ARKLE RESOURCES PLC

Earnings Release • Jun 30, 2022

National Storage Mechanism | Additional information

RNS Number : 7032Q

Arkle Resources PLC

30 June 2022

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

30 June 2022

Arkle Resources PLC

("Arkle", the "Group" or the "Company")

Final Results for the Year Ended 31 December 2021

Arkle Resources PLC (LON: ARK), the Irish gold and zinc exploration and development company, is pleased to announce its audited results for the year ending 31 December 2021.

Chairman's Statement

Arkle is an Irish based zinc and gold explorer with an active zinc exploration project in the Stonepark area of Limerick and ongoing gold exploration in Wexford / Wicklow and in Donegal. In recent months, the directors have also been examining resource projects in other jurisdictions, resulting in our entry into Zimbabwe in June 2022.

It is frustrating to be an explorer at present. With zinc selling above $3,700 a tonne and gold over $1,800 an ounce it should be a good time for explorers. The future outlook for metals has rarely been better. There is an increasing demand and consumption of metals, being driven by the green economy: electric vehicles require substantial quantities while one offshore wind turbine contains up to 1,600 tonnes of metal.

Yet there has been a substantial drop in exploration expenditure. We anticipate there can only be one outcome - higher prices. For those of us willing to take the chance the potential returns are greater.

There has been a drop in exploration, which some consider attributable to some speculative capital being use on alternative investments in technology and crypto. Recent collapses in these sectors might be a wake-up call. Additionally, mining is not seen to be environmentally friendly, and the industry tends to underplay the positive impact it has on job creation, infrastructure development and tax receipts.

Ireland, for long a beacon on how to provide a good structure for exploration, is faltering. Long delays in renewing exploration permits and some unhelpful political statements increase uncertainty. An exploration dollar is an orphan with no loyalties. It goes where it is most wanted. Anything that increases uncertainty will have a detrimental impact on exploration. There are more commercial deposits to be discovered in Ireland. For more than 50 years Ireland has been at the forefront with clear, transparent and stable policies relating to title, tax and environmental commitments. It is hoped that the current uncertainties are purely temporary.

Turning to the ongoing activities of Arkle. Very promising results have come from drilling undertaken by our partner, Group Eleven, on our 23.44% owned Stonepark zinc licences in Limerick. A deep hole in an undrilled part of the block discovered a previously unknown fault. Large Irish zinc deposits are generally discovered at the base of a fault. Group Eleven has been exploring their own ground prior to this in an attempt to find such a fault. The Stonepark results may point toward a large zinc target a few hundred metres to the north of the discovery hole. While examining how best to proceed with this discovery, three holes will be drilled in and around the existing shallow 5 million tonne zinc discovery at Stonepark North.

Our gold exploration in Wicklow / Wexford is once again proving to be an enigma. A 13 hole programme produced outstanding results from a few holes then either the veins petered out or we missed them in drilling. We have spent time re-examining the data and we have commissioned a full review and modelling exercise on the extensive database we hold. While awaiting this we are looking at some further detailed sampling and mapping using the new technology that successfully identified new zones. There remains huge potential in the area and we intend to drill.

In the Inishown peninsula of Donegal we have a very specific target. We had hoped to drill this area in early 2022 but months of delays in renewing licences means we have missed the window, but we intend to drill in the future.

Despite our good gold prospects, the recent significant zinc results and very high metal prices, the Arkle share price has languished. The directors have concluded that it is worthwhile examining potential opportunities outside of Ireland, which we have been doing. Most of the projects we have seen have been worked before and / or shopped around and have not been pursued further.

We have developed a focus on battery metals: lithium, cobalt, copper and rare earths. As a first tentative low cost step into this new area, post year-end we were awarded three licences in Southern Zimbabwe, covering 163 hectares to prospect for lithium. These licences contain hard rock spodumene which is known to contain lithium and the area saw mining of lepidolite (a lithium bearing mineral) in the late 1960s. Zimbabwe is a major hard rock lithium producer.

We are also examining a specific exploration opportunity in another jurisdiction. I look forward to updating shareholders on this as soon as possible.

