ARKLE RESOURCES PLC

Quarterly Report • Jun 27, 2023

National Storage Mechanism | Additional information

RNS Number : 9532D

Arkle Resources PLC

27 June 2023

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.

27 June 2023

Arkle Resources PLC

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

Final Results for the Year Ended 31 December 2022

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 2022.

Chairman's Statement

Despite the market for junior exploration companies being friendless Arkle had a good exploration year. We discovered lithium bearing rocks on our Wicklow / Wexford ground and drilling by our partners, Group Eleven, on our Stonepark zinc licences identified a significant geological fault, while we expanded our overseas search for new projects in Battery Metals and Platinum Group Metals (PGMs) with the grant of three small licences in Zimbabwe.

During the period we raised £200,000 mainly from directors and associates. In recent months the Arkle share price has been volatile mainly due to one investor who purchased over 25 million shares equal to 6.8% of the issued equity only to sell off the block in large chunks a short time later.

Zinc

The main focus in the period under review was the Stonepark zinc project where seven holes were drilled. The drilling discovered a major fault zone in the south of the block of six licences and identified a significant and extensive zinc target.

Ireland is highly prospective for zinc. Over the past 60 years a number of world class large zinc mines have been brought into production and it is believed that more deposits remain to be discovered.

In the Stonepark area of Limerick, Arkle is in a joint venture with Group Eleven Resources Corp., a listed Canadian junior, where Arkle owns 23.44% and Group Eleven, 76.56%. Earlier drilling discovered an inferred resource of 5.1 million tons at a combined 11.3% zinc / lead. Though zinc / lead metal prices have come back from highs of over $4,000 a tonne to the current $2,000 plus, the value the ground is over $200 per ton of ore.

The licence block contains six licences covering 184sq km. In 2022 seven holes were drilled, including four early stage exploration holes which identified new mineralised trends. Three additional holes were targeted on previously identified areas, Carrickittle West, Carrickittle North and Stonepark West. A new major fault structure was identified at Carrickittle West. This is now a high priority zinc target at depth. Arkle has indicated to Group Eleven that it will contribute its share to the drilling on this block.

Stonepark remains a central asset in the Arkle portfolio. It lies adjacent to the massive Pallas Green zinc discovery estimated to contain over 40 million tons and also adjacent to the ongoing discoveries at Carrickittle made by our partner Group Eleven. Zinc is a critical metal in economic development. We believe the deposits in Limerick will be developed in the future.

Gold

Turning to our five licences at Wexford / Wicklow, covering 2,135 km, where we have been exploring the ground looking for commercial grades and quantities of gold. Significant sampling, trenching and drilling have repeatedly identified high grade veins. Getting continuity is the issue. The principal gold target is the Tombreen area now outlined as 1.5km long and 750 metres wide. Grades in this area have been up to 50 g/t.

Drilling in Wicklow is complicated. The gold is contained in veins and is "nuggety". Drilling can miss the veins and / or hit the veins and miss the nuggets. The answer is more drilling. Ideally Arkle would find a partner to take detailed exploration to the next level.

In 2016 Arkle discovered gold on a block of licences in Donegal. The block was licenced because the geology was similar to that of the large Dalradian gold deposit in adjacent Tyrone and it was believed, later confirmed, that there is a gold bearing trend from Northwest Ireland, through Ulster into Scotland. Drilling found exciting results. Some high grades but the gold is nuggety making analysis difficult.

The focus is on the Meenaragh prospect where drill ready targets have been identified in good grade gold bearing veins. Delays in renewing our licence application, meant the loss of two drilling seasons.

Lithium

Though our focus has been on zinc and gold, we are alive to other opportunities on our licence holdings. The rapid growth in the demand for batteries containing lithium has stretched the supply. Rising prices mean that previously uneconomic hard rock deposits of lithium containing rocks become commercial. It had long been known that the ground in Wexford / Wicklow area contained pegmatites which can contain lithium.

