.
The following table summarizes the Group's significant remaining contractual maturities for financial liabilities at 31 December 2021.
| Less than | ||||
|---|---|---|---|---|
| 12 | 1 – 5 |
Total | ||
| Months | Year | £ | ||
| £ | £ | |||
| Accounts payable | 20,642 | - | 20,642 | |
| Accrued liabilities | 22,600 | - | 22,600 | |
| 43,242 | - | 43,242 |
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, in order to enable the Group to continue to explore, develop and mine precious and base metal projects. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts.
The Group defines capital based on the total equity and reserves of the Group. The Group monitors its level of cash resources available against future planned operational activities and may issue new shares in order to raise further funds from time to time.
As at 31 December 2021 the Group had AU\$95,000 of capital commitments in relation to operating activities at the Wudinna Gold Project.
There were no contingent liabilities as at 31 December 2021.
On 16 February 2022, the Company completed a private share placement issuing 63,000,000 Ordinary shares at a price of 1.5 pence each, raising £945,000 before costs.
On 13 April 2022, the Company announced that it had been granted an additional 536 km2 exploration tenement directly east of, and contiguous with, the Wudinna Project.
There is no ultimate controlling party.
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