Annual Report (ESEF) • Jun 22, 2021
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Download Source File213800TBL26T6GO88M13-2020-12-31-T01.html 213800TBL26T6GO88M13 2020-01-01 2020-12-31 213800TBL26T6GO88M13 2019-01-01 2019-12-31 213800TBL26T6GO88M13 2018-12-31 213800TBL26T6GO88M13 2019-12-31 213800TBL26T6GO88M13 2018-12-31 ifrs-full:IssuedCapitalMember 213800TBL26T6GO88M13 2019-01-01 2019-12-31 ifrs-full:IssuedCapitalMember 213800TBL26T6GO88M13 2019-12-31 ifrs-full:IssuedCapitalMember 213800TBL26T6GO88M13 2018-12-31 ifrs-full:SharePremiumMember 213800TBL26T6GO88M13 2019-01-01 2019-12-31 ifrs-full:SharePremiumMember 213800TBL26T6GO88M13 2019-12-31 ifrs-full:SharePremiumMember 213800TBL26T6GO88M13 2018-12-31 ifrs-full:CapitalRedemptionReserveMember 213800TBL26T6GO88M13 2019-12-31 ifrs-full:CapitalRedemptionReserveMember 213800TBL26T6GO88M13 2018-12-31 ifrs-full:OtherReservesMember 213800TBL26T6GO88M13 2019-01-01 2019-12-31 ifrs-full:OtherReservesMember 213800TBL26T6GO88M13 2019-12-31 ifrs-full:OtherReservesMember 213800TBL26T6GO88M13 2018-12-31 ifrs-full:RetainedEarningsMember 213800TBL26T6GO88M13 2019-01-01 2019-12-31 ifrs-full:RetainedEarningsMember 213800TBL26T6GO88M13 2019-12-31 ifrs-full:RetainedEarningsMember 213800TBL26T6GO88M13 2018-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TBL26T6GO88M13 2019-01-01 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TBL26T6GO88M13 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TBL26T6GO88M13 2019-01-01 2019-12-31 ifrs-full:NoncontrollingInterestsMember 213800TBL26T6GO88M13 2019-12-31 ifrs-full:NoncontrollingInterestsMember 213800TBL26T6GO88M13 2020-12-31 213800TBL26T6GO88M13 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember 213800TBL26T6GO88M13 2020-12-31 ifrs-full:IssuedCapitalMember 213800TBL26T6GO88M13 2020-01-01 2020-12-31 ifrs-full:SharePremiumMember 213800TBL26T6GO88M13 2020-12-31 ifrs-full:SharePremiumMember 213800TBL26T6GO88M13 2020-12-31 ifrs-full:CapitalRedemptionReserveMember 213800TBL26T6GO88M13 2020-01-01 2020-12-31 ifrs-full:OtherReservesMember 213800TBL26T6GO88M13 2020-12-31 ifrs-full:OtherReservesMember 213800TBL26T6GO88M13 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember 213800TBL26T6GO88M13 2020-12-31 ifrs-full:RetainedEarningsMember 213800TBL26T6GO88M13 2020-01-01 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TBL26T6GO88M13 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 213800TBL26T6GO88M13 2020-01-01 2020-12-31 ifrs-full:NoncontrollingInterestsMember 213800TBL26T6GO88M13 2020-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:USD iso4217:USD xbrli:shares 1 | Pembridge Resources plc Contents Strategic Report 2 Chairman’s and Chief Executive’s statement 2 Principal Risks and Uncertainties and Key Performance Indicators 6 Corporate and Social Responsibility Report 9 Board of Directors and Senior Management 10 Directors’ Report 11 Governance Report 13 Directors’ Remuneration Report 16 Directors’ Responsibilities 19 Independent Auditor’s Report to the members of Pembridge Resources Plc 20 Consolidated Financial Statements 26 Consolidated Statement of comprehensive income 26 Consolidated Statement of ȴnancial position 27 Company Statement of ȴnancial position 28 Consolidated Statement of changes in equity 29 Company Statement of changes in equity 31 Consolidated Cash ȵoZ statement 32 Company Cash ȵoZ statement 33 Notes to the Financial Statements 34 Company Information 65 Company Information 65 Notice of Annual General Meeting 66 2 | Pembridge Resources plc | Strategic Report Chairman and Chief Executive’s statement We are pleased to present the report and Consolidated Financial Statements of Pembridge Resources Plc (“Pembridge” or “the Group”) and the company Financial Statements of Pembridge Resources Plc (“the Company”) for the year ended 31 December 2020. Introduction Having acquired Minto Explorations Ltd. (“Minto”) from Capstone Mining Corporation (“Capstone”) in 2019 and restarting the operation of the copper mine in October 2019 the Company Zas looking forZard to developing the project. The Covid-19 pandemic that moved most commodities prices doZnZards impacted the Minto project signiȴcantly. In the ȴrst half of 2020 Ze Zere facing the result of copper prices falling from US$2.79 at the end of 2019 to a loZ of US$2.10 on 23 March 2020. The strong support from Minto’s shareholders ensured that 2020 proved to be a year of success and groZth and established the foundation for realising the long-term value of Minto. During 2020 a successful inȴll drilling program Zas executed Zith the results being the basis for the NI 43-101 Preliminary Economic Assessment Technical Report being completed in early 2021 by JDS Energy & Mining Inc. Chairman and Chief Executive’s statement 3 | Pembridge Resources plc | Strategic Report Restructuring Minto shareholding and removing Pembridge ȴnancial obligations relating to Minto In light of the ȴnancial market conditions as a result of the Covid-19 pandemic and the potential for material cash calls on Pembridge the Company agreed Zith the other shareholders of Minto (collectively “the US Investors”) to remove certain future funding obligations of Pembridge and to restructure the Minto share oZnership. The Joint Advisory Committee of Minto (consisting of representatives from Pembridge and the US Investors) authorised a US$3 million capital call to fund Zorking capital Zhich Zas due to be paid by Pembridge in accordance Zith the Shareholders’ Agreement. Considering the potential cash needs of Minto during the ȴrst half of 2020 and the subsequent future ȴnancial commitments on Pembridge that this Zould impose as Zell as having undertaken a strategic revieZ the %oard of Pembridge concluded it Zas in the best interests of the Company to seek an agreement Zith the US Investors Zhereby the Company reduced its percentage oZnership in Minto in exchange for removing certain future ȴnancial liabilities thereby ensuring the ȴnancial stability of the Company. Pembridge reached an agreement Zith the US Investors that provided cash for Minto to meet its cash requirements as Zell as assist Pembridge’s liquidity in the unprecedented market conditions. The US Investors subscribed for neZ Class % shares in Minto to a value of US$3 million to support the short-term ȴnancial needs of Minto thereby ensuring its ability to continue to operate in the challenging times from the start of 2020. As a result of this investment into Minto by the US Investors, Pembridge’s economic interest Zas reduced from 33 to 11. In addition, the US Investors agreed to support a decision by the Minto Board of Directors for Minto to take over all of Pembridge’s future payment obligations on behalf of Minto Zith respect to the escroZ surety account (the “Control Account”). This action reduced the future ȴnancing commitments of Pembridge by CAD$3 million. Further, the US Investors also agreed to support a decision by the Minto Board of Directors for Minto to take over all future consideration payments due from Pembridge to Capstone Mining Corporation (“Capstone”) in accordance Zith the Share Sale and Purchase Agreement (“SPA”) dated 3 June 2019. Previously Pembridge had been expected to pay a minimum of US$5 million and up to US$20 million out of the income that it derived from Minto. On 16 April 2020 the Board of Directors approved the issuance and allotment of 11,175,499 neZ ordinary shares at a price of 3.3p each, raising proceeds of e368,000. To enable this share issue Zithin the rules of the London Stock Exchange the directors agreed to surrender their share options and the changes Zere made to the Convertible Loan Agreement Zith Pembridge’s Chairman and Chief Executive Oɝcer, Gati Al-Jebouri. Those changes included extension of the loan’s maturity to 31 December 2022 and removal of the right to convert to shares in the Company in return for Zhich the interest rate on the loan Zas increased from 8 to 10 per annum. Chairman and Chief Executive’s statement 4 | Pembridge Resources plc | Strategic Report Chairman and Chief Executive’s statement Minto operations During the year to 31 December 2020, 629,078 MT (2019 104,005 MT) of ore Zere processed, resulting in production of 24,646 MT (2019: 6,436 MT) of copper concentrate containing 8,089 MT (2019: 2,247 MT) of copper, 8,420 oz (2019: 2,413 oz) of gold and 74,025 oz (2019: 19,591 oz) of silver. USD$64.3 million (2019: US$7.1 million) Zas received in payments for production during the year to 31 December 2020, pursuant to the otake agreement Zith Sumitomo, of Zhich $5.4 million related to December 2019 production. The measures taken by the Canadian and Yukon government as a result of the COVID-19 pandemic have had signiȴcant impacts on Minto, including mandatory quarantines of employees and contractors entering the Yukon. Such quarantines have disrupted operations and caused above normal operating expenses but have enabled operations to continue Zhile ensuring the safety of the mine’s employees. During 2020, Minto took certain steps to mitigate risk, Zhich included increased and routine communication Zith the Yukon Government, adhering to a tZo-Zeek quarantine of employees arriving from outside of the Yukon and physical distancing measures at site. As a result of the close cooperation Zith the Yukon government, Minto is noZ able to have the quarantine of employees on site as opposed to in Whitehorse. A vaccination program has been implemented and by the end of Q2 2021 all employees accepting to be vaccinated Zill have been vaccinated. Shortly after taking over Minto, an o-take agreement for 55,000 tonnes of copper concentrate to be produced by the Minto mine Zas signed Zith Sumitomo Canada Limited (“Sumitomo”), a subsidiary of Sumitomo Corporation, (the “Agreement”). In September 2020, Minto signed a prepayment funding facility Zith Sumitomo of up to US$12.5 million to ȴnance the Zorking capital needs of Minto. 5 | Pembridge Resources plc | Strategic Report Financials 2020 is the ȴrst full year of production after the acquisition of Minto by Pembridge and the US Investors, compared to only three months after the mine restarted at the end of 2019. During the year the Group made a loss of US$27,275,000 (2019 – loss of US$13,087,000). The operating loss of $24,296,000 (2019: $11,818,000) comprised an exceptional expense of US$9,369,000 on revaluing the Capstone liability due to actual and expected increased copper prices (2019: exceptional expenses from the Minto acquisition of $2,347,000), administrative costs of the Company of $1,585,000 (2019: $3,049,000) and the operating loss from Minto of $13,342,000 (2019: loss of $6,422,000). The closing cash and cash equivalents balance is US$415,000 (2019: US$ 964,000). With the copper price having recovered to levels Zell above those seen in the ȴrst half of 2020, I and the Board are conȴdent in the ability of Minto’s management team to generate the value that Zas ȴrst identiȴed at the time of the acquisition of Minto. I am conȴdent that the next several years Zill prove to be extremely interesting Zith respect to the copper market conditions. I base this conȴdence on my expectation of continuous groZth in copper demand due to the energy transition process that is accelerating as Zell as the expected signiȴcant increase in electric vehicles that Zill be sold at the same time as many countries are starting or expanding major infrastructure projects that Zill require more and more copper. I look forZard to leading Pembridge on this challenging, and reZarding for our shareholders, path. 6 | Pembridge Resources plc | Strategic Report Principal risks and Uncertainties Nature of Risk How we manage it Funding Risk The Company and its subsidiary may need to secure additional funding to cover Zorking capital needs. Impact Shortage of cash for Head Oɝce and operational costs. The Company and its subsidiary have the capability to raise funds through equity and loans from shareholders. COVID-19 The COVID-19 pandemic has forced many businesses to close. Impact Closure of the mine Zould stop production, Zith consequential impact on Minto’s ȴnances and on its employees and suppliers. By folloZing government requirements on quarantining Zorkers, vaccinating those employees that agree to be vaccinated, and using preventative measures on the site, the mine has been able to remain open to date. Copper Price Risk The success of Minto is dependent partly on the market value of copper. Impact A high copper price Zill provide a good income and additional funding for mine development, Zhereas a loZ market price Zill reduce that income. Continuous monitoring of the forecast cash ȵoZ for Minto together Zith using hedging instruments for ȴxing the price of produced copper ensure that copper price risks are managed. In addition, continuous evaluation of cost optimisation opportunities is carried out to seek to reduce the operating costs and thus have the ability to operate proȴtably at loZer copper prices. Mine Development Risk The Group’s strategy is to further develop the area around the Minto Mine and create underground extensions to extend the life of the Minto Mine. Impact Such development requires funding, a lack of Zhich could delay progress and the resulting increased returns. As Minto’s operations become established the Company and its felloZ investors Zill have increased opportunities to obtain funding for its further development. Regulatory Risk Mining is an industry regulated for environmental and safety purposes. Impact Failure to comply Zith regulations can result in penalties. The Company has appointed experienced mine management Zhose knoZledge of the regulatory environment enables them to ensure compliance. 7 | Pembridge Resources plc | Strategic Report Principal risks and Uncertainties Nature of Risk How we manage it Human Resources Risk The achievement of the Group’s objectives Zill be dependent on the Company attracting and retaining qualiȴed and motivated sta. Impact The eɝciency of a particular aspect of the Group’s operations could be aected leading to reduced proȴtability. The Group has attracted and Zill retain a qualiȴed team by providing a competitive remuneration policy, Zhich includes ȴnancial performance incentives so as to align the team Zith the shareholders of the Group. Investment Risk The investments the Company makes fail to generate value. Impact The investments are Zritten o. Pembridge has a comprehensive investment policy and strategy, as outlined in its Financial Prospects Policy (“FPP”) procedures, that Zill assist in prudent measures being made to identify and perform due diligence on the investments that the Company makes. 8 | Pembridge Resources plc | Strategic Report Principal risks and Uncertainties Business Review & Development A revieZ of the business and its operations can be found in the Chairman’s and Chief Executive’s statement on page 1. Section 172(1) statement The Directors believe they have acted in the Zay most likely to promote the success of the Company for the beneȴt of its members as a Zhole, as required by s172 of the Companies Act 2006. A Director of a company is required to act in a Zay he considers, in good faith, Zould be most likely to promote the success of the company for the beneȴt of its members as a Zhole, having regard to: • Likely consequences of long term decisions • Interests of the employees • Need to further the group’s business relationships Zith suppliers, customers and others • Impact of operations on the community and environment • Maintaining reputation for high standards of business conduct • Need to act fairly The application of the s172 requirements can be demonstrated in relation to the some of the key decisions made during 2020: Response to Covid-19 related issues The Covid-19 pandemic impacted hoZ Ze operate the Minto mine as Zell as hoZ Ze organise our Zork in London. At the Minto mine all Canadian and Yukon government regulations have been strictly adhered to and all measures taken to ensure the health and safety of our employees. Prior to receiving approval to quarantine our employees on site, all sta Zould be quarantined in Whitehorse prior to commencing their Zork shifts on site. At the Minto site, speciȴc protocols Zere introduced to monitor everyone’s health and isolate sta if there are any health concerns. The London based team of the Company continued Zorking based at their homes Zith extensive use of conference calling technology and limited person to person meetings. All regulations set by the UK government have been adhered to Zith respect to Covid-19. The Covid-19 pandemic aected the Company ȴnancially in tZo Zays. The Minto mine remained open and producing copper concentrate throughout 2020, but the fall in copper prices early in the year reduced its income, so that it needed additional funding at a time Zhen it had been aiming to fund itself. The pandemic also caused a loss of market conȴdence that caused the Company’s share price to fall and lenders to be more cautious than before, so that the Company Zas not able to raise further funds as readily as had been expected Zhen its shares Zere re-listed at the end of 2019. To address these challenges, the Company re-negotiated its agreement Zith its co-investors in Minto as described above and the Company also raised neZ equity of e368,000 from existing shareholders in May 2020. A further e570,000 of equity Zas raised in early 2021 to fund the Company’s oZn operations. Involving the local community As a company operating in the Yukon, Minto engages Zith the First Nations community in the operations & support functions of the mine, providing much needed employment and Zider economic beneȴts to the local communities. The Pembridge Board of Directors fully supports all initiatives to continue strengthening the relationship Zith the Yukon government and the Selkirk First Nation leadership. By order of the Board Gati Al-Jebouri &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU 17 May 2021 9 | Pembridge Resources plc | Corporate and Social Responsibility Report Pembridge is committed to complying Zith all Health and Safety, environmental and social legislation and protecting the health and general Zellbeing of its employees. It is committed to preserving the environment. Environment As a mining-focused company, concern for the environment is of utmost importance to Pembridge. It is our policy to reduce to a minimum the potential environmental impact of our activities and have a positive impact on the areas in Zhich Ze operate. Health, Safety and Security The health, safety and security of the personnel and communities in Zhich Ze operate takes priority in the management of our operations. Our goal is to prevent injury and ill health to employees and contractors by providing a safe and healthy Zorking environment and by minimising risks associated Zith occupational hazards. The monthly report from the Minto mine to its Board highlights injuries as a performance measure. Business Ethics Pembridge is committed to carrying out all its operations Zith high moral and legal standards. Pembridge has an anti-corruption and anti-bribery policy Zhich are in line Zith the requirements of the UK Bribery Act and equivalent legislation in other countries Zhere it operates. Sta and contractors are made aZare of their obligations both on recruitment and by periodical updates. The Strategic Report (comprising the Chairman’s and Chief Executive’s statement and principal risks and uncertainties) on pages 2-8 Zas approved by the Board of Directors and Zas signed on its behalf by Gati Al- Jebouri, Chairman of the Board. By order of the Board Gati Al-Jebouri &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU 17 May 2021 Corporate and Social Responsibility Report (CSR) 10 | Pembridge Resources plc | Board of Directors and Senior Management David James, &KLHI)LQDQFLDO2ɝFHUDQG&RPSDQ\6HFUHWDU\ David is a Chartered Accountant, having qualiȴed Zith KPMG in 1995. David has had a varied career including time spent in Budapest, Hungary and in blue chip multinational groups, folloZed by 10 years running his oZn business as a consolidation and reporting specialist, providing ȴnancial reporting services mainly to multinational listed companies before joining the Company in February 2020. Board of Directors and Senior Management Gati Al-Jebouri, &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU Mr Al-Jebouri, Zho Zas born in Bulgaria in 1969, graduated from the University of Bristol Zith a Civil Engineering degree in 1990 and from the Institute of Chartered Accountants as a chartered accountant in 1994. In 2001 he Zas appointed Deputy Minister of Energy of Bulgaria and in 2002 Bulgaria’s First Deputy Minister of Finance. His varied career has included Zorking for the accountancy ȴrm KPMG in London and Bulgaria until being recruited to LUKOIL, Zhere he soon became Director of investment and Finance in the London oɝce. In 2003 he became Chief Financial Oɝcer of LITASCO (LUKOIL International Trading and Supply Company), Zhere he rose to Chief Executive Oɝcer tZo years later. In 2010 he became Executive Director for Finance and Marketing of LUKOIL Mid East Ltd and in 2016 Zas promoted to Vice President LUKOIL and Head of Middle East Upstream. He has been a Non-Executive Director since 2017 and became Chairman and Chief Executive Oɝcer on 19 September 2019. Frank McAllister, 1RQ([HFXWLYH'LUHFWRU With over 50 years’ industry experience, Frank McAllister has held various senior and Board positions in a number of metals and mining companies. He Zorked Zith ASARCO Incorporated for 33 years during Zhich he became Chief Financial Oɝcer in 1982 and then Executive Vice President of Copper Operations in 1993. Eventually he became ASARCO’s President and Chief Operating Oɝcer before becoming Chairman and Chief Executive Oɝcer in 1999. In 1996 he became an Independent Director of Clis Natural Resources Inc and its Lead Director from 2004 to 2013. During the same period, he Zas also Chairman, CEO and a Director at StillZater Mining Co, and served as President of the National Mining Association during 2012 and 2013. Frank holds an MBA from NeZ York University, Bachelor of Science in Finance from the University of Utah and attended the Advanced Management Program at Harvard Business School. Guy Le Bel, 1RQ([HFXWLYH'LUHFWRU Guy brings more than 30 years of international experience in strategic and ȴnancial mine planning to the Pembridge team. He is currently CEO of Aquila Resources Ltd. He Zas previously CEO and CFO of Golden Queen Mining Ltd, and, earlier, Zas Vice President Evaluations for Capstone Mining Corp, Director of Golden Queen Mining, RedQuest Capital Corp and Zas VP, Business Development at Quadra Mining Ltd. He also held business advisory, strategy and planning, business valuation, and ȴnancial planning management roles at BHP Billiton Base Metals Ltd., Rio Algom Ltd. and Cambior Inc. He has extensive experience across precious and base metals industries in the Americas. Guy holds an MBA Finance from École des Hautes Études Commerciales, a Master Applied Sciences, Mining Engineering - University of British Columbia and a B.Sc. Mining Engineering from Université Laval. 