Companies immediately to the west of our ground have been actively searching for lithium for some time including Ganfeng, the world's leader in lithium. Arkle undertook a Proof of Concept sampling programme in the Southwest of our licence block. We were very pleased to discover pegmatites in a number of locations. Lithium was present though grades were not high.

A short follow up programme on a different part of the block found indicator minerals but no lithium. The data is being reviewed to decide on the next steps while we have applied for additional ground. The programme is at an early stage.

Overseas Interests

The lack of investor interest in Irish exploration led the board to look at overseas projects particularly in Battery Metals and PGMs and initially in sub-Saharan Africa where your directors have experience. We obtained ground in Zimbabwe, a major lithium producer but have faced delays in expanding the holding.

We reviewed a number of investment opportunities in the past year and in particular we are pursuing grassroot opportunities in lithium.

John Teeling

Chairman

26 June 2023

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
Megan Ray	+44 (0) 207 138 3204
Teneo
Luke Hogg

ARKLE RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

	2022 €	2021 €
Administrative expenses	(303,195)	(320,266)
	-	-
Loss from operations	(303,195)	(320,266)
Profit/(loss) due to fair value volatility of warrants	3,981	746,526
Profit/(loss) before tax	(299,214)	426,260
Tax expense	-	-
Profit/(loss) for the year	(299,214)	426,260
Total comprehensive income	(299,214)	426,260
Earnings per share attributable to the ordinary equity holders of the parent
	cents	cents
Profit/(Loss) per share - Basic & Diluted	(0.09)	0.14

ARKLE RESOURCES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

	2022 €	2021 €
Assets
Non-current assets
Intangible assets	3,991,023	3,831,080
Current assets
Other receivables	6,928	32,635
Cash and cash equivalents	199,990	79,678
	206,918	112,313
Total assets	4,197,941	3,943,393
Liabilities
Current liabilities
Trade and other liabilities	(325,799)	(233,872)
Warrants	(155,690)	(159,672)
Total liabilities	(481,489)	(393,544)
Net assets	3,716,452	3,549,849
Equity
Called-up Share capital - Deferred	992,337	992,337
Called-up Share capital - Ordinary	988,456	764,956
Share premium reserve	6,922,562	6,680,245
Share based payments reserve	156,494	156,494
Retained deficit	(5,343,397)	(5,044,183)
Total Equity	3,716,452	3,549,849

ARKLE RESOURCES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

	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	(5470,443)	2,997,386
Shares issued	-	22,344	74,564	-	-	96,908
Share-based payment	-	-	-	29,295	-	29,295
Profit for the year	-	-	-	-	426,260	426,260
At 31 December 2021	992,337	764,956	6,680,245	156,494	(5,044,183)	3,549,849
Shares issued	-	223,500	242,317			465,817
Share-based payment	-	-	-	-	-	-
Loss for the year					(299,214)	(299,214)
At 31 December 2022	992,337	988,456	6,922,562	156,494	(5,343,397)	3,716,452

ARKLE RESOURCES PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

	2022 €	2021 €
Cash flows from operating activities
Profit / (loss) for the year	(299,214)	426,260
Adjustments for
Share based payments charge	-	29,295
Fair Value movement of warrants	(3,981)	(746,526)
Foreign exchange	12,250	(25,527)
	(290,945)	(316,498)
Movements in working capital:
Decrease/(Increase) in trade and other receivables	25,707	(10,712)
Increase in trade and other payables	91,926	57,208
Net cash used in operating activities	(173,312)	(270,002)
Cash flows from investing activities
Payments for exploration and evaluation	(159,943)	(457,592)
Net cash used in investing activities	(159,943)	(457,592)
Cash flows from financing activities
Proceeds from issue of equity shares	465,817	96,908
Share issue expenses	-	-
Net cash generated from financing activities	465,817	96,908
Net cash increase/(decrease) in cash and cash equivalents	132,562	(630,686)
Cash and cash equivalents at the beginning of year	79,678	684,837
Exchange gains on cash and cash equivalents	(12,250)	25,527
Cash and cash equivalents at the end of the year	199,990	79,678

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 2021.  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

Basic earnings 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 earnings per share is computed by dividing the profit or 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 table sets forth the computation for basic and diluted earnings per share (EPS):

	2022 €	2021 €
Numerator
For basic and diluted EPS Loss after taxation	(299,214)	426,260
Denominator	No.	No.
For basic and diluted EPS	343,481,056	305,517,186
Basic EPS	(0.09c)	0.14c
Diluted EPS	(0.09c)	0.14c
Basic and diluted loss per share are the same as the effect of the outstanding share options and warrants is anti-dilutive.

