I am pleased to be joining Metals
Exploration at what is an exciting milestone in the Company's
growth trajectory.
2023 proved a defining year for
the business with an array of new records broken at its Runruno
project, including record annual gold revenues of US$167 million
directly on the back of a record production of 85,194 ounces. This,
we are proud to relate, exceeded the upper revised production
guidance for the year.
I am also very pleased to report to
shareholders that for the year ended 31 December 2023, your Company
made a profit before interest, tax, depreciation and amortisation
(EBITDA) of US$180.3 million (2022: US$43.7 million) and an EBITDA
adjusted for impairment charges/reversals of US$82.6 million (2022:
US$44.9 million).
This outstanding achievement is a
testament to the recent corporate turnaround implemented by
management following the new leadership appointments in 2019 and
the subsequent hard work and dedication of the entire workforce in
the Philippines. These strong results have culminated in an entire
deleveraging of the balance sheet transferring value from lenders
to equity shareholders.
Shareholders will undoubtedly be
pleased to know we are now essentially debt free, a pivotal moment
for Company: for the first time in Metals Exploration history, we
can talk meaningfully about growth. With only three/four years of
life-of-mine left on the Runruno project, Metals Exploration has
turned its attention to ensuring the longevity of the business and
continued value creation for you, our shareholders. Future cash
flow will be directed to investing in growth opportunities,
initially in the Philippines beyond our Runruno project.
This is already well underway with
our recent proposed acquisition of 72.5% of the issued share
capital of Yamang Mineral Corporation, and 100% of the issued share
capital of Yamang Corporation Pte Ltd, which includes the "Abra
Project". The project comprises an exploration licence over an area
of 16,200 hectares in the Abra region, approximately 200km north of
MTL's existing operations in Runruno. The acquisition, subject to
lender and shareholder approval, will provide exploration
potential, with the initial exploration programme to focus on the
Lacub and Manikbel areas.
This growth strategy is yet
another illustration of the exceptional turnaround strategy so
clearly evident in the 2023 year-end financial
performance.
In the short space of time I have
been at Metals Exploration, I have been impressed by the operations
and the 'Metals Exploration' way of working. The Company has, under
the guidance of CEO Darren Bowden, not only nurtured a robust
social licence to operate but also built a respected brand in the
Philippines.
Having visited the Runruno site
for the first-time last month, I can personally attest to the fact
this change has reverberated across the Company in its entirety,
having a profound effect at each level. This is a case study in the
making and has progressed the Company dramatically, from
underperforming to exceeding its own revised production guidance in
just a few years.
Metals Exploration has been
successfully operating in the Philippines for the past 15 years.
Naturally, the Company is proud to have developed and maintained
strong relationships amongst all our stakeholders, from the central
Government down to the local communities. Our position as a
successful and ESG complaint operator is decidedly advantageous as
we embark on our strategy to acquire more assets in the
Philippines, and potentially the wider region, and to mirror the
success we have realised with our Runruno project.
Throughout our record-breaking
performance this year, Metals Exploration is proud to have
maintained an exemplary operational and environmental track record.
Metals Exploration continues to be active in promoting responsible
mining practices, combined with numerous environmental protection
and enhancement programmes. These are in addition to our Community
& Social Development programme, which continues to focus on
health, education, capacity building and enterprise
development.
The Company's strong
sustainability performance has been recognised by the Philippine
Government Awards: Metals Exploration was honoured to receive the
Presidential Mineral Industry Environmental Award (PMIEA) in the
Surface Mining Operation Category for the second year in a row in
2023, the highest government mining award attainable in the
Philippines. We also received 3rd Runner-up for the Best
Mining Forest Contest in the Metallic Category, an acknowledgement
of the team's diligent efforts to uphold the highest environmental
standards. These awards are a particularly notable achievement as
an indication of support from local communities and government
agencies. In the ASEAN Mineral Awards 2023, the Company was pleased
to place as the 1st Runner-up in recognition of
outstanding best practices in Sustainable Mineral Development
(Mineral Mining - Metallic). ESG and the communities that we work
in remain at the forefront of everything that we do at Metals
Exploration.
Looking ahead to FY2024, my first
month at Metals Exploration has given me every confidence that our
production guidance of 74,000-80,000 ounces is well within reach.
The continuing strong cash flow from operations at Runruno, without
any ongoing debt repayments, will catalyse the Company's
transformative growth period, providing us with opportunities to
deliver significant shareholder value as well as looking at organic
growth and M&A opportunities.
I am excited to continue nurturing
the stakeholder relationships in the Philippines that serve as a
cornerstone for the next chapter in the Company's trajectory, and,
importantly, working diligently to continue the work begun by the
accomplished team I have joined.
Nick von Schirnding
Independent Non-Executive
Chairman
22 May 2024
CHIEF EXECUTIVE OFFICER'S
REPORT
The Group is pleased to report on
what was a stellar year with record gold production, record gold
sale revenue and record operating and net profits for the year.
Pleasingly, the Group closed out the year with gold production
exceeding its published, and re-stated, gold production guidance
for the year.
With the Group's robust business
fundamentals providing a strong platform from which to grow, we go
into 2024 focused on opportunities to transform the Group into a
multi-project company.
Most importantly, the Group
continues to create a net-positive impact for its stakeholders and
local communities. Our environmental, sustainability and social
programmes continue to be of a very high standard, ensuring the
Company continues to be accountable, transparent, and responsible
in its corporate purpose.
SAFETY AND HEALTH
Safety remains at the core of the
Group's business. During the year there were no material safety and
health incidents throughout all Group operations. A safe working
culture is actively promoted by a dedicated occupational safety and
health department and is embraced across the Group and by all
departments. All staff recognise their individual responsibilities
for their own safety and the safety of others.
Evidence of adhering to these
values is the excellent safety record that the Group's employees
and contractors have achieved. As at the date of this report the
Group has achieved in excess of 22.7
million man-hours with no lost time incidents occurring since the
last lost time incident in December 2016. This is a remarkable
achievement for an operation of this nature, and all employees and
contractors are to be congratulated on this outstanding
record.
FINANCIAL YEAR 2023 ("FY2023") OVERVIEW
Operational profit was US$29.2
million (FY2022: US$23.8 million) following record gold production
for FY2023 of 85,194 ounces, being significantly higher than
FY2022's production of 72,537 ounces. The gold production was
achieved with average gold recovery improving to 88.7% from 85.7%
in FY2022. The all-in-sustaining-cost ('AISC') for FY2023 was
US$1,126 per ounce (FY2022: US$1,235 per ounce), which was slightly
above the lower FY2023 AISC guidance of US$1,120 per
ounce.
During FY2023 the gold price
remained strong resulting in an average sales price of US$1,944 per
ounce (FY2022: US$1,797 per ounce). Total sales for FY2023 were
US$166.7 million (FY2022: US$124.4 million).
During FY2023 the cash generated
from operations was US$74.6 million (FY2022: US$38.2 million). This
enabled the Group to make US$64.8 million in debt
interest/principal repayments during FY2023 (FY2022: US$33.8
million).
Management's operational focus
during FY2023 was to consolidate plant performance improvements and
operational reliability. Mill throughput was maintained above
nameplate design levels, while numerous modifications and equipment
upgrades throughout the process circuit have improved general
performance and reliability of the plant.
GROUP DEBT
In October 2020 the Group
completed a debt restructuring with Runruno Holdings Limited and D
& A Holdings Limited (together the "RHL Group") and MTL (Luxembourg) S.à r.l. ("MTL Lux"). In
the period to November 2022 the Group made regular monthly senior
loan repayments such that, except for a nominal US$2,586, the
senior debt was fully repaid. This nominal amount had been left
unpaid to ensure various securities remained in place until the
mezzanine loans were elevated to the status of secured borrowings
(the "Elevation"). The Elevation process
required completion of complex and
multi-country documentation and the registration of new security
arrangements in numerous jurisdictions. Although the necessary
material documentation was agreed by all
parties it has not been executed due to a dispute in relation to
the applicable rate of interest applying to, and hence, the quantum
of the remaining mezzanine debt.
The October 2020 debt
restructuring agreements envisaged the interest rate applicable to
the mezzanine debt being reduced from 15% pa to 7% pa once the
senior debt is repaid and the elevation of the mezzanine debt to
"new" senior debt is complete. The Company's position was
that the intent of the October 2020 debt restructure was that the
interest rate applicable to the mezzanine debt should have reduced
from 15% pa to 7% pa in November 2022.
The Company's position was that
the final payment due to the lenders under the Company's mezzanine
debt facilities was made on 25 March 2024, on the basis of the
lower interest rate of 7% (as opposed to 15%) applying from 3
November 2022, which the Company believed should apply under such
facilities.
The Company's minority 29.3%
mezzanine debt lenders, the RHL Group, disputed that the interest
rate applicable to their portion of the mezzanine debt reduced from
15% to 7% from 3 November 2022. Further, the RHL Group claimed that
several events of default have occurred
under the Group's senior and mezzanine facilities, such that the
relevant default interest rate (being a total of 12% under the
senior debt facility and 20% under the mezzanine debt facilities)
should apply with effect from 5 October 2023. The Company disputed
these allegations.
In light of the RHL Group's
position in respect of the application of 15% interest to its loans
under the mezzanine facilities, MTL Lux. (holding 70.7% of the
mezzanine debt), contrary to historical assurances otherwise,
sought to receive this interest rate on its own loans to the
Company. MTL Lux has formally recorded that it does not believe
penalty interest should apply.
After a detailed consideration of
the Company's legal position in this matter, and associated issues
such as the cost of an ongoing dispute with the Company's two
largest shareholders, the Company has attempted to resolve this
matter by making a payment, in May 2024, of approximately 50% of
the total quantum currently under dispute.
However, as this dispute has not
been fully resolved, the Company has, at 31 December 2023, created
a provision for possible increased interest of US$2.6 million,
being the remaining difference between 15% per annum and 7% per
annum on the mezzanine loans for the period 3 November 2022 to 31
December 2023.
The Company continues to negotiate
with MTL Lux and the RHL Group on this matter.
RUNRUNO MINE
Mining
Operations
Total material moved during FY2023
was above budget at 12.4Mt (million tonnes) (FY2022:
13.7Mt).
Mining operations during FY2023
were concentrated in Stages 3 and 4. In-pit backfilling, which will
reduce closure and environmental restoration costs upon the
eventual closure of the mine, continues in Stages 1 and 2, with
resultant reduced haulage times.
During FY2023, a drill programme
was undertaken with the aim of discovering additional economic
resources outside of the current mine plan pit-shell, especially to
the north, east and west of the current Stage 5 pit design. The
objective was to discover new economically mineable ounces that
would increase the Runruno life of mine ("LOM"). The area drilled
encountered evidence of significant mining having been conducted by
the illegal small-scale miners that delayed the Group's access to
these areas. Unfortunately, no material new resources were
discovered from this drill programme.
All relevant permits for
operations remain in place for the Runruno mine.
Gold Reserve
Statement
As the resource extension drilling
was not successful there has been no calculation of an updated ore
reserve statement.
The most recent gold reserve
statement was issued in February 2022, based on data as at 1 August
2021, as follows:
Table 1 - Ore Reserve
estimate - published in February 2022
Reserve
|
Ore
|
Gold
|
Category
|
Mt
|
g/t
|
Moz
|
Proved
|
-
|
-
|
-
|
Probable
|
9.94
|
1.35
|
0.43
|
Total
|
9.94
|
1.35
|
0.43
|
Inferred resources included in LOM
model pit
|
Inferred material
|
0.69
|
1.11
|
0.02
|
Using a Surpac block model, the
Group modelled an internal estimation of the subsequent depletion
of ore due to mining that has occurred since the above model was
calculated (the period 1 August 2021 to 31 December 2023). The
estimated resource depletion and the resulting depleted reserve
statement (note that these calculations have not been independently
verified) as at 31 December 2023 are:
Table 2 - Ore depletion
estimate
Reserve
|
Ore
|
Gold
|
Category
|
Mt
|
g/t
|
Moz
|
Estimated ore mined from August
2021 to December 2023
|
4.80
|
1.35
|
0.21
|
Table 3 - December 2023
Depleted Ore Reserve estimate
Reserve
|
Ore
|
Gold
|
Category
|
Mt
|
g/t
|
Moz
|
Proved
|
-
|
-
|
-
|
Probable
|
5.14
|
1.35
|
0.22
|
Total
|
5.14
|
1.35
|
0.22
|
Inferred resources included in LOM
model pit
|
Inferred material
|
0.50
|
1.00
|
0.02
|
Process
Plant
Plant performance in FY2023
continued to show improvement in gold recovery from both the
flotation and BIOX® circuits. During FY2023, the Group achieved an
overall gold recovery of 88.7%, an improvement upon FY2022 which
was 85.7%. Total gold produced in FY2023 was 85,194 ounces compared
to 72,537 ounces in FY2022.
During FY2023, further upgrades to
the process plant return water and BIOX® tank cooling systems were
undertaken, improving plant availability and throughput rates. This
upgrade also improved the ability to control BIOX® temperatures
with further marginal production gains in BIOX® anticipated. These
modifications combined with a largely uninterrupted supply of power
during FY2023 resulted in a stable operating environment leading to
the record average gold recoveries achieved over the
year.
Unplanned downtime during FY2023
resulted mainly from tails line failures and repairs to the SAG
mill girth gear, conveyor belts and return water line. Overall
unplanned downtime has reduced through the Group's programme of
proactive maintenance.
Notwithstanding the above, the
process plant operated above design throughput with the following
points of note:
·
The crushing and grinding circuit operated above
design throughput, achieving a utilisation rate of 91.8% (FY2022:
86.5%) and processing 2.10Mt of ore (FY2022: 2.07Mt);
· The gravity circuit achieved a recovery of 28.5% (FY2022:
27.9%);
·
Fine-tuning of the flotation circuit resulted in
incremental increases in recovery to 93% (FY22: 91%);
· The CIL circuit achieved an overall CIL recovery of 91.6%
(FY2022: 89.9%);
·
A major upgrade to the cooling water circuit was
completed providing greater control of temperatures in the BIOX®;
improving sulphur oxidation to 76.1% (FY2022: 67.5%);
and
· The other plant circuits and ancillary systems all operated
adequately.
Residual Storage Impoundment
(RSI)
The Group's tailings products are
delivered to a residual storage impoundment (RSI) structure. This
structure has been designed and is being constructed to
international standards that relate to water storage dams. The
standard to which the RSI is being constructed far exceeds
international standards that apply to traditional mining tailings
dam structures.