11 | Pembridge Resources plc | Directors’ Report The Directors present their report and the audited Financial Statements for the year ended 31 December 2020. General information about the Company is provided in note 1 to the Financial Statements. Principal activity The principal activity of Pembridge is to operate as a base and precious metals focussed holding Company. The principal activity of its main subsidiary, Minto Explorations Ltd, is copper mining. Business review and future development A revieZ of the business and future developments of the Group is included Zithin the Chairman and Chief Executive’s statement on pages 1 and 2, Zhich forms part of the Strategic Report. Results and dividends During the year the Group made a loss of US$27,275,000 (2019 – loss of US$13,087,000). The loss incurred during the year consists of the operating loss generated by Minto, a loss on mark-to-market revaluation of the Capstone liability, costs of running the head oɝce in London, and associated listing and regulatory requirements. No dividends Zere paid during the year and the Directors do not recommend payment of a ȴnal dividend (2019: $nil). Going concern The Financial Statements have been prepared on a going concern basis, Zhich assumes that the Company and Group Zill continue operating in the foreseeable future and Zill be able to service their debt obligations, realise their assets and discharge their liabilities as they fall due. The Company and Minto both have a planning, budgeting and forecasting process to determine the funds required to support their operations and expansionary plans. The Company raised neZ equity in January 2021, Zhich is expected to support its operations until it starts to receive repayments from Minto of its inter-company balance. At 31 December 2020, Minto had cash of US$398,000 and available capacity of US$ 9.5 million under the prepayment facility Zith Sumitomo Canada Limited. The Group’s ability to continue as a going concern is dependent on their ability to obtain additional funding and the successful development of their existing assets in order to meet their planned business objectives. HoZever, because there can be no assurance of this funding or the Group’s ability to generate positive cash ȵoZs, a material uncertainty exists Zhich may cast doubt on the Group’s ability to continue as a going concern. At present the Group believes that there should be no signiȴcant material disruption to its mining operations from COVID-19, but the Board continues to monitor these risks and Minto’s business continuity plans. Having prepared forecasts based on current resources, assessing methods of obtaining additional ȴnance and assessing the possible impact of COVID-19, the Directors believe the Group and Company have suɝcient resources to meet its obligations for a period of 12 months from the date of approval of these Financial Statements. Taking these matters into consideration, the Directors continue to adopt the going concern basis of accounting in preparing these Financial Statements. The Financial Statements do not include the adjustments that Zould be required should the going concern basis of preparation no longer be appropriate. Post reporting date events These are set out in note 33 to the ȴnancial statements. Directors The Directors Zho served during the year ended 31 December 2020 and up to the date of signing the Financial Statements Zere as folloZs: Gati Al-Jebouri Chairman and Chief Executive Oɝcer Francis McAllister Non-Executive Director Guy Le Bel Non-Executive Director Substantial shareholders As at 31 December 2020, the total number of issued ordinary shares Zith voting rights in the Company Zas 74,406,993. Details of the Company’s capital structure and voting rights are set out in Note 24 to the Financial Statements. The Company has been notiȴed of the folloZing interests of 3 per cent or more in its issued share capital on the date these Financial Statements Zere approved by the Board. Party Name Number of Ordinary Shares % of Share Capital Gati Al-Jebouri 18,418,754 20.7 Jonathan Armstrong 6,012,121 6.8 Frank McAllister 4,663,540 5.2 Guy Le Bel 3,073,545 3.5 Richard Calleri 5,424,242 6.1 Ruggero Maman 5,424,242 6.1 Directors’ Report 12 | Pembridge Resources plc | Directors’ Report Capital structure The Company’s capital consists of ordinary shares Zhich rank pari passu in all respects and are traded on the Standard segment of the Main Market of the London Stock Exchange. There are no restrictions on the transfer of securities in the Company or restrictions on voting rights and none of the Company’s shares are oZned or controlled by employee share schemes. There are no arrangements in place betZeen shareholders that are knoZn to the Company that may restrict voting rights, restrict the transfer of securities, result in the appointment or replacement of Directors, amend the Company’s articles of association or restrict the poZers of the Company’s Directors, including in relation to the issuing or buying back by the Company of its shares or any signiȴcant agreements to Zhich the Company is a party that take eect after, or terminate upon, a change of control of the Company folloZing a takeover bid, or arrangements betZeen the Company and its Directors or employees providing for compensation for loss of oɝce or employment (Zhether through resignation, purported redundancy or otherZise) that may occur because of a takeover bid. Directors’ indemnities Pembridge maintained liability insurance for its Directors and oɝcers during the period and also as at the date of approval of the Directors’ Report. Financial instruments The ȴnancial risk management policies and objectives are set out in detail in Notes 28 and 30 of the Financial Statements. Information on exposure to risks Principal risks and uncertainties are discussed in the Strategic Report on page 6, Zhile liquidity risks are covered in Note 28. Greenhouse gas emissions The Company consumed less than 40,000 KWh of energy in the United Kingdom during the period for Zhich the Directors’ Report is prepared and there is no local requirement that Minto report its oZn energy consumption, therefore the Group is exempt from the requirement to disclose its greenhouse gas and other emission producing sources under the Companies Act 2006 (Strategic Report and Directors report) Regulations 2014. Corporate Governance The Governance Report is disclosed on pages 13 to 15. Statement as to disclosure of information to auditor The Directors Zho Zere in oɝce on the date of approval of these Financial Statements have conȴrmed, as far as they are aZare, that there is no relevant audit information of Zhich the auditors are unaZare. Each of the Directors have conȴrmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aZare of any relevant audit information and to establish that it has been communicated to the auditor. Auditor The auditors, PKF Littlejohn LLP, have expressed their Zillingness to continue in oɝce and a resolution that they be re-appointed Zill be proposed at the general meeting. By order of the Board Gati Al-Jebouri &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU 17 May 2021 Directors’ Report 13 | Pembridge Resources plc | Governance Report Introduction Pembridge Resources Plc recognises the importance of, and is committed to, high standards of Corporate Governance. At the date of this Report, and Zhilst the Company is not formally required to comply Zith the UK Corporate Governance Code, the Company Zill try to observe, Zhere practical, the requirements of the UK Corporate Governance Code. The UK Corporate Governance Code can be found at frc.org.ukour-Zork publications/Corporate-Governance. The Company Zill comply Zith QCA Code, as published by the Quoted Companies Alliance, to the extent they consider appropriate in light of the Company’s size, stage of development and resources. The Company is currently a small company Zith 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 betZeen 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. Set out beloZ are the Company’s corporate governance practices for the year ended 31 December 2020. Leadership The Company is headed by an eective Board Zhich is collectively responsible for the long-term success of the Company. 7KHUROHRIWKH%RDUG - The Board sets the Company’s strategy, ensuring that the necessary resources are in place to achieve the agreed strategic priorities, and revieZs management and ȴnancial performance. It is accountable to shareholders for the creation and delivery of strong, sustainable ȴnancial performance and long-term shareholder value. To achieve this, the Board directs and monitors the Company’s aairs Zithin a frameZork of controls Zhich enable risk to be assessed and managed eectively. The Board also has responsibility for setting the Company’s core values and standards of business conduct and for ensuring that these, together Zith the Company’s obligations to its stakeholders, are Zidely understood throughout the Company. %RDUG0HHWLQJV- 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 revieZs of the business are conducted. Additional meetings and conference calls are arranged to consider matters Zhich require decisions outside the scheduled meetings. During the year, the Board met on 17 occasions. Outside the scheduled meetings of the Board, the Directors maintain frequent contact Zith 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. 0DWWHUVUHVHUYHGVSHFLȴFDOO\IRU%RDUG- The Board has a formal schedule of matters reserved that can only be decided by the Board. The key matters reserved are the consideration and approval of; - The Company’s overall strategy; - Financial Statements and dividend policy; - Management structure including succession planning, appointments and remuneration; material acquisitions and disposal, material contracts, major capital expenditure projects and budgets; - Capital structure, debt and equity ȴnancing and other matters; - Risk management and internal controls; - The Company’s corporate governance and compliance arrangements; and - Corporate policies. 6XPPDU\RIWKH%RDUGȇVZRUNLQWKH\HDUȂ During the year, the Board considered all relevant matters Zithin its remit, but focused in particular on the liquidity and ȴnancial stability of both the Company and Minto under diɝcult conditions. Certain other matters are delegated to the Board Committees, namely the Audit and Remuneration Committees. Attendance at meetings: Member Meetings attended Francis McAllister 17 Guy Le Bel 17 Gati Al-Jebouri 17 All Directors attended 100 of Board meetings they Zere entitled to attend during the period. The Board is pleased Zith the high level of attendance and participation of Directors at Board and committee meetings. Governance Report 14 | Pembridge Resources plc | Governance Report The Chairman sets the Board Agenda and ensures adequate time for discussion. Non-executive Directors - The non-executive Directors bring 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 (Zhere appointed) and to monitor the performance of the management team in the delivery of the agreed objectives and targets. Non-executive Directors are initially appointed for a term of three years Zhich may, subject to satisfactory performance and re-election by shareholders, be extended by mutual agreement. 2WKHUJRYHUQDQFHPDWWHUV - All of the Directors are aZare that independent professional advice is available to each Director in order to properly discharge their duties as a Director. In addition, each Director and Board Committee has access to the advice of the Company Secretary. 7KH&RPSDQ\6HFUHWDU\ - The Company Secretary role is carried out by the Chief Financial Oɝcer. Eectiveness The Board comprises of a combined Chairman and Chief Executive Oɝcer and tZo independent non- executive Directors. Biographical details of the Board members are set out on page 10 of this report. The Directors are of the vieZ that the Board and its committees consist of Directors Zith an appropriate balance of skills, experience, independence and diverse backgrounds to enable them to discharge their duties and responsibilities eectively. ΔQGHSHQGHQFH- The Board considers each of the non-executive Directors to be independent in character and judgement. $SSRLQWPHQWV – the Board is responsible for revieZing and the structure, size and composition of the Board and making recommendations to the board Zith regards to any required changes. &RPPLWPHQWV – All Directors have disclosed any signiȴcant commitments to the Board and conȴrmed that they have suɝcient time to discharge their duties. ΔQGXFWLRQ – All neZ Directors received an induction as soon as practical on joining the Board. &RQȵLFWVRILQWHUHVW- A Director has a duty to avoid a situation in Zhich he or she has, or can have, a direct or indirect interest that conȵicts, or possibly may conȵict Zith the interests of the Company. The Board had satisȴed itself that there is no compromise to the independence of those Directors Zho have appointments on the Boards of, or relationships Zith, companies outside the Company. The Board requires Directors to declare all appointments and other situations Zhich could result in a possible conȵict of interest. %RDUGSHUIRUPDQFHDQGHYDOXDWLRQ – The company has a policy of appraising Board performance annually. Having revieZed various approaches to Board appraisal, the Company has concluded that for a Company of its current scale, an internal process of regular face to face meetings is most appropriate, in Zhich all Board members discuss any issues as and Zhen they arise in relation to the Board or any individual member’s performance. Although the Board consists of only male Directors, the Board supports diversity in the Boardroom and the Financial Reporting Council’s aims to encourage such diversity. The folloZing table sets out a breakdoZn by gender at 31 December 2020: Male Female Directors 3 - Senior Managers 1 - Accountability The Board is committed to providing shareholders Zith a clear assessment of the Company’s position and prospects. This is achieved through this report and as required other periodic ȴnancial and trading statements. RLQJFRQFHUQ - The Group’s and Company’s business activities, together Zith factors likely to aect its future operations, ȴnancial position, and liquidity position are set out in the Directors’ Report and the Principal risks and Uncertainties sections of the Strategic Report. In addition, the notes to Financial Statements discloses the Group’s and Company’s ȴnancial risk management practices Zith respect to its capital structure, liquidity risk, foreign exchange risk, and other related matters. Governance Report 15 | Pembridge Resources plc | Governance Report The Directors, having made due and careful enquiry, are of the opinion that the Group and Company have adequate Zorking capital to execute their operations and have the ability to access additional ȴnancing, if required, over the next 12 months. The Directors, therefore, have made an informed judgement, at the time of approving Financial Statements, that there is a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for the foreseeable future. As a result, the Directors have continued to adopt the going concern basis of accounting in preparing the annual Financial Statements. ΔQWHUQDOFRQWUROV - The Board of Directors revieZs the eectiveness of the Company’s system of internal controls in line Zith the requirement of the Code. The internal control system is designed to manage the risk of failure to achieve its business objectives. This covers internal ȴnancial and operational controls, compliance and risk management. The Company has necessary procedures in place for the year under revieZ and up to the date of approval of the Annual Report and Financial Statements. The Directors acknoZledge their responsibility for the Company’s system of internal controls and for revieZing its eectiveness. The Board conȴrms the need for an ongoing process for identiȴcation, evaluation and management of signiȴcant risks faced by the Company. The Directors carry out a risk assessment before signing up to any commitments. The Audit Committee is made up of the tZo non- executive directors and regularly revieZs and reports to the Board on the eectiveness of the system of internal control. Given the size of the Company and the relative simplicity of the systems, the Board considers that there is no current requirement for an internal audit function. The procedures that have been established to provide internal ȴnancial control are considered appropriate for a Company of its size and include controls over expenditure, regular reconciliations and management accounts. The Directors are responsible for taking such steps as are reasonably available to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. Remuneration A Remuneration Committee Zas established during 2019 and is made up of the tZo non-executive directors. Remuneration paid to Directors in the period under revieZ is disclosed in the Directors’ Remuneration Report. Nomination Currently due to the size of the Company there is no Nomination Committee. Shareholder relations &RPPXQLFDWLRQDQGGLDORJXH– Open and transparent communication Zith shareholders is given high priority and there is regular dialogue Zith institutional investors, as Zell as general presentations made at the time of the release of the annual and interim results. All Directors are kept aZare of changes in major shareholders in the Company and are available to meet Zith shareholders Zho have speciȴc interests or concerns. The Company issues its results promptly to individual shareholders and also publishes them on the Company’s Zebsite: ZZZ.pembridgeresources.com. Regular updates to record neZs in relation to the Company are included on the Company’s Zebsite. Shareholders and other interested parties can subscribe to receive these neZs updates by email by registering online on the Zebsite free of charge. The Directors are available to meet Zith institutional shareholders to discuss any issues and gain an understanding of the Company’s business, its strategies and governance. Meetings are also held Zith the corporate governance representatives of institutional investors Zhen requested. $QQXDOHQHUDO0HHWLQJ- At an AGM individual shareholders are normally given the opportunity to put questions to the Chairman and to other members of the Board that may be present although, due to the COVID-19 pandemic, physical attendance at the AGM is not possible in 2021. Notice of the AGM is sent to shareholders at least 21 Zorking days before the meeting. Details of proxy votes for and against each resolution, together Zith the votes Zithheld, are announced to the London Stock Exchange and are published on the Company’s Zebsite as soon as practical after the meeting. Gati Al-Jebouri &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU 17 May 2021 Governance Report 16 | Pembridge Resources plc | Directors’ Remuneration Report During 2019 the Company put in place a remuneration committee comprising its tZo non-executive directors. The items included in this report are unaudited unless otherZise stated. Statement of Pembridge Resources Plc’s policy on Directors’ remuneration The Company’s policy is to maintain levels of remuneration so as to attract, motivate, and retain Directors and Senior Executives of the highest calibre Zho can contribute their experience to deliver industry leading performance Zith the Company’s operations. Currently Director’s remuneration is not subject to speciȴc performance targets. In 2020, the Company implemented a remuneration policy so that a meaningful proportion of Executive and Senior Management’s remuneration is structured so as to link reZards to corporate and individual performance, align their interests Zith those of shareholders and to incentivise them to perform at the highest levels. No Director takes part in any decision directly aecting their oZn remuneration. Directors’ remuneration The Directors Zho held oɝce at 31 December 2020 and Zho had beneȴcial interests in the ordinary shares of the Company are summarised as folloZs: Name of Director Position No.of shares held Gati Al-Jebouri Chairman and Chief Executive Oɝcer 15,418,754 Francis McAllister Non-Executive Director 4,663,540 Guy Le Bel Non-Executive Director 2,823,545 The Directors entered into service agreements at the time of the Company’s admission to the main market in August 2018. Mr. Al-Jebouri entered into a neZ service agreement Zhen he became Chairman and Chief Executive Oɝcer on 19 September 2019. Details of Directors’ emoluments and of payments made for professional services rendered are set out beloZ. Remuneration components For the year ended 31 December 2020 salaries, fees and share based payments Zere the main components of remuneration, Zith health insurance also for the Chief Executive Oɝcer. This is expected to continue in 2021. • Salaries and fees • Health insurance • Pensions • Share Incentive arrangements Directors’ Remuneration Report 17 | Pembridge Resources plc | Directors’ Remuneration Report Directors’ Remuneration Report Directors’ emoluments and compensation (audited) Set out beloZ are the emoluments of the Directors for the years ended 31 December 2020 and 2019: 2020 Fees US$’000 Bonus US$’000 Share based payments US$’000 Health insurance US$’000 Redundancy Pay US$’000 Total US$’000 Francis McAllister 26 - - - - 26 Gati Al-Jebouri 301 - - 16 - 317 Guy Le Bel 26 - - - - 26 Total 353 - - 16 - 369 2019 Fees US$’000 Bonus US$’000 Share based payments US$’000 Health insurance US$’000 Redundancy Pay US$’000 Total US$’000 Francis McAllister - - - - - - David Charles Linsley 155 501 - 13 483 1,152 Gati Al-Jebouri 91 501 - 3 - 595 Guy Le Bel - 250 - - - 250 Total 246 1,252 - 16 483 1,997 Directors beneȴcial share interests (audited) The interests of the Directors Zho served during the year in the share capital of the Company at 31 December 2020 and at the date of this report or their resignation (if earlier) Zere as folloZs: Name of Director Number of ordinary shares held at 31 December 2020 Number of ordinary shares held as at the date of this report Number of options / warrants Number of share options / warrants vested but unexercised Francis McAllister 4,663,540 4,663,540 1,395,833 - Guy Le Bel 2,823,545 3,073,545 1,395,833 - Gati Al-Jebouri 15,418,754 18,418,754 2,235,000 - 18 | Pembridge Resources plc | Directors’ Remuneration Report Total pension entitlements (audited) The Company currently has a statutory Zorkplace pension scheme in place but did not pay pension amounts in relation to any Directors. The Company has not paid out any excess retirement beneȴts to any Directors or past Directors. Payments to past Directors (audited) The Company has not paid any compensation to past Directors. Payments for loss of oɝce (audited) No payments Zere made to Directors for loss of oɝce during the year. Consideration of shareholder views 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. Policy for new appointments Base salary levels Zill take into account market data for the relevant role, internal relativities, the individual’s experience and their current base salary. Where an individual is recruited at beloZ market norms, they may be re-aligned over time (e.g. tZo to three years), subject to performance in the role. Beneȴts Zill generally be in accordance Zith the approved policy. For external and internal appointments, the Board may agree that the Company Zill meet certain relocation and/or incidental expenses as appropriate. Policy on payment for loss of oɝce Payment for loss of oɝce Zould be determined by the remuneration committee once appointed, taking into account contractual obligations. Other matters The Company does not currently have any annual or long-term incentive schemes in place for any of the Directors and as such there are no disclosures in this respect. Approved on behalf of the Board Gati Al-Jebouri &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU 17 May 2021 Directors’ Remuneration Report 19 | Pembridge Resources plc | Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance Zith applicable laZ and regulations. Company laZ requires the Directors to prepare Financial Statements for each ȴnancial year. Under that laZ the Directors have elected to prepare the Group and Company Financial Statements in accordance Zith international accounting standards in conformity Zith the Companies Act 2006 and as regards the Company Financial Statements, as applied in accordance Zith the provisions of the Companies Act 2006. Under Company laZ the Directors must not approve the Financial Statements unless they are satisȴed that they give a true and fair vieZ of the state of aairs of the Group and the Company and of the proȴt or loss of the Group and Company for that period. In preparing these Financial Statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state Zhether applicable international accounting standards in conformity Zith the Companies Act 2006 have been folloZed, subject to any material departures disclosed and explained in the Financial Statements; and • prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group and Company Zill continue in business. The Directors are responsible for keeping adequate accounting records that are suɝcient to shoZ and explain the Group’s and Company’s transactions and disclose Zith reasonable accuracy at any time the ȴnancial position of the Group and Company and enable them to ensure that the Financial Statements and the Directors’ Remuneration Report comply Zith the requirements of the Companies Act 2006 and, as regards the Group Financial Statements, international ȴnancial reporting standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union. 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. Website publication The Directors are responsible for the maintenance and integrity of the corporate and ȴnancial information included on the Company’s Zebsite. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may dier from legislation in other jurisdictions. Directors’ Responsibility Statement Pursuant to Disclosure and Transparency Rules Each of the Directors, Zhose names and functions are listed on page 10, conȴrm that, to the best of their knoZledge and belief: • the Financial Statements have been prepared in accordance Zith international ȴnancial reporting standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union, and give a true and fair vieZ of the assets, liabilities, ȴnancial position and loss of the Group and Company; and • the annual report and Financial Statements, including the Business revieZ, includes a fair revieZ of the development and performance of the business and the position of the Group and Company, together Zith a description of the principal risks and uncertainties that they face. Directors’ responsibilities 20 | Pembridge Resources plc | Independent Auditor’s Report to the members of Pembridge Resources Plc Opinion We have audited the ȴnancial statements of Pembridge Resources plc (the ȆParent Company’) and its subsidiaries (the ȆGroup’) for the year ended 31 December 2020 Zhich comprise the 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 Cash FloZ Statements and notes to the ȴnancial statements, including signiȴcant accounting policies. The ȴnancial reporting frameZork that has been applied in their preparation is applicable laZ and international accounting standards in conformity Zith the requirements of the Companies Act 2006 and as regards the Parent Company ȴnancial statements, as applied in accordance Zith the provisions of the Companies Act 2006. In our opinion: • the ȴnancial statements give a true and fair vieZ of the state of the Group’s and of the Parent Company’s aairs as at 31 December 2020 and of the Group’s and Parent Company’s loss for the year then ended; • the Group ȴnancial statements have been properly prepared in accordance Zith international accounting standards in conformity Zith the requirements of the Companies Act 2006; • the Parent Company ȴnancial statements have been properly prepared in accordance Zith international accounting standards in conformity Zith the requirements of the Companies Act 2006 and as applied in accordance Zith the provisions of the Companies Act 2006; and • the ȴnancial statements have been prepared in accordance Zith the requirements of the Companies Act 2006; and as regard to the Group ȴnancial statements, international ȴnancial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. Basis for opinion We conducted our audit in accordance Zith International Standards on Auditing (UK) (ISAs (UK)) and applicable laZ. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the ȴnancial statements section of our report. We are independent of the Group and Parent Company in accordance Zith the ethical requirements that are relevant to our audit of the ȴnancial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and Ze have fulȴlled our other ethical responsibilities in accordance Zith these requirements. We believe that the audit evidence Ze have obtained is suɝcient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draZ attention to note 2 in the ȴnancial statements, Zhich indicates that the Group’s and Parent Company’s ability to continue in operation as a going concern is dependent on its ability to obtain additional funding and successfully develop existing assets in order to meet commitments and Zorking capital requirements. As stated in note 2, these events or conditions, along Zith the other matters as set forth in that note, indicate that a material uncertainty exists that may cast signiȴcant doubt on the Group’s and Parent Company’s ability to continue as a going concern. Our opinion is not modiȴed in respect of this matter. In auditing the ȴnancial statements, Ze have concluded that the director’s use of the going concern basis of accounting in the preparation of the ȴnancial 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 revieZing forecast ȴnancial information at the parent company and operating subsidiary level, and obtaining an understanding of future funding requirements, over a period of 12 months from the date of approval of the ȴnancial statements. Our responsibilities and the responsibilities of the directors Zith respect to going concern are described in the relevant sections of this report. Independent Auditor’s Report to the Members of Pembridge Resources Plc 21 | Pembridge Resources plc | Independent Auditor’s Report to the members of Pembridge Resources Plc Our application of materiality Materiality 2020 Materiality 2019 Basis for materiality Group - $701,000 Group - $660,000 Average of 1% of revenue and 5% of loss before tax Company - $88,100 Company - $130,000 5% of loss before tax Materiality is a key concept in the context of an audit. In providing an opinion on Zhether the ȴnancial statements give a Ȇtrue and fair’ vieZ, Ze are providing an opinion on Zhether the ȴnancial statements as a Zhole are free from material misstatement Zhether due to fraud or error. Materiality is an expression of the relative signiȴcance of a particular matter in the context of the ȴnancial statements as a Zhole. An item, either individually or in aggregate, is considered material if omitting it or misstating it could reasonably be expected to inȵuence decisions that users make on the basis of an entity’s ȴnancial statements. Materiality has both quantitative and qualitative characteristics. It depends on the size or nature of the item or error judged in the particular circumstances of its omission or misstatement. We also determine a level of performance materiality Zhich Ze use to assess the extent of testing needed to reduce to an appropriately loZ level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the ȴnancial statements as a Zhole. Performance materiality for the group ȴnancial statements Zas set at $490,700 (2019: $462,000) and the parent company Zas set at $61,670 (2019: $91,000), being 70 of materiality for the ȴnancial statements as a Zhole respectively. The benchmarks and percentages for calculating materiality are unchanged from the prior year. FolloZing the ȴrst full year of trading for signiȴcant component and subsidiary Minto Explorations Limited, Ze consider that revenue and loss before tax are the most signiȴcant determinant of the Group’s ȴnancial position and performance used by shareholders. Materiality for the parent company Zas based upon the result before tax to gain suɝcient coverage of expenses in our testing. Whilst the Group materiality for the ȴnancial statements as a Zhole Zas set at $701,000, component materiality Zas set at CAD$680,000 (USD equivalent approximately $534,000) for Minto Explorations Limited, Zith performance materiality set at 70. We applied the concept of materiality both in planning and performing our audit, and in evaluating the eect of misstatements. We agreed Zith the audit committee that Ze Zould report all audit dierences identiȴed during the course of our audit in excess of $35,050 (2019: $33,000). We also agreed to report any other audit misstatements beloZ that threshold that Ze believe Zarranted reporting on qualitative grounds. Our approach to the audit In designing our audit, Ze determined materiality and assessed the risk of material misstatement in the ȴnancial statements. In particular, Ze looked at areas involving signiȴcant accounting estimates and judgement by the directors and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including among other matters consideration of Zhether there Zas evidence of bias that represented a risk of material misstatement due to fraud. An audit Zas performed on the ȴnancial information of the Group’s signiȴcant operating components Zhich, for the year ended 31 December 2020, Zere located in the United Kingdom and Canada. The signiȴcant and material Canadian component Zas audited by a component auditor under our instruction. There Zas regular interaction Zith the component auditor during all stages of the audit, and Ze Zere responsible for the scope and direction of their audit process. We performed a remote revieZ of the component audit ȴle prepared by the auditor of Minto Explorations Limited, including the Zork performed on the signiȴcant risks identiȴed at group level. The component auditor also provided their ȴndings to us Zhich Zere revieZed and challenged accordingly. This gave us suɝcient appropriate evidence for our opinion on the Group ȴnancial statements. Independent Auditor’s Report to the Members of Pembridge Resources Plc 22 | Pembridge Resources plc | Independent Auditor’s Report to the members of Pembridge Resources Plc Key audit matters Key audit matters are those matters that, in our professional judgment, Zere of most signiȴcance in our audit of the ȴnancial statements of the current period and include the most signiȴcant assessed risks of material misstatement (Zhether or not due to fraud) Ze identiȴed, including those Zhich had the greatest eect on: the overall audit strategy, the allocation of resources in the audit; and directing the eorts of the engagement team. These matters Zere addressed in the context of our audit of the ȴnancial statements as a Zhole, and in forming our opinion thereon, and Ze do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section Ze have determined the matters described beloZ to be the key audit matters to be communicated in our report. Key Audit Matter How our scope addressed this matter Revenue recognition (Note 7) Revenue from the sale of metal concentrate is recognised on transfer of physical possession to the customer and the customer has the signiȴcant risks and rewards of ownership Metal concentrates are normally sold under pricing arrangements where ȴnal prices are determined based on quoted market prices in a period subsequent to the date of sale and therefore based on forward commodity prices for the expected period of ȴnal settlement In addition, there can be subsequent variations to metal concentrate weight and grade Minto Explorations Limited is engaged in streaming and otake arrangements therefore revenue recognition, including deferred revenue, needs to take into account the underlying contractual arrangements and performance obligations, in accordance with IFRS 15 Revenue from Contracts with Customers There is a risk that revenue is not recorded in accordance with IFRS 15 Our Zork in this area, including that undertaken by the component auditor, included: • Updating our understanding of the internal control environment in operation for the signiȴcant income streams. Undertaking a Zalk-through to ensure that the key controls Zithin these systems have been operating in the period under audit; • RevieZ of key contractual terms contained Zithin the streaming and otake arrangements, concentrating in particular on any changes from the prior period, and ensuring the revenue recognised is measured in accordance thereZith. Ensuring the disclosures in the ȴnancial statements adequately reȵect the terms of those agreements; • Substantive transactional testing of income recognised in the ȴnancial statements by the component auditor, including deferred and accrued income balances recognised at year-end; • Cut-o testing by the component auditor around the year-end having regard to contractual performance obligations and to ensure correctly matched Zith inventory and other direct mining costs; and • A revieZ of post year end receipts to ensure completeness of income recorded in the accounting period, including mark to market pricing adjustments and variations to Zeight and grade from assay checks up to the date of ȴnal acceptance. Carrying value and assessment of impairment of producing mineral properties, mineral exploration and development properties, CIP and properties plant and equipment (Note 15) Future proȴtability at the mine is expected to be sensitive to copper market prices and the success of exploration activities in order to increase resources reserves Management’s assessment of impairment indicators, and estimation of value in use, will involve cash ȵow forecasts and assumptions which are inherently judgmental and potentially sensitive to reasonably possible change Our Zork in this area, including that undertaken by the component auditor, included: • RevieZing the Zork undertaken by the component auditor Zith regard to the carrying values in the individual ȴnancial statements of Minto; • RevieZ of management’s impairment considerations at group level, including challenge of judgements and estimates therein, as Zell as obtaining available Zorkings and independent reports to support the valuation; and • Evaluating actual performance in the year versus budgeted performance, particularly Zith regard to quantities processed and product grade achieved. The Directors’ judgements in their assessment of recoverability are reasonable and our Zork did not identify an impairment to the year-end carrying value. Independent Auditor’s Report to the Members of Pembridge Resources Plc 23 | Pembridge Resources plc | Independent Auditor’s Report to the members of Pembridge Resources Plc Independent Auditor’s Report to the Members of Pembridge Resources Plc Other information The other information comprises the information included in the annual report, other than the ȴnancial statements and our auditor’s report thereon. The directors are responsible for the other information contained Zithin the annual report. Our opinion on the Group and Parent Company ȴnancial statements does not cover the other information and, except to the extent otherZise explicitly stated in our report, Ze do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider Zhether the other information is materially inconsistent Zith the ȴnancial statements or our knoZledge obtained in the course of the audit, or otherZise appears to be materially misstated. If Ze identify such material inconsistencies or apparent material misstatements, Ze are required to determine Zhether this gives rise to a material misstatement in the ȴnancial statements themselves. If, based on the Zork Ze have performed, Ze conclude that there is a material misstatement of this other information, Ze are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance Zith the Companies Act 2006. In our opinion, based on the Zork undertaken in the course of the audit: • the information given in the strategic report and the directors’ report for the ȴnancial year for Zhich the ȴnancial statements are prepared is consistent Zith the ȴnancial statements; and • the strategic report and the directors’ report have been prepared in accordance Zith applicable legal requirements. Matters on which we are required to report by exception In the light of the knoZledge and understanding of the Group and the Parent Company and their environment obtained in the course of the audit, Ze have not identiȴed material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the folloZing matters in relation to Zhich the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or • the Parent Company ȴnancial statements and the part of the directors’ remuneration report to be audited are not in agreement Zith the accounting records and returns; or • certain disclosures of directors’ remuneration speciȴed by laZ are not made; or • Ze have not received all the information and explanations Ze require for our audit. Responsibilities of Directors As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the Group and Parent Company ȴnancial statements and for being satisȴed that they give a true and fair vieZ, and for such internal control as the directors determine is necessary to enable the preparation of ȴnancial statements that are free from material misstatement, Zhether due to fraud or error. In preparing the Group and Parent Company ȴnancial 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. 24 | Pembridge Resources plc | Strategic Report Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about Zhether the ȴnancial statements as a Zhole are free from material misstatement, Zhether 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 Zith ISAs (UK) Zill alZays detect a material misstatement Zhen 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 inȵuence the economic decisions of users taken on the basis of these ȴnancial statements. Irregularities, including fraud, are instances of non-compliance Zith laZs and regulations. We design procedures in line Zith our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to Zhich our procedures are capable of detecting irregularities, including fraud is detailed beloZ: • We obtained an understanding of the Group and Parent Company and the sector in Zhich they operate to identify laZs and regulations that could reasonably be expected to have a direct eect on the ȴnancial statements. We obtained our understanding in this regard through discussions Zith management and the component auditor as Zell as relevant industry experience. We also selected a speciȴc audit team based on experience Zith auditing entities Zithin this industry facing similar audit and business risks. • We determined the principal laZs and regulations relevant to the Group and Parent Company in this regard to be those arising from: • Disclosure & Transparency Rules • Listing Rules • Companies Act 2006 • UK employment laZ • Local Canadian tax laZs and regulations • Local environmental, mineral exploration and mining regulations • We designed our audit procedures to ensure the audit team considered Zhether there Zere any indications of non-compliance by the Group and Parent Company Zith those laZs and regulations. These procedures included, but Zere not limited to: • Making enquiries of management; • A revieZ of Board minutes; • A revieZ of legal ledger accounts; • A revieZ of RNS announcements; and • A revieZ of component auditor’s Zork surrounding compliance Zith laZs and regulations, Zhich included obtaining conȴrmations from the subsidiary’s legal counsel. • As in all of our audits, Ze addressed the risk of fraud arising from management override of controls by performing audit procedures Zhich included, but Zere not limited to: the testing of journals, revieZing accounting estimates for evidence of bias; and evaluating the business rationale of any signiȴcant transactions that are unusual or outside the normal course of business. Similar testing Zas also undertaken by the component auditor on the subsidiary undertaking. Because of the inherent limitations of an audit, there is a risk that Ze Zill not detect all irregularities, including those leading to a material misstatement in the ȴnancial statements or non-compliance Zith regulation. This risk increases the more that compliance Zith a laZ or regulation is removed from the events and transactions reȵected in the ȴnancial statements, as Ze Zill be less likely to become aZare 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 ȴnancial statements is located on the Financial Reporting Council’s Zebsite at: ZZZ.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Independent Auditor’s Report to the Members of Pembridge Resources Plc 25 | Pembridge Resources plc | Independent Auditor’s Report to the members of Pembridge Resources Plc Independent Auditor’s Report to the Members of Pembridge Resources Plc Other matters which we are required to address We Zere appointed by the Board of Directors on 10 February 2018 to audit the ȴnancial statements for the year ended 31 December 2017 and subsequent ȴnancial periods. Our total uninterrupted period of engagement is 5 years, covering the periods ending 31 December 2017 to 31 December 2020. The non-audit services prohibited by the FRC’s Ethical Standard Zere not provided to the Group or the Parent Company and Ze remain independent of the Group and the Parent Company in conducting our audit. Our audit opinion is consistent Zith the additional report to the audit committee. Use of our report This report is made solely to the Company’s members, as a body, in accordance Zith Chapter 3 of Part 16 of the Companies Act 2006. Our audit Zork has been undertaken so that Ze might state to the Company’s members those matters Ze are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by laZ, Ze do not accept or assume responsibility to anyone, other than the Company and the Company’s members as a body, for our audit Zork, for this report, or for the opinions Ze have formed. David Thompson (Senior statutory auditor) For and on behalf of PKF Littlejohn LLP Statutory auditor 17 May 202 15 Westferry Circus Canary Wharf London E14 4HD 26 | Pembridge Resources plc | Consolidated Financial Statements Note Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 Revenue from contracts Zith customers 7 58,278 12,398 Production costs (62,542) (14,739) Mark-to-market revaluation of concentrate receivable 647 - Royalties (308) (204) Depreciation and amortisation (8,381) (3,459) Administrative, legal and professional expenses (2,036) (3,110) Exceptional items – acquisition and re-admission costs 8 - (2,347) – revaluation of Capstone liability 8 (9,369) - Foreign exchange gain / (loss) (585) (357) Operating loss 8 (24,296) (11,818) Finance income 22 - Finance cost 12 (2,895) (1,295) Loss before income tax (27,169) (13,113) Income tax 13 (106) 26 Loss for the year (27,275) (13,087) Other comprehensive income (175) 936 Total comprehensive income for the year (27,450) (12,151) Loss is attributable to: Non-controlling interest 8 (12,544) (5,024) Shareholders of the Company 8 (14,731) (8,063) Loss for the year (27,275) (13,087) Total comprehensive income is attributable to: Non-controlling interest (12,546) (4,400) Shareholders of the Company (14,904) (7,751) Total comprehensive income for the year (27,450) (12,151) Earnings per share expressed in US cents Year ended 31 December 2020 Year ended 31 December 2019 Basic and diluted loss per share attributable to the equity holders of the Company 14 (20.8c) (33.5c) All amounts relate to continuing activities. The notes form an integral part of these ȴnancial statements. Consolidated statement of comprehensive income For the year ended 31 December 2020 27 | Pembridge Resources plc | Consolidated Financial Statements Note 31 December 2020 US$’000 31 December 2019 US$’000 Assets Non-current assets Property, plant and equipment 15 56,798 50,207 Intangible assets 16 - 394 Long-term deposits 18 7,059 4,040 Total non-current assets 63,857 54,641 Current assets Inventories 17 4,401 5,710 Trade and other receivables 18 5,672 8,610 Cash and cash equivalents 19 415 964 Total current assets 10,488 15,284 Total assets 74,345 69,925 Non-Current liabilities BorroZings 23 (15,470) (10,631) Lease liabilities 21 (2,835) (2,734) Reclamation and closure cost provision 22 (25,286) (22,438) Deferred consideration due to Capstone 32 - (4,305) Deferred tax liabilities 13 (388) (270) Total non-current liabilities (43,979) (40,378) Current liabilities Trade and other payables 20 (16,253) (8,736) BorroZings 23 (1,600) - Lease liabilities 21 (4,764) (2,899) Deferred consideration due to Capstone 32 (18,571) (4,897) Total current liabilities (41,188) (16,532) Total liabilities (85,167) (56,910) Net assets/(liabilities) (10,822) 13,015 Equity Share capital 24 965 825 Share premium 24 9,222 8,900 Capital redemption reserve 1,011 1,011 Translation reserve 139 312 Other reserve 46 369 Retained deȴcit (30,516) (13,465) Equity attributable to shareholders of the Company (19,133) (2,048) Non-controlling interests 27 8,311 15,063 Total equity (10,822) 13,015 The Financial Statements Zere approved and authorised for issue by the Board on 17 May 2021 and signed on behalf of the Board by: łĸŦłĭęôÒŰúôŦŰÒŰúĶúĸŰłČƥĸÒĸîęÒĭŜłŦęŰęłĸ As at 31 December 2020 Gati Al-Jebouri &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU The notes form an integral part of these ȴnancial statements. 