3.    Going Concern

The Group incurred a loss for the financial year of €299,214 (2021: profit €426,260) and had net current liabilities of €274,571 (2021: net current liabilities €281,231) at the statement of financial position date leading to concern about the Company and Group's ability to continue as a going concern.

The Group had a cash balance of €199,990 (2021: €79,678) at the statement of financial position date.

Included in current liabilities is an amount of €217,500 (2021: €172,500) owed to key management personnel in respect of remuneration due at the balance sheet date. 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. 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. The directors are confident that additional capital can be raised as required. The Group raised £397,000 during the year from warrant exercises and a placing.

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 of assets and liabilities, if the Company or Group was unable to continue as a going concern.

4.    Intangible Assets

	2022 €	2021 €
Exploration and evaluation assets:
Cost:
At 1 January	3,831,080	3,373,488
Additions	159,943	457,592
Impairment	-	-
At 31 December	3,991,023	3,831,080
Carrying amount:
At 31 December	3,991,023	3,831,080

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 2022 was owned 23.44% (2021: 23.44%) by Limerick Zinc Limited (subsidiary of Arkle Resources plc) and 76.56% (2021: 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.

On 23 June 2022 the Company announced it had been granted three licences covering 163 hectres to prospect for Lithium in the Insiza District of the Matabeleland South Province of Zimbabwe. The Directors believe that these licences, which cover a small area, represent a low-cost entry into one of the largest lithium producing countries in the world.

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:

- uncertainties over development and operational risks;

- compliance with licence obligations;

-ability to raise finance to develop assets;

- liquidity risks; and

- going concern risks.

Should this prove unsuccessful the carrying value included in the statement of financial position would be written off to the statement of comprehensive income.

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 2022 the directors are satisfied that the value of the intangible asset is not less than carrying value.

Segmental Analysis       

	2022 €	2021 €
Limerick	1,705,480	1,600,424
Rest of Ireland	2,273,502	2,230,656
Zimbabwe	12,041	-
	3,991,023	3,831,080

5.    Trade payables

	2022 €	2021 €
Current assets:
Trade and other payables	96,299	42,872
Accruals	229,500	191,000
	325,799	233,872

It is the Group's normal practice to agree terms of transactions, including payment terms, with suppliers and provided suppliers perform in accordance with the agreed terms, it is the Group's policy that payment is made between 30 - 45 days.

Included in accruals are amounts due for directors' remuneration of €217,500 (2021: €172,500) accrued but not paid at year end.

The carrying value of trade and other payables approximates to their fair value.

6.    Share Capital and Share Premium

Authorised	2022 €	2021 €
1,000,000,000 Ordinary shares of €0.0025 each	2,500,000	2,500,000
500,000,000 Deferred shares of €0.0075 each	3,750,000	3,750,000
	6,250,000	6,250,000

Deferred Shares - nominal value of €0.0075
	Number	Share Capital €	Share Premium €
At 1 January 2021 and 2022	132,311,591	992,337	-
At 31 December 2021 and 2022	132,311,591	992,337	-
Ordinary Shares - nominal value of €0.0025
Allotted, called-up and fully paid:
	Number	Share Capital	Share Premium
		€	€
At 1 January 2021	297,044,926	742,612	6,605,681
Issued during the year	8,937,500	22,344	74,564
At 31 December 2021	305,982,426	764,956	6,680,245
Issued during the year	89,400,000	223,500	242,317
At 31 December 2022	395,382,426	988,456	6,922,562

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 a premium arising on the issue of shares. Share issue expenses are deducted against the share premium reserve when incurred.