The final scheduled lift to the
RSI has been completed, with construction of the in-rock final
spill-way underway. This final in-rock spillway will ensure the RSI
has the capacity to cope with a 'Probable Maximum Flood'
event.
The RSI remains in compliance with
local guidelines and local development requirements, although it
has not reached the final design stage of being capable of
successfully coping with a 'Probable Maximum Flood' event. The
in-rock final spillway is expected to be completed in Q1
2025.
The performance of the RSI is
continuously monitored by independent international consulting
engineers.
Government Industry
Awards
During Q4 2023, the Group was
awarded the following Philippine Government awards:
·
Presidential Mineral Industry Environmental Award
(PMIEA) in the Surface Mining Operation Category 2023, awarded for
the second year in a row.
·
3rd Runner-up, Best Mining Forest
Contest - Metallic Category 2023.
·
Ronald Wayan, Safety Officer, was the winner on
the Best Safety Inspector (Surface Award).
In addition, the Group was selected
to represent the Philippines at the third ASEAN Mineral Awards. At
these awards the Group was awarded:
·
1st Runner-up in recognition of
outstanding best practices in Sustainable Mineral Development
(Mineral Mining - Metallic).
·
2nd Runner-up in recognition of
outstanding best practices in Sustainable Mineral Development
(Mineral Processing - Metallic).
These awards are given to mining
companies in recognition of outstanding levels of dedication,
initiatives and innovations in the pursuit of excellence in
environmental protection, health & safety management and
social/community development. Winning the Presidential award is the
highest Government mining award attainable in the
Philippines.
NEW PROJECTS
As noted in our 2022 Annual
Report, it was the Gorup's strategy to investigate acquiring other mining opportunities in the
Philippines. A number of Philippines located
projects have been reviewed and in January 2024 the Company
announced an initial acquisition of the Abra project, subject to
lender and shareholder approval, has been made. Other Philippines
located projects continue to be assessed for
suitability.
Abra
In January 2024 the Company agreed
to acquire a controlling interest in the YMC group, subject to
lender and shareholder approval. The YMC group holds an extensive
exploration tenement in the Abra region of Luzon, Philippines. The
purchase price is US$1.6 million (offset by approximately US$1.1
million cash held by the YMC group) and the issue of options to
subscribe for up to 41 million new ordinary shares of £0.0001 each
in the capital of the Company.
The Abra tenement covers 16,200
hectares on Luzon, Philippines, approximately 200km north of the
Company's Runruno mine, in the Cordillera region, which is a
prolific gold belt in the Philippines, with proven mineral
endowment, having produced over 40Moz of gold
historically.
OUTLOOK
Annual production guidance for
FY2024 for the Runruno mine has been set at 74,000 - 80,000 ounces
at an AISC of between US$1,175 - US$1,275 per ounce. FY2024
operations are expected to maintain the general operational results
produced during FY2023, such that free cash flow is maintained from
a stable consistent level of mining and gold production.
The Group's positive operational
cash-flows in Q1 2024 have been utilised to finalise, subject to
resolving the interest rate matter, the full repayment of the
Group's external debt. Free cash flow for the remainder of 2024
will be accumulated and applied to accelerate exploration of new
projects and/or to acquire addition exploration and development
opportunities, initially focused on the Philippines and potentially
the wider region.
Darren Bowden, Chief Executive
Officer
22 May 2024
Competent Persons'
Statement
The information contained in this report that relates to the
Gold Reserves Estimate, issued in February 2022, was compiled by
Paola Tuyor of Metals Exploration and reviewed and verified by
Grant Walker of Xenith Consulting. Mr Walker is a Member of
The Australasian Institute of Mining and Metallurgy and is a
Competent Person as defined by the JORC Code, 2012 Edition, having
five years' experience that is relevant to the style of
mineralisation and type of deposit described in the
Report.
Mr Darren Bowden, a director of the Company, a Member of the
Australasian Institute of Mining and Metallurgy and who has been
involved in the mining industry for more than 25 years, has
compiled, read and approved the technical disclosure in this
regulatory announcement in accordance with the AIM Rules - Note for
Mining and Oil & Gas Companies.
Forward Looking
Statements
Certain statements relating to the estimated or expected
future production, operating results, cash flows and costs and
financial condition of Metals Exploration plc and the Group,
planned work at the Company's projects and the expected results of
such work contained herein are forward-looking statements which are
based on current expectations, estimates and projections about the
potential returns of the Group, industry and markets in which the
Group operates in, the Directors' beliefs and assumptions made by
the Directors. Forward-looking statements are statements that are
not historical facts and are generally, but not always, identified
by words such as the following: "expects", "plans", "anticipates",
"forecasts", "believes", "intends", "estimates", "projects",
"assumes", "potential" or variations of such words and similar
expressions. Forward-looking statements also include reference to
events or conditions that will, would, may, could or should occur.
Information concerning exploration results and mineral reserve and
resource estimates may also be deemed to be forward-looking
statements, as it constitutes a prediction of what might be found
to be present when a project is actually
developed.
These statements are not guarantees of future performance or
the ability to identify and consummate investments and involve
certain risks, uncertainties and assumptions that are difficult to
predict, qualify or quantify. Among the factors that could cause
actual results or projections to differ materially include, without
limitation: uncertainties related to raising sufficient financing
to fund the planned work in a timely manner and on acceptable
terms; changes in planned work resulting from logistical, technical
or other factors; the possibility that results of work will not
fulfil projections/expectations and realise the perceived potential
of the Company's projects; uncertainties involved in the
interpretation of drilling results and other tests and the
estimation of gold reserves and resources; risk of accidents,
equipment breakdowns and labour disputes or other unanticipated
difficulties or interruptions; the possibility of environmental
issues at the Company's projects; the possibility of cost overruns
or unanticipated expenses in work programs; the need to obtain
permits and comply with environmental laws and regulations and
other government requirements; fluctuations in the price of gold
and other risks and uncertainties.
The Company expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward looking
statements contained herein to reflect any change in the Group's
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based
unless required to do so by applicable law or the AIM
Rules.
AUDIT COMMITTEE
REPORT
Dear Shareholders,
I am pleased to report to you on
behalf of the Audit Committee.
Since April 2021, the Audit
Committee has been comprised of only non-lender appointed,
non-executive directors, which has consolidated the Group's
commitment to improved corporate governance.
The Group's established financial
reporting structures have continued to perform effectively in the
year, and the Committee has continued to oversee the proper
maintenance of these structures. The Group's robust framework of
internal controls facilitated a smooth external audit process,
helping to ensure the integrity of the 2023 Annual
Report.
Aims of the Audit Committee
The overall aim of the Audit
Committee is to assist the Board in discharging its duties
regarding the financial statements, to ensure that a robust
framework of accounting policies is in place and enacted, and to
oversee the maintenance of proper internal financial controls and
risk management. The Committee monitors
the integrity of the Financial Statements of the Interim and Annual
Reports and formal announcements relating to the Group's financial
performance, including advising the Board that the Annual Report
taken as a whole is fair, balanced and understandable.
The Committee reviews significant
financial reporting issues, key judgements and accounting policies
and disclosures in financial reports, reviews the effectiveness of
the Group's internal control procedures and risk management systems
and considers how the Group's internal audit requirements shall be
satisfied, making recommendations to the Board. It reviews the
independent auditor's audit strategy and implementation plan and
its findings in relation to the Annual Report and Interim Financial
Statements. It monitors the relationship with the Group's
independent auditor including the consideration of audit fees and
independence.
Membership and attendance
The Audit Committee consisted of
myself, Andrew Chubb, as the Chair, together with two other
Non-Executive Directors, David Cather and Tim Livesey, until
September 2023 when Mr Cather resigned as a director of the
Company. On 18 March 2024, Mr von Schirnding was appointed as the
third committee member in replacement of Mr Cather.
The Committee aims to meet at
least three times each year. The external audit team and the Chief
Financial Officer are invited to attend meetings of the Committee,
and I am satisfied that we were presented with papers of good
quality, and in a timely manner. Attendances at committee meetings
during the year were:
Audit committee member/qualifications
|
Eligible to
attend
|
Attended
|
Andrew Chubb (B.Law (Hons)) -
Chair
|
4
|
4
|
Tim Livesey (B.Sc (Hons)
Geology)
|
4
|
4
|
David Cather (B.Sc (Hons) Mining)
(resigned 18 September 2023)
|
3
|
3
|
Nick von Schirnding
(B.A-LLPB)
(appointed 18 March 2024)
|
-
|
-
|
The external auditors, for the
relevant periods they acted in that role, attended all committee
meetings held during the year.
Key responsibilities
The main responsibilities of the
Audit Committee are contained within its terms of reference that
have been approved by the Board and are available on our
website. The terms of reference and the
key responsibilities of the Audit Committee are set out
below:
·
Maintain the integrity of the
annual and interim financial statements of the Company and review
any significant reporting matters they contain;
·
Review the Annual Report and
Accounts and other financial reports;
·
Maintain the accuracy and
fairness of the Company's financial statements, including through
ensuring compliance with applicable accounting standards and the
AIM Rules;
·
Review the adequacy and
effectiveness of the Company's internal control environment and
risk management systems;
·
Review the adequacy and
effectiveness of the Company's Whistleblowing policies;
·
To consider the need for, and to
oversee, internal audit activities; and
·
Oversee the relationship
with, and the remuneration of, the external auditor, reviewing
their performance and advising the Board members on their
appointment.
Activities of the Audit Committee during the
year
On behalf of the Board, the Audit
Committee has closely monitored the maintenance of internal
controls and risk management during the year. Key financial risks
are reported during each Audit Committee meeting, including
developments and progress made towards mitigating these
risks.
The Committee received regular
reports from the Chief Financial Officer throughout the year and
was satisfied with the effectiveness of internal controls and risk
mitigation. The Committee also received and considered reports from
the external auditor, PKF Littlejohn LLC ("PKF"), and prior to
their resignation from CLA Evelyn Partners Limited ("EP"), which
included control findings relevant to their audit.
Significant reporting matters
The Audit Committee has reviewed
management's assessment of critical accounting judgements and key
sources of estimating uncertainty disclosed in note 2.
As part of the review, the
Committee considered whether:
·
There are any material or sensitive
omissions from the Annual Report narrative;
·
The Annual Report narrative is a
true and balanced reflection of events and performance in the
year;
·
There is consistency throughout the
Annual Report and Financial Statements; and
·
There is a clear explanation of key
performance indicators, their link to performance and strategy and
equal prominence of statutory performance measures.
The Committee is satisfied that
management have considered these matters appropriately and that a
reasonable conclusion has been reached, and appropriate disclosure
made, based on the information available to the Group. The
Committee is not aware of any significant failings or weaknesses in
the Company's existing system of internal controls.
The Committee has determined that an internal
audit function is not an appropriate mechanism for the Company in
the context of the Company's current level of complexity of its
operations.
Going concern
The Directors consider the
continuing strong operating and financial performance of the Group
provides ample evidence that there currently is no material
uncertainty surrounding the Company and the Group's ability to
continue as a going concern.
Accordingly, the Company and Group
financial statements are prepared on a going concern basis. Further
detail regarding the reasoning behind this conclusion can be found
in the Directors' Report on page 32.
External audit
The Audit Committee considers
various matters when reviewing the appointment of an external
auditor including their performance in conducting the audit and its
scope, terms of engagement including remuneration and their
independence and objectivity. Details of auditor's fees are
included in the notes to the financial statements.
Since the Company's incorporation
CLA Evelyn Partners Limited ("EP") (formerly Smith &
Williamson) had acted as the Group and Company auditor. During this
period, EP had also provided corporate tax services. After
considering primarily the length of time EP had served as audit
partners, as well as the potential for possible independence
issues relating to additional services, it was mutually agreed with
EP that they should be replaced as Group and Company
auditor.
On 1 December 2023, following a
thorough tender process run by the Audit Committee and the CFO, PKF
Littlejohn LLC were appointed as Group and Company
auditor.
The Audit Committee has confirmed
it is satisfied with PKF's industry experience, knowledge of the
Company and its effectiveness as external auditor. PKF does not
provide any non-audit services to the Group or the Company. As such
the Audit Committee has recommended the reappointment of PKF to the
Board. There will be a resolution to this effect at the forthcoming
annual general meeting.
The year ahead
The Audit Committee remains
focussed on ensuring that the robust framework of internal controls
and risk management currently in place throughout the Group is
maintained. Financial risk management will continue to be closely
monitored, and any potential risks mitigated where
appropriate.
The Audit Committee will also
continue its close dialogue with the Company's external auditors,
highlighting any emerging financial risks or matters facing the
Company throughout the coming year and ensuring that the Company's
financial reporting mechanisms continue to be constantly updated in
line with best practice and subjected to scrutiny and
challenge.
Andrew Chubb, Chair of the
Audit Committee
22 May 2024
REMUNERATION COMMITTEE
REPORT
Dear Shareholders,
It is my pleasure to report to you
on behalf of the Remuneration Committee.
As part of the Group's commitment
to improved corporate governance, only non-lender, appointed
non-executive directors have been members of the Remuneration
Committee since April 2021.
Throughout 2023 the Committee has
continued to focus on aligning reward with performance and
providing incentives, such that the Company's remuneration
framework best facilitated an environment that delivered the swift
repayment of the Group's external debt. This allowed the Group to
focus on strategic opportunities to grow the Group's activities.
Certain covenants within the Group's debt documents require lender
approvals of any equity incentive schemes and the Committee's
efforts in seeking a lender approved acceptable long-term incentive
programme continue.
Aims of the Remuneration Committee
The Committee's overall aim is to
align employee remuneration with the successful delivery of
long-term shareholder value. Our core principles that enable us to
achieve this goal are:
1. To offer competitive
remuneration to executive management that attracts, retains and
motivates highly skilled individuals;
2. To align remuneration packages
with performance-related metrics that mirror our short and
long-term business strategies; and,
3. To encourage accountability in
the workplace and link reward with success.
The Group currently operates the
following remuneration framework:
·
Annual salary and associated
benefits; and
·
Discretionary bonuses that
are granted following the Committee's assessment of performance
against certain key business indicators.
Membership and attendance
The Remuneration Committee
consisted of myself, Tim Livesey, as the Chair, together with two
other Non-Executive Directors, David Cather and Andrew Chubb, until
September 2023 when Mr Cather resigned as a director of the
Company. On 18 March 2024, Mr von Schirnding was appointed as the
third committee member in replacement of Mr Cather.