John Teeling

Chairman

29 June 2022

Enquiries:

Arkle Resources PLC
John Teeling, Chairman	+353 (0) 1 833 2833
Jim Finn, Finance Director	+353 (0) 1 833 2833
SP Angel Corporate Finance LLP Nominated Adviser & Joint Broker
Matthew Johnson/Adam Cowl	+44 (0) 203 470 0470
First Equity Limited
Joint Broker
Jason Robertson	+44 (0) 207 374 2212
BlytheRay	+44 (0) 207 138 3204
Megan Ray
Rachael Brooks
Teneo
Luke Hogg	+353 (0) 1 661 4055
Ciara Wylie	+353 (0) 1 661 4055

ARKLE RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

Administrative expenses	2021 € (320,266)	2020 € (324,099)
Impairment of exploration and evaluation assets	-	(330,000)
Loss from operations	(320,266)	(654,099)
Profit/(loss) due to fair value volatility of warrants	746,526	(441,829)
Profit/(loss) before tax	426,260	(1,095,928)
Tax expense	-	-
Profit/(loss) for the year	426,260	(1,095,928)
Total comprehensive income	426,260	(1,095,928)
Earnings per share attributable to the ordinary equity holders of the parent
	cents	cents
Profit/(loss) per share - Basic & Diluted	0.14	(0.50)

ARKLE RESOURCES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021

Assets Non-current assets	2021 €	2020 €
Intangible assets	3,831,080	3,373,488
Current assets
Other receivables	32,635	21,923
Cash and cash equivalents	79,678	684,837
	112,313	706,760
Total assets	3,943,393	4,080,248
Liabilities Current liabilities
Trade and other liabilities	(233,872)	(176,664)
Warrants	(159,672)	(906,198)
Total liabilities	(393,544)	(1,082,862)
Net assets	3,549,849	2,997,386
Issued capital and reserves attributable to owners of the parent
Called-up Share capital - Deferred	992,337	992,337
Called-up Share capital - Ordinary	764,956	742,612
Share premium reserve	6,680,245	6,605,681
Share based payments reserve	156,494	127,199
Retained deficit	(5,044,183)	(5,470,443)
TOTAL EQUITY	3,549,849	2,997,386

ARKLE RESOURCES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

	Called up Share Capital Deferred	Called up Share Capital Ordinary	Share Premium	Share Based Payment Reserve	Retained Deficit	Total
	€	€	€	€	€	€
At 1 January 2021	992,337	742,612	6,605,681	127,199	(5,470,443)	2,997,386
Shares issued	-	22,344	74,564	-	-	96,908
Credit to equity for equity-settled share-based payments	-	-	-	29,295	-	29,295
Profit for the year	-	-	-	-	426,260	358,250
At 31 December 2021	992,337	764,956	6,680,245	156,494	(5,044,183)	3,549,849
At 1 January 2020	-	1,323,116	6,209,190	44,989	(4,314,086)	3,263,209
Sub-division of shares	992,337	(992,337)	-	-	-	-
Shares issued	-	411,833	396,491	-	-	808,324
Share issue expenses	-	-	-	-	(60,429)	(60,429)
Credit to equity for equity-settled share-based payments	-	-	-	82,210	-	82,210
Loss for the year	-	-	-	-	(1,095,928)	(1,095,928)
At 31 December 2020	992,337	742,612	6,605,681	127,199	(5,470,443)	2,997,386

Deferred share capital

The deferred share reserve comprises of the value of the deferred shares that arose when the Company divided the ordinary shares via special resolution on 22 April 2020 the shares into 500,000,000 deferred shares of 0.75 cent each and 500,000,000 ordinary shares of 0.25 cent each.

Called up ordinary share capital

The called up ordinary share capital reserve comprises of the nominal value of the issued share capital of the Company.

Share premium

The share premium reserve comprises of the excess of monies received in respect of share capital over the nominal value of shares issued.

Share based payment reserve

The share based payment reserve arises on the grant of share options to directors and consultants under the share options plan. Share options expired are reallocated from share based payment reserve to retained deficit at their grant date fair value.

Retained deficit

Retained deficit comprises accumulated losses in the current and prior financial years.