Movement in shares

On 22 February 2022, a total of 30,080,000 shares were issued on the exercise of 30,080,000 warrants at a price of 0.5p per share to provide additional working capital and future development costs.

On 28 April 2022, a total of 9,320,000 shares were issued on the exercise of 9,320,000 warrants at a price of 0.5p per share to provide additional working capital and future development costs.

On 21 November 2022, a total of 50,000,000 shares were issued at a price of 0.4p per share to provide additional working capital and fund development costs.  For each share subscribed for, the investors also received one warrant to subscribe for an additional ordinary share at a price of 0.5p per share until 24 November 2024.

7.    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.

Share Options

	31 December 2022		31 December 2021
	Options	Weighted average exercise price in pence	Options	Weighted average exercise price in pence
Outstanding at beginning of year	16,100,000	1.32	13,100,000	1.22
Granted during the year	-	-	3,000,000	1.80
Expired during the year	-	-	-	-
Outstanding at end of year	16,100,000	1.32	16,100,000	1.32
Exercisable at end of year	16,100,000	1.32	16,100,000	1.32

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.

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

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

8.    Warrants

	2022 €	2021 €
Fair Value
At 1 January	159,672	906,198
FV of warrants issued during the year at grant date	155,690	-
FV of warrants exercised during the year	(72,192)	(68,010)
Movement in fair value	(87,480)	(678,516)
At 31 December	155,690	159,672

	2022 €	2021 €
Profit/(Loss) due to Fair Value Volatility of Warrants
Fair Value at 1 January	159,672	906,198
Less Fair Value at 31 December	155,690	159,672
Movement for the year	3,981	746,526

	31 December 2022		31 December 2021
	Number of Warrants	Weighted average exercise price in pence	Number of Warrants	Weighted average exercise price in pence
Outstanding at beginning of  year	110,462,500	0.90	119,400,000	0.90
Granted during the year	50,000,000	0.50	-	-
Expired during the year	(71,062,500)	0.90	-	-
Exercised during the year	(39,400,000)	0.50	(8,937,500)	0.50
Outstanding and exercisable at the end of the year	50,000,000	0.50	110,462,500	0.90

On 22 February 2022 a total of 30,080,000 warrants and on 28 April 2022 a total of 9,320,000 warrants with an exercise price of 0.5p per warrant were exercised with a fair value of €72,192. The movement in fair value of €72,192 was included to the Consolidated Statement of Comprehensive Income.

The balance of 2,000,000 warrants expired on 22 April 2022. On 7 September 2022 a total of 69,062,500 warrants with an exercise price of 1.2p per warrant expired. The movement in fair value of €87,480 was included to the Consolidated Statement of Comprehensive Income.

On 21 November, a total of 50,000,000 warrants with an exercise price of 0.5p per warrant were granted as part of the placing. The fair value was expensed to the Consolidated Statement of Comprehensive Income. The fair value was calculated using the Black-Scholes valuation model.

9.    Other Reserves

	Share Based Payment Reserve €
Balance at 1 January 2021	127,199
Granted during the year	29,295
Balance at 31 December 2021	156,494
Granted during the year	-
Balance at 31 December 2022	156,494

Share Based Payment Reserve

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

10.  Retained Deficit

	2022	2021
	£	£
Opening Balance	(5,044,183)	(5,470,443)
Profit/(Loss) for the year	(299,214)	426,260
Closing Balance	(5,343,397)	(5,044,183)

Retained Deficit

Retained deficit comprises of accumulated profits and losses incurred in the current and prior years.

11.  Post Balance Sheet Events

There were no material post balance sheet events affecting the Group.

12.  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 27 July 2023 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 2022.  The financial information for 2021 is derived from the financial statements for 2021 which have been delivered to the Companies Registration Office.  The auditors have reported on 2021 statements; their report was unqualified. The financial statements for 2022 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2022 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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