28 | Pembridge Resources plc | Consolidated Financial Statements Note 31 December 2020 US$’000 31 December 2019 US$’000 Assets Non-current assets Property, plant and equipment 15 - 3 Investment in subsidiary 31 9,202 9,202 Long-term deposits 18 - 1,517 Inter-company receivable 18 3,399 - Total non-current assets 12,601 10,722 Current assets Trade and other receivables 18 428 1,490 Cash and cash equivalents 19 16 399 Total current assets 444 1,889 Total assets 13,045 12,611 Non-Current liabilities BorroZings 23 (5,198) (2,049) Deferred consideration due to Capstone 32 - (4,305) Total non-current liabilities (5,198) (6,354) Current liabilities Trade and other payables 20 (214) (1,738) BorroZings 23 (20) - Deferred consideration due to Capstone 32 (18,571) (4,897) Total current liabilities (18,805) (6,635) Total liabilities (24,003) (12,989) Net liabilities (10,958) (378) Equity Share capital 24 965 825 Share premium 24 9,222 8,900 Capital redemption reserve 1,011 1,011 Other reserve 46 369 Retained deȴcit (22,202) (11,483) Equity attributable to shareholders of the Company (10,958) (378) The Company has taken advantage of the exemption alloZed under section 408 of the Companies Act 2006 and has not included its oZn statement of comprehensive income in these Financial Statements. The Company’s loss for the period amounted to $11,193,000 (2019: $5,555,000 loss). The Financial Statements Zere approved and authorised for issue by the Board on 17 May 2021 and signed on behalf of the Board by: łĶŜÒĸƗŦŰÒŰúĶúĸŰłČƥĸÒĸîęÒĭŜłŦęŰęłĸ As at 31 December 2020 Registered number : 07352056 Gati Al-Jebouri &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU The notes form an integral part of these ȴnancial statements. 29 | Pembridge Resources plc | Consolidated Financial Statements Consolidated statement of changes in equity For the year ended 31 December 2020 Share capital US$’000 Share premium US$’000 Capital redemption reserve US$’000 Translation/ Other reserve US$’000 Retained deȴcit US$’000 Total US$’000 Non- controlling interest US$’000 Total Equity US$’000 Balance at 1 January 2020 825 8,900 1,011 681 (13,465) (2,048) 15,063 13,015 Loss for the year - - - - (14.731) (14,731) (12,544) (27,275) Other comprehensive income – items that may be reclassiȴed subsequently to proȴt or loss Exchange dierence on translation - - - (173) - (173) (2) (175) Total comprehensive income for the year - - - (173) (14,731) (14,904) (12,546) (27,450) Proceeds from shares issued 140 322 - - - 462 - 462 Equity element of convertible loan - - - (53) - (53) - (53) Investment by non-controlling interest in Minto share capital - - - - 330 330 2,670 3,000 Change in share of economic interest in Minto - - - - (3,124) (3,124) 3,124 - Share-based payments - - - 204 - 204 - 204 Transfer to retained deȴcit after surrender of share options - - - (474) 474 - - - Total transactions Zith oZners recognised directly in equity 140 322 - (323) (2,320) (2,181) 5,794 3,613 Balance at 31 December 2020 965 9,222 1,011 185 (30,516) (19,133) 8,311 (10,822) 30 | Pembridge Resources plc | Consolidated Financial Statements Consolidated statement of changes in equity For the year ended 31 December 2019 Share capital US$’000 Share premium US$’000 Capital redemption reserve US$’000 Translation/ Other reserve US$’000 Retained deȴcit US$’000 Total US$’000 Non- controlling interest US$’000 Total Equity US$’000 Balance at 1 January 2019 295 2,902 1,011 66 (5,933) (1,659) - (1,659) Loss for the year - - - - (8,063) (8,063) (5,024) (13,087) Other comprehensive income – items that may be reclassiȴed subsequently to proȴt or loss Exchange dierence on translation - - - 312 - 312 624 936 Total comprehensive income for the year - - - 312 (8,063) (7,751) (4,400)(12,151) Proceeds from shares issued 530 6,109 - - - 6,639 - 6,639 Direct cost of shares issued - (111) - - - (111) - (111) Equity element of convertible loan - - - 53 - 53 - 53 Investment by non-controlling interest in Minto share capital - - - - 531 531 1,059 1,590 Non-controlling interest on acquisition of subsidiary - - - - - - 18,404 18,404 Share-based payments - - - 250 - 250 - 250 Total transactions Zith oZners recognised directly in equity 530 5,998 - 303 531 7,362 19,463 26,825 Balance at 31 December 2019 825 8,900 1,011 681 (13,465) (2,048) 15,063 13,015 31 | Pembridge Resources plc | Consolidated Financial Statements Share capital US$’000 Share premium US$’000 Capital redemption reserve US$’000 Other reserve US$’000 Retained deȴcit US$’000 Total US$’000 Balance at 1 January 2019 295 2,902 1,011 66 (5,928) (1,654) Loss for the year - - - - (5,555) (5,555) Other comprehensive income for the year - - - - - - Total comprehensive income for the year - - - - (5,555) (5,555) Proceeds from shares issued 530 6,109 - - - 6,639 Direct cost of shares issued - (111) - - - (111) Equity element of convertible loan - - - 53 - 53 Share based payments - - - 250 - 250 Total transactions Zith oZners recognised directly in equity 530 5,998 - 303 - 6,831 Balance at 31 December 2019 825 8,900 1,011 369 (11,483) (378) Balance at 1 January 2020 825 8,900 1,011 369 (11,483) (378) Loss for the year - - - - (11,193) (11,193) Other comprehensive income for the year - - - - - - Total comprehensive income for the year - - - - (11,193) (11,193) Proceeds from shares issued 140 322 - - - 462 Equity element of convertible loan - - - (53) - (53) Share based payments - - - 204 - 204 Transfer to retained deȴcit after surrender of share options - - - (474) 474 - Total transactions Zith oZners recognised directly in equity 140 322 - (323) 474 613 Balance at 31 December 2020 965 9,222 1,011 46 (22,202) (10,958) The notes form an integral part of these ȴnancial statements. The folloZing describes the nature and purpose of each reserve Zithin Group and Company oZners’ equity: Reserve Description and purpose Share capital Nominal value of shares issued. Share premium Amount subscribed for share capital in excess of nominal value, less share issue costs. Capital redemption reserve Reserve created on cancellation of deferred shares. Other reserve Cumulative fair value of Zarrants and share options granted, together Zith the equity element of the convertible loan. Translation reserve Cumulative translation adjustment from retranslation of group undertakings Zith functional currencies other than USD. Retained deȴcit Cumulative net gains and losses recognised in the statement of comprehensive income. Non-controlling interest Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the parent company and are presented separately in the Consolidated Statement of comprehensive income and Zithin equity in the Consolidated statement of ȴnancial position, distinguished from parent company shareholders’ equity. Company statement of changes in equity For the year ended 31 December 2020 32 | Pembridge Resources plc | Consolidated Financial Statements Note Year Ended 31 December 2020 US$’000 Year Ended 31 December 2019 US$’000 &DVKȵRZVIURPRSHUDWLQJDFWLYLWLHV Loss for the year (27,275) (13,087) Adjusted for: Net ȴnance costs 2,873 1,295 Unrealised FX on debt included in administrative expenses (75) (169) Depreciation and amortisation 8,381 3,459 Tax charge / (credit) 106 (26) Share based payments 204 250 Revaluation of Capstone liability 9,369 - (6,417) (8,278) Movements in Zorking capital Decrease / (increase) in inventories 1,359 (3,248) Decrease / (increase) in trade and other receivables 2,995 (8,252) Increase / (decrease) in trade and other payables 6,735 6,752 Cash generated from / (used by) operations 4,672 (13,026) Income taxes recovered / (paid)-- Net cash generated from / (used in) operating activities 4,672 (13,026) &DVKȵRZVIURPLQYHVWLQJDFWLYLWLHV Payments into long-term deposits (2,737) (1,582) Purchase of property, plant and equipment (4,518) (490) Purchase of mining claims - (237) Net cash used in investing activities (7,255) (2,309) &DVKȵRZVIURPȴQDQFLQJDFWLYLWLHV Interest payments (1,297) (497) Repayment of borroZings (122) (647) Proceeds from borroZings 5,471 10,754 Lease payments (5,521) (1,621) Proceeds from issuance of shares - Company 462 6,528 Proceeds from issuance of shares - Minto 3,000 1,621 1HWFDVKJHQHUDWHGIURPȴQDQFLQJDFWLYLWLHV 1,993 16,138 Net increase in cash and cash equivalents (590) 803 Cash and cash equivalents at beginning of year 964 151 Impact of exchange rates on cash balances 41 10 Cash and cash equivalents at end of year 19 415 964 The notes form an integral part of these ȴnancial statements. łĸŦłĭęôÒŰúôîÒŦĔƦłƑŦŰÒŰúĶúĸŰ For the year ended 31 December 2020 33 | Pembridge Resources plc | Consolidated Financial Statements Note Year Ended 31 December 2020 US$’000 Year Ended 31 December 2019 US$’000 &DVKȵRZVIURPRSHUDWLQJDFWLYLWLHV Loss for the year (11,193) (5,555) Adjusted for: Net ȴnance costs 239 160 Unrealised FX on debt included in administrative expenses 232 - Depreciation 37 Tax charge / (credit) -- Share based payments 204 250 Revaluation of Capstone liability 9,369 - (1,146) (5,138) Movements in Zorking capital Increase in trade and other receivables (596) (1,147) Decrease in trade and other payables (1,524) (93) Cash used by operations (3,266) (6,378) Income taxes recovered / (paid) -- Net cash used in operating activities (3,266) (6,378) &DVKȵRZVIURPLQYHVWLQJDFWLYLWLHV Payments into long-term deposits - (1,518) Disposal/(purchase) of property, plant and equipment 5 Net cash used in investing activities - (1,513) &DVKȵRZVIURPȴQDQFLQJDFWLYLWLHV Interest payments - (60) Repayment of borroZings (50) (647) Proceeds from borroZings 2,471 2,318 Proceeds from issuance of shares 462 6,528 1HWFDVKJHQHUDWHGIURPȴQDQFLQJDFWLYLWLHV 2,883 8,139 Net (decrease)/increase in cash and cash equivalents (383) 248 Cash and cash equivalents at beginning of year 399 151 Cash and cash equivalents at end of year 19 16 399 The notes form an integral part of these ȴnancial statements. łĶŜÒĸƗîÒŦĔƦłƑŦŰÒŰúĶúĸŰ For the year ended 31 December 2020 34 | Pembridge Resources plc | Consolidated Financial Statements Notes to the Financial Statements For the year ended 31 December 2020 1. NATURE OF OPERATIONS AND GENERAL INFORMATION The principal activity of the Company is to operate as a mining focused holding Company. The Company has an investment in the Minto copper-gold-silver mine in Yukon, Canada. Pembridge Resources Plc is incorporated and domiciled in England. The address of the Company’s registered oɝce is 200 Strand, London, WC2R 1DJ. Pembridge Resources Plc’s shares are listed on the Standard Segment of the Oɝcial List of the London Stock Exchange. The Group’s Financial Statements are presented in United States dollars (US$), Zhich is also the functional currency of the Company, and rounded to the nearest thousand. 2. BASIS OF PREPARATION The Financial Statements have been prepared in accordance Zith international accounting standards in conformity Zith the Companies Act 2006 and international ȴnancial reporting standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union. The Financial Statements have been prepared under the historical cost convention, except as modiȴed for assets and liabilities recognised at fair value on a business combination and contingent consideration measured at fair value. The preparation of Financial Statements in conformity Zith IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a high degree of judgement or complexity, or areas Zhere assumptions and estimates are signiȴcant to the Financial Statements, are disclosed in Note 4. Going concern The Financial Statements have been prepared on a going concern basis, Zhich assumes that the Company and Group Zill continue operating in the foreseeable future and Zill be able to service their debt obligations, realise their assets and discharge their liabilities as they fall due. The Company and Minto both have a planning, budgeting and forecasting process to determine the funds required to support their operations and expansionary plans. The Company raised neZ equity in January 2021, Zhich is expected to support its operations until it starts to receive repayments from Minto of its inter-company balance in 2022. At 31 December 2020, Minto had cash of US$ 398,000 and available capacity of US$ 9.5 million under the prepayment facility Zith Sumitomo Canada Limited. The Group’s liabilities include a contingent consideration balance of US$ 18,571,000 due to Capstone, Zhich is disclosed as a current liability and explained fully in note 32. The amount that Zill actually be paid in respect of this obligation, and the timing thereof, is dependent on future copper price movements, so is not certain, and there may be scope to negotiate a delay in payments beyond one year if this is necessary. Because the liability Zould become payable in full only if copper prices remain at or above certain levels, the same factors that Zould cause it to be payable Zould also assist the Group in funding it through increased operational cash ȵoZs. The Group’s ability to continue as a going concern is dependent on their ability to obtain additional funding and the successful development of their existing assets in order to meet their planned business objectives. HoZever, because there can be no assurance of this funding or the Group’s ability to generate positive cash ȵoZs, a material uncertainty exists Zhich may cast doubt on the Group’s ability to continue as a going concern. At present the Group believes that there should be no signiȴcant material disruption to its mining operations from COVID-19, but the Board continues to monitor these risks and Minto’s business continuity plans. Having prepared forecasts based on current resources, assessing methods of obtaining additional ȴnance and assessing the possible impact of COVID-19, the Directors believe the Group and Company have suɝcient resources to meet its obligations for a period of 12 months from the date of approval of these Financial Statements. Taking these matters into consideration, the Directors continue to adopt the going concern basis of accounting in preparing these Financial Statements. The Financial Statements do not include the adjustments that Zould be required should the going concern basis of preparation no longer be appropriate. 35 | Pembridge Resources plc | Consolidated Financial Statements Notes to the Financial Statements For the year ended 31 December 2020 3. STANDARDS AND INTERPRETATIONS NOT YET APPLIED BY THE COMPANY 1HZDQGDPHQGHGVWDQGDUGVPDQGDWRU\IRUWKHȴUVWWLPHIRUWKHȴQDQFLDO\HDUEHJLQQLQJ-DQXDU\ The folloZing neZ IFRS standards and/or amendments to IFRS standards are mandatory for the ȴrst time for the Company and Group: Standard (HFWLYHGDWH IFRS 3 (Amendments) Business Combinations – revised deȴnition of a business 1 January 2020 IAS 1 (Amendments) Presentation of Financial Statements 1 January 2020 IAS 8 (Amendments) Accounting policies, Changes in Accounting Estimates 1 January 2020 IFRS 9, IAS 39 and IFRS 7 (Amendments) Interest rate benchmark reform 1 January 2020 The Directors believe that the adoption of these standards has not had a material impact on the ȴnancial statements other than changes to disclosures. 6WDQGDUGVDPHQGPHQWVDQGLQWHUSUHWDWLRQVWRH[LVWLQJVWDQGDUGVWKDWDUHQRW\HWHHFWLYHDQGKDYHQRWEHHQ adopted early by the Group or Company The standards and interpretations that are issued, but not yet eective, up to the date of issuance of the condensed interim ȴnancial statements are listed beloZ. The Company intends to adopt these standards, if applicable Zhen they become eective. Standard (HFWLYHGDWH IAS 1 (Amendments) Classiȴcation of liabilities as current or non-current 1 January 2022 IFRS 3 (Amendments) Business Combinations – reference to the Conceptual FrameZork 1 January 2022 IAS 16 (Amendments) Property, plant and equipment 1 January 2022 IAS 37 (Amendments) Provisions, Contingent Liabilities and Contingent Assets 1 January 2022 IFRS 2018-2020 Cycle Annual Improvements 1 January 2022 Not yet endorsed by the EU. The Company and Group are evaluating the impact of the neZ and amended standards above. The Directors believe that these neZ and amended standards are not expected to have a material impact on the Company’s and Group’s results or shareholders’ funds. 36 | Pembridge Resources plc | Consolidated Financial Statements 4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group’s accounting policies, described in Note 5, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may dier from these estimates. The estimates and underlying assumptions are revieZed on an ongoing basis. Revisions to accounting estimates are recognised in the period in Zhich the estimate is revised if the revision aects only that period or in the period of the revision and future periods if the revision aects both current and future periods. Critical judgments exercised in applying accounting policies, apart from those involving estimates, that have the most signiȴcant eect on the amounts recognised in the ȴnancial statements are as folloZs: (FRQRPLFUHFRYHUDELOLW\DQGSUREDELOLW\RIIXWXUHHFRQRPLFEHQHȴWVRIPLQHUDOH[SORUDWLRQHYDOXDWLRQDQGGHYHORSPHQWFRVWV The Company has determined that exploratory drilling, evaluation, development, and related costs incurred, Zhich Zere capitalised, have future economic beneȴts and are economically recoverable. In making this judgment, the Company has assessed various sources of information including, but not limited to, the geologic and metallurgic information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, proximity to existing ore bodies, existing permits, and life of mine plans. )LQDQFLDOLQVWUXPHQWV Financial assets and liabilities are designated upon inception to various classiȴcations. The designation determines the method by Zhich the ȴnancial instruments are carried on the balance sheet subsequent to inception and hoZ changes in value are recorded. The designation may require the Company to make certain judgments, taking into account management’s intention of the use of the ȴnancial instruments. &RQVROLGDWLRQRIHQWLWLHVLQZKLFKWKHURXSKROGVOHVVWKDQDPDMRULW\RIYRWLQJULJKWVHFRQRPLFLQWHUHVW The Company considers that, although it has an economic interest of less than 50 in Minto’s results and net assets, it has control over Minto through holding 100 of voting rights and having control of the Minto Board, Zhich means that it is able to control the day-to-day operations of the mine. The folloZing are the critical estimates that the Directors have made in the process of applying the Group’s accounting policies and that have the most signiȴcant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the Financial Statements. (VWLPDWHGUHFODPDWLRQDQGFORVXUHFRVWV The Group’s provision for reclamation and closure cost obligations represents management’s best estimate of the present value of the future cash outȵoZs required to settle the liability. The provision reȵects estimates of future costs directly attributable to remediating the liability, inȵation, movements in foreign exchange rates and assumptions of risks associated Zith the future cash outȵoZs, and the applicable risk-free interest rates for discounting future cash outȵoZs. Changes in the factors above can result in a change to the provision recognised by the Group. To the extent the carrying value of the related mining property is not increased above its recoverable amount, changes to reclamation and closure cost obligations are recorded Zith a corresponding change to the carrying amounts of related mining properties. ΔQFRPHWD[HV Deferred tax assets and liabilities are determined based on dierences betZeen the ȴnancial statement carrying values of assets and liabilities and their respective income tax bases (“temporary dierences”), and losses carried forZard. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable proȴt Zill be available against Zhich the losses can be utilised. The determination of the ability of the Group and Company to utilise tax loss carry-forZards to oset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Group and Company. Management is required to assess Zhether it is probable that the Group and Company Zill beneȴt from these prior losses and other deferred tax assets, and Zhat tax rates are expected to be in eect Zhen temporary dierences reverse. Changes in economic conditions, metal prices and other factors could result in revisions to the estimates of the beneȴts to be realised or the timing of utilizing the losses. 0LQHUDOUHVHUYHDQGUHVRXUFHHVWLPDWHV The ȴgures for mineral reserves and mineral resources are determined in accordance Zith National Instrument 43-101, “Standards of Disclosure for Mineral Projects”, issued by the Canadian Securities Administrators. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Group’s control. Such estimation is a subjective process, and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Dierences betZeen management’s assumptions, including economic assumptions such as metal prices, and the market conditions could have a material eect in the future on the Group’s ȴnancial position and results of operation. Such dierences could increase or decrease the mine’s revenues and may aect the rate of depreciation for mineral properties and of other ȴxed assets Zhose useful life is determined by the amount of reserves. Notes to the Financial Statements For the year ended 31 December 2020 37 | Pembridge Resources plc | Consolidated Financial Statements 4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (continued) (VWLPDWHGSHUPLWWHGUHVHUYHV The carrying amounts of the Group’s producing mining properties are depleted based on permitted reserves. Changes to estimates of permitted reserves and depletable costs including changes resulting from revisions to the Group’s mine plans and changes in metal price forecasts can result in a change to future depletion rates. 'HSUHFLDWLRQDQGDPRUWLVDWLRQUDWHIRUSURSHUW\SODQWDQGHTXLSPHQWDQGGHSOHWLRQUDWHVIRUPLQLQJLQWHUHVWV Depletion, depreciation, and amortisation expenses are allocated based on estimated asset lives. Should the asset life, depletion rates, or depreciation rates dier from the initial estimate, an adjustment Zould be made in the statement of (loss) / income on a prospective basis. ΔPSDLUPHQWRIPLQHUDOSURSHUWLHVSODQWDQGHTXLSPHQW Management considers both external and internal sources of information in assessing Zhether there are any indications that the Group’s mineral properties, plant and equipment are impaired and Zhether previously recorded impairments should be reversed. External sources of information management considers include changes in the market, economic and legal environment in Zhich the Group operates that are not Zithin its control and aect the recoverable amount of its mineral properties, plant and equipment. Internal sources of information that management considers include the manner in Zhich mineral properties, plant and equipment are being used or are expected to be used and indications of economic performance of the assets. In determining the recoverable amounts of the Group’s mineral properties, plant and equipment, management makes estimates of the future operating results and discounted net cash ȵoZs expected to be derived from the Group’s mining properties, costs to sell the mining properties and the appropriate discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future non-expansionary capital expenditures, reductions in the amount of recoverable mineral reserves, mineral resources, and exploration potential, and/or adverse current economics can result in a Zrite-doZn of the carrying amounts of the Group’s mineral properties, plant and equipment. ΔQYHQWRU\YDOXDWLRQ Consumable parts and supplies, ore stockpiles and concentrates, are valued at the loZer of cost and net realizable value. Estimates in the carrying values of inventories arise due to the nature of the valuation of ore stockpiles and concentrates based on an appropriate allocation of direct mining costs, direct labour and material costs, mine site overhead, and depletion and amortization. 9DOXDWLRQRIȴQDQFLDOLQVWUXPHQWVLQFOXGLQJHVWLPDWHVXVHGLQSURYLVLRQDOSULFLQJFDOFXODWLRQV Financial instrument estimates are based on either unadjusted quoted prices in active markets or direct or indirect observable inputs in accordance Zith the deȴnitions of the ȴnancial instruments. Provisional pricing calculations are determined based on the change in the value of forZard commodity prices of metals. To account for the change in metal prices from the total contract value to the 90 of the provisional value amount that has been received, estimates of the value of concentrates are used to determine the provisionally priced concentrate receivables at each period. 6KDUHEDVHGSD\PHQWV Estimating fair value for share based payment transactions requires determination of the most appropriate valuation model, Zhich is dependent on the terms and conditions of the grant of share options and Zarrants. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life, volatility and dividend yield and making assumptions about them. The assumptions used for estimating fair value for share based payment transactions are disclosed in Note 25. &RQWLQJHQWFRQVLGHUDWLRQ 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 Minto, contingent consideration Zith an estimated fair value of US$9,202,000 Zas recognised at the acquisition date. See Note 32 for further details. The Group is required to remeasure the contingent liability at fair value at each reporting date Zith changes in fair value recognised in accordance Zith IFRS 9. Such remeasurement involves making key assumptions around future copper price volatility and assumptions over inputs to the Monte Carlo simulation model. Notes to the Financial Statements For the year ended 31 December 2020 38 | Pembridge Resources plc | Consolidated Financial Statements 5. SIGNIFICANT ACCOUNTING POLICIES Basis of consolidation and Business combinations The consolidated Financial Statements comprise the Financial Statements of the company and its subsidiaries as at 31 December 2020. Control is achieved Zhen the Group is exposed, or has rights, to variable returns from its involvement Zith the investee and has the ability to aect those returns through its poZer over the investee. Speciȴcally, the Group controls an investee if the Group has: (i) PoZer over the investee i.e. existing rights that give it the current ability to direct the relevant activities of the investee (ii) Exposure, or rights to, variable returns from its involvement Zith the investee (iii) The ability to use its poZer over the investee to aect its returns Generally there is a presumption that a majority of voting rights results in control. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing Zhether it has poZer over an investee, including: (i) The contractual arrangements Zith the other vote holders of the investee (ii) Rights arising from other contractual arrangements (iii) The Group’s voting rights and potential rights Consolidation of a subsidiary begins Zhen a Group obtains control over a subsidiary and ceases Zhen the Group loses control of the subsidiary. Proȴt or loss and each component of Other Comprehensive Income (ȆOCI’) are attributed to the equity holders of the Company and to the non-controlling interest, even if this results in the non-controlling interest having a deȴcit balance. When necessary, adjustments are made to the ȴnancial statements of subsidiaries to bring their accounting policies in line Zith the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash ȵoZs relating to transactions betZeen members of the Group are eliminated in full on consolidation. A change in the oZnership interest of a subsidiary, Zithout a loss of control, is accounted for as an equity transaction. Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, Zhich is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquire. Acquisition related costs are expensed as incurred and included in administrative expenses. Identiȴable assets acquired and liabilities and contingent liabilities assumed in a business combination are, Zith limited exceptions, measured initially at their fair values at the acquisition date. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classiȴed as a liability and Zithin the scope of IFRS 9 is measured at fair value Zith the changes in fair value recognised in proȴt or loss. Reporting foreign currency transactions in functional currency In preparing the Financial Statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date Zhen the fair value Zas determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange dierences arising, if any, are recognised in proȴt or loss. Translation from functional currency to presentational currency When the functional currency of a Group entity is dierent from the Group’s presentational currency (US dollars), its results and ȴnancial position are translated into the presentational currency as folloZs: (i) Assets and liabilities are translated using exchange rates prevailing at the balance sheet date. (ii) Income and expense items are translated at average exchange rates for the year, except Zhere the use of such average rates does not approximate the exchange rate at the date of a speciȴc transaction, in Zhich case the transaction rate is used.. (iii) All resulting exchange dierences are recognised in other comprehensive income and presented in the translation reserve in equity and are reclassiȴed to proȴt or loss in the period in Zhich the foreign operation is disposed of. Inventories Inventories for consumable parts and supplies, ore stockpiles and concentrates, are valued at the loZer of cost and net realisable value. Costs allocated to consumable parts and supplies are based on average costs and include all costs of purchase, conversion and other costs in bringing these inventories to their existing location and condition. Costs allocated to ore stockpiles and concentrates are based on average costs, Zhich include an appropriate share of direct mining costs, direct labour and material costs, mine site overhead, depreciation and amortisation. If carrying value exceeds net realisable amount, a Zrite doZn is recognised. The Zrite doZn may be reversed in a subsequent period if the circumstances Zhich caused it no longer exist. Notes to the Financial Statements For the year ended 31 December 2020 39 | Pembridge Resources plc | Consolidated Financial Statements 5. SIGNIFICANT ACCOUNTING POLICIES (continued) Mineral properties, plant and equipment Title to mineral properties involves certain inherent risks due to the diɝculties of determining the validity of certain claims as Zell as the potential for problems arising from the frequently ambiguous conveyancing historical characteristic of many properties. The Group has investigated title to all of its mineral properties and, to the best of its knoZledge, title to all of its properties is in good standing. Producing mineral properties Producing mineral properties are recorded at cost less accumulated depletion and impairment charges. The costs associated Zith producing mineral properties include acquired interests in production stage properties representing the fair value at the time they Zere acquired. Producing mineral properties also include additional capitalised costs after initial acquisition. Upon sale or abandonment of producing mineral properties, the carrying value is derecognised and any gains or losses thereon are included in proȴt or loss. Mineral exploration and development properties The carrying amount of mineral exploration and development properties comprise costs that are directly attributable to: • researching and analysing existing exploration data; • conducting geological studies, exploratory drilling and sampling; • examining and testing extraction and treatment methods; and • activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource. The costs associated Zith mineral exploration and development properties include acquired interests in development and exploration stage properties representing the fair value at the time they Zere acquired. Mineral exploration and development properties related to greenȴeld properties, Zhich are prospective in nature and not yet supported by an internal economic assessment, are expensed in the statement of (loss) / income, except for acquisition costs and mining interest rights. Exploration and development expenses related to broZnȴeld mineral properties are capitalised provided that one of the folloZing conditions is met: • Such costs are expected to be recouped in full through successful development and exploitation of the area of interest or alternatively, by its sale; or • Exploration and evaluation activities in the area of interest have not yet reached a stage Zhich permits a reasonable assessment of the existence of economically recoverable reserves, hoZever active and signiȴcant operations in relation to the area are continuing, or planned for the future. The carrying values of capitalised amounts of mineral exploration and development properties are revieZed Zhen there are indicators of impairment at each reporting date. In the case of undeveloped projects, there may be only inferred mineral resources to alloZ management to form a basis for the impairment revieZ. The revieZ is based on the Company’s intentions for development of such a project. If a project does not prove viable, all unrecoverable costs associated Zith the project are charged to proȴt or loss at the time the determination is made. Once management has determined that the development potential of the property is economically viable and the necessary permits are in place for its development, the costs of the exploration asset are reclassiȴed to producing mineral properties. Plant and equipment Plant and equipment are recorded at cost less accumulated depreciation and impairment losses. Plant and equipment includes in its purchase price, any costs directly attributable to bringing plant and equipment to the location and condition necessary for it to be capable of operating in the manner intended by management and the estimated close doZn and restoration costs associated Zith dismantling and removing the asset. Upon sale or abandonment of any plant and/or equipment, the cost and related accumulated amortization and impairment losses, are Z ritten o and any gains or losses thereon are included in proȴt or loss. Notes to the Financial Statements For the year ended 31 December 2020 40 | Pembridge Resources plc | Consolidated Financial Statements 5. SIGNIFICANT ACCOUNTING POLICIES (continued) Construction in progress Mineral property development and plant and equipment construction commences Zhen approved by management and/or the Board and the Company has obtained all regulatory permissions to proceed. Development and construction expenditures are capitalised and classiȴed as construction in progress. Once completed, the costs associated Zith all applicable assets related to the development and construction are reclassiȴed to the appropriate category Zithin mineral properties or plant and equipment. Depreciation and amortisation of mineral properties, plant and equipment The carrying amounts of mineral properties, plant and equipment are depreciated or amortised to their estimated residual value over the estimated economic life of the speciȴc assets to Zhich they relate, using the depreciation or amortisation methods and rates as indicated beloZ. Estimates of residual values and useful lives are reassessed annually and any change in estimate is taken into account in the determination of the remaining amortisation rate. Amortisation commences on the date the asset is available for its use as intended by management. Depreciation and amortisation is computed using the folloZing rates: Item Methods Rates Mineral properties Units of production Estimated proven, probable and permitted mineral reserves Plant, equipment and motor vehicles Straight line, units of production 4 – 10 years, Estimated proven and probable mineral reserves Right of use assets under leases – plant and equipment Straight line Lesser of lease term and estimated useful life Impairment of long-lived assets At each reporting date, the Group and Company revieZ the carrying amounts of its assets to determine Zhether there are any indicators of impairment. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where the asset does not generate cash inȵoZs that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit (“CGU”) to Zhich the asset belongs. The recoverable amount is determined as the higher of fair value less direct costs to sell and the asset or CGU’s value in use. In assessing recoverable amount, the estimated future cash ȵoZs are discounted to their present value. Estimated future cash ȵoZs are calculated using estimated recoverable mineral reserves, estimated future commodity prices and the expected future operating and capital costs. The projected cash ȵoZs are aected by changes in assumptions about metal selling prices, future capital expenditures, production cost estimates, discount rates, and exchange rates. The discount rate applied to the estimated future cash ȵoZs reȵects current market assessments of the time value of money and the risks speciȴc to the asset for Zhich the future cash ȵoZ estimates have not been adjusted. Determining the discount rate includes appropriate adjustments for the risk proȴle of the country in Zhich the individual asset or CGU operates. If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its recoverable amount and an impairment loss is recognised in the statement of (loss) / income. Assets that have been impaired are tested for possible reversal of the impairment Zhenever events or changes in circumstance indicate that the impairment may have reversed. Where an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that Zould have been determined (net of amortization or depletion) had no impairment loss been recognised for the asset or CGU in prior periods. A reversal of impairment is recognised in proȴt or loss. Taxes Income tax represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable result for the period. Taxable proȴt or loss diers from reported proȴt or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items 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 reporting date. Deferred tax is the tax expected to be payable or recoverable on dierences betZeen the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable proȴ t, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary dierences, and deferred tax assets are recognised to the extent that it is probable that taxable proȴts Zill be available against Zhich deductible temporary dierences can be utilised. Notes to the Financial Statements For the year ended 31 December 2020 41 | Pembridge Resources plc | Consolidated Financial Statements 5. SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred tax is calculated at the tax rates that are expected to apply in the period Zhen the liability is settled or the asset is realised. Deferred tax is charged or credited in proȴt or loss, except Zhen it relates to items charged or credited directly to equity, in Zhich case the deferred tax is also dealt Zith in equity. Tax relating to items recognised in other comprehensive income is recognised in other comprehensive income. Deferred tax assets and liabilities are oset Zhen there is a legally enforceable right to set o current tax assets against current tax liabilities and Zhen they relate to taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Mining taxes and royalties are treated and disclosed as current and deferred taxes if they have the characteristics of an income tax. This is considered to be the case as they are imposed under government authority and the amount payable is calculated by reference to revenue derived (net of any alloZable deductions) after adjustment for items comprising temporary dierences. Compound instruments and borrowings The component parts of compound instruments are classiȴed separately as ȴnancial liabilities and equity in accordance Zith the substance of the contractual agreement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar debt instruments. This amount is recorded as a liability on an amortised cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a Zhole. This is recognised and included in equity, net of income tax eects, and is not subsequently remeasured. BorroZings are classiȴed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. BorroZing costs are expensed in the period in Zhich they are incurred. Financial instruments On initial recognition, ȴnancial assets are recognised at fair value and are subsequently classiȴed and measured at: (i) amortised cost; (ii) fair value through other comprehensive income (“FVOCI”); or (iii) fair value through proȴt or loss (“FVTPL). The classiȴcation of ȴnancial assets is generally based on the business model in Zhich a ȴnancial asset is managed and its contractual cash ȵoZ characteristics. A ȴnancial asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for ȴnancial assets at FVTPL Zhere transaction costs are expensed. All ȴnancial assets not classiȴed and measured at amortised cost or FVOCI are measured at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. The classiȴcation determines the method by Zhich the ȴnancial assets are carried on the statement of ȴnancial position subsequent to inception and hoZ changes in value are recorded. Accounts receivable are measured at amortised cost Zith subsequent impairments recognised in the statement of (loss) / income. Concentrate receivables and derivative assets are measured at FVTPL Zith subsequent changes recognised in proȴt or loss. The mark-to-market adjustments for provisional pricing changes on concentrate receivables are based on forZard commodity prices of metals and are included in revenues until ȴnal settlement. Financial liabilities are designated as either: (i) fair value through proȴt or loss; or (ii) amortised cost. All ȴnancial liabilities are classiȴed and subsequently measured at amortised cost except for ȴnancial liabilities at FVTPL. The classiȴcation determines the method by Zhich the ȴnancial liabilities are carried on the statement of ȴnancial position subsequent to inception and hoZ changes in value are recorded. Accounts payable and accrued liabilities are classiȴed as amortised cost and carried on the statement of ȴnancial position at amortised cost. All interest and other borroZing costs incurred in connection Zith the above are expensed as incurred and reported as part of ȴnancing costs in the statement of comprehensive income. The Company derecognises ȴnancial liabilities Zhen, and only Zhen, the Company’s obligations are discharged, cancelled or they expire. )DLUYDOXHPHDVXUHPHQW Fair value is the price that Zould be received to sell an asset or paid to transfer a liability in an orderly transaction betZeen market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. A fair value measurement of a non-ȴnancial asset takes into account a market participant’s ability to generate economic beneȴts by using the asset in its highest and best use or by selling it to another market participant that Zould use the asset in its highest and best use. Notes to the Financial Statements For the year ended 31 December 2020 42 | Pembridge Resources plc | Consolidated Financial Statements 5. SIGNIFICANT ACCOUNTING POLICIES (continued) All assets and liabilities for Zhich fair value is measured or disclosed in the Financial Statements are categorised Zithin the fair value hierarchy described as folloZs: (i) Level 1 – quoted market prices in active markets for identical assets or liabilities (ii) Level 2 – valuation techniques for Zhich the loZest level input that is signiȴcant to the fair value measurement is directly or indirectly observable (iii) Level 3 – valuation techniques for Zhich the loZest level input that is signiȴcant to the fair value measurement is unobservable External valuers are involved for the valuation of assets and liabilities acquired in a business combination, and signiȴcant liabilities such as contingent consideration. Trade receivables Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain signiȴcant ȴnancing components. They are subsequently measured at amortised cost using the eective interest method, less loss alloZance. ΖPSDLUPHQWDQGXQFROOHFWLELOLW\RIȴQDQFLDODVVHWV An Ȇexpected credit loss’ impairment model applies Zhich requires a loss alloZance to be recognised based on expected credit losses. This applies to ȴnancial assets measured at amortised cost. The estimated present value of future cash ȵoZs associated Zith the asset is determined and an impairment loss is recognised for the dierence betZeen this amount and the carrying amount as folloZs: the carrying amount of the asset is reduced to estimated present value of the future cash ȵoZs associated Zith the asset, discounted at the ȴnancial asset’s original eective interest rate, either directly or through the use of an alloZance account and the resulting loss is recognised in proȴt or loss for the period. In a subsequent period, if the amount of the impairment loss related to ȴnancial assets measured at amortised cost decreases, the previously recognised impairment loss is reversed through proȴt or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed Zhat the amortised cost Zould have been had the impairment not been recognised. Cash and cash equivalents Cash and cash equivalents includes cash in hand and deposits held at call Zith banks. Any interest earned is accrued monthly and classiȴed as ȴnance income. For the purposes of the statement of cash ȵoZs, cash and cash equivalents consist of cash and cash equivalents as deȴned above. Trade and other payables These amounts represent liabilities for goods and services provided to the Group and Company prior to the end of the ȴnancial year Zhich are unpaid. Trade and other payables are presented as current liabilities unless payment is not due Zithin 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the eective interest method. Leases The Group recognises lease liabilities in relation to leases other than leases of loZ-value assets and short-term leases (shorter than tZelve months). The lease liabilities are calculated at the present value of the remaining lease payments, discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borroZing rate is used, calculated as the local government bond rate plus an interest rate spread. In cases Zhere there is an option to terminate or extend a lease, the duration of the lease assumed for this purpose reȵected the Group’s existing intentions regarding such options. Lease liabilities include the net present value of the folloZing lease payments: • ȴxed payments (including in-substance ȴxed payments), less any lease incentives receivable • variable lease payments that are based on an index or a rate • amounts expected to be payable by the lessee under residual value guarantees • the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and • payments of penalties for terminating the lease, if the lease term reȵects the lessee exercising that option. The right of use asset is measured initially at the amount equal to the lease liability, plus any costs of bring the asset into use. The right-of- use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Reclamation and closure cost obligations A reclamation and closure cost obligation is recognised for close doZn, restoration and environmental rehabilitation costs (Zhich include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the ȴnancial period Zhen the related environmental disturbance occurs, based on the estimated future costs using information available at the balance sheet date. At the time of establishing the provision, a corresponding asset is capitalised, Zhere it gives rise to a future beneȴt, and amortised over future production from the operations to Zhich it relates. The provision is discounted using a current market-based pre-tax discount rate and the unZinding of the discount is included in proȴt or loss as interest expense from discounting reclamation and closure cost obligations. Notes to the Financial Statements For the year ended 31 December 2020 43 | Pembridge Resources plc | Consolidated Financial Statements 5. SIGNIFICANT ACCOUNTING POLICIES (continued) The obligation is revieZed each reporting period for changes to obligations, legislation or discount rates that impact estimated costs or lives of operations. The cost of the related asset is adjusted for changes in the provision resulting from changes in the estimated cash ȵoZs or discount rate and the adjusted cost of the asset is amortised prospectively. Provisions Provisions are recognised Zhen the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outȵoZ of resources that can be reliably estimated Zill be required to settle the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where the eect is material, the provision is discounted to net present value using an appropriate current market-based pre-tax discount rate and the unZinding of the discount is included in proȴt or loss as interest expense from discounting obligations. Revenue recognition Sales are recognised and revenue is recorded at market prices folloZing the transfer of title and risk of oZnership, provided that collection is reasonably assured, the price is reasonably determinable, the Company has no signiȴcant continuing involvement, and the costs incurred or to be incurred in respect of the transaction can be measured readily. The Company’s metal concentrates are sold under a pricing arrangement Zhere ȴnal prices are determined by quoted market prices in a period subsequent to the date of sale. Until prices are ȴnal, revenues are recorded based on forZard market prices for the expected period of ȴnal settlement, net of costs such as transportation and reȴning Zhich Zill be incurred in completing the transaction. Subsequent variations in the ȴnal determination of the metal concentrate Zeight and assay are recognised as revenue adjustments as they occur until ȴnalised. Subsequent variations in the ȴnal determination of the price are treated as a remeasurement of a ȴnancial asset under IFRS 9 and are recognised as revenue adjustments as they occur until ȴnalised. Government grants In response to the COVID-19 pandemic, governments have assisted companies in various Zays. During the year ended 31 December 2020, the Group received US$ 1.6 million of emergency Zage subsidy from the Government of Canada. Under IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance, this may be recognised as either income or a reduction of the expenses related to the grant. The Zage subsidy relates to production expenses and has been recognised as a reduction to payroll expense in these consolidated ȴnancial statements and not separately disclosed as other income. (PSOR\HHEHQHȴWV Liabilities for Zages and salaries, including non-monetary beneȴts and annual leave, that are expected to be settled Zholly Z ithin 12 months after the end of the period in Zhich the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid Zhen the liabilities are settled. Earnings per share Basic earnings (loss) per share is computed by dividing net earnings available (attributable) to common shareholders by the Zeighted average number of common shares outstanding during the period. The computation of diluted earnings (loss) per share assumes the conversion, exercise or contingent issuance of securities only Zhen such conversion, exercise or issuance Zould have a dilutive eect on earnings (loss) per share. The dilutive eect of convertible securities is reȵected in diluted earnings (loss) per share by application of the “if converted” method. Investment in subsidiary The Company recognises its investments in subsidiaries at cost, less any provision for impairment. Share capital Ordinary shares are classiȴed as equity. Incremental costs directly attributable to the issue of neZ ordinary shares are shoZn in equity as a deduction from proceeds. Share based payments The fair value of services received from employees and third parties in exchange for the grant of share options and Zarrants is recognised as an expense, except for those granted in connection Zith the issue of neZ ordinary shares Zhich are shoZn as a deduction in equity. A corresponding increase is recognised in other reserves in equity. The fair value of the share options and Zarrants is calculated using an appropriate valuation model. At each reporting period end the Company revises its estimate of the number of options that are expected to become exercisable. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and share premium Zhen exercised. Notes to the Financial Statements For the year ended 31 December 2020 44 | Pembridge Resources plc | Consolidated Financial Statements 6. OPERATING SEGMENTS Operating segments are reported in a manner consistent Zith the internal reporting provided to the Board, Zho are responsible for allocating resources and assessing performance of the operating segment. The Group has one operating segment, being copper mining (of Zhich gold and silver are by-products), therefore all IFRS 8 disclosures are incorporated Zithin other notes to the Financial Statements. 7. REVENUE FROM CONTRACTS WITH CUSTOMERS Year Ended 31 December 2020 US$’000 Year Ended 31 December 2019 US$’000 Copper 53,721 12,789 Gold 10,772 1,579 Silver 204 54 Total gross revenue 64,697 14,422 Less: treatment and selling costs (6,419) (2,024) Revenue 58,278 12,398 All revenue comprises the sale of metal concentrate to one customer. When considering the recognition of revenue, IFRS 15 requires preparers to go through ȴve steps Zhich Zill determine the timing and quantum of the revenue recognised at a given time. 1 Identify contract with a customer Since acquisition, and through 2020, Minto sells its concentrate to only end customer, Zhich is Sumitomo, under an otake agreement. Sales of copper are made direct to Sumitomo and sale of gold and silver are made to Sumitomo via Wheaton, hence the valuation of the gold and silver revenues is determined by Minto’s contract Zith Wheaton but timing of revenue recognition for them is the same as for copper. 2 Identify performance obligation The performance obligation is the sale of copper, gold and silver concentrate to Sumitomo, including its transportation to a location speciȴed by them in Japan. At the end of each month, under the otake agreement, Minto Zeighs and assays the concentrate it has produced and Sumitomo takes title to it, paying Minto a provisional payment of 90 of its value. Minto must keep the concentrate separate from any other product in a location approved by Sumitomo and may not sell it to any other party. From this point, Minto has control over the concentrate and, if it is still physically in Minto’s care, Minto is acting as its custodian for Sumitomo. 3 Determine the transaction price The Company’s metal concentrates are sold under a pricing arrangement Zhere ȴnal prices are determined by quoted market prices in a period subsequent to the date of sale. Until prices are ȴnal, revenues are recorded based on forZard market prices for the expected period of ȴnal settlement. Subsequent variations in the ȴnal determination of the metal concentrate Zeight and assay are recognised as revenue adjustments as they occur until ȴnalised. Subsequent variations in the ȴnal determination of the price are treated as a remeasurement of a ȴnancial asset under IFRS 9 and are recognised as revenue adjustments as they occur until ȴnalised. Allocate price to each performance obligation There is one overarching performance obligation, Zhich is the delivery of metal concentrates to Sumitomo. This includes the production of the concentrates and their transportation to Japan. Their transportation does not carry signiȴcant risks or reZards and its cost can be estimated in advance, so the revenue is recognised net of that cost until it is delivered. 5 Recognise revenue when the performance obligation is satisȴed by transferring good or service to customer (ie the customer obtains control) Because Sumitomo gains control over the concentrate at the end of each month, even if it is on the Minto site, and its subsequent transportation does not carry signiȴcant risks or reZards, the main obligation is satisȴed Zhen Sumitomo takes title and the revenue is booked at this time, net of costs such as transportation and reȴning Zhich Zill be incurred in completing the transaction. Notes to the Financial Statements For the year ended 31 December 2020 45 | Pembridge Resources plc | Consolidated Financial Statements 8. OPERATING LOSS Audit fees and sta costs are shoZn in notes 9 and 10. The exceptional charge of $9,369,000 in 2020 relates to the mark-to-market revaluation of the Capstone liability. Because the payments are dependent on certain conditions related to production and copper prices being met, they are not certain in amount or timing. The copper price at the end of 2020 Zas considerably higher, and the market outlook more positive, than at the end of 2019 so the probability of making the payments dependent on them has correspondingly increased. The revised Shareholders’ Agreement betZeen the Company and its felloZ investors in Minto provides that Minto may fund the deferred consideration payments due from Pembridge to Capstone and it is expected that this Zill happen. The impact of this exceptional charge on the division of 2020 losses betZeen shareholders of the Company and the non-controlling interest is shoZn beloZ. Loss attributable to Shareholders of the Company US$’000 Loss attributable to non-controlling interest US$’000 Total loss US$’000 Loss of Minto (3,538) (12,544) (16,082) Company loss before exceptional item (1,824) - (1,824) Revaluation of Capstone liability (9,369) - (9,369) (14,731) (12,544) (27,275) Exceptional items charged in 2019 related to the acquisition of Minto and the re-listing of the Company’s shares. They comprised legal and listing fees of $609,000 and bonuses to directors and sta of the Company that Zere contingent on the acquisition and re-listing of $1,738,000. 9. AUDITOR’S REMUNERATION Year Ended 31 December 2020 US$’000 Year Ended 31 December 2019 US$’000 Remuneration receivable by the Company’s auditors for the audit of the Financial Statements 48 53 Fees payable to the Company’s auditor and its associates for other services - 39 Total remuneration 48 92 10. EMPLOYEES AND KEY MANAGEMENT During the year, the Group received US$ 1.6 million of emergency Zage subsidy from the Government of Canada due to the Covid-19 pandemic. The Zage subsidy relates to production expenses and has been recognised as a reduction to payroll expense in these consolidated ȴnancial statements. The total Directors’ emoluments for the year, including share based payments, Zere US$1,997,000 (2018 - US$419,000). Detailed disclosure of Directors’ remuneration is disclosed in the Directors’ remuneration report on page 17. The average number of employees in the Group during the year Zas 107 (2019 – 34) and in the Company Zas 3 (2019 – 4). Key management personnel as deȴned under IAS 24 have been identiȴed as only the Board of Directors. Notes to the Financial Statements For the year ended 31 December 2020 46 | Pembridge Resources plc | Consolidated Financial Statements 10. EMPLOYEES AND KEY MANAGEMENT (continued) Group Year ended 31 December 2020 US$’000 Group Year ended 31 December 2019 US$’000 Company Year ended 31 December 2020 US$’000 Company Year ended 31 December 2019 US$’000 6WDFRVWV Wages and salaries 10,349 5,878 766 2,579 Redundancy costs - 668 - 668 Social security costs 284 391 95 391 Injury protection and health insurance 175 270 18 - Pensions 272 65 10 10 Share based payments 204 250 204 250 11,284 7,522 1,093 3,898 11. RELATED PARTY TRANSACTIONS The Company has borroZings from its Chairman and CEO, Gati Al-Jebouri, Zhich incur interest of 10 per annum and are repayable on 31 December 2022. The Company also pays an arrangement fee in the amount of 6 of the amounts draZn doZn under the Convertible Loan. Under this facility, the Company had borroZed e3,430,000 at 31 December 2020. The background and changes to this arrangement during the year are set out beloZ. As previously disclosed in the ȴnancial statements for the year ended 31 December 2019, on 30 October 2019, the Company entered into a convertible loan facility of e1.7 million Zith Gati Al-Jebouri. The loan Zas to be repaid by 25 October 2021 and carried interest at an annual rate of 8. The Company also paid an arrangement fee in the amount of 6 of the amounts draZn doZn under the Convertible Loan. Of this facility, e1.5 million had been borroZed at 31 December 2019. At any time prior to the Termination Date Mr Al-Jebouri could elect to convert all or part of the Convertible Loan into ordinary shares of nominal value 1 pence each in the capital of the Company (“Ordinary Shares”), to be issued at 12.5 pence per share, provided that such election Zould not place the lender’s shareholding above 29.9 of the total issued share capital of the Company. The Company could elect to repay any portion of the Convertible Loan at any point prior to the Termination Date, provided alZays that the Lender Zill have the option to have such repayment made in Ordinary Shares, to be issued at the Conversion Price. On 16 April 2020, the terms of this loan Zere changed as folloZs: • removing the right of Mr. Al-Jebouri to convert any of the loans to shares in the Company; • the maturity date of the loans Zas extended from 25 October 2021 to 31 December 2022. The extension in maturity corresponds Zith the Company’s expectations Zith regard to inȵoZ of funds from Minto Explorations Ltd to the Company; and • In consideration for these changes, the Company agreed to increase the interest rate on the loan from 8 to 10 Zith eect from 1 May 2020, Zith the accumulated interest to be paid only at the maturity date of the loan Zith no interim payments. During 2019, the Company also entered into the folloZing related party transactions Zith its Directors in order to fund Zorking capital: a) On 28 August 2018, the Company borroZed e200,000 from Frank McAllister. The loan had no ȴxed term, but Zas due to be repaid Zithin 30 days of the Company being re-listed. The loan carried an interest rate of 10 per annum, payable semi-annually in arrears. b) On 13 December 2018, the Company borroZed e40,000 from Frank McAllister. The loan had a tZo year term, and carried an interest rate of 20 per annum, payable semi-annually in arrears. c) on 20 December 2018, the Company borroZed e40,000 from Guy Le Bel. The loan had a tZo year term, and carried an interest rate of 20 per annum, payable semi-annually in arrears. d) on 25 February 2019, the Company borroZed e40,000 from Gati Al-Jebouri. The loan had a tZo year term, and carried an interest rate of 20 per annum, payable semi-annually in arrears. On 19 June the Company borroZed an additional e11,033 from him on the same terms. Upon re-listing on 16 December 2019, the above loans and accrued interest thereon Zere settled in shares. Notes to the Financial Statements For the year ended 31 December 2020 47 | Pembridge Resources plc | Consolidated Financial Statements 12. FINANCE COSTS Year Ended 31 December 2020 US$’000 Year Ended 31 December 2019 US$’000 Interest on loans - Pembridge 461 109 Interest on loans - Minto 1,630 618 Discount unZind on reclamation provision 94 376 Interest in respect of lease arrangements 710 192 2,895 1,295 13. INCOME TAX Current tax: Year Ended 31 December 2020 US$’000 Year Ended 31 December 2019 US$’000 UK corporation tax on the result for the year - - Total current taxation - (292) Deferred taxation 106 266 Income tax 106 (26) Dierences explained beloZ: Loss before tax (27,169) (13,087) Loss before tax multiplied by the standard rate 19 (2019: 19) (5,162) (2,487) Eect of: Dierent tax rates (1,051) (519) Non-qualifying depreciation 11 Expenses not deductible 2,391 244 Non-taxable portion of unrealised gains (7) 23 Tax losses for Zhich no deferred income tax asset Zas recognised 3,828 2,738 Yukon mining taxes 106 (26) Tax charge / (credit) for the year 106 (26) Unrecognised deferred tax asset Tax losses UK – excess management expenses 2,165 2,145 Tax losses Canada 5,232 1,727 7,397 3,872 The deferred tax assets are currently unrecognised as the likelihood of suɝcient future taxable proȴts does not yet meet the deȴnition of “probable”. The unrecognised deferred tax asset has no expiry period. The deferred tax liability of $388,000 (2019: $270,000) relates to timing dierences on long-term assets. Notes to the Financial Statements For the year ended 31 December 2020 48 | Pembridge Resources plc | Consolidated Financial Statements 14. EARNINGS PER SHARE The calculation of basic and diluted loss per ordinary share is based on the folloZing data: Year Ended 31 December 2020 Year Ended 31 December 2019 Basic and diluted loss per share (US cents) (20.8c) (33.5c) Weighted average number of shares for basic and diluted loss per share 70,742,894 24,063,552 The basic and diluted loss per share have been calculated using the loss attributable to shareholders of the Company of US$14,731,000 (2019: US$8,063,000) as the numerator, i.e. no adjustment to loss Zas necessary. The basic and dilutive loss per share are the same as the eect of the exercise of share options and Zarrants Zould be anti-dilutive. Details of share options and Zarrants that could potentially dilute earnings per share in future periods are set out in Note 25. 15. PROPERTY PLANT AND EQUIPMENT - GROUP Mineral properties US$’000 Plant, equipment and motor vehicles US$’000 Construction in progress US$’000 Right of use assets – plant and equipment US$’000 Total US$’000 Cost At 1 January 2020 20,281 23,829 2,435 7,178 53,723 Additions 4,070 236 213 6,561 11,080 Adjustment to reclamation provision 2,153 - - - 2,153 Reclassiȴed from mining claims 382 - - - 382 Disposals ----- FX on translation 789 523 63 506 1,881 At 31 December 2020 27,675 24,588 2,711 14,245 69,219 Depreciation At 1 January 2020 (152) (2,080) - (1,284) (3,516) Charge for the year (733) (3,150) - (4,498) (8,381) FX on translation (42) (213) - (269) (524) At 31 December 2020 (927) (5,443) - (6,051) (12,421) Net book value at 31 December 2020 26,748 19.145 2,711 8,194 56,798 Net book value at 31 December 2019 20,129 21,749 2,435 5,894 50,207 Notes to the Financial Statements For the year ended 31 December 2020 49 | Pembridge Resources plc | Consolidated Financial Statements 15. PROPERTY PLANT AND EQUIPMENT - GROUP (continued) Mineral properties US$’000 Plant, equipment and motor vehicles US$’000 Construction in progress US$’000 Right of use assets – plant and equipment US$’000 Total US$’000 Cost At 1 January 2019 - 21 - - 21 Additions - - 403 7,065 7,468 Acquisition of subsidiary 20,370 22,986 1,954 - 45,310 Rehabilitation provision adjustment (813) - - - (813) Disposals - (9) - - (9) FX on translation 724 831 77 113 1,745 At 31 December 2019 20,281 23,829 2,434 7,178 53,722 Depreciation At 1 January 2019 - (6) - - (6) Charge for the year (149) (2,045) - (1,265) (3,459) Depreciation Zritten back on disposals - 4 - - 4 FX on translation (3) (33) - (19) (55) At 31 December 2019 (152) (2,080) - (1,284) (3,516) Net book value at 31 December 2019 20,129 21,749 2,435 5,894 50,207 Net book value at 31 December 2018 - 15 - - 15 Notes to the Financial Statements For the year ended 31 December 2020 50 | Pembridge Resources plc | Consolidated Financial Statements 15. PROPERTY PLANT AND EQUIPMENT - COMPANY 2020 Furniture and oɝce equipment US$’000 2019 Furniture and oɝce equipment US$’000 Cost At 1 January 12 21 Additions -- Disposals -(9) At 31 December 12 12 Depreciation At 1 January (9) (6) Charge for the year (3) (7) Depreciation written back on disposals -4 At 31 December (12) (9) Net book value at 31 December -3 16. INTANGIBLE ASSETS - GROUP 2020 Mining claims US$’000 2019 Mining claims US$’000 Cost At 1 January 394 148 Additions - 237 Reclassiȴed to mineral properties (382) - FX on translation (12) 9 At 31 December - 394 Depreciation At 1 January -- Charge for the year -- FX on translation -- At 31 December -- Net book value at 31 December - 394 Notes to the Financial Statements For the year ended 31 December 2020 51 | Pembridge Resources plc | Consolidated Financial Statements 17. INVENTORIES Group 31 December 2020 US$’000 Group 31 December 2019 US$’000 Consumable parts and supplies 2,842 1,666 Ore stockpiles (to be processed within 12 months) 1,559 4,044 4,401 5,710 Inventories recognised as an expense during the year are shown in proȴt and loss as ȆProduction costs’ and amounted to $62,542,000 (2019: US$14,739,000). US$1,036,000 of inventories were written down during the year (2019: US$nil). 18. TRADE AND OTHER RECEIVABLES Group 31 December 2020 US$’000 Group 31 December 2019 US$’000 Company 31 December 2020 US$’000 Company 31 December 2019 US$’000 Trade receivables 4,736 6,562 - - Inter-company receivables - - 403 394 Other receivables - 10 - 10 Prepayments 615 298 23 14 VAT and other sales taxes 321 693 2 25 Unpaid share capital - 1,047 - 1,047 Other receivables 936 2,048 428 1,490 Trade and other receivables - current 5,672 8,610 428 1,490 Other receivables – non-current: Long-term deposits 7,059 4,040 - 1,517 Inter-company receivables - - 3,399 - Long term deposits are held to provide security for decommissioning cost obligations. The inter-company receivable is payable by Minto to Pembridge. Of this, $3,399,000 results from the transfer during 2020 of the surety account, containing at that date C$4 million, to Minto from Pembridge, and is receivable in 2022. 19. CASH AND CASH EQUIVALENTS Group 31 December 2020 US$’000 Group 31 December 2019 US$’000 Company 31 December 2020 US$’000 Company 31 December 2019 US$’000 Cash and short-term deposits 415 964 16 399 Notes to the Financial Statements For the year ended 31 December 2020 52 | Pembridge Resources plc | Consolidated Financial Statements 20. TRADE AND OTHER PAYABLES Group 31 December 2020 US$’000 Group 31 December 2019 US$’000 Company 31 December 2020 US$’000 Company 31 December 2019 US$’000 Trade payables 16,039 6,973 - - Other payables and accruals 214 1,763 214 1,738 16,253 8,736 214 1,738 Trade and other payables are non-interest bearing and normally settled in the month following date of invoice. 21. LEASE LIABILITIES 2020 Lease liabilities US$’000 2019 Lease liabilities US$’000 At 1 January 5,633 - Additions 6,562 6,974 Lease payments (5,521) (1,621) Interest accretion 710 192 FX on translation 215 88 At 31 December 7,599 5,633 Current portion 4,764 2,899 Non-current portion 2,835 2,734 7,599 5,633 31 December 2020 US$’000 31 December 2019 US$’000 Undiscounted lease liabilities: No later than 1 year 5,336 3,328 Later than 1 year and not later than 5 years 3,244 2,939 At 31 December 8,580 6,267 During the year, the Group entered into lease arrangements for several mining equipment assets. The incremental borrowing rate for the lease liabilities initially recognised is 10 percent. Interest expense on the lease liabilities amounted to US$710,000 for the period ended December 31, 2020 (2019 - $192,000). There were no leases with residual value guarantees or leases not yet commenced to which Minto is committed. The expense relating to short-term leases and low value leases amounted to $nil for the period ended December 31, 2020 (2019 - $nil). The right of use assets are shown in Note 15. The maturity analysis of lease liabilities is disclosed in Note 28. Notes to the Financial Statements For the year ended 31 December 2020 53 | Pembridge Resources plc | Consolidated Financial Statements 22. RECLAMATION AND CLOSURE COST PROVISION 2020 US$’000 2019 US$’000 At 1 January 22,438 22,084 Change in estimate 2,153 (813) Interest expense from discounting obligations 94 376 FX on translation 601 791 At 31 December 25,286 22,438 A reclamation and closure cost obligation has been recognised in respect of the mining operations of the Minto Mine, including associated infrastructure and buildings. The estimated undiscounted cash ȵows required to satisfy the Minto reclamation and closure cost obligation as at December 31, 2020 were US$23.9 million (2019: US$20.8 million), which were adjusted for inȵation and uncertainty of the cash ȵows and then discounted using current market-based pre-tax discount rate of 0.39 percent (2019: 1.68 percent). An amount of C$72.1 million is secured by a Surety Bond from Zurich Insurance Company Ltd. in favour of the Government of Yukon. Capstone Mining Corp. acts as an indemnitor to the surety bond provider. The Company expects that the cash outȵows in respect to the balances accrued at the ȴnancial statement date will occur proximate to the dates these long-term assets are retired. In view of uncertainties concerning reclamation and closure cost obligations, the ultimate costs could be materially dierent from the amounts estimated. The estimate of future reclamation and closure cost obligations is also subject to change based on amendments to applicable laws and legislation. Future changes in reclamation and closure cost obligations, if any, could have a signiȴcant impact on the asset retirement obligation. Notes to the Financial Statements For the year ended 31 December 2020 54 | Pembridge Resources plc | Consolidated Financial Statements 23. BORROWINGS Group 31 December 2020 US$’000 Group 31 December 2019 US$’000 Company 31 December 2020 US$’000 Company 31 December 2019 US$’000 Loan notes 8,911 8,582 - - Loans from directors 5,198 2,049 5,198 2,049 Prepayment funding 1,361 - - - Borrowings – non-current 15,470 10,631 5,198 2,049 Prepayment funding - current 1,580 - - - Other loans - current 20 - 20 - Total borrowings 17,070 10,631 5,218 2,049 The Company and Minto entered into a Financing Agreement on 3 June 2019 with Copper Holdings, LLC, a New York based private equity group and Cedro Holdings I, LLC, an entity managed by Lion Point Capital, L.P. (together, the ȆȆInvestor Consortium’’), pursuant to which the Investor Consortium advanced $10 million to Minto to ȴnance the recommencement of operations. The $10 million comprised $1.6m of subscription proceeds from new ȆB’ shares issued by Minto and $8.4m of proceeds, net of a 15.9 discount, from a private placement of $10m of 8 loan notes. The Investor Consortium shall be entitled to be repaid from all free cash-ȵows and realisations arising from Minto until the holders of the loan note (i.e., the Investment Consortium, their assignors and successors) have received US$10,000,000 plus interest at a rate of 8 per annum. The Investor Consortium have been granted security over the assets of Minto until such time as the holders of the loan note have been repaid. On 8 September 2020, Minto entered into a Prepayment Facility Agreement with Sumitomo Canada Limited, the purchaser of its copper under an otake agreement, under which Sumitomo has security over Minto’s assets. The facility limit is US$12.5 million and may be drawn against at any time giving notice in increments of US$1 million. Interest is calculated quarterly on the outstanding balance at LIBOR for the applicable period. The balance is repayable over the remaining life of the related otake agreement. On 30 October 2019, the Company entered into a loan facility of e1.7 million with Gati Al-Jebouri, Chief Executive Oɝcer and Chairman of the Board, which was increased to e3.7 million in February 2020 and reduced to e3.4m in January 2021. The loan is to be repaid by 31 December 2022 and carries interest at an annual rate of 10. The Company also pays an arrangement fee in the amount of 6 of the amounts drawn down under the Loan. Of this facility, the full e3.4 million had been borrowed at 31 December 2020. 