ARKLE RESOURCES PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

	2021 €	2020 €
Cash flows from operating activities
Profit / (loss) for the year Adjustments for	426,260	(1,095,928)
Impairment of exploration and evaluation assets	-	330,000
Share based payments charge	29,295	42,679
Fair Value movement of warrants	(746,526)	441,829
Foreign exchange	(25,527)	(4,847)
	(316,498)	(286,267)
Movements in working capital:
Increase in trade and other receivables	(10,712)	(18,059)
Increase / (decrease) in trade and other payables	57,208	(30,688)
Cash used in operations	(270,002)	(335,014)
Net cash used in operating activities	(270,002)	(335,014)
Cash flows from investing activities
Payments for exploration and evaluation	(457,592)	(218,247)
Net cash used in investing activities	(457,592)	(218,247)
Cash flows from financing activities
Proceeds from issue of equity shares	96,908	1,254,049
Share issue expenses	-	(60,429)
Net cash generated from financing activities	96,908	1,193,620
Net cash (decrease) / increase in cash and cash equivalents	(630,686)	640,359
Cash and cash equivalents at the beginning of year	684,837	39,631
Exchange gains on cash and cash equivalents	25,527	4,847
Cash and cash equivalents at the end of the year	79,678	684,837

Notes:

1.    Accounting Policies

There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2020.  The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and in accordance with the Companies Act 2014.

2.    Earnings per Share

(i)          Earnings per share

Basic profit/(loss) per share is computed by dividing the loss after taxation for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted profit/(loss)loss per share is computed by dividing the loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

The following tables sets out the computation for basic and diluted earnings per share (EPS):

	2021	2020
	cents	cents
Profit/(Loss) per share - Basic and Diluted	0.14	(0.50)
Total diluted earnings per share attributable to the ordinary equity holders of the Company	0.14	(0.50)

(ii) Reconciliation of earnings used in calculating earnings per share

Basic loss per share

The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:

Profit/(loss) from continuing operations attributable to the ordinary equity holders of the Company
	€	€
Used in calculating basic earnings per share	426,260	(1,095,928)
Used in calculating diluted earnings per share	426,260	(1,095,928)
(iii)        Denominator
	2021	2020
	Number	Number
For basic and diluted earnings per share	305,517,186	220,039,097

Basic and diluted profit/(loss) per share is the same as the effect of the outstanding share options and warrants is anti-dilutive.

3.    Going Concern

The Group generated a profit for the financial year of €426,260 (2020: loss €1,095,928) and the Group had net current liabilities of €281,231 (2020: net current liabilities €376,102) at the statement of financial position date leading to concern about the Group's ability to continue as a going concern.

The Group had a cash balance of €79,678 (2020: €684,837) at the statement of financial position date.

Included in current liabilities is an amount of €172,500 (2020: €127,500) owed to key management personnel in respect of remuneration due at the statement of financial position. Key management have confirmed that they will not seek settlement of these amounts in cash for a period of at least one year after the date of approval of the financial statements or until the Group has generated sufficient funds from its operations after paying its third party creditors.

The directors have prepared cashflow projections for a period of at least twelve months from the date of approval of these financial statements. The cashflow projections include any anticipated impacts of the Covid-19 pandemic on the Group and Company as well as the minimum spend/cash call requirements in relation to licenses held by the Group. As the Group and the Company are not revenue or cash generating they rely on raising capital from the public market. The cash flow projections prepared by the Group and Company indicate that additional finances will be required to meet the obligations of the Group and Company for a period of at least twelve months from the date of approval of these financial statements. This amounts to a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.

The directors are confident that additional capital can be raised as required. The Group received £86,250 from the conversion of warrants during the financial year. Subsequent to year end, pursuant to the receipt of warrant conversion notices, the Group also raised £150,400 in February 2022 and £46,600 in April 2022. Further information is detailed in Note 8.