The Committee aims to meet at
least two times each year. Attendances at Committee meetings during
the year were:
Remuneration committee
member
|
Eligible
to attend
|
Attended
|
Tim Livesey - Chair
|
3
|
3
|
Andrew Chubb
|
3
|
3
|
David Cather (resigned 18
September 2023)
|
2
|
2
|
Nick von Schirnding (appointed 18
March 2024)
|
-
|
-
|
No Director is involved in any
decisions relating to their own remuneration. None of the Committee
has any personal financial interest, conflicts of interests arising
from cross-directorships, or day-to-day involvement in running the
business.
Terms of reference
The terms of reference of the
Remuneration Committee, that have been
approved by the Board and are available on our website,
are set out below:
·
Determine and propose to the
Board the Company's overall remuneration policy and monitor the
efficacy of the policy on an ongoing basis;
·
Determine and propose to the
Board the remuneration of the Executive Directors and senior
management;
·
Determine the objectives and
headline targets for any performance-related bonus or incentive
schemes;
·
Monitor, review and approve the
remuneration framework for other senior employees; and,
·
Review and approve any
termination payment, such that these are appropriate for both the
individual and the Company.
Executive remuneration package and service
contracts
There was no change to the CEO's
base remuneration and no material changes to other executive
remuneration packages during the year. The Group's remuneration
framework includes payment of an annual salary and short term
bonus. At present there is no long-term incentive programme in
place. Executives are provided with life assurance cover equivalent
to two times their base salary (capped at £500,000). There are no
pension/superannuation schemes in place for executives or
non-executive directors. Termination of executive contracts are
subject to a three month notice period or an in lieu base salary
termination payment.
Management Incentive Programme ("MIP") - 2023
Performance
The CEO and other senior
executives are eligible to participate in a MIP. The MIP awards an
annual short-term bonus based on performance achieved against
pre-determined key performance indicators ("KPIs"). Given the Group
priority on being cash generative to reduce external debt, the KPIs
are focused on operations and productivity performance.
The following table details the
KPIs adopted by the Committee in its assessment of the Group's
performance and the quantum of the MIP bonus, which were applied to
FY2023.
Performance indicator
|
Standard target weighting
|
2023
Rating
|
2023
Performance
|
Environmental/Safety/Health and
compliance
|
25%
|
Exceptional
|
Zero
LTIs recorded; TRIFR < 0.95, no material FTAA/RSI/Environmental
incidents
|
Free cash generated before debt
principal/interest/fees
|
35%
|
Maximum
target achieved
|
Free
cash generated 245% of budget.
|
Gold Recovery v budget
|
25%
|
Maximum
target achieved
|
Average
gold recovery 106.4% of budget
|
Total Expenditure v
budget
|
5%
|
Award
target threshold achieved
|
Actual
spend 103% of budget
|
Total Material Movements v
budget
|
5%
|
Maximum
target achieved
|
Actual
mined material 110.4% of budget
|
Mill Throughput v plant
design
|
5%
|
Maximum
target achieved
|
Actual
throughput 120.2% of design
|
Glossary:
KPI - Key performance indicator; LTI - Lost time injury;
TRIFR - Total reportable injury frequency rate
FTAA - Financial and Technical Assistance Agreement; RSI -
Residual storage impoundment
Of the total MIP bonus, 15% is
satisfied by an issue of new Ordinary Shares, at an issue price
equal to the 30-day VWAP market value prior to the date the MIP
bonus is approved by the Board (subject to shareholder
approval).
Shareholders will be asked, at a
shareholder meeting, to approve the future issue of 3,785,447 new
Ordinary Shares to executives as part of the 2023 MIP bonus award.
In June 2023, following the 2023 AGM, 7,147,850 new Ordinary Shares
were issued to management as part of the 2022 MIP award.
Non-executive director remuneration
All non-executive directors are
appointed under a letter of engagement that sets out the terms,
responsibilities and remuneration attaching to their appointment.
The remuneration of lender nominated non-executive directors is
governed by the terms of a revolving credit facility and
relationship agreements between the Company and the two major
shareholders. The remuneration of non-lender nominated
non-executive directors is determined by the full board.
Director remuneration
The Directors' remuneration for
the year was as follows:
Year ended 31 December
2023
|
Fees/salary
US$
|
Short-term performance
bonus
US$
|
Share- based
payments
US$
|
Total
US$
|
Darren
Bowden1
Executive director/CEO
|
805,610
|
-
|
-
|
805,610
|
Steven
Smith2
Interim Chairman & Non-executive
director
|
70,117
|
-
|
-
|
70,117
|
Tim Livesey
Independent non-executive
director
|
84,764
|
-
|
20,947
|
105,710
|
Andrew Chubb
Non-executive director
|
62,326
|
-
|
5,210
|
67,537
|
Guy Walker
Non-executive director
|
73,545
|
-
|
-
|
73,545
|
David
Cather1
Independent Chairman (resigned 18 September 2023)
|
70,117
|
-
|
5,210
|
74,297
|
Total
|
1,166,478
|
-
|
31,368
|
1,197,846
|
Year ended 31 December
2022
|
Fees/salary
US$
|
Short-term performance
bonus
US$
|
Share based
payments
US$
|
Total
US$
|
Darren
Bowden1
Executive director/CEO
|
805,610
|
-3
|
-
|
805,6103
|
David
Cather1
Independent Chairman
|
92,024
|
-
|
28,469
|
120,493
|
Tim Livesey
Independent non-executive director (appointed
5 May 2022)
|
40,240
|
-
|
36,081
|
76,321
|
Andrew Chubb
Non-executive director
|
61,349
|
-
|
28,469
|
89,818
|
Guy Walker
Non-executive director
|
65,030
|
-
|
-
|
65,030
|
Steven
Smith2
Non-executive director
|
61,349
|
-
|
-
|
61,349
|
Jeremy Wrathall
Independent non-executive director (resigned 5
May 2022)
|
21,109
|
-
|
8,982
|
30,091
|
Total
|
1,146,711
|
-
|
102,001
|
1,248,712
|
Notes:
¹ Includes consulting fees
paid to private consulting companies.
2
Fees paid in
accordance with a Services Agreement between the Company and MTL
(Luxembourg) Sarl.
3
Restated to
eliminate 2022 year-end bonus accruals were cancelled during
FY2023.
No element of the Directors'
remuneration (other than the share options and shares issued as
part of the MIP bonus as noted above) is currently related to the
Company's future share price.
Director interests in shares and options
No directors own any shares in the
Company apart from Mr Bowden who owns 8,257,355 Ordinary
Shares.
Directors' beneficial interests in
unissued ordinary shares granted by the Company under share options
as at FY2023 year-end are as follows:
Director
|
Option expiry date
|
Option exercise price
|
Issued
during year
|
Vested
at year end
|
Options
held at year end
|
Andrew Chubb
Non-executive director
|
On or before
28 October 2024
|
Nominal share value
|
-
|
6,600,000
|
6,600,000
|
Tim Livesey1
Independent non-executive director
|
On or before
17 June 2025
|
Nominal share value
|
-
|
4,400,000
|
6,600,000
|
Vesting/exercise conditions
Provided the option-holder remains
a director of the Company,
1
the remaining 2,200,000 options will vest on 17
June 2024.
The relevant Non-Executive
Directors' independence is not considered to be compromised due to
holding these options as the level of share options are deemed to
be sufficiently immaterial.
The year ahead/Long-term incentive
programme
Under the Group's debt finance
agreements material changes to the Group's remuneration policies
and the level of executive and senior management remuneration
requires the approval of the Group's two lenders in accordance with
the various loan agreements.
It is hoped that a resolution to
approve a long-term incentive programme, that has the support of
the Company's lenders and major shareholders, will soon be proposed
for shareholder approval at a Company general meeting.
Other than the introduction of a
long-term incentive programme for executives and senior management,
it is not proposed to make any change to remuneration
policy.
Tim Livesey, Chair of the
Remuneration Committee
22 May 2024
SUSTAINABILITY REPORT
In accordance with Philippine
Government requirements, the Group issues a biennial in-depth
sustainability report. Shareholders are recommended to access the
most recent biennial sustainability report, titled 'Charting a
Legacy', issued in May 2024, covering the 2022 and 2023 calendar
years, which is available on the Company website at
www.metalsexploration.com/esg.
The report is prepared in
accordance with the Global Reporting Initiative (GRI) Standards and
provides stakeholders with a transparent account and comprehensive
information on our sustainability performance and governance and
climate-risk related disclosures.
RISK MANAGEMENT
The Group's Code of Conduct
enumerates its ethics. Operational procedural standards, aligned
with legal requirements, have been established for all activities
we undertake. Operations are certified with ISO 14001:2015
compliance and the Group is a member of the Chamber of Mines of the
Philippines "Towards Sustainable Mining" initiative. The reporting
of any infractions, particularly on safety concerns and potential
environmental non-compliance, is participatory and cuts across all
employees regardless of position.
COMMUNITY AND SOCIAL DEVELOPMENT
As part of our commitment to
enriching the lives of local communities, the Group allocates 1.5%
of direct mining and processing costs to be applied in its Social
Development and Management Program ("SDMP"). Through the SDMP the
Group partners with local communities to identify and implement
impactful socio-economic programmes that drive sustainable
development in our host and neighbouring areas. Implementation of
the SDMP passes through a series of community consultations to
identify appropriate socio-economic programmes. The Group's SDMP
programmes are focused on:
·
Health;
·
Education;
·
Capacity building;
·
Community development and empowerment;
·
Enterprise development, improvement and
networking;
·
Infrastructure development; and
·
Preservation and respect of socio-cultural
values.
Total community programme
expenditure for FY2023 was US$1.4 million, up from US$1.3 million
for FY2022 programmes. The reach of the programmes extends to
assist the residents of the Barangay of Runruno and surrounding
Barangays, the Municipality of Quezon and the Province of Nueva
Vizcaya.
The Community Relations
Department, the community interface arm of the Group, maintains
strong partnerships with various national agencies and local
governments from Barangay to Provincial level. They are primarily
engaged in managing the implementation of identified and
prioritised projects within the mandated SDMP and other programmes
under them as a component of the Group's commitment to its
Corporate Social Responsibility ("CSR").
SAFETY AND HEALTH
A safety and health programme is
created each year to establish a robust foundation for the
implementation of measures that prioritise the well-being and
protection of workers. This ensures that workers are provided with
a just, safe, and humane working environment. It is updated
annually to ensure that the programme remains up-to-date and
sufficiently addresses the evolving hazards and risks of the
operations.
There were no material safety and
health incidents throughout the project site. A safe working
culture is actively promoted by a dedicated occupational safety and
health department. To date the operation has accumulated in excess
of 22.7 million man-hours with no lost time incidents.
HUMAN CAPITAL
Employees are the lifeblood of our
operations. Without their dedication to exemplary performance, and
a work ethic that aligns with the values of our Company, the growth
and development that the Group has achieved through the years will
not be attained. It is therefore crucial for our Company to invest
in our people to be able to power the business and continue
operations, as well as support them in their journey towards a
rewarding career and achievement of success that ripples through
their lives and their communities.
Our policy is to recruit and
retain the most talented and high-performing people who share the
Group's commitment to sustainable development. Great care is taken
in every step of the employment process with an emphasis on
equality, diversity, work-place safety and employee
welfare.
ENVIRONMENT
The Group is active in promoting
and implementing "responsible mining" practices. It is a leader in
the Philippine mining industry in its environmental and
environmental rehabilitation practices, having received numerous
government/industry awards in this area over a number of years. The
Group implements innovative technologies to enhance the efficiency
and effectiveness of existing programmes across all operational
facets, including our environment-related projects. Use of
technologies like low-cost hydroseeding technology combined with a
zero waste initiative, and maintaining a tree nursery and a clonal
tree nursery research facility, are essential for the
sustainability of our environmental restoration efforts.
WASTE MANAGEMENT
Safe management of tailings and
other waste products are crucial to the safety of our communities
and longevity of our operations. All tailings are sent to the
residual storage impoundment facility (RSI) which has been
constructed to international standards applicable to water storage
dams, which are much higher than international standards applicable
to mining tailings.
While the Group has a strong waste
management record to date, it understands the risks associated with
tailings management are a particular concern to our stakeholders
and the Group is determined to maintain high levels of safe
tailings management.
REFORESTATION AND REHABILITATION
The Group acts positively to
reduce the potential environmental impacts of its operations. It
undertakes this obligation through immediate and continuous
rehabilitation activities, by the re-greening of disturbed areas,
the establishment of protection forests and the provision of
habitat for wildlife within the FTAA area.
These programmes demonstrably
improve the environment within and surrounding the Group's
operations and are designed for beautification, stabilisation and
to off-set green-house gas emissions and the impacts of the Group's
operations. Through its various programmes, the Group has been
responsible for planting over 2 million endemic and cash crop
trees.
A total of 5.21 hectares within
the FTAA area were rehabilitated during FY2023 (FY2022: 7.17
hectares) to bring the total area rehabilitated since commencement
of mining to 49.34 hectares.
In addition, the Group
participates in the National Forest Programme and the National
Greening Programme. During FY2023, the Group was responsible for a
further 195 hectares of reforestation (FY2022: 241
hectares).
As a manifestation of our
unwavering and exemplary commitment, the Group has received the
Presidential Mineral Industry Environmental Award (PMIEA) in the
Surface Mining Operation Category for the second year in a
row.
WATER MANAGEMENT
Mining activities require a large
and constant supply of water, and the Group recognises that access
to safe water is a fundamental right for local
communities.
The Group operates a dynamic water
management programme to avoid possible impacts on the downstream
water quantity, quality and aquatic environment. The ASTER
technology contained in the final segment of the process plant
destroys all cyanide species from tailings before the tailings are
pumped into the RSI.
Th Group aims to reduce its
monthly average water consumption by at least 1% per
annum.
ANTI-SLAVERY AND HUMAN TRAFFICKING
Our anti-slavery policy reflects
our commitment to acting ethically and with integrity in all our
business relationships and to implementing and enforcing effective
systems and controls to ensure slavery and human trafficking are
not taking place anywhere in our supply chains. Our Company abides
by various legislation and frameworks, including the UK Modern
Slavery Act 2015, the Philippine Anti-discrimination Act of 2011,
Republic Act 7877, the Philippine Anti-Sexual Harassment Act of
1995, and the United Nations Guiding Principles on Business and
Human Rights.
CLIMATE CHANGE REPORTING
The Group recognises its social
responsibility to align its efforts to contribute to global climate
change goals and targets including net-zero emissions by 2050.
Policies to minimise the Group's greenhouse gas emissions ("GHG"),
are followed, as far as economically practicable.