24. SHARE CAPITAL AND PREMIUM Allotted, called up and fully paid Number of ordinary shares Share Capital – ordinary shares US$000 Share premium US$000 Total US$000 At 1 January 2020 63,231,494 825 8,900 9,725 Proceeds from share issue at 0.033p per share 11,175,499 140 322 462 At 31 December 2020 74,406,993 965 9,222 10,187 Ordinary shares have attached to them full voting, dividend and capital distribution rights (including on a winding up). On 16 April 2020 the Board of Directors approved the issuance and allotment of 11,175,499 new ordinary shares at a price of 3.3p each, raising proceeds of e368,000. In order to enable this share issue within the rules of the London Stock Exchange the directors agreed to surrender their share options and the following changes were made to the Convertible Loan Agreement with Pembridge’s Chairman and Chief Executive Oɝcer, Gati Al-Jebouri: • removing the right of Mr. Al-Jebouri to convert any of the loans to shares in the Company; • the maturity date of the loans was extended from 25 October 2021 to 31 December 2022. The extension in maturity corresponds with the Company’s expectations with regard to inȵow of funds from Minto Explorations Ltd to the Company; and • in consideration for these changes, the Company agreed to increase the interest rate on the loan from 8 to 10 with eect from 1st May 2020, with the accumulated interest to be paid only at the maturity date of the loan with no interim payments. To increase the share capital headroom and so enable the share issue, the Directors surrendered their rights to options over 4,085,000 shares. Notes to the Financial Statements For the year ended 31 December 2020 55 | Pembridge Resources plc | Consolidated Financial Statements 25. SHARE BASED PAYMENTS Movements in the number of share options and warrants and their related weighted average exercise prices are as follows: 2020 2019 Options and warrants Number Average exercise price (pence) Options and warrants Number Average exercise price (pence) Outstanding at 1 January 7,859,800 19.09 177,110,843 3.29 Impact of share consolidation - (159,399,759) Granted 7,206,666 5.69 6,284,800 12.65 Forfeited (7,159,000) 15.90 (16,136,084) 33.39 Outstanding at 31 December 7,907,466 9.77 7,859,800 19.09 Exercisable at 31 December 1,200,800 36.44 1,650,800 39.23 The weighted average remaining contractual life for the share options and warrants outstanding as at 31 December 2020 was 6.2 years (2019: 8.6 years). The fair value of share-based payment transactions is calculated using the Black-Scholes Option Pricing Model. Key inputs to the model were: volatility 77.75, risk free rate 0.75 and dividend yield 0. Share options and warrants outstanding at the end of year have the following expiry dates and exercise prices: Grant-Vest Expiry date Exercise price (pence) 2020 Number 2019 Number 2017 2021 43.4 600,000 600,000 2018 2022 43.4 300,000 300,000 2018 2027 20.00 - 225,000 2018-2019 2027 40.00 - 225,000 2018-2020 2027 80.00 - 225,000 2019-2021 2029 12.50 - 5,984,000 2019 2022 15.625 300,800 300,800 2020-2021 2023 5.00 2,791,666 - 2020-2021 2030 5.00 3,915,000 - Notes to the Financial Statements For the year ended 31 December 2020 56 | Pembridge Resources plc | Consolidated Financial Statements 26. BUSINESS COMBINATION AND ACQUISITION OF NON-CONTROLLING INTEREST There were no acquisitions in 2020. Acquisition of Minto Explorations Ltd On 3 June 2019 the Company acquired all of the outstanding common shares of Minto Explorations Ltd (Minto) from Capstone Mining Corp (Capstone) (“Minto Acquisition”). The consideration for the Minto Acquisition, which is unconditional, comprises up to US$20 million in total payments due to Capstone payable out of future cash ȵows and realisations from Minto and based on certain hurdles linked to production levels at Minto as well as future copper prices as detailed below. 1. First payment to Capstone of US$5 million will be due at the earlier of when production at Minto has reached a steady state 60 of mill capacity and 21 January 2021 (the ȆRestart Date’). 2. Second payment to Capstone of US$5 million will be due onc e production at Minto has reached 60 of mill capacity and the copper price has averaged over US$3.00/lb (US$6,615/t) for two consecutive quarters, within three years of the Restart Date. 3. Final payment to Capstone of US$10 million will be due upon the copper price achieving an average of US$3.50/lb (US$7,717/t) for two consecutive quarters, within three years of the Restart Date. The Company calculated a fair value for the total consideration due for the Minto Acquisition as US$9.2 million, and accordingly a liability of $9.2 million was recorded in the consolidated statement of ȴnancial position. Because its payment is dependent on future events, this liability is subject to revaluation on a mark-to-market basis, and has been so revalued as at 31 December 2020. This liability is held in the books of the Company but the revised Shareholders’ Agreement between the Company and its fellow investors in Minto provides that Minto may fund the deferred consideration payments due from Pembridge to Capstone and it is expected that this will happen. On the same day, to fund the re-starting of mine operations, Pembridge made an agreement with two other investors, Copper Holdings and Lion Point, who each acquired non-voting B shares in Minto which represent a one third economic interest each in Minto. The provisional fair values of identiȴable assets and liabilities of Minto as at the date of acquisition were: Provisional fair value $’000 Cash and cash equivalents 1 Inventory 2,325 Long term deposits 2,371 Current assets 4,697 Mineral properties 20,370 Property, plant and equipment 22,986 Construction in progress 1,954 Non-current assets 45,310 Total assets 50,007 Income and mining tax (317) Reclamation and closure cost provision (22,084) Total liabilities (22,401) Net Assets acquired at fair value 27,606 Non-controlling interest 18,404 Purchase consideration 9,202 27,606 Notes to the Financial Statements For the year ended 31 December 2020 57 | Pembridge Resources plc | Consolidated Financial Statements 26. BUSINESS COMBINATION AND ACQUISITION OF NON-CONTROLLING INTEREST (continued) The Group elected to recognise the non-controlling interest at the proportionate share of the acquired identiȴable net assets. The ȴnalisation of the valuation work required to determine the fair values of the assets and liabilities acquired was completed within 12 months of the acquisition date. The Company’s one third economic interest in Minto means that it had an interest in 33 of the above net assets, which is US$9.2m. No goodwill arose on the acquisition. During 2020, the Company’s economic interest reduced to 11 under a revised Shareholders’ Agreement with the other Minto shareholders under which the other shareholders contributed US$3 million of new equity to Minto and the Company was relieved of a funding obligation of C$2 million, and it was agreed that Minto may fund the deferred consideration payments due from Pembridge to Capstone. The revenue and loss before tax of Minto from acquisition to 31 December 2019, and for the full year of acquisition, are set out below. From acquisition US$’000 From 1 January 2019 US$’000 Revenue 12,398 24,556 Loss before income tax (7,562) (13,916) There was no up front consideration for the acquisition. Transaction costs such as legal fees directly related to the acquisition were $198,000. The non-current assets are not movable so were valued on an income basis as a part of the wider Minto business. This required a DCF valuation of the overall business, based on the investment case, which gave a Business Enterprise Value (ȆBEV’). The values of the mineral properties and property, plant and equipment from an independent valuation were reduced by an obsolescence provision in order that the fair-valued nets assets would ȴt within the BEV. Minto’s reclamation and closure cost provision reȵects its obligation to restore past disturbances caused by the mining, exploration and development of the mine. It was valued with the income approach, reȵecting the present value of the expected reclamation cash ȵows, based on an appropriate discount rate to reȵect the time value and risk of the cash ȵows. 27. NON-CONTROLLING INTEREST IN MINTO EXPLORATIONS LTD In June 2020, the Company and its fellow investors agreed changes to the terms of the Shareholders’ Agreement. These changes resulted in new investment into Minto by Copper Holdings and Cedro Holdings of US$ 3 million and relieved the Company of some large ȴnancial obligations. They also resulted in a change in relative economic interests in Minto, increasing the combined economic ownership of Copper Holdings and Cedro Holdings in Minto from 66.66 percent to 89 percent and reducing the economic ownership of Pembridge from 33.33 percent to 11 percent. The Company considers that, although it now has an economic interest of considerably less than 50 in Minto’s results and net assets, it has control over Minto through holding 100 of voting rights and having control of the Minto Board, which means that it is able to control the day-to-day operations of the mine. On this basis it continues to consolidate the results of Minto. Year ended 31 December 2020 $’000 Year ended 31 December 2019 $’000 Balance at start of period 15,063 - On acquisition of 67 economic interest of subsidiary - 18,404 Investment by non-controlling interest in Minto share capital 2,670 1,059 Change in share of economic interest in Minto 3,124 - Share of loss for the period (12,544) (5,024) Share of exchange dierence on translation (2) 624 Balance at end of period 8,311 15,063 Notes to the Financial Statements For the year ended 31 December 2020 58 | Pembridge Resources plc | Consolidated Financial Statements 27. NON-CONTROLLING INTEREST IN MINTO EXPLORATIONS LTD (continued) Summarised ȴnancial information for Minto since its acquisition on 3 June 2019 is set out below. Summarised income statement Year to 31 December 2020 $’000 3 June – 31 December 2019 $’000 Revenue 58,278 12,398 Operating loss (13,341) (6,345) Loss before income tax (15,976) (7,562) Income tax (106) 26 Loss for the year (16,082) (7,536) Summarised statement of ȴnancial position Non-current assets 63,454 52,726 Current assets 7,048 13,789 Non-current liabilities (38,782) (34,024) Current liabilities (22,382) (9,896) Net assets 9,338 22,595 Cash ȵow statement Cash ȵows from operating activities 9,455 (6,884) Cash ȵows from investing activities (8,773) (559) Cash ȵows from ȴnancing activities (890) 7,998 Net increase in cash and cash equivalents (208) 555 Cash and cash equivalents at start of period 565 1 Impact of exchange rates on cash balances 42 9 Cash and cash equivalents at end of period 399 565 Notes to the Financial Statements For the year ended 31 December 2020 59 | Pembridge Resources plc | Consolidated Financial Statements 28. FINANCIAL INSTRUMENTS 6LJQLȴFDQWDFFRXQWLQJSROLFLHV Details of the signiȴcant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of ȴnancial asset, ȴnancial liability and equity instrument, are disclosed in note 5. The only ȴnancial assets currently held by the Group are classiȴed as receivables and cash and cash equivalents. &DWHJRULHVRIȴQDQFLDOLQVWUXPHQWV The carrying amounts presented in the statement of ȴnancial position relate to the following categories of assets and liabilities. The trade payables are concentrate receivables as described in note 5. Because of the conditional nature of the deferred consideration due to Capstone, this balance is shown at fair value and is subject to subsequent remeasurement with changes in fair value being booked to the income statement. Group 31 December 2020 US$’000 Group 31 December 2019 US$’000 Company 31 December 2020 US$’000 Company 31 December 2019 US$’000 Financial assets $WIDLUYDOXHWKURXJKSURȴWDQGORVV Trade receivables 4,736 6,562 - - At amortised cost Inter-company receivables - - 3,802 394 Other receivables 321 1,750 2 1,082 Long-term deposits 7,059 4,040 - 1,517 Cash and cash equivalents 415 964 16 399 12,531 13,316 3,820 3,392 Financial liabilities At amortised cost Trade payables (16,039) (6,973) - - Other payables (214) (1,763) (214) (1,738) Borrowings (17,070) (10,631) (5,218) (2,049) $WIDLUYDOXHWKURXJKSURȴWDQGORVV Deferred consideration due to Capstone (18,571) (9,202) (18,571) (9,202) (51,894) (28,569) (24,003) (12,989) As at 31 December 2020, trade and other receivables are all considered to be recoverable. The fair value is equivalent to book value for current assets and liabilities at amortised cost. Trade receivables are classiȴed as level 2 under the fair value hierarchy. The key inputs to the valuation of the trade receivable balance are payable metal and future metal prices. At each reporting date, trade receivables are marked-to-market based on a quoted forward price for which there exists an active market. The main risks arising from the Company’s ȴnancial instruments are liquidity risk and foreign currency risk. Interest rate risk is minimised by ȴxed rate borrowings as described in note 23. The Directors review and agree policies for managing these risks and these are summarised below. Notes to the Financial Statements For the year ended 31 December 2020 60 | Pembridge Resources plc | Consolidated Financial Statements 28. FINANCIAL INSTRUMENTS (continued) /LTXLGLW\ULVN Liquidity risk arises from the Group’s management of working capital. It is the risk that the Company will encounter diɝculty in meeting its ȴnancial obligations as they fall due. The Directors are current assessing the Company’s options in respect of raising additional ȴnance for the business. The Directors monitor cash ȵow on a regular basis and at quarterly Board meetings in the context of their expectations for the business, in order to ensure suɝcient liquidity is available to meet foreseeable needs. The Group’s cash at bank is held with institutions with A, AA and AA- credit ratings (Fitch). As of December 31, 2020, the Group’s liabilities that have contractual maturities were as follows: Contractual cash ȵows Carrying amount US$’000 Total US$’000 2021 US$’000 2022 US$’000 2023 US$’000 2024 US$’000 After 2024 US$’000 Trade and other payables 16,253 16,253 16,253 - - - - Long term debt 17,070 18,158 776 650 6,228 10,504 - Lease liabilities 7,599 8,580 5,336 2,332 912 - - Payable to Capstone 18,571 20,000 20,000 - - - - 59,493 62,991 42,365 2,982 7,140 10,504 - The amount that will actually be paid to Capstone, and the timing thereof, is dependent on future copper price movements, so is not certain, and there may be scope to negotiate a delay in payments beyond one year if this is necessary. Because the liability would become payable in full only if copper prices remain at or above certain levels, the same factors that would cause it to be payable would also assist the Group in funding it through increased operational cash ȵows. As of December 31, 2019, the Group’s liabilities that have contractual maturities were as follows: Contractual cash ȵows Carrying amount US$’000 Total US$’000 2020 US$’000 2021 US$’000 2022 US$’000 2023 US$’000 After 2023 US$’000 Trade and other payables 15,709 15,709 15,709 - - - - Long term debt 10,631 12,119 - 2,133 - - 9,986 Lease liabilities 5,634 6,268 3,329 2,525 414 - - Payable to Capstone 9,202 5,000 5,000 - - - - 41,176 39,096 24,038 4,658 414 - 9,986 The cash ȵows for the payable to Capstone above were limited to the ȴrst payment due to the uncertainty over the other components of the balance. Notes to the Financial Statements For the year ended 31 December 2020 61 | Pembridge Resources plc | Consolidated Financial Statements 28. FINANCIAL INSTRUMENTS (continued) )RUHLJQFXUUHQF\ULVNPDQDJHPHQW The carrying amounts of monetary assets and monetary liabilities denominated in a currency other than the relevant company’s functional currency at the reporting date are as follows: USD items in a CAD functional company 31 December 2020 US$’000 GBP items in a USD functional company 31 December 2020 US$’000 USD items in a CAD functional company 31 December 2019 US$’000 GBP items in a USD functional company 31 December 2019 US$’000 Financial assets Trade receivables 4,736 - 6,562 - Other receivables - 2 362 1,082 Cash and cash equivalents 257 16 754 399 Long term deposits 351 - - - 5,344 18 7,678 1,481 Financial liabilities Trade and other payables (119) (214) (363) (1,738) Long term debt (11,852) (5,198) (8,582) (2,049) (11,971) (5,412) (8,945) (3,787) (6,627) (5,394) (1,267) (2,306) The following table details the Group’s sensitivity to a 10 increase and decrease in the US dollar against the relevant foreign currencies. 10 is the sensitivity rate used when reporting foreign currency risk internally and represents Management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 10 change in foreign currency rates. A positive number below indicates an increase in proȴt and equity where the US dollar strengthens 10 against the relevant currency. For a 10 weakening of the US dollar against the relevant currency, there would be an equal and opposite impact on the proȴt and equity, and the balances below would be negative. 31 December 2020 US$’000 31 December 2019 US$’000 Eect on loss 10 539 36 -10 539 36 Eect on equity 10 1,355 36 -10 1,355 36 Notes to the Financial Statements For the year ended 31 December 2020 62 | Pembridge Resources plc | Consolidated Financial Statements 29. RECONCILIATION OF MOVEMENT IN NET DEBT 2020 At 1 January US$’000 New borrowing US$’000 Interest added to debt US$’000 Debt repaid US$’000 Other cash ȵows US$’000 Foreign exchange US$’000 At 31 December US$’000 Cash at bank and in hand 964 5,471 - (5,643) (419) 42 415 Borrowings - by the Company (2,049) (2,471) (515) 50 - (233) (5,218) by Minto (8,582) (3,000) (342) 72 - - (11,852) (10,631) (5,471) (857) 122 - (233) (17,070) Lease liabilities (5,633) (6,562) (710) 5,521 - (215) (7,599) Net debt (15,300) (6,562) (1,567) - (419) (406) (24,254) 2019 At 1 January US$’000 New borrowing US$’000 Interest added to debt US$’000 Debt repaid US$’000 Other cash ȵows US$’000 Foreign exchange US$’000 At 31 December US$’000 Cash at bank and in hand 151 10,701 - (2,765) (7,132) 9 964 Borrowings - by the Company (382) (2,265) (144) 707 - 35 (2,049) by Minto - (8,436) (583) 437 - - (8,582) (382) (10,701) (727) 1,144 - 35 (10,631) Lease liabilities - (6,974) (192) 1,621 - (88) (5,633) Net debt (231) (6,974) (919) - (7,132) (44) (15,300) 30. CAPITAL MANAGEMENT POLICIES AND PROCEDURES The Company considers its capital to be equal to the sum of its total equity, disclosed on the Group Balance Sheet, and net debt. The Group’s objectives when managing its capital are: • To ensure that the Group and all of its businesses are able to operate as going concerns and ensure that the Group operates within the ȴnancial covenants contained within its debt facilities • To have available the necessary ȴnancial resources to allow the Group to invest in areas that may deliver acceptable future returns to investors • To maintain suɝcient ȴnancial resources to mitigate against risks and unforeseen events • To maximise shareholder value through maintaining an appropriate balance between the Group’s equity and net debt Notes to the Financial Statements For the year ended 31 December 2020 63 | Pembridge Resources plc | Consolidated Financial Statements 31. GROUP STRUCTURE The parent entity of the Group is Pembridge Resources plc, incorporated in England, and the book value of its subsidiaries are set out below. 2020 Company $’000 2019 Company $’000 At 1 January 9,202 - Acquisition - 9,202 At 31 December 9,202 9,202 On 3 June 2019, the Company acquired 100 of the voting rights in Minto Exploration Ltd (ȆMinto’), which gives it control over the running of its subsidiary. The other two investors in Minto have non-voting shares which do not give them control but do entitle them each to a third of its economic interest. As part of the agreement with the other two investors they also each gained a third in the economic interests of Yukon 536545 Inc. and Yukon 536445 Inc. The details of its subsidiaries are as follows. Ownership Interest Activity Registered oɝce address Jurisdiction As at 31 December 2020 As at 31 December 2019 Yukon 536545 Inc. Holds mining rights 200-204 Lambert Street, Whitehorse, YT, Y1A 1Z4 Canada 11 33 Yukon 536445 Inc. Holds mining rights 200-204 Lambert Street, Whitehorse, YT, Y1A 1Z4 Canada 11 33 Minto Exploration Ltd. Mining 625 Howe Street, Suite 860, Vancouver, BC, V6C 3B8 Canada 11 33 Minotaur Acquisition Ltd. Dormant 625 Howe Street, Suite 860, Vancouver, BC, V6C 3B8 Canada 100 100 The change in ownership interest during 2020 is explained in note 27. Notes to the Financial Statements For the year ended 31 December 2020 64 | Pembridge Resources plc | Consolidated Financial Statements Notes to the Financial Statements For the year ended 31 December 2020 32. COMMITMENTS AND CONTINGENCIES Contingent consideration On 3 June 2019, the Company acquired all of the outstanding common shares of Minto Explorations Ltd (“Minto”) from Capstone Mining Corp (Capstone) (“Minto Acquisition”). The consideration for the Minto comprises up to US$20 million in total payments due to Capstone payable out of future cash ȵows and realisations from Minto and based on certain hurdles linked to production levels at Minto as well as future copper prices as detailed below. Of the three payments detailed below, the ȴrst is contingent only in respect of its timing, whereas payments 2 and 3 are contingent on copper prices reaching certain levels within a speciȴed timeframe. 1. First payment to Capstone of US$5 million will be due at the earlier of when production at Minto has reached a steady state 60 of mill capacity and 31 January 2021 (the ȆRestart Date’). 2. Second payment to Capstone of US$5 million will be due once production at Minto has reached 60 of mill capacity and the copper price has averaged over US$3.00/lb (US$6,615/t) for two consecutive quarters, within three years of the Restart Date. 3. Final payment to Capstone of US$10 million will be due upon the copper price achieving an average of US$3.50/lb (US$7,717/t) for two consecutive quarters, within three years of the Restart Date. Because the payments are dependent on the above conditions being met, they are not certain in amount or timing. The Company has calculated a fair value as at 31 December 2020 for the total consideration due for the Minto Acquisition as US$18.6 million (2019: US$9.2 million). This amount is divided between current and current liabilities as shown below, for both the Company and Group. The revised Shareholders’ Agreement between the Company and its fellow investors in Minto provides that Minto may fund the deferred consideration payments due from Pembridge to Capstone and it is expected that this will happen. $’000 $’000 Current 18,571 4,897 Non-current - 4,305 18,571 9,202 Agreements with the Selkirk First Nation Under the terms of a revised co-operation agreement between Minto and the Selkirk First Nation (“Selkirk”) dated 15 October 2009, Minto has made various commitments to Selkirk to enhance Selkirk participation in the Minto Mine, including a variable net smelter return royalty on production from the Minto Mine that ȵuctuates from 0.5 to 1.5 depending on the variation of copper prices, as well as various commitments in respect of employment, contracting, training and scholarship opportunities. 