As in previous years the Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements and believe the going concern basis is appropriate for these financial statements. The financial statements do not include any adjustment to the carrying amount, or classification

4.    Intangible Assets

Exploration and Evaluation:	2021	2020
	€	€
Cost:
At 1 January	3,373,488	3,445,710
Additions	457,592	257,778
Impairment	-	(330,000)
At 31 December	3,831,080	3,373,488
Carrying amount:
At 31 December	3,831,080	3,373,488

In 2012 the Group entered into an agreement with Teck Ireland Limited ("Teck"), a subsidiary of Teck Resources Limited, which gave Teck the option of earning a 75% interest in licences held by the Group in Cavan/Meath by spending €1.35 million on the licences in order to earn the option to acquire 75% interest. As per the agreement the licences had been transferred into a new company, Oldcastle Zinc Limited. As at 31 December 2019 Teck had completed €1.35 million worth of expenditure to give them a total of 75% in the company.

On 10 November 2020, the Group and Teck Ireland Limited agreed to terminate the Oldcastle agreement and dissolve the joint venture. Accordingly, the directors have impaired in full all expenditure relating to the Oldcastle licences, resulting in an impairment charge of €330,000 in the prior year.

In 2007 the Group entered into an agreement with Teck Cominco which gave Teck Cominco the option to earn a 75% interest in a number of other licences held by the Group. Teck Cominco had to spend CAD$3m to earn the interest. During 2012 the relevant licences were transferred to a new company, TILZ Minerals Limited, which at 31 December 2020 was owned 23.44% (2019: 23.44%) by Limerick Zinc Limited (subsidiary of Arkle Resources plc) and 76.56% (2019: 76.56%) by Group Eleven Resources Corp (third party).

On 13 September 2017 the board of Arkle Resources plc were informed that Group Eleven Resources Corp. a private company, has acquired the 76.56% interest held by Teck Ireland in TILZ Minerals. Arkle Resources plc owns the remaining 23.44%.

The Group's share of expenditure on the licences continues to be capitalised as an exploration and evaluation asset. The Group is subject to cash calls from Group Eleven Resources Corp. in respect of the financing of the ongoing exploration and evaluation of these licences. In the event that the Group decides not to meet these cash calls its interest in TILZ Minerals Limited may be diluted accordingly.

The realisation of the intangible assets is dependent on the discovery and successful development of economic reserves which is subject to a number of risks as outlined below:

The Group's exploration activities are subject to a number of significant and potential risks including:

- uncertainties over development and operational risks;

- compliance with licence obligations;

-ability to raise finance to develop assets;

- liquidity risks; and

- going concern risks.

The directors are aware that by its nature there is an inherent uncertainty in such exploration and evaluation expenditure as to the value of the asset. Having reviewed the carrying value of exploration and evaluation of assets at 31 December 2021 the directors are satisfied that the value of the intangible asset is not less than carrying value.

Segmental Analysis

	2021	2020
	€	€
Limerick	1,600,424	1,600,424
Oldcastle	-	-
Rest of Ireland	2,230,656	1,773,064
	3,831,080	3,373,488

5.    Share Capital and Share Premium

	2021	2020
	€	€
Authorised:
500,000,000 Ordinary shares of €0.0025 each	1,250,000	1,250,000
500,000,000 Deferred shares of €0.0075 each	3,750,000	3,750,000
	5,000,000	5,000,000

Deferred Shares - nominal value of €0.0075

		Share	Share
	Number	Capital	Premium
		€	€
At 1 January 2021	132,311,593	992,337	-
31 December 2021	132,311,593	992,337	-

Ordinary Shares - nominal value of €0.0025

Allotted, Called-Up and Fully Paid:

		Share	Share
	Number	Capital	Premium
		€	€
At 1 January 2020	132,311,593	1,323,116	6,209,190
Transfer to deferred shares	-	(992,337)	-
Issued during the financial year	164,733,333	411,833	396,491
At 31 December 2020	297,044,926	742,612	6,605,681
Issued during the financial year	8,937,500	22,344	74,564
31 December 2021	305,982,426	764,956	6,680,245

Movement in shares

On 19 January 2021, a total of 8,937,500 shares were issued on the exercise of 8,937,500 warrants at a price of 0.5p and 1.2p per share to provide additional working capital and fund development costs. 

6.    Share Based Payments

Equity-settled share-based payments are measured at fair value at the date of grant.