Task Force on Climate-related Financial
Disclosures
The Group is committed to managing
the impact of its operations on the planet and the impact of
climate change on its operations, particularly to ensure continued
operational and financial resilience in a changing world and
marketplace. The Group understands the importance of these matters
to its investors, partners, and regulatory authorities and as
required by the Listing Rules, has adopted the Task Force on
Climate-related Financial Disclosure's framework for communicating
climate related financial risks.
This is the first year the Group
has published a report in line with the TCFD Recommendations and
the Group has endeavoured to make disclosures consistent with the
TCFD recommended disclosures taking into consideration the short
remaining mine life at the Runruno mine and the size and complexity
of the Group as a whole. The Group will continue to develop and
enhance its infrastructure, strategies, structures, resources and
tools to manage the risks and opportunities presented by climate
change.
TCFD PILLAR - Governance
Board Oversight
The Group recognises the threats
and impacts posed by climate change. As a responsible mining
company, the Group recognises its crucial role in the transition to
a low-carbon economy. The Group aims to align our efforts to
contribute to global climate goals and targets. One of the
ambitious goals of the Company is to become the first carbon
neutral mining operator in the Philippines.
Management Oversight
Management is involved in
identifying and evaluating risks that may affect the operations.
These risks are constantly assessed to prevent potential
environmental, economic and sociocultural impacts to our
stakeholders. Within the Group's operations the use of renewable
energy is supported by purchasing our power from a hydroelectric
power company. In addition, the Group has adopted methods and
technologies that increase the efficiency of its operations without
causing significant harm to the environment. The Group initiates
efforts to include stakeholders in its programs and initiatives in
mitigating and addressing the impacts of climate change.
TCFD PILLAR - Strategy
Identified climate-related risks and
opportunities
The identified key climate-related
threats include increased risk of potential emergencies such as
earthquakes, floods, typhoons and dam failures. In response to
these identified threats, the Group has developed an emergency
control plan (ECP) to ensure preparedness for these potential
emergency situations. The ECP is shared with local communities to
facilitate a planned effective and timely response, aiming to
mitigate threats and minimise consequences to life, environment,
and property.
Impact of climate-related risks and opportunities on strategy
and planning
The Group continues to investigate
opportunities to reduce its GHG emissions while seeking to minimise
the potential effects of longer-term risk to power sources from
potential climate-related risks.
Resilience of strategy
Management has incorporated
climate scenarios into the Group's strategic operational planning
and review process. The Board encourages senior management to
assess principal and emerging climate-related risks on a regular
basis. Any changes in risks identified are to be reported to and
discussed at Board level and incorporated into the strategy and
planning of the Group.
TCFD Pillar - Risk Management
Processes for identifying and assessing climate-related
risks
The Company's Risk Management Plan
is designed to identify, assess and mitigate risks to minimise and
control any potential impacts.
Processes for managing climate-related
risks
The Board and Senior management
co-ordinate the Group's analysis and planning of the effects of
climate change on our business. The Board regularly discusses the
impact of any risks identified through the organisation. The
mitigation of GHG emissions and identification of climate related
risks has been integrated into our corporate policy, project and
procurement evaluation criteria to ensure it is consistently
applied and managed. The Group continuously monitors and reports
key performance indications relating to environmental
matters.
Process for integrating climate-related risks into the
overall risk management
New or evolving climate change
risks identified by both senior and local management are reported
to and discussed at Board level and incorporated into the strategy,
planning and climate policy of the Group. Where possible, plans to
mitigate the effect of climate change on our operations and our
local communities will be integrated into the Group's environmental
management and social and labour plans.
TCFD Pillar - Metrics and Targets
Metrics used by the Group
The Group annually sets targets to
move forward towards its net-zero ambition. Targets are set for the
reduction of water, diesel, and electricity consumption, and waste
generation. Further, a target to increase reforestation and
restoration is also set.
Greenhouse Gas Emissions
The Group is committed to
measuring and reporting our scope 1 and 2 greenhouse gas emissions
as noted below. Scope 3 emissions are not currently measured given
the size and life of Group's mine.
Targets used by the Group
The Group has only the single
Philippine located operation, with a remaining life of mine of
approximately three/four years. In the short term, the Group's
continues to evaluate areas where GHG emissions can be further
reduced. Once the Group has identified the scope of further
potential reductions, their time, capital cost and practicability
of implementation, as short-term targets for the Group will be
assessed.
Over the long term, as part of the
Group's business strategy, the Board continues to evaluate
opportunities to diversify its business activities, which in turn
will involve the consideration of climate-related risks.
GREENHOUSE GAS EMISSIONS
Scope 1 GHG emissions from
operations refers to direct activities that are owned or controlled
by the Group; primarily emissions from fuel consumed by haul
trucks, other vehicles and stationary plant at the Runruno
project.
The calculation of GHG emissions
is based on activity data, i.e. monitoring of fuel consumption
rates, fuel composition, etc multiplied by industry produced
conversion factors.
Scope 2 GHG emissions are indirect
emissions from the generation of purchased electricity consumed by
operations that are owned or controlled by the Group. Group Scope 2
emissions have been calculated using Philippine government recorded
supplier-specific emission factors. Within our operations we
support the use of renewable energy by purchasing our electricity
from a hydroelectric company.
These Scope 1 and 2 GHG emissions
are regularly reported to the Philippines mines
department.
The Group's total carbon footprint
(generated outside of the UK) was measured as follows:
|
2023
CO2e Tonnes
|
2022*
CO2e Tonnes
|
Scope 1 GHG emissions
|
21,429
|
23,668
|
Scope 2 GHG emissions
|
74,737
|
70,309
|
Operational GHG emissions
Total
|
96,166
|
93,977
|
|
Total
CO2e Tonnes per
ounces
gold produces
|
Total
CO2e Tonnes per
ounces
gold produced
|
Operational GHG Emissions
Intensity
|
1.13
|
1.30
|
* restated
ENVIRONMENTAL MONITORING
The Group maintains very high
compliance standards and employs industry leading initiatives to
ensure the highest environmental performance. The Group conducts
regular internal comprehensive environmental monitoring to ensure
compliance with its licence provisions, Philippine Regulations and
any appropriate contemporary standards. This monitoring extends to
reference sites outside the immediate operational area. The
Government undertakes quarterly monitoring by an independent,
community based Multipartite Monitoring Team; while an independent
third-party consultant group specialising in environment monitoring
services is also engaged to independently monitor the Group's
environmental performance.
LEGAL COMPLIANCE
High compliance standards are
practiced across the Group. A large site-based team is dedicated to
managing the high levels of compliance mandated within the
Philippines. The site is regularly audited with upwards of 60
audits, verifications or reviews of its operations undertaken
annually by the various regulators. The wide range of permits to
operate in the Philippines are secured from more than a dozen
Government agencies and regulators.
CORPORATE GOVERNANCE
STATEMENT
The Board has chosen to adopt the
Quoted Companies Alliance's Corporate Governance Code for small and
mid-size quoted companies (the "QCA Code").
The QCA Code identifies ten
principles that focus on the pursuit of medium to long-term value
for shareholders without stifling the entrepreneurial spirit in
which the Company was created. The principles of the QCA Code are
embedded into the Company's internal reporting and governance
structures to the extent expected of a company of
Metals Exploration's size, stage of development
and resources.
The Company's governance
structures are further governed by the Company's Articles of
Association ("Articles") together with relationship agreements (the
"Relationship Agreements") and a revolving credit facility (the
"RCF") with the Company's two largest shareholders, MTL
(Luxembourg) S.à r.l. ("MTL Lux") and Runruno Holdings Limited
("RHL").
The Relationship Agreements
regulate the relationship between the Company and its two largest
shareholders to ensure, amongst other things, that the Company and
its business shall be managed for the benefit of the shareholders
of the Company as a whole. The Relationship
Agreements grant each shareholder the
right to appoint one director, for so long as it (together with its
successors or assignees) continues to hold
more than 10% of the voting rights of the
Company.
The RCF sets out the remuneration
payable to directors nominated by the two largest shareholders.
Further, the RCF requires the prior consent of both these
shareholders (together with its successors or
assignees) for the Company to undertake a number of
operational decisions.
The Company's current compliance, or otherwise, with each of the ten
principles of the QCA Code are detailed below.
|
Principle
|
Disclosure
|
1
|
Establish a strategy and business model which promotes
long-term value for shareholders
|
The Board's strategy and corporate
plan is to:
-
Provide shareholders with capital growth
potential, delivered by developing mineral projects into profitable
mines.
-
Undertake cost-effective and precise exploration
on those targets considered most likely to deliver future positive
shareholder returns.
-
Respect the indigenous culture of the exploration
and development areas and to promote social and economic
development for the traditional custodians.
-
Manage the inherent value of its mining
properties portfolio by delivering an efficient mining
operation.
-
Conduct operations in a safe and environmentally
responsible manner to industry best practice standards.
-
Offer employment opportunities to those who live
in the project area.
-
Reward loyal and dedicated employees who drive
the Company's objectives.
-
Consider acquisition opportunities to foster
additional long-term capital growth potential.
This Annual Report sets out key
risks and uncertainties that may represent challenges to the
successful execution of the Company's strategy and business model,
and how such risks and uncertainties are managed by the Company.
These risks are set out in the Directors Report and notes 33 and 34
to the financial statements.
|
2
|
Seek to understand and meet shareholder needs and
expectations
|
The Company engages openly with
its shareholders via announcements made via a regulatory
information service, its corporate website and other social media
platforms and investor webinars. The Board encourages investors to
participate, if possible, at its Annual General Meeting and General
Meetings. The Board believes that the Annual Report and Accounts,
and the Interim Results published at the half-year stage, play an
important part in presenting all shareholders with an assessment of
the Company's position and prospects.
The Company's website contains
information on the Company's business, corporate information and
specific disclosures required under the AIM Rules and the QCA Code.
Management will also conduct periodic meetings either in person or
electronically to shareholders, private client brokers and
investment analysts.
|
3
|
Consider stakeholder and social responsibilities and their
implications for long term-success
|
The Company's long-term success
relies upon good relations with all its stakeholder groups, both
internal and external. The Board affords highest priority to
ensuring that it maintains a strong understanding of the needs and
expectations of all stakeholders, monitoring feedback from them and considers such feedback in
developing future policy.
The Company undertakes its
exploration and mining activities in a manner that seeks to
minimise or eliminate negative environmental impacts and to
maximise positive impacts of an environmental nature.
The Company operates a
comprehensive safety and health programme to ensure the wellness
and security of its employees. The control and eventual elimination
of all work-related hazards requires a dedicated team effort
involving the active participation of all employees. A
comprehensive safety and health programme is the primary means for
delivering best practices in safety and health
management.
Employment opportunities and
regular training are offered for local Filipinos, while gender
diversity policies are actively followed.
Employee involvement is
fundamental in recognising and reporting unsafe conditions and
avoiding events that may result in injuries and
accidents.
The Company has a dedicated
community relations division that is active in developing and
assisting with various community social programs with special focus
on health, education and infrastructure projects.
|
4
|
Embed effective risk management, considering both
opportunities and threats, throughout the
organisation
|
The Board is responsible for the
Company's system of internal controls and for reviewing its
effectiveness. The system is designed to manage, rather than
eliminate, the risk of failure to achieve the execution of the
Company's strategic objectives and business model.
The Board reviews this internal reporting on a
regular basis.
The Board monitors financial
controls through the setting and approval of an annual budget and a
formal delegation of authority matrix combined with the regular
review of key risk areas and monthly management accounts. The
management accounts contain a number of indicators that are
designed to reduce the possibility of misstatement in the financial
statements.
Each year, on behalf of the Board,
the Audit Committee reviews the effectiveness of the Company's
system of internal controls. This is achieved primarily via a
comprehensive review of risks which cover both financial and
non-financial issues potentially affecting the Company and from
discussions with the external auditor. Details of the key risks,
and their management, are contained in the following Directors'
Report and notes 33 and 34 to the
financial statements. The Board is not aware of any significant
failings or weaknesses in the Company's existing system of internal
controls.
Operational risk
management is the driver for how the Company does
business and dictates requirements to design, plan and adequately
respond to internal and external events. This ensures that proper
incident response, and effective monitoring can be implemented to
minimise anticipated risks and reduce harm and disruption to
people, the environment, and the Company's operations.
|
5
|
Maintain the Board as a well-functioning, balanced team led
by the Chair
|
The purpose of the Board is to
ensure that the business is managed for the long-term benefit of
all shareholders, whilst at the same time having regard for
employees, customers, suppliers and our impact on the environment
and the communities in which we operate. The full Board is
responsible and accountable to shareholders for the management and
success of the Company and for providing effective controls to
assess and manage the risks that the Company faces.
The Company's business is directed
by the Board and is managed on a day-to-day basis by the Chief
Executive Officer ("CEO"). The Board monitors compliance with the
objectives and policies of the Company through monthly performance
reporting, budget updates and periodic operational reviews. The
Board has formal face-to-face meetings at least twice a year, while
restricted agenda meetings are held on an ad hoc basis when
required. Minutes of the meetings of the Directors are circulated
to the Board for approval.
On appointment, Non-Executive
Directors commit to set aside sufficient time on the business of the Company to maintain a full
understanding of the business which will include an annual visit to
the Company's operations in the Philippines.
Board membership and
attendance:
Board member/role
|
Meetings eligible to
attend
|
Meetings
attended
|
Nick von Schirnding - Independent
Non-Executive Chair (appointed 18 March 2024)
|
-
|
-
|
Darren Bowden - CEO &
Executive Director
|
6
|
6
|
Tim Livesey - Independent
Non-Executive Director
|
3
|
3
|
Andrew Chubb - Non-Executive
Director
|
6
|
6
|
Steven Smith - Non-Executive
Director
|
6
|
6
|
Guy Walker - Non-Executive
Director
|
6
|
6
|
David Cather -Independent
Non-Executive Chair (resigned 18 September 2023)
|
3
|
2
|
Steven Smith has been nominated to
the Board by the substantial shareholder MTL Lux, while Guy Walker
was nominated to the Board by the substantial shareholder
RHL.
The two directors nominated by MTL
Lux and RHL are not independent but have relevant experience from
which the Company can benefit. Andrew Chubb is not independent, as
he is a partner of the Company's corporate broker and advises the
Company in this role.
The members of the Board, as a
whole, have suitable knowledge of the Company and expertise to
discharge their duties and responsibilities effectively. All
Directors are encouraged to use their independent judgement and to
challenge all matters, whether strategic or operational. Any
Director must declare a conflict of interest in relation to a
particular item of business before commencement of discussion on
the topic.