33. EVENTS SUBSEQUENT TO THE REPORTING DATE On 8 January 2021 the Board of Directors announced the issuance and allotment of 14,250,000 new ordinary shares at a price of 4.0p each, raising proceeds of e570,000. Of these shares, 2,500,000 were issued in January and the remaining 12,000,000 are to be issued in May 2021. In accordance with the Share Purchase Agreement between Pembridge and Capstone, dated 3 June 2019, the purchase price for the acquisition of Minto is deȴned as US$5 million payable by 31 March 2021 plus an additional up to US$15 million payable subject to copper price levels as set out an RNS dated 4 June 2019. On 29 June 2020 the Amended and Restated Shareholders’ Agreement (“Agreement”) between the Company and its fellow investors in Minto was signed. As per the Agreement, Minto shall pay the deferred consideration payments to Capstone on behalf of Pembridge and the ȴrst payment of US$5 million noted above was made by Minto on 30 March 2021. 65 | Pembridge Resources plc | Company Information Company Information Directors Gati Al-Jebouri Francis Ralph McAllister Guy Le Bel (Chairman and Chief Executive Oɝcer) (Non-Executive Director) (Non-Executive Director) Secretary David James Registered oɝce 200 Strand London WC2R 1DJ Registered number 07352056 (England and Wales) Auditor PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD Bankers Bank of Scotland St James’s Gate 14-16 Cockspur Street London SW1Y 5BL Solicitors Armstrong Teasdale (UK) Limited 200 Strand London WC2R 1DJ Brokers Brandon Hill Capital Ltd Kemp House 152-160 City Road London EC1V 2NX Registrars Link Group 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL Website www.pembridgeresources.com TDIM PERE 66 | Pembridge Resources plc | Notice of Annual General Meeting THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK, SOLICITOR, ACCOUNTANT, FUND MANAGER OR OTHER APPROPRIATE INDEPENDENT FINANCIAL ADVISER. If you have sold or otherwise transferred all of your shares in Pembridge Resources plc (the “Company”), you should send this document together with the accompanying documents as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was eected, for delivery to the purchaser or transferee. Pembridge Resources plc Annual General Meeting 24 June 2021 Notice of Annual General Meeting Notice is given that the Annual General Meeting (“AGM”) of the Company will be held at the oɝces of Armstrong Teasdale LLP 200 Strand London WC2R 1DJ on 24 June 2021 at 2:00 p.m. to consider, and if thought ȴt, to pass the following resolutions. In line with Governmental guidelines related to Covid-19, the AGM will not be a public meeting and attendance by shareholders will not be allowed. Shareholders are strongly encouraged to vote online at www.signalshares.com in accordance with the instructions available on this website. This letter provides you with some general background and explanation of the resolutions to be put to the AGM. PLEASE NOTE: IMPORTANT INFORMATION: The health and well-being of our colleagues, shareholders and the communities in which we operate is a priority for us. However, we are also committed to ensuring that shareholders can exercise their right to vote in the upcoming AGM. In line with government guidelines, the AGM will not be a public meeting and attendance by shareholders will not be allowed but shareholders can be represented by appointing the Chair of the meeting as their proxy. Shareholders are strongly encouraged to vote online at www.signalshares.com in accordance with the instructions available on this website. Shareholders are encouraged to return this as early as possible in advance of the AGM in accordance with the procedures set out on the website in order to vote remotely at the AGM and in any event no later than 2.00 p.m. on 22 June 2021. Following the AGM, the results of the voting will be posted RQWKH&RPSDQ\ȇVZHEVLWHDQGQRWLȴHGWRWKH/RQGRQ Stock Exchange. The quorum for the AGM is any two shareholders or their proxies / corporate representatives. We are therefore PDNLQJDUUDQJHPHQWVIRUWKHTXRUXPWREHVDWLVȴHGE\ the attendance of two directors/employee shareholders. In view of the restrictions on travel and public gatherings in place at the date of writing, we do not intend to admit any other shareholders to the meeting venue and any shareholder who attempts to attend the AGM in person will be excluded from the AGM by the Chair. Proceedings ZLOOEHDVEULHIDVSRVVLEOHDQGZHZLOOQRWEHRHULQJ refreshments. In the event that, nearer the time, relaxation of Covid-related guidelines means that the AGM may be attended by shareholders, we will issue an RNS to WKLVHHFWWKDWDOVRZLOOSRVWHGRQRXUZHEVLWHDW www.pembridgeresources.com. Notice of Annual General Meeting 67 | Pembridge Resources plc | Notice of Annual General Meeting Resolutions 1 to 8 (inclusive) will be proposed as ordinary resolutions and resolution 9 will be proposed as a special resolution, and the authorities sought in resolutions 8 and 9 (inclusive) are designed to capture the authorities which the Company would request in the ordinary course. Ordinary resolutions 1. To receive the Company’s au dited ȴnancial statements for the ȴnancial year ended 31 December 2020, together with the Directors’ reports and the auditor’s reports set out in the annual report for the year ended 31 December 2020 (the “2020 Annual Report”). 2. To approve the Directors’ remuneration report for the year ended 31 December 2020, as set out on pages 16 to 18 of the 2020 Annual Report. 3. To re-elect Gati Al-Jebouri as a director of the Company. 4. To re-elect Guy Le Bel as a director of the Company. 5. To re-elect Frank McAllister as a director of the Company. 6. To re-appoint PKF Littlejohn LLP as auditor of the Company to hold oɝce from the conclusion of this meeting until the conclusion of the next AGM of the Company at which accounts are laid. 7. To authorise the Directors to set the fees paid to the auditor of the Company. 8. THAT the Directors be and they are hereby generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (“the Act”) to exercise all powers of the Company to allot shares in the capital of the Company up to an aggregate nominal amount of £300,000 provided that this authority shall, unless renewed, varied or revoked by the Company in general meeting, expire at the conclusion of the Company’s next Annual General Meeting after this resolution is passed or, if earlier, at the close of business 15 months after the passing of this resolution, but, in each case, so that the Company may make oers or agreements before the authority expires which would or might require shares to be allotted or Rights to be granted after the authority expires, and so that the Directors may allot shares or grant Rights in pursuance of any such oer or agreement notwithstanding that the authority conferred by this resolution has expired. Special resolution 9. THAT (subject to passing of resolution 8 set out in the notice of this meeting) the Directors be empowered to allot ordinary shares (as deȴned in section 560 of the Act) of the Company for cash, pursuant to the authority of the directors under Section 551 of the Act conferred by resolution 2 above (in accordance with Section 570(1) of the Act), and/or by way of a sale of treasury shares for cash (in accordance with Section 573 of the Act), in each case, as if section 561 of the Act did not apply to any such allotment or sale, provided that this power shall be limited to allotments of ordinary shares up to an aggregate nominal amount of £300,000; unless renewed, varied or revoked by the Company in general meeting, such power shall expire at the commencement of the next Annual General Meeting of the Company, but so that the Company may before such expiry make an oer or agreement which would or might require ordinary shares to be allotted or treasury shares to be sold after such expiry, and the Directors may allot ordinary shares or sell treasury shares in pursuance of any such oer or agreement as if the power conferred by this resolution had not expired. Recommendation Your board of Directors (the “Board”) believe that each of the resolutions to be proposed at the AGM is in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend that shareholders vote in favour of all of the resolutions proposed, as the Directors intend to do in respect of their own beneȴcial holdings. BY ORDER OF THE BOARD David James Company Secretary 25 May 2021 Pembridge Resources plc Registered Oɝce: 200 Strand London WC2R 1DJ Registered in England No. 07352056 68 | Pembridge Resources plc | Notice of Annual General Meeting Resolutions 1 to 4 (inclusive) will be proposed as ordinary resolutions, which means that for each of those resolutions to be passed, more than half the votes cast must be cast in favour of the resolution. Resolution 5 will be proposed as a special resolution, which means that for such resolution to be passed, at least three-quarters of the votes cast must be cast in favour of the resolution. Resolution 1 – Receipt of 2020 Annual Report The Directors are required to lay the Company’s audited ȴnancial statements and the Directors’ and auditor’s reports before shareholders each year at a general meeting of the Company. The audited ȴnancial statements and the Directors’ and auditor’s reports for the year ended 31 December 2020 are included in the 2020 Annual Report. Resolution 2 – Approval of Directors’ remuneration report The Directors’ remuneration report (the “Directors’ Remuneration Report”) is presented in two sections: • the annual statement from the Chairman of the Remuneration Committee; and • the annual report on remuneration. The annual statement from the Chairman of the Remuneration Committee, set out in the 2020 Annual Report, summarises, for the year ended 31 December 2020, the major decisions taken on Directors’ remuneration, any substantial changes relating to Directors’ remuneration made during the year, and the context in which those changes occurred and decisions have been taken. The annual report on remuneration, set out in the 2020 Annual Report, provides details of the remuneration paid to Directors in respect of the year ended 31 December 2020, including base salary, taxable beneȴts, short-term incentives (including percentage deferred), long-term incentives vested in the year, pension-related beneȴts, any other items in the nature of remuneration and any sum(s) recovered or withheld during the year in respect of amounts paid in earlier years. The Directors’ Remuneration Report is subject to an annual advisory shareholder vote by way of an ordinary resolution; resolution 2 is to approve the Directors’ Remuneration Report. Resolutions 3 to 5 – Individual re-election of Directors In accordance with the UK Corporate Governance Code (the “Code”) and the Articles, every Director will stand for re-election at the AGM. Biographical details of each Director are set out below. Over half of the Directors standing for re-election/election are Non-executive Directors who are considered independent under the Code. Gati Al-Jebouri - Chairman Mr Al-Jebouri, who was born in Bulgaria in 1969, graduated from the University of Bristol with a Civil Engineering degree in 1990 and from the Institute of Chartered Accountants as a chartered accountant in 1994. In 2001 he was appointed Deputy Minister of Energy of Bulgaria and in 2002 Bulgaria’s First Deputy Minister of Finance. His varied career has included working for the accountancy ȴrm KPMG in London and Bulgaria until being recruited to LUKOIL, where he soon became Director of investment and Finance in the London oɝce. In 2003 he became Chief Financial Oɝcer of LITASCO (LUKOIL International Trading and Supply Company), where he rose to Chief Executive Oɝcer two years later. In 2010 he became Executive Director for Finance and Marketing of LUKOIL Mid East Ltd and in 2016 was promoted to Vice President LUKOIL and Head of Middle East Upstream. He has been a Non-Executive Director since 2017 and became Chairman and Chief Executive Oɝcer on 19 September 2019. Frank McAllister – Non-Executive Director With over 50 years’ industry experience, Frank McAllister has held various senior and board positions in a number of metals and mining companies. He worked with ASARCO LLC for 33 years during which he became Chief Financial Oɝcer in 1982 and then Executive Vice President of Copper Operations in 1993. Eventually became ASARCO’s President and Chief Operating Oɝcer before becoming Chairman and Chief Executive Oɝcer in 1999. In 1996 he became an Independent Director of Clis Natural Resources Inc and its Lead Director from 2004 to 2013. From 2001 to 2013, Mr McAllister was chairman and chief executive oɝcer of Stillwater Mining Company. Mr McAllister also served as president of the National Mining Association between 2012 and 2013. Mr McAllister holds an MBA from New York University, Bachelor of Science in Finance from the University of Utah and attended the Advanced Management Program at Harvard Business School. Guy Le Bel - Non-Executive Director Guy brings more than 30 years of international experience in strategic and ȴnancial mine planning to the Pembridge team. He is currently CEO of Aquila Resources Ltd. He was previously CEO and CFO of Golden Queen Mining Ltd, and, earlier, was Vice President Evaluations for Capstone Mining Corp, Director of Golden Queen Mining, RedQuest Capital Corp and was VP, Business Development at Quadra Mining Ltd. He also held business advisory, strategy and planning, business valuation, and ȴnancial planning management roles at BHP Billiton Base Metals Ltd., Rio Algom Ltd. and Cambior Inc. He has extensive experience across precious and base metals industries in the Americas. Guy holds an MBA Finance from École des Hautes Études Commerciales, a Master Applied Sciences, Mining Engineering - University of British Columbia and a B.Sc. Mining Engineering from Université Laval. Explanatory notes to the proposed resolutions 69 | Pembridge Resources plc | Notice of Annual General Meeting Resolution 6 – Re-appointment of auditor The Company is required to appoint an auditor at each general meeting at which accounts are laid before shareholders, to hold oɝce until the next such meeting. The Audit Committee has reviewed the eectiveness, performance, independence and objectivity of the existing external auditor, PKF Littlejohn LLP, on behalf of the Board, and concluded that the external auditor was in all respects eective. Resolution 7 – Authority to agree auditor’s remuneration This resolution authorises the Directors, in accordance with standard practice, to negotiate and agree the fees to be paid to the auditor. In practice, the Audit Committee will consider and approve the remuneration of the auditor on behalf of the Board. Resolution 8 – Authority to allot shares This resolution seeks shareholder approval to grant the Directors the authority to allot shares in the Company, or to grant rights to subscribe for or convert any securities into shares in the Company (“Rights”) pursuant to section 551 of the Act (the “Section 551 authority”). The authority contained in the resolution will be limited to an aggregate nominal amount of £300,000 and would give the Directors authority to allot shares in the Company or grant Rights in connection with a rights issue up to aggregate nominal amount of £300,000. The Company does not hold any shares in treasury. If approved, the Section 551 authority shall, unless renewed, revoked or varied by the Company, expire at the end of the Company’s next AGM after the resolution is passed or, if earlier, at the close of business 15 months after the passing of this resolution. The exception to this is that the Directors may allot shares or grant Rights after the authority has expired in connection with an oer or agreement made or entered into before the authority expired. The Directors have no present intention to exercise the Section 551 authority. Resolution 9 – Partial disapplication of pre-emption rights This resolution seeks shareholder approval to grant the Directors the power to allot equity securities of the Company pursuant to section 570 and 573 of the Act (the “Section 570 and 573 power”) without ȴrst oering them to existing shareholders in proportion to their existing shareholdings. The power in resolution 9 will be limited to allotments for cash up to a maximum nominal value of £300,000. 70 | Pembridge Resources plc | Notice of Annual General Meeting Explanatory notes as to the proxy, voting and attendance procedures at the Annual General Meeting The following notes explain your general rights as a shareholder and your right to attend and vote at this AGM or to appoint someone else to vote on your behalf. Members are entitled to appoint a proxy/proxies to exercise all or any of the rights to vote on their behalf at the meeting. All shareholders are advised that, due to the Government’s current restrictions and guidance, they will not be allowed to attend the AGM in person but can be represented by the Chair of the AGM as their proxy. An entitlement to attend or speak, as referred to in this AGM Notice, will not allow such persons to attend the AGM in person. Given the restrictions on attendance, shareholders are strongly encouraged to appoint the Chairman of the AGM as their proxy, as any proxies (other than the Chairman of the meeting) will not be permitted to attend the AGM in person. Similarly, corporate representatives other than the Chairman of the AGM will not be permitted to attend the AGM in person: A form of proxy for the AGM does not accompany this Document. Instead, if you would like to vote on the Resolutions you can: (a) submit a proxy vote online at www.signalshares.com. You will need to log into your online account, or register if you have not previously done so. To register you will need your Investor Code, which is detailed on your share FHUWLȴFDWHDQGLVDYDLODEOHIURPRXUUHJLVWUDUV/LQNURXS Once logged on, you can click on the ‘Vote Online Now’ button to vote; (b) in the case of CREST members only, complete a CREST Proxy Instruction as set out in the Notes to the Notice of Annual General Meeting; or (c) submit a hard copy form of proxy (appointing the Chairman of the AGM as your proxy). You may request this directly from our registrars, Link Group, by calling 0371 664 0300. Alternatively, you can request a hard copy proxy card by emailing [email protected]. Hard copy proxy forms must be returned to the Company’s registrars at Link Group, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL. 1. To be entitled to attend and vote at the AGM (and for the purpose of the determination by the Company of the votes they may cast), shareholders must be registered in the Register of Members of the Company at close of business on 22 June 2021 (or, in the event of any adjournment, close of business on the date which is 48 hours before the time of the adjourned meeting). Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting. 2. A member of the Company entitled to attend and vote at the meeting convened by the notice set out above is entitled to appoint one or more proxies to exercise all or any of its rights to attend and to speak and vote in that member’s behalf at the meeting. A proxy need not be a member of the Company. More than one proxy may be appointed to exercise the rights attaching to dierent shares held by the member, but a member may not appoint more than one proxy to exercise rights attached to any one share. A form of proxy which may be used to make such appointment and give proxy instructions can be requested from Link Group on 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Link Group is open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales, and calls may be recorded and randomly monitored for security and training purposes. It should be noted however, that due to the current COVID-19 pandemic, if any person should appoint a proxy other than the Chairman of the AGM, such proxy will not be permitted to attend the AGM in person. 3. In the case of joint holders, where more than one of the joint holders purport to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the ȴrst name being the most senior). 4. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote to abstain from voting at his/her discretion. Your proxy will vote (or abstain from voting) as he/she thinks ȴt in relation to any other matter which is put to the AGM. 5. To be valid, any instruction appointing a proxy must be received at the Company’s Registrar by no later than 2.00 p.m. on 22 June 2021. If you return more than one proxy appointment, either by paper or electronic communication, that received last by the Registrar before the latest time for the receipt of proxies will take precedence. 6. The submission of a form of proxy, other such instrument or any CREST Proxy Instruction (as described in note 8 below) will not preclude a member from attending and voting at the meeting in person should the situation and the applicable restrictions regarding COVID-19 change such that you are permitted to, and you subsequently wish to do so. 71 | Pembridge Resources plc | Notice of Annual General Meeting 7. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for this meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual (available via www.euroclear.com). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 8. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with the speciȴcations of Euroclear UK & Ireland Limited, and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, to be valid, be transmitted so as to be received by Link Group (participating ID RA10 by the latest time for receipt of proxy appointments speciȴed in this notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. 9. CREST members and, where applicable, their CREST sponsors, or voting service provider should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system provider are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertiȴcated Securities Regulations 2001. 10. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that no more than one corporate representative exercises powers in relation to the same shares. A resolution of the directors, or other governing body, of the corporation will be required in order to evidence the valid appointment of the corporate representative, in accordance with section 323 of the Act. It should be noted however, that due to the current COVID-19 pandemic, if any corporation should appoint corporate representatives other than the Chairman of the AGM, they will not be permitted to attend the AGM in person. 11. Members may not use any electronic address (within the meaning of section 333(4) of the Act) provided either in this notice of meeting or any related documents to communicate with the Company for any purposes other than those expressly stated. 12. Your personal data includes all data provided by you, or on your behalf, which relates to you as a shareholder, including your name and contact details, the votes you cast and your reference number (as attributed to you by the Company or its registrars). The Company determines the purposes for which, and the manner in which, your personal data is to be processed. The Company and any third party to which it discloses the data (including the Company’s registrars) may process your personal data for the purposes of compiling and updating the Company’s records, fulȴlling its legal obligations and processing the shareholder rights you exercise. A copy of this Notice, and other information required by Section 311A of the Act, can be found on the Company’s website at https://www.pembridgeresources.com/. Shareholder enquiries If you have any questions, please call the Company’s Registrars, Link Group, on 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. We are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. Alternatively, you may send an email to [email protected] 72 | Pembridge Resources plc
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