The Group plan provides for a grant price equal to the average quoted market price of the ordinary shares on the date of grant.  

OPTIONS

	2021	2021	2020	2020
	Options	Weighted average exercise price in pence	Options	Weighted average exercise price in pence
Outstanding at beginning of the financial year	13,100,000	1.22	2,800,000	2.276
Granted during the financial year	3,000,000	1.80	10,300,000	0.93
Outstanding at the end of the financial year	16,100,000	1.32	13,100,000	1.22
Exercisable at the end of the financial year	16,100,000	1.32	13,100,000	1.22

On 9 March 2021 a total of 3,000,000 options with an exercise price of 1.8p per option were granted to the directors with a fair value of €29,295. The fair value was calculated using the Black-Scholes valuation model.

The inputs into the Black-Scholes valuation model were as follows:

Grant 9 March 2021
Weighted average share price at date of grant (in pence)	1.0p
Weighted average exercise price (in pence)	1.8p
Expected volatility	116.32%
Expected life	7 years
Risk free rate	0.1%
Expected dividends	none

Expected volatility was determined by management based on their cumulative experience of the movement in share prices over the years.

The terms of the options granted do not contain any market conditions within the meaning of IFRS 2.

The Group capitalised expenses of €Nil (2020: €39,531) and expensed costs of €29,295 (2020: €42,679) relating to equity-settled share-based payment transactions during the financial year.

7.    Warrants

Fair Value
	2021 €	2020 €
At 1 January	906,198	18,644
FV of warrants issued during the year at grant date	-	445,725
FV of warrants exercised during the year	(68,010)	-
Movement in fair value	(678,516)	441,829
At 31 December	159,672	906,198

Number

	2021	2021	2020	2020
	Warrants	Weighted average exercise price in pence	Warrants	Weighted average exercise price in pence
Outstanding at beginning of the financial year	119,400,000	0.9	46,203,312	4.7
Granted during the financial year	-		125,400,000	0.9
Expired during the financial year	-		(46,203,312)	4.7
Exercised during the financial year	(8,937,500)	0.5	(6,000,000)	0.5
Outstanding and exercisable at the end of the financial year	110,462,500	0.9	119,400,000	0.9

On 19 January 2021 a total of 3,000,000 (2020: 6,000,000) warrants with an exercise price of 0.5p per warrant were exercised with a fair value of €27,665. On 31 December 2021 the fair value for the outstanding warrants was €75,857 (2020: €396,040). The gain due to the movement in fair value of €292,518 (2020: loss €217,001) was included in the Consolidated Statement of Comprehensive Income. The fair value was calculated using the Black-Scholes valuation model.

On 19 January 2021 a total of 5,937,500 warrants with an exercise price of 1.2p per warrant were exercised with a fair value of €40,345. On 31 December 2021 the fair value for the outstanding warrants was €83,815 (2020: €510,158). The gain due to the movement in fair value of €385,998 (2020: loss €510,158) was included in the Consolidated Statement of Comprehensive Income. The fair value was calculated using the Black-Scholes valuation model.

8.    Post Balance Sheet Events

On 22 February 2022, the Company announced that, pursuant to the receipt of warrant conversion notices, it had raised £150,400 from the issue of 30,080,000 ordinary shares of €0.0025 each at the exercise price of 0.5 pence per share.

On 28 April 2022, the Company announced that, pursuant to the receipt of warrant conversion notices, it had raised £46,600 from the issue of 9,320,000 ordinary shares of €0.0025 each at the exercise price of 0.5 pence per share.

9.    Annual General Meeting

The Company's Annual General Meeting will be held at held at the Hotel Riu Plaza The Gresham, 23 O'Connell Street Upper, North City Dublin, D01 C3W7, Ireland on 5 August 2022 at 10.00am.

General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2021.  The financial information for 2020 is derived from the financial statements for 2020 which have been delivered to the Companies Registration Office.  The auditors have reported on 2020 statements; their report was unqualified. The financial statements for 2021 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2021 will be mailed to all shareholders shortly and will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland.  The annual report will shortly be available for viewing at Arkle's website at www.arkleresources.com

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