The Board has delegated some of
its responsibilities to various Committees, which operate within
specific terms of reference which can be found on the Company's
website. In the event of a proposal to appoint a new Director, each
Director is given the opportunity to meet the candidate prior to
any formal decision being taken. Under the Articles and the RCF,
new director appointments require the approval of the Company's two
largest shareholders. Due to the small size of the Company, no
Nomination Committee has been established.
The Company has established an
Audit committee - refer to page 11 for the Audit Committee Report.
In addition, the Company has established a Remuneration Committee -
refer to page 14 for the Remuneration Committee Report.
In accordance with the Company's
Articles, the Relationship Agreements and the RCF, the
Non-Executive Directors nominated by the Company's two largest
shareholders are not required to be re-elected at the Company's
Annual General Meetings. Further, their remuneration and terms and
conditions of appointment are governed by the Relationship
Agreements and the RCF.
The remuneration and terms and
conditions of appointment of Non-Executive Directors not nominated
by the two largest shareholders are set by the Chair and the Board
and are governed by the Articles.
|
6
|
Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities
|
The skills and experience of the
Board are set out in their biographical details on the Company's
website. The experience and knowledge of each of the Directors
gives them the ability to constructively challenge strategy and to
scrutinise performance.
MSP Corporate Services Limited, a
professional company secretarial services provider, acts as Company
Secretary.
|
7
|
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
|
The collective performance of the
Board is reflected in the success of the business. Evaluation of
the performance of the Board, its Committees and individual members
has historically been implemented on an on-going and ad hoc basis
given the stage of the Company's development. The Company does
not therefore currently comply with Principle 7 in that it has no
formal board evaluation process.
Succession planning is currently
the responsibility of the Board as a whole and the establishment of
a Nomination Committee is not considered necessary due to the
current size of the Board.
|
8
|
Promote a corporate culture that is based on ethical values
and behaviours
|
The Board recognises that its
decisions will impact the corporate culture of the Group as a whole
and that this will affect the performance of the business. The
Board is also very conscious that the tone and culture that it sets
will greatly impact all aspects of the Group and the way that
employees behave and operate. The importance of maintaining sound
ethical values and behaviours is crucial to the ability of the
Company to successfully achieve its corporate
objectives.
The Company seeks to ensure that
responsible business practice is fully integrated into the
management of all its operations and into the culture of all parts
of the Company's business. It believes that the consistent adoption
of responsible business practice is essential for operational
excellence, which in turn is expected to ensure the delivery of its
core objectives of, inter
alia, sustained real growth in future
profitability.
In addition, employee involvement
is recognised as fundamental in recognising and reporting unsafe
conditions and avoiding events that may result in injuries and
accidents, which, in turn, as a mining company, the Board
considers, to be a fundamental part of recognising and establishing
ethical values and behaviours throughout the Company's
operations.
|
9
|
Maintain Governance structures and processes that are fit for
purpose and support good decision making by the
Board
|
The Company maintains appropriate
governance structures and processes according to its current size
and complexity, and its stage of development and level of
resources.
There is a clear division of
responsibility between the Independent Non-Executive Chairman and
the CEO. The Chairman is responsible for running the business of
the Board and for ensuring appropriate strategic focus and
direction. In addition, the Chairman is responsible for the
implementation and practice of sound corporate
governance.
The CEO is responsible for
proposing the strategic focus to the Board, implementing it once it
has been approved and overseeing the management of the Company's
operations.
The role of Non-Executive
Directors includes questioning and challenging the CEO and
assisting where possible in developing strategic proposals;
reviewing and commenting on the integrity of the Company's
financial reporting systems and the information they provide;
recommending appropriate standards of corporate governance;
reviewing internal control systems; ensuring that risk management
systems are robust; and reviewing corporate performance and
ensuring that performance is appropriately reported to
shareholders.
Notwithstanding the above,
the RCF requires certain operational
matters to be pre-approved by the Group's two largest shareholders.
These lending covenants are exceptions to
compliance with Principle 9 that are expected to continue until the
termination of the RCF.
|
10
|
Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
|
The Company recognises that
meaningful engagement with its shareholders is integral to the
continued success of the Group. The Company engages with its
shareholders through meetings, webinars, presentations and
roadshows when appropriate.
The Board believes that the Annual
Report and Accounts, and the Interim Results published at the
half-year stage, play an important part in presenting all
shareholders with an assessment of the Company's position and
prospects. All regulatory announcements are published on the
Company's website. The Annual General Meeting and General Meetings
are an opportunity for shareholders to discuss the Company's
business with the Directors.
The Board is supported by the
Audit and Remuneration Committees, each of which has access to such
information, resources and advice that it deems necessary, at the
Company's cost, to enable the committees to discharge their duties
as are set out in the Terms of Reference of each
committee.
Further the Board is supported in
its dialogue with shareholders by its corporate broker and an
investor relations consultancy group.
|
|
|
|
|
DIRECTORS' REPORT
The Directors present their Annual
Report together with the audited financial statements of Metals
Exploration plc (the "Company") and its subsidiary undertakings
(the "Group"), for the year ended 31 December 2023.
PRINCIPAL ACTIVITIES
The principal activity of the
Group is to identify, acquire, explore and develop mining and
processing projects, mining companies, businesses or opportunities
with particular emphasis on precious and base metals mining
opportunities in the Philippines.
The Company was incorporated on 8
April 2004 under the Companies Act 1985 (now Companies Act 2006)
and is registered in England and Wales with registered number
05098945. The Company was admitted to trading on AIM in October
2004.
The principal activity of the
Company is that of a holding company for its subsidiary
undertakings, which are set out in note 14 of the financial
statements.
FINANCIAL RESULTS
For the year ended 31 December
2023 the profit before tax of the Group for the year was US$119.6
million (2022: US$8.7 million). This result included a net
impairment of assets reversal of US$97.7 million (2022: impairment
expense of US$1.2 million).
DIVIDENDS
The Directors do not recommend the
payment of a dividend for the year ended 31 December 2023 (2022:
US$nil).
BUSINESS REVIEW AND FUTURE DEVELOPMENTS
A review of the current and future
development of the Group's business is given in the Chairman's
Statement on page 3 and the Chief Executive Officer's Report on
page 5.
NOMINATED ADVISER & CORPORATE BROKER
The Company's nominated adviser is
Strand Hanson Limited. The Company's corporate broker is Hannam
& Partners ("H&P Advisory Limited").
AUDITOR
PKF Littlejohn LLP were appointed
as auditor of the Company on 1 December 2023, in accordance with
Section 485 of the Companies Act 2006 following the resignation of
CLA Evelyn Partners Limited. It is
proposed that PKF Littlejohn LLP be re-appointed as auditor of the
Company at the Company's forthcoming Annual General
Meeting.
DIRECTORS & DIRECTORS' INTERESTS
The Directors of the Company
during the year and since the year end were:
Nick Von Schirnding
(Independent Non-Executive Chairman),
appointed 18 March 2024
Darren Bowden
(Chief Executive Officer
and Executive Director)
Andrew Chubb
(Non-Executive
Director)
Tim Livesey
(Independent Non-Executive Director)
Steven Smith
(Non-Executive Director)
Guy Walker
(Non-Executive Director)
David Cather
(Independent Chairman and Non-Executive Director), resigned 18
September 2023
Refer to the Remuneration Report
for details of Directors' beneficial interests in unissued ordinary
shares granted by the Company under share options.
ARRANGEMENTS TO PURCHASE SHARES OR
DEBENTURES
There was no issue of securities
to directors during FY2023, however, during FY2022, the Company
issued:
·
6,600,000 options to acquire new ordinary shares
to Mr Livesey. These options are subject to vesting conditions as
noted in the Remuneration Report.
·
8,257,335 new ordinary shares to Mr Bowden in
lieu of a cash payment of a portion of his management incentive
bonus award.
Apart from outstanding share
options, a full summary of which is disclosed in the Remuneration
Report, there are no other arrangements entered into to enable the
Directors of the Company to acquire benefits by means of the
acquisition of shares in, or debentures of, the Company or any
other body corporate.
DIRECTORS' INTEREST IN CONTRACTS OF
SIGNIFICANCE
No contract of significance to
which the Company, or any of its subsidiary companies was a party
and in which a Director of the Company had a material interest,
whether directly or indirectly, subsisted at the end of the
financial year or at any time during the year; other
than:
·
Steven Smith is a 10% shareholder in MTL Guernsey
Limited ("MTLG"), which has a nominal amount still owing to it
under the Senior Debt Facility.
·
Andrew Chubb is a partner of Hannam &
Partners, the Company's broker and financial adviser.
PRINCIPAL RISKS AND UNCERTAINTIES FACING THE
GROUP
The Board of Directors review the
principal risks and uncertainties facing the Group on an ongoing
and regular basis. Assessments are made as to how to manage these
and mitigate as much risk as possible through various controls.
Many of these risks and uncertainties are common to all mining
projects. The principal risks and uncertainties facing the Group
are identified as follows:
Market
risk
The profitability of the Group's
projects is impacted by the risks associated with the gold market.
Profitability can be affected by factors beyond the Group's
control, such as a prolonged decline in world gold prices. The
Group regularly tracks gold prices and regularly refines its models
on financial profitability in order to have available for the Board
at all times, a current view on the future financial viability of
its active projects. The Group has attempted to mitigate this risk
by entering into limited hedge arrangements in relation to future
gold prices. Refer note 20.
The Group is exposed to currency
risks in its operations; particularly in relation to Philippine
domestic peso currency exposure from costs associated with mining
and gold recovery. Currency exposures are carefully monitored, and
forward contracts are in place to insure against major adverse
currency movement risk. Refer note 20.
Nature of mining, resource
estimation and mineral processing
Mineral resource and reserves
estimation provides no assurance that the potential tonnage and
grades will be achieved. The exploration of mineral rights is
speculative in nature and any published results are expressions of
judgement developed using industry tested measuring techniques,
none of which can be relied upon with complete certainty. Each set
of published results builds upon the previous published information
and includes any new and reliable information from systematic drill
results, mining, and recovery and reconciliation activities and is
independently verified by qualified persons. However, this still
involves experience, judgement, skill and estimation, all of which
are imprecise, interpretative and open to challenge. The actual
results of mining may differ upwards or downwards from the
published reserves upon which the Group relies in its business
projections.
The size of the deposit, its
grade, depth and type of orebody, are only some of the particular
attributes which determine the costs and recovery methods required
to be employed. There is also the length of haul to the processing
plant, age and maintenance programmes for plant and equipment, land
access, environmental protection and community relations, capital
costs, reclamation and closure costs and labour and host community
relations. The quantities, costs and assumptions used to identify
and interpret these variables can be modelled to the lowest level
of detail possible, but they do not provide absolute certainty that
the expected cost of mining will be achieved.
The metallurgy of the Group's ore
requires a complex set of processes to extract economic levels of
gold doré. Maintaining efficient processing operations requires
specialised equipment and consumables, combined with an experienced
and motivated processing team. It is also subject to numerous
factors some of which are within the Group's ability to control,
and some that are external factors outside the control of the
Group.
Reserves and life of
mine
Based upon the Group's current
delineated gold reserves and planned mining schedule it is
predicted that the Runruno project's remaining life of mine is
approximately 3-4 years.
Exploration and development of
mineral deposits involve a wide range of significant risks and
require a significant investment over an extended period of time.
These risks are seldom constant with new types invariably arising
and adding to the industry's and Group's challenges.
Exploration success that results
in the discovery of new gold resources that can be developed into
new economic gold mineral reserves that in turn can extend the
Runruno project life of mine is not guaranteed.
Mining regulatory
risk
Mining investors are exposed to a
high level of regulatory risk under the governing bodies
responsible for the Philippine mining sector. There is a wide array
of 'rules and regulations' ("Rules") that govern the regulatory
regime for foreign mining investment in the Philippines and the
Rules are created and enforced by several layers of government and
government agencies nationally, provincially and locally. The
Philippines mining industry is subject to frequent audit and review
activity by regulatory agencies.
Failure to receive, extend or
amend any Regulatory Approval, or delays in receiving, extending or
amending any Regulatory Approval may adversely affect the
properties, business or operations of the Group including, but not
limited to, increasing the costs of the Group's activities;
limiting the Group's capacity to produce gold; delaying the
implementation of any planned changes to the Group's activities; or
requiring the full or partial suspension of the Group's
operations.
The Group has almost 500
approvals, licences and permits to conduct mining, processing and
related activities at its Runruno Gold Project in the Philippines
(collectively "Regulatory Approvals") and is routinely required to
obtain new permits and Regulatory Approvals or to amend, renew or
extend its existing permits and Regulatory Approvals.
As at the date of this Report,
neither the Group nor the Runruno project is subject to any
suspension or closure order. The Group has applied for, or is in
the process of, applying for the issue, extension or renewal of a
number of Regulatory Approvals and cannot be certain that they will
be issued, extended or renewed on acceptable terms or within the
required timeframes.
Key
personnel
The Group's future success is
substantially dependent upon the continued service of senior
management, and it's highly skilled and trained personnel at all
levels of management, however the retention of relevant members of
staff cannot be guaranteed. There can be no certainty that the
Group can recruit suitably qualified or skilled employees in a
competitive, highly skilled, specialist industry and it is possible
the Group will face periods of varying lengths of management and
skills shortages.
Where key personnel cannot be
retained in the medium to long term, the Group's commercial
production could be compromised at various intervals.
Environmental
risk
Mining operations are by nature
environmentally risky ventures. As a responsible miner the Group
takes its environmental responsibilities very seriously and is
subject to stringent rules and regulations before, during and after
its period of exploration and mining development. Open pit mining
is mining on a large-scale and has the potential to become
entangled in environmental disputes. The Group employs every effort
to avoid and mitigate even the most minor of damage to the
environment, but it is aware it will always be exposed to these
risks for as long as it is present at Runruno.
Any breach of its environmental
code or obligations to the environment as dictated in its Financial
or Technical Assistance Agreement ("FTAA") or its Environmental
Compliance Certificate may result in a temporary suspension of
operations, fines, and even the possibility of closure of mining
operations at Runruno. The Group is aware there may be further
environmental standards imposed throughout the life of its mining
operations which will involve further costs, time and compromises
to be compliant.
Political and country
risk
The Philippines is a challenging
jurisdiction for foreign mining companies to succeed. The Mining
industry's percentage contribution to the country's GDP has dropped
significantly over the last 30-40 years. Philippine political and
country perceived risk issues have hindered the development of a
world class Philippine mining industry. The Group has no control or
influence in these matters and these risks are a
constant.
In an effort to reduce these
risks, the Group applied for and was granted a FTAA, a contract in
law with the government. The 1995 Mining Act allows 100% foreign
ownership of mining entities where there is a US$50 million
investment or higher, through the ownership of a FTAA. Mines
operating under a FTAA have recourse for disputes to be arbitrated
offshore. Despite opposition to the 1995 Mining Act successive
Presidents have supported the framework.
Access to tenement
areas
The Group now has full access to
all stages of the mining plan, having finalised the removal of
illegal gold miners, and their structures from Stages 3, 4 and 5 of
the Runruno mine. No further delays to the Group's mining schedule
are expected due to tenement access issues.
RSI
integrity
The Group's tailings waste is
directed to a residual storage impoundment ("RSI") facility. The
RSI is being constructed to standards applicable to international
water dam construction, which has significantly higher standards
than normal mine tailings facilities. However, the failure of the
RSI would be catastrophic, and as such the continued integrity of
this structure is of the utmost importance.
Third party audits of the design
and construction integrity of the RSI are conducted, and the RSI
remains in compliance with local guidelines and local development
requirements. Construction of the final in-rock spillway commenced
in Q1 2023 and is expected to be completed during Q1 2025. This
final in-rock spillway will ensure the RSI has the capacity to cope
with a 'Probable Maximum Flood' event.
The performance of the RSI is
continuously monitored by an independent international consulting
group.
GOING CONCERN
The consolidated financial
statements of the Group have been prepared on a going concern
basis, which contemplates the continuity of business activities and
the realisation of assets and the settlement of liabilities in the
normal course of business.
Although the Group's current
liabilities exceeded its current assets, this is primarily due to
the external borrowings as at 31 December 2023.
The Board of Directors believe
that the Runruno mine will continue to operate successfully and
produce positive cash flows ensuring the continuing viability of
the Group and its ability to operate as a going concern, meeting
its commitments as and when they fall due.
As a result, the Directors believe
there is no material uncertainty over the Group's going concern and
that it is appropriate that the financial statements should be
prepared on a going concern basis.
KEY PERFORMANCE INDICATORS
The Directors monitor the
performance of the Group through the following key performance
indicators:
·
Safety - Safety is at the core of the Group's
business. The Group aspires to a world class TRIFR target of
<0.95, which was achieved both in FY2023 and FY2022. Indeed, the
focus on safety has been successful with over 22.7 million
work-hours being recorded since the last lost-time incident.
Maintaining a safe working environment at all times, for all
employees and contractors, is of paramount importance to the Group.
Safety is the lead item for consideration at all management
meetings, with safety briefings and safety protocol reviews
regularly undertaken. Management remains determined to minimise and
where possible eliminate potential safety risks.
·
Environment/permit compliance - The Group aims to
have no major environmental/permitting incidents and <3 minor
reportable environmental/permitting incidents per annum. This
target was achieved during both FY2023 and FY2022. Operations are
subject to numerous environmental and permit obligations and
regulations. A dedicated department monitors the Group's
performance in this regard. Regular reporting of compliance with
these obligations and regulations is strictly adhered to. The Group
is confident of its satisfaction of the compliance obligations
imposed on its operations and its ability to maintain and renew
permits as required.
·
Gold recovery - Overall gold recovery measured
against budget reflects the outcome of ongoing technical work
undertaken to improve operational performance. The average gold
recovery in FY2023 was 88.7% (FY2022: 85.7%) surpassing the average
gold recovery target. Gold recoveries are continuously monitored
providing detailed information on day-to-day performance, and for
ongoing studies into improving gold recovery even
further.
·
Free cash flow - Given the Group's historical
high debt level the amount of free cash flow produced to pay down
Group debt has been of paramount importance; and performance is
determined by comparison of actual results against budget. The cost
efficiencies of operations are measured against budgets and
forecasts on a weekly and monthly basis. Detailed annual budgets
are approved by the Board. Free cash generated from operations of
US$74.6 million (FY2022: US$38.2 million) exceeded
budget.
·
Total expenditure - Total operating cost and
CAPEX expenditure is measured against budget on a weekly, monthly
and annual basis. Projected costs are re-forecast at regular
intervals. Total operating cost and CAPEX expenditure, excluding
excise tax, for FY2023 of US$87.6 million (FY2022: US$89.7 million)
was slightly in excess of budget.
·
Total movement of material - Actual physical
mining performance, both ore and waste, compared to budget is a key
driver to ongoing mining operations. Mine schedules are constantly
being reviewed to ensure sufficient ore is delivered to the process
plant on a timely basis at an economic grade. Actual tonnes mined
during the year was 10.4% above budget at 12.4Mt (FY2022:
13.7Mt).
·
Mill throughput - Actual tonnes milled of 2.1Mt
(FY2022: 2.1Mt) compared to the 1.75Mt name-plant design of the
process plant indicates the degree of success plant modifications
have made on the Group's ability to increase production rates above
original design expectations.
EVENTS AFTER THE BALANCE SHEET DATE
Details of significant events
occurring after the balance sheet date are set out in note 36 to
the financial statements.
FINANCIAL RISK MANAGEMENT
Details of the Group's policies
with respect to financial risk management are given in note 34 to
the financial statements.
Although monitoring financial risk
falls within the terms of reference of the audit committee, this
matter is a standard agenda item at all board meetings. The Group's
finance departments implement policies set by the Board of
Directors.
CORPORATE RESPONSIBILITY AND ENVIRONMENTAL
POLICY
The Group's policy is to conduct
operations in a safe and environmentally responsible manner to
industry best practice standards, to respect the indigenous culture
of the mining project areas, to promote social and economic
development and to offer employment and training opportunities to
those who live in the mining project areas.
POLITICAL CONTRIBUTIONS AND CHARITABLE
CONTRIBUTIONS
During FY2023, the Group did not
make any political or charitable contributions (FY2022:
$nil).
ANNUAL GENERAL MEETING
This report and the financial
statements will be presented to shareholders for their approval at
the Annual General Meeting ("AGM").
The Company's AGM is expected to
be held on 28 June 2024 at the offices of Armstrong Teasdale LLP in
London. The Notice of the AGM will be issued shortly.
In accordance with the Company's
Articles of Association, Messrs von Schirnding, Bowden, Chubb, and
Livesey will retire and will offer themselves for re-election at
the AGM.
SHARE CAPITAL
On 31 December 2023, there were
2,098,144,271 ordinary shares of £0.0001 each in the capital of the
Company in issue.
SIGNIFICANT SHAREHOLDINGS
As at 31 December 2023, the
Company is either aware of or has been notified of the following
shareholders who hold disclosable interests of 3% or more of the
nominal value of the Company's ordinary shares:
Significant
Shareholders
|
Shares held as
of
|
%
|
Shares held as
of
|
%
|
|
31
December
|
31
December
|
|
2023
|
2022
|
|
MTL (Luxembourg) Sarl¹
|
969,532,143
|
46.6%
|
970,532,143
|
46.6%
|
|
Runruno Holdings Ltd
|
393,513,302
|
18.8%
|
393,513,302
|
18.8%
|
|
Hargreaves Lansdown³
|
109,545,714
|
5.2%
|
85,083,121
|
4.1%
|
|
Baker Steel Capital Managers
LLP²
|
99,488,429
|
4.8%
|
113,488,429
|
5.4%
|
|
Interactive Investor³
|
77,948,910
|
4.2%
|
87,747,000
|
4.2%
|
|
|
|
|
|
|
|
¹ MTL (Luxembourg) Sarl's
holding includes 1 million shares owned by Ms. Crompton Candy who
is deemed to be acting in concert with MTL Luxembourg.
|
|
² Baker Steel Capital
Managers LLP acting on behalf of various funds for which it acts as
full discretionary Investment Manager.
|
|
³ Acting on behalf of its
clients.
|
|
|
|
|
|
|
|
|
BOARD ENGAGEMENT WITH STAKEHOLDERS - SECTION 172
STATEMENT
Section 172 of the Companies Act
2006 requires a Director of a company to act in the way he or she
considers, in good faith, and would be most likely to promote the
success of the company for the benefit of its members as a whole.
In doing this, section 172 requires a Director to have regard,
among other matters, to: the likely consequences of any decision in
the long term; the interests of the company's employees; the need
to foster the company's business relationships with suppliers,
customers and others; the impact of the company's operations on the
community and the environment; the desirability of the company
maintaining a reputation for high standards of business conduct;
and the need to act fairly with members of the company.
The Directors use the Board
meetings as a mechanism for giving careful consideration to the
factors set out above in discharging their duties under section
172.
Stakeholder engagement
Key stakeholder groups we engage
with are listed below, together with an explanation of why we focus
on them and how we engage them.
Employees
The success of the Group is
dependent upon the hard work and dedication of all our employees.
The Board ensures a continuing investment in existing employees who
are supported through professional, technical and on-the-job
training relevant to their functional areas. The Board directs
executives and senior managers to keep staff informed of the
progress and development of the Group on a regular basis through
formal and informal operational updates, meetings and other regular
communications. In addition, the Board ensures funds are provided
for regular events to encourage employee participation in local
community initiatives.
The Group strives to create an
equal opportunity work environment where employees can be safe and
healthy at all times, while feeling valued and supported. Employees
are encouraged to speak out about anything that impacts their
performance and/or safety.
The Board is conscious of its
social obligation to impart skills and knowledge onto local
Philippine employees. Accordingly, over 98% of the Group's
workforce is Philippine. Workforce gender diversity policies are
actively followed with approximately 28% of the workforce being
female.
Government Agencies & Local Communities
The Group operates in the highly
regulated mining business in the Philippines. The Board ensures the
Company adopts a positive focus on maintaining productive relations
with local communities and all levels of government. As a result,
the Chief Executive Officer and senior managers regularly conduct
consultations with multi-levels of government agencies to ensure
that all regulatory approvals and permits remain in good order.
Development of local community improvement programmes are
undertaken with consultation of local government and community
representatives.
Contractors & Suppliers
Our contractors and suppliers are
key business partners, and the quality of goods and services we
receive are essential to supporting operations and to provide the
Group with the opportunity to produce positive cash
flows.
As directed by the Board,
management collaborates and continually works with our contractors
and the full supply chain, sharing best practice and seeking out
synergies to improve performance.
Lenders
For the entire reporting period,
the CEO and the CFO, on behalf of the Board, were in regular
contact with its lenders regarding the Group's performance in an
endeavour to manage expectations.
Customers
The Group's business in mining and
selling gold doré means
it only deals with a small number of end customers, being refiners
of doré and/or gold concentrate. The Board
ensures a close relationship is maintained with senior personnel at
each customer group.
Investors
Investors are considered key
stakeholders, and consequently investor relations are a focus area
for Directors. Where possible the Board engages investors on Group
performance following trading updates and results
announcements.
DISCLOSURE OF INFORMATION TO THE
AUDITORS
The Directors at the date of
approval of this Annual Report individually confirm
that:
·
so far as the Director is aware, there is no
relevant audit information of which the Group's auditors are
unaware; and
·
the Director has taken all the steps that he
ought to have taken as a Director in order to make himself aware of
any relevant audit information and to establish that the Group's
auditors are aware of that information.
This confirmation is given and
should be interpreted in accordance with the provision of Section
418 of the Companies Act 2006.
Approved by the Board of Directors
and signed on behalf of the Board
Darren Bowden, Chief
Executive Officer
22 May 2024
STATEMENT OF DIRECTORS'
RESPONSIBILITIES
The Directors are responsible for
preparing the Corporate Governance Report, Strategic Report,
Directors' Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare financial statements for each financial year. Under that
law, the Directors have elected to prepare the financial statements
in accordance with applicable law and in
accordance with UK-adopted international accounting
standards. Under Company law the Directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required
to:
·
select suitable accounting policies and then
apply them consistently;
·
make judgments and accounting estimates that are
reasonable and prudent;
·
state whether UK-adopted
international accounting standards have been followed,
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
Company and Group will continue in business.
The Directors are responsible
for:
·
keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities;
·
ensuring that they meet their responsibilities
under the AIM Rules; and
·
the maintenance and integrity of the corporate
and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF METALS
EXPLORATION PLC
Opinion
We have audited the financial
statements of Metals Exploration Plc (the 'parent company') and its
subsidiaries (the 'group') for the year ended 31 December 2023
which comprise the Consolidated Statement of Total Comprehensive
Income, the Consolidated and Company Statements of Financial
Position, the Consolidated and Company Statements of Changes in
Equity, the Consolidated and Company Statements of Cash Flows and
notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international
accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
·
the financial statements give a true and fair
view of the state of the group's and of the parent company's
affairs as at 31 December 2023 and of the group's profit for the
year then ended;
·
the group financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards;
·
the parent company financial statements have been
properly prepared in accordance with UK-adopted international
accounting standards and as applied in accordance with the
provisions of the Companies Act 2006; and
·
the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in
accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities
for the audit of the financial statements section of our report. We
are independent of the group and parent company in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial
statements, we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue
to adopt the going concern basis of accounting included:
·
Testing the integrity of management's forecast
model for a period of 12 months from the date of approval of the
financial statements and further, checking the mathematical
accuracy of the model, including challenging the appropriateness of
key assumptions and inputs with reference to empirical data and
external evidence with specific focus on the following key
assumptions: gold price, production, costs, gold grade, recoveries
and assessed their consistency with approved budgets and the mine
development plan, as applicable;
·
Comparing budgets to actual figures achieved to
assess the reliability of management's forecasts;
·
Evaluating management's sensitivity analysis and
performing our own sensitivity analysis in respect of the key
assumptions and inputs underpinning the forecasts. We assessed the
validity of any mitigating actions identified by
management;
·
Confirming the terms of all borrowing facilities
in place and that the terms are not breached and reviewing the
repayments of loans and ensuring that they were reflected in the
cash flow forecast; and
·
Assessing if the going concern disclosures in the
financial statements are appropriate and in accordance with the
revised ISA UK 570 going concern standard.
Based on the work we have
performed, we have not identified any material uncertainties
relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's or parent
company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the
responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Our application of materiality
The scope of our audit was
influenced by our application of materiality. The quantitative and
qualitative thresholds for materiality determine the scope of our
audit and the nature, timing and extent of our audit
procedures.
We determined materiality for the
group and parent financial statements to be:
|
Group
|
Parent
|
|
$
|
Basis
|
$
|
Basis
|
Overall materiality
|
1,689,000
|
1% of revenue
|
1,654,000
|
5% of profit before tax
|
Performance materiality
|
1,013,400
|
60% of materiality
|
992,400
|
60% of materiality
|
Triviality
|
84,450
|
5% of materiality
|
82,700
|
5% of materiality
|
In determining group materiality,
we consider revenue to be the primary measure used by the
shareholders in assessing the performance of the group, driving
profitability within the group and revenue is expected to provide a
more stable measure year on year. The percentage applied to this benchmark of 1% has been
selected to bring into scope all significant classes of
transactions, account balances and disclosures relevant for the
shareholders, and also to ensure that matters that would have a
significant impact on the reported profit were appropriately
considered.
In determining parent materiality,
we consider profit before tax to be the primary measure used by the
shareholders in assessing the performance of the company. The
parent is generating consultancy revenue from its subsidiaries, and
holds little fixed assets for these reasons.
The percentage applied to this benchmark of 5%
has been selected to bring into scope all significant classes of
transactions, account balances and disclosures relevant for the
shareholders, and also to ensure that matters that would have a
significant impact on the reported profit were appropriately
considered.
We use performance materiality to
reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds
overall materiality. Specifically, we use performance materiality
in determining the scope of our audit and the nature and extent of
our testing of account balances, classes of transactions and
disclosures. We set the performance materiality at 60% of
materiality.
In determining performance
materiality, we considered the following factors:
·
Our knowledge of the group and parent and its
environment, including industry specific trends;
·
Significant transactions during the year;
and
·
The level of judgement required in respect of the
key accounting estimates.
We agreed with the audit committee
that we would report all individual audit differences identified
for the group during the course of our audit in excess of $84,450
($82,700 for the parent) together with any other audit
misstatements below that threshold that we believe warranted
reporting on qualitative grounds.
We determined materiality
for the significant component to be:
|
$
|
Basis
|
Overall materiality
|
1,500,000
|
Based on a factor of overall group
materiality
|
Performance materiality
|
900,000
|
60% of materiality
|
Triviality
|
75,000
|
5% of materiality
|
|
|
|
|
We applied the concept of
materiality in planning and performing our audit and in evaluating
the effects of misstatement.
Our approach to the audit
Our audit is risk based and is
designed to focus our efforts on the areas at greatest risk of
material misstatement, aspects subject to significant management
judgement as well as greatest complexity, risk and size.
As part of designing our audit, we
determined materiality, as above, and assessed the risk of material
misstatement in the financial statements. In particular, we looked
at areas involving significant accounting estimates and judgement
by the directors and considered future events that are inherently
uncertain.
These areas of estimate and
judgement included:
·
Valuation of property, plant and
equipment
·
Revenue recognition
·
Recoverability of investments in subsidiaries and
receivables from subsidiaries
·
Valuation of inventory
·
Accuracy and completeness of rehabilitation
provision
·
Valuation and classification of loan
payable
·
Accuracy and valuation of retirement benefit
obligations
·
Accuracy and valuation of shared-based
payments
We also addressed the risk of
management override of internal controls, including among other
matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to
fraud.
Of the group's 7 components,
including the parent company, 2 were considered material (including
parent company - audited by PKF-Littlejohn), financially
significant and subject to full scope audit for group purposes. The
remaining components were not considered material and we performed
a limited scope analytical review together with substantive
testing, as appropriate.
A full scope audit was performed
for the one significant component in the Philippines.
In establishing our overall approach to the Group
audit, we determined the scope, direction of the audit process, and
the type of work that needed to be undertaken by the component
team. We determined the appropriate level of involvement to enable
us to determine that sufficient audit evidence had been obtained as
a basis for our opinion on the Group as a whole.
We carried out a site visit to the
Philippines in April 2024 and performed an on-site file review of
the work performed by the component auditor.
The key audit matters and how
these were addressed are outlined below.
Key audit matters
Key audit matters are those
matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the
current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter
|
How our scope addressed this matter
|
Carrying value and impairment of property, plant and
equipment (Valuation)
|
|
The group holds a significant
balance of tangible non-current assets of $140m which are key to
the Group's mining operations. Management assess the
recoverable amounts of these balances on a cash generating unit
(CGU) based on the value-in use of the Runruno operations using
cash flow projections over the remaining expected life of the mine
(LOM) which is ending in 2027
and at appropriate discounted rates. This is to
be used as an impairment indicator in the impairment
calculations.
Given the significant judgements
and estimates used by management in determining the value
in use of these
assets, there is the risk that the carrying value is not fully
recoverable, taking into consideration all applicable factors
including current and future mined ore grades, production
quantities, revenues, direct costs and discount rates, which all
feed into the value in use calculations
The disclosure is provided in the
financial statements under Note 8.
|
Our work in this area
included:
·
Considering any potential impairment indicators
through discussion with management and the onsite visit to the mine
site during the audit fieldwork, as well as reviewing of
announcements to the market and board minutes for evidence of
impairment.
·
Obtaining and reviewing management's discounted
cash flow model;
·
Assessing and reviewing indicators of impairment
as per IAS 36;
·
Ensuring the basis of preparation of the model is
in line with applicable accounting standards;
·
Assessing the appropriateness of estimates and
inputs including ore grade, commodity price, production, operating
costs, capital costs, discount rates, foreign exchange rates;
and
·
Ensuring inputs into the model are in line with
third party expert's opinion of total mineral resources.
|
Other information
The other information comprises
the information included in the annual report, other than the
financial statements and our auditor's report thereon. The
directors are responsible for the other information contained
within the annual report. Our opinion on the group and parent
company financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this
regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work
undertaken in the course of the audit:
·
the information given in the strategic report and
the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial
statements; and
·
the strategic report and the directors' report
have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and
understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the
directors' report.
We have nothing to report in
respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our
opinion:
·
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 financial statements are not
in agreement with the accounting records and returns; or
·
certain disclosures of directors' remuneration
specified by law are not made; or
·
we have not received all the information and
explanations we 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
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the group and parent
company financial statements, the directors are responsible for
assessing the group 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.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain
reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud,
are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is
detailed below:
·
We obtained an understanding of the group and
company and the sector in which it operates to identify laws and
regulations that could reasonably be expected to have a direct
effect on the financial statements. We obtained our understanding
in this regard through discussions with management, and our
expertise of the sector.
·
We determined the principal laws and regulations
relevant to the company in this regard to be those arising from
Companies Act 2006, UK-adopted international accounting standards,
the AIM Rules for Companies, as well as local laws and regulations
in the jurisdiction in which the group and parent company
operate.
·
Compliance with laws and regulations at the
subsidiary level was ensured through enquiry of management,
communication with component auditors and correspondence for any
instances of non-compliance.
·
We designed our audit procedures to ensure the
audit team considered whether there were any indications of
non-compliance by the group and parent company with those laws and
regulations. These procedures included, but were not limited
to:
o conducting enquiries of management regarding potential
instances of non-compliance;
o reviewing RNS announcements;
o reviewing legal and professional fees for evidence of any
litigation or claims against the company; and
o reviewing board minutes and other correspondence from
management.
·
We also identified the risks of material
misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk
of fraud arising from management override of controls, whether key
management judgements could include management bias in
relation:
o Valuation of property, plant and equipment as outlined in the
Key audit matters section above
o Recoverability of investments in subsidiaries and receivables
from subsidiaries
o Valuation of inventory
o Accuracy and completeness of rehabilitation
provision
o Accuracy and valuation of retirement benefit
obligations
o Accuracy and valuation of shared-based payments
·
As in all of our audits, we addressed the risk of
fraud arising from management override of controls by performing
audit procedures which included, but were not limited to: the
testing of journals; reviewing accounting estimates for evidence of
bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of
business.
Because of the inherent
limitations of an audit, there is a risk that we will not detect
all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law
or regulation is removed from the events and transactions reflected
in the financial statements, as we will be less likely to become
aware of instances of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error,
as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our
responsibilities for the audit of the financial statements is
located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Use of our report
This report is made solely to the
company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so
that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone, other than the company and the
company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory Auditor
London E14 4HD
22
May 2024
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 31 DECEMBER
2023
|
|
|
|
2023
|
|
2022
|
|
Notes
|
|
|
US$
|
|
US$
|
Continuing Operations
|
|
|
|
|
|
|
Revenue
|
3
|
|
|
166,682,876
|
|
124,410,991
|
Cost of sales
|
|
|
|
(129,422,805)
|
|
(91,667,471)
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
37,260,071
|
|
32,743,520
|
Administrative expenses
|
|
|
|
(8,086,753)
|
|
(8,924,926)
|
|
|
|
|
|
|
|
Operating profit
|
4
|
|
|
29,173,318
|
|
23,818,594
|
|
|
|
|
|
|
|
Impairment gain/(loss)
|
8
|
|
|
97,737,620
|
|
(1,202,397)
|
Net finance and other
charges
|
8
|
|
|
(7,310,461)
|
|
(13,765,824)
|
Provision for (loss) on
derivatives
|
20
|
|
|
(29,759)
|
|
(4,883)
|
Share based payment
expense
|
27
|
|
|
(31,368)
|
|
(102,001)
|
Share of (loss)/profit of
associates
|
15
|
|
|
15,970
|
|
(76,854)
|
Profit before tax
|
|
|
|
119,555,320
|
|
8,666,635
|
Tax (expense)/benefit
|
9/10
|
|
|
(306,582)
|
|
87,321
|
Profit for the period attributable to equity holders of the
parent
|
|
|
|
119,248,738
|
|
8,753,956
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
Items that may be re-classified subsequently to profit or
loss:
|
|
|
|
|
|
|
Exchange differences on translating
foreign operations
|
|
|
|
(3,479,370)
|
|
(247,475)
|
Items that will not be re-classified subsequently to profit
or loss:
Re-measurement of pension
liabilities
|
|
|
|
222,909
|
|
(634,652)
|
Total comprehensive profit for the period attributable to
equity holders of the parent
|
|
|
|
115,992,277
|
|
7,871,829
|
|
|
|
|
Cents
per share
|
|
Cents
per share
|
Earnings per share:
|
|
|
|
|
|
|
Basic cents per share
|
11
|
|
|
5.70
|
|
0.42
|
Diluted cents per share
|
11
|
|
|
5.64
|
|
0.42
|
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023
|
|
|
|
|
|
2023
|
|
2022
|
|
Notes
|
|
|
|
|
US$
|
|
US$
|
Non-current assets
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
12
|
|
|
|
|
140,597,506
|
|
81,459,218
|
Other intangible assets
|
13
|
|
|
|
|
7,664
|
|
33,049
|
Investment in associate
companies
|
15
|
|
|
|
|
121,381
|
|
105,411
|
Trade and other
receivables
|
16
|
|
|
|
|
16,720,701
|
|
8,796,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157,447,252
|
|
90,393,811
|
Current assets
|
|
|
|
|
|
|
|
|
Inventories
|
17
|
|
|
|
|
18,695,048
|
|
21,215,487
|
Trade and other
receivables
|
19
|
|
|
|
|
5,000,515
|
|
8,135,100
|
Cash and cash equivalents
|
18
|
|
|
|
|
339,997
|
|
861,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,035,560
|
|
30,211,656
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Loans
|
23
|
|
|
|
|
-
|
|
(51,983,413)
|
Trade and other payables
|
22
|
|
|
|
|
(70,850)
|
|
(1,314,556)
|
Retirement benefits
obligations
|
21
|
|
|
|
|
(2,471,289)
|
|
(2,463,112)
|
Deferred tax liabilities
|
10
|
|
|
|
|
(544,697)
|
|
(574,038)
|
Provision for mine
rehabilitation
|
24
|
|
|
|
|
(4,145,567)
|
|
(3,764,708)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,232,403)
|
|
(60,099,827)
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
22
|
|
|
|
|
(16,063,666)
|
|
(12,431,948)
|
Loans - current portion
|
23
|
|
|
|
|
(23,896,298)
|
|
(30,001,208)
|
Derivative liabilities
|
20
|
|
|
|
|
(357,546)
|
|
(308,725)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(40,317,510)
|
|
(42,741,881)
|
Net
assets
|
|
|
|
|
|
133,932,899
|
|
17,763,759
|
Equity
|
|
|
|
|
|
|
|
|
Share capital
|
25
|
|
|
|
|
282,783
|
|
281,638
|
Share premium account
|
25
|
|
|
|
|
144,350
|
|
-
|
Acquisition of non-controlling
interest reserve
|
|
|
|
|
|
(5,107,515)
|
|
(5,107,515)
|
Translation reserve
|
|
|
|
|
|
10,941,631
|
|
14,421,001
|
Re-measurement reserve
|
|
|
|
|
|
(249,740)
|
|
(472,649)
|
Other reserves
|
27/28
|
|
|
|
|
144,351
|
|
1,639,920
|
Profit and loss account
|
26
|
|
|
|
|
127,777,039
|
|
7,001,364
|
|
|
|
|
|
|
|
|
|
Equity attributable to equity holders of the
parent
|
|
|
|
|
|
133,932,899
|
|
17,763,759
|
The financial statements were
approved by the Board of Directors on 22 May 2024 and were signed
on its behalf by:
Darren Bowden, Chief Executive Officer
22 May 2024
COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER
2023
|
|
|
|
2023
|
|
2022
|
|
Notes
|
|
|
US$
|
|
US$
|
Net
cash (used in) operating activities
|
29
|
|
|
(112,740)
|
|
(37,720)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
Repayment of borrowing
principal
|
30
|
|
|
(61,430,747)
|
|
(7,384,358)
|
Repayment of borrowing
interest
|
30
|
|
|
(3,369,253)
|
|
(1,215,642)
|
Advances from subsidiary
|
|
|
|
64,800,000
|
|
8,600,000
|
Shares issued
|
|
|
|
280
|
|
-
|
Net
cash provided by financing activities
|
|
|
|
280
|
|
-
|
|
|
|
|
|
|
|
Net
(decrease) in cash and cash equivalents
|
|
|
|
(112,460)
|
|
(37,720)
|
Cash and cash equivalents at
beginning of year
|
|
|
|
168,614
|
|
199,978
|
Foreign exchange
difference
|
|
|
|
(5,120)
|
|
6,356
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
|
|
51,034
|
|
168,614
|
NOTES TO THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.
Accounting policies
The principal accounting policies
are summarised below. Except as elsewhere disclosed, the accounting
policies have all been applied consistently throughout the period
covered by these financial statements.
Basis of preparation
The financial information has been
prepared on a historical cost basis, except for derivative
financial instruments, which are measured at fair value, and
in accordance with UK-adopted international
accounting standards.
For the Group and its
subsidiaries, US Dollars is both the functional and presentational
currency. Although the Company's functional currency is pounds
sterling, it uses US Dollars as its presentational currency, to
better reflect the underlying performance of that
entity.
Going concern
The consolidated financial
statements of the Group have been prepared on a going concern
basis, which contemplates the continuity of business activities
and the realisation of assets and the settlement of liabilities in
the normal course of business.
Although the Group's current
liabilities continue to exceed its current assets, this was
primarily due to external debt at 31 December 2023. Further,
the Board of Directors believe that the
Runruno mine will continue to operate successfully and produce
positive cash flows ensuring the continuing viability of the Group
and its ability to operate as a going concern, meeting its
commitments as and when they fall due.
As a result, the Directors believe
there is no material uncertainty over the Group's going concern and
that it is
appropriate that the financial statements should
be prepared on a going concern basis.
Changes in accounting policies and
disclosures
The accounting policies and
disclosures applied in the preparation of these financial
statements are consistent with the accounting policies and
disclosures applied in the preparation of the prior period
financial statements.
New standards and
interpretations
The financial statements have been
drawn up on the basis of accounting standards, interpretations and
amendments effective from the beginning of the accounting period on
1 January 2023. The new standards, interpretations and
amendments effective from 1 January 2023 had no significant impact
on the Group.
There are a number of
international accounting standards, amendments to standards, and
interpretations which have been issued that are effective in future
accounting periods and which have not been adopted early. None of
these standards, amendments to standards or interpretations are
expected to have a significant effect on the
Group.
Basis of consolidation
The Group's financial statements
incorporate the financial statements of the Company and its
subsidiary undertakings for the year ended 31 December 2023. A
subsidiary is an entity controlled, directly or indirectly, by the
Group. Control exists when the Group is
exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns
through its power over the investee.
The financial statements of the
subsidiary companies have been included in the Group's financial
statements from the date of acquisition when control was passed to
the Group using the acquisition method of accounting. The Group
financial statements include the results of the Company and its
subsidiaries as if they were a single reporting entity. On
consolidation, intra-Group transactions
and balances are eliminated.
Foreign currency
The financial statements are
presented in United States Dollar ("US$"). All Group revenue, significant expenses and major sources of
financing are transacted in US$. Items
included in the financial statements of the Company are measured
using the currency of the primary economic environment in which the
entity operates ("functional currency"). Individual companies in the Group have different
functional currencies,
Transactions in currencies
different to the company's functional currency are recorded at the
rates of exchange prevailing on the dates of the transactions. At
each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Exchange gains and losses on
the settlement of monetary items are recognised in the
statement of total comprehensive
income.
On consolidation, the assets and
liabilities are translated to US Dollars at the rates prevailing at
the balance sheet date. Income and expenses are translated at the
average exchange rates for the period. Exchange differences are
recognised within other comprehensive
income in the consolidated statement of total comprehensive
income.
Taxation and deferred tax
Current tax is based on the
taxable profit for the period. Taxable profit differs from net
profit as reported in the statement of total comprehensive income
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 Company's liability for current
tax is calculated using tax rates that have been substantively
enacted by the balance sheet date.
Deferred tax is recognised on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax base used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised only to the extent it is
probable that future taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax is calculated at the
tax rates that are expected to apply in the period when the
liability is settled or the asset realised. Deferred tax is charged
or credited, as applicable, as a taxation debit/credit to the
statement of total comprehensive income, except when it relates to
items charged or credited directly to other comprehensive income in
which case, the deferred tax is recognised in the other
comprehensive income section within the statement of total
comprehensive income.
Deferred tax assets and
liabilities are offset when the Group has a legally enforceable
right to offset current tax assets and liabilities and the deferred
tax assets and liabilities relate to taxes levied by the same tax
authority, on either the same taxable Group Company or different
Group entities, which intend to settle current tax assets and
liabilities on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which
significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Share-based payments
The Company may enter into
equity-settled share-based transactions with its Directors,
employees of its subsidiaries, its contractors or its lenders in
which the counterparty provides services/goods to the Company in
exchange for remuneration in the form of certain equity instruments
of the Company. The equity instruments can comprise of shares,
warrants and share options.
The services/goods received by the
Company in these share-based transactions are measured by reference
to the fair value of the equity instruments at the date of grant
and are recognised as an expense in the statement of total comprehensive income with a corresponding increase other reserves in
equity.
Inventories
Inventories of finished goods
(bullion), gold in circuit and stockpiles of processed ore are
brought to account and stated at the lower of costs and estimated
net realisable value. Cost comprises direct materials, direct
labour and an appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated based on normal operating
capacity. Costs are assigned to ore stockpiles and gold in
circuit items of inventory based on weighted average costs.
Net realisable value is the estimated selling price in the
ordinary course of business (excluding derivatives) less the
estimated costs of completion and the estimated costs necessary to
make the sale.
Consumables have been valued at
cost less an appropriate provision for obsolescence. Cost is
determined on a first-in-first-out basis.
Intangible assets
Exploration costs
Costs relating to the exploration
of precious and base metal properties are capitalised as intangible
assets in the balance sheet once the Group has obtained the legal
right to explore an area.
Capitalised exploration costs are
reclassified to tangible assets once technical feasibility and
commercial viability of extracting a mineral resource are
demonstrable. The capitalised exploration costs are tested for
impairment annually.
Where exploration costs have been
incurred and capitalised for a specific tenement and the commercial
and technical requirements to demonstrate positive economic returns
using approved mining techniques has not been established, the
Company recognises these costs as an intangible asset and tests
these costs annually for impairment. These costs are considered
fully impaired unless the results of exploration indicate the
presence of mineral resources that have the potential to be defined
as an inferred resource in accordance with industry
standards.
Other intangible assets
Intangible assets acquired
separately are initially recognised at cost. Intangible assets
acquired as part of a business combination are measured at their
fair value at the date of acquisition. Subsequently, intangible
assets are carried at cost less any accumulated amortisation and
impairment losses. Amortisation charges are recognised in cost of
sales. Computer software is amortised over its expected useful life
of 3 years using the straight-line method. Licences acquired to
support mining operations will be amortised over the expected
useful life of the mining operation (or the term of the licence if
shorter) when development is complete and mining commences.
Intangible assets are tested annually for impairment.
Investments
Investments in subsidiaries are
recognised at cost less any impairment losses in the Company
accounts.
Equity accounting is applied to
investments in associates on a Group basis. Investments in
associates are recognised at the cost of investment as adjusted for
post-acquisition changes in the Group's share of net assets of the
associate. Losses of an associate in excess of the Group's interest
in that associate are recognised only to the extent that the Group
has incurred legal or constructive obligations or made payments on
behalf of the associate.
Property, plant and equipment
Property, plant and equipment are
initially recognised at cost plus directly attributable expenses
and are subsequently carried at cost less accumulated depreciation
and impairment losses. Property, plant and equipment are
depreciated over their expected useful lives, using the
straight-line method.
The classes of depreciable assets,
their expected useful lives and their depreciation methods
are:
Buildings & leasehold
improvements 10 years
Straight-line
Drilling equipment
5 years
Straight-line
Motor vehicles
3-5 years
Straight-line
Fixtures, fittings and equipment
3 years
Straight-line
Process plant
applying the units of
production over the useful life of the mine.
Residual Storage Impoundment
applying the units of production over the useful life of the
mine.
Mining properties
applying the units of production over the
useful life of the mine.
Mining properties costs have
arisen entirely because of a reclassification of the intangible
assets deferred exploration costs, mine development costs, advances
to surface occupants, and mining licenses. As of 20 October 2011,
the extraction of gold from the Runruno site was assessed as being
both technically feasible and commercially viable. Further costs
since this date have been capitalised directly to mining
properties.
Construction in progress costs are
allocated to a property, plant and equipment tangible asset
category, once the relevant asset has been assessed as being
available for use as intended by management. The costs will be
treated as being reclassified and will be depreciated according to
the adopted method of the appropriate asset category.
Provision for mine rehabilitation
and decommissioning
Provision is made for close down,
restoration and environmental rehabilitation costs (which include
the dismantling and demolition of
infrastructure, removal of residual materials and remediation of
disturbed areas) at the end of the reporting period when the
related environmental disturbance occurs, based on the estimated
future costs using information available at the end of the
reporting period. The provision is discounted using a current
market-based pre-tax discount rate and the unwinding of the
discount is classified as net finance and other costs in the
statement of total comprehensive income. At the time of
establishing the provision, a corresponding asset is capitalised
and depreciated over future production from the operations to which
it relates.
The provision is reviewed on an
annual basis for changes to obligations or legislation or discount
rates that affect change in cost estimates or life of operations.
The cost of the related asset is adjusted for changes in the
provision resulting from changes in the estimated cash flows or
discount rate, and the adjusted cost of the asset is depreciated
prospectively.
Where rehabilitation is conducted
systematically over the life of the operation, rather than at the
time of closure, provision is made for the estimated outstanding
continuous rehabilitation work at each end of the reporting period
and the cost is charged to the statement of total comprehensive
income.
Revenue recognition
Gold sales
The Group is principally engaged
in the business of producing gold. Revenue is recognised when the
Group transfers control of its gold to a
customer at the amount at which payment is
expected. Sales revenue represents
the gross proceeds receivable from the customer.
For gold sales, the enforceable
contract is each purchase order, which is an individual, short-term
contract, while the performance obligation is the delivery of the
metals.
Recognition of sales revenue for
the gold is based on determined metal in concentrate and the London
Bullion Market Association (LBMA) quoted prices, net of smelting
and related charges.
Revenue is recognised when control
passes to the customer, which occurs at a point in time when the
metal concentrate is credited to the buyer's account and
provisionally paid by the buyer. Under the terms of offtake
agreements with the customer, the Company issues a provisional
invoice for the entire volume of concentrate loaded to the
customer's vessel. A final invoice is made thereafter upon
customer's outturn of concentrates delivered and submission of
their final assay report. Adjustment is accordingly made
against the final invoice with respect to provisional collections
received by the Company within two days to determine amounts still
owing from/to customers.
As the enforceable contract for
the arrangements is the purchase order, the transaction
price is determined at the date of each
sale (i.e., for each separate contract) and, therefore, there is
minimal future variability within scope of IFRS 15 and no further
remaining performance obligations under those contracts.
Revenue from the immaterial sale
of by-products such as silver is accounted for as a credit to the
cost of sales.
Financial instruments
Financial Assets
Financial assets are classified,
at initial recognition, as subsequently measured at amortised
cost, fair value through other
comprehensive income and fair value
through profit or loss.
Financial assets at amortized cost (debt
instruments)
The Company measures financial
assets at amortized cost if both of the following conditions are
met:
·
The financial asset is held within a business
model with the objective to hold financial assets in order to
collect contractual cash flows; and
·
The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely for payments
of principal and interest on the principal amount
outstanding.
Financial assets at amortized cost
are subsequently measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses are recognized in
the statement of comprehensive income when the asset is
derecognized, modified or impaired.
Financial liabilities
Initial recognition and measurement
Financial liabilities are
classified, at initial recognition, as financial liabilities at
fair value through profit or loss, loans and borrowings, payables,
or as derivatives designated as economic, as
appropriate.
All financial liabilities are
recognized initially at fair value and, in the case of loans and
borrowings and other financial liabilities, net of directly
attributable transaction costs. The Company's financial liabilities
include payables, loans and borrowings and derivative forward
contracts.
Subsequent measurement
Payables
This category pertains to
financial liabilities that are not held for trading or not
designated as at fair value through profit or loss upon the
inception of the liability. These include liabilities arising from
operations (e.g., accounts payable and accrued
liabilities).
Payables, which include trade and
other payables, are recognised initially at fair value and are
subsequently carried at amortized cost, taking into account the
impact of applying the EIR method of amortization (or accretion)
for any related premium, discount and any directly attributable
transaction cost.
Loans and borrowings
After initial recognition,
interest-bearing loans and borrowings are subsequently measured at
amortized cost using the EIR method. Gains and losses are
recognized in the profit or loss when the liabilities are
derecognized as well as through the EIR amortization
process.
Amortized cost is calculated by
taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortization
is included as finance costs in the statements of total
comprehensive income.
Derecognition
A financial liability is
derecognized when the obligation under the liability is discharged
or cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated
as the de-recognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognized in the statements of total comprehensive
income.
Derivative assets and liabilities
Derivative financial instruments
(e.g. commodity derivatives such as forwards and options to
economically hedge exposure to fluctuations in gold prices and
foreign exchange rates) are initially recognised at fair value on
the date on which a derivative contract is entered into and are
subsequently re-measured at fair value. Derivatives are carried as
assets when the fair value is positive and as liabilities when the
fair value is negative.
Derivatives are accounted for at
fair value through profit or loss, where any gains or losses
arising from changes in fair value on derivatives are taken
directly to profit or loss for the year. As at 31 December 2023,
the derivative instruments held by the Group were gold price
put/call option contracts and USD:PHP exchange rate forward
contracts.
Both the Group and the Company
have recognised derivative liabilities arising from the currency
exchange rate forward contracts as at 31 December 2023.
Compound financial instruments
Compound financial instruments
comprise both liability and equity components. At issue date, the
fair value of the liability component is estimated by discounting
its future cash flows at an interest rate that would have been
payable on a similar debt instrument without any equity conversion
option. The liability component is accounted for as a financial
liability. The difference between the net issue proceeds and the
liability component is the equity component, and is accounted for
as equity.
Any transaction costs associated
with the issue of a compound financial instrument are allocated in
proportion to the equity and liability components.
The interest expense on the
liability component is calculated by applying the effective
interest rate for the liability component of the instrument. The
difference between the interest expense and the interest payments
made are included in the carrying amount of the
liability.
2.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of financial
statements in conformity with generally accepted accounting
practice requires management to make estimates, assumptions and
judgements that affect the application of policies, and reported
amounts of assets and liabilities as well as the disclosure of
contingent assets and liabilities at the balance sheet
date.
Estimates and judgements are
continually evaluated and are based on historical experience and
other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Actual results
may differ from reported amounts in the financial
statements.
The key sources
of estimation uncertainty and judgements which have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities are:
Judgements
Impairment and impairment reversals of
assets
The Group assesses at each
reporting date whether there are any indicators that its assets and
cash generating units (CGUs) may be impaired or require previous
impairment provisions to be reversed. Operating and economic
assumptions which could affect the valuation of assets using
discounted cash flow models are regularly reviewed and updated as
part of the Group's monitoring of operational and financial
performance and forecasting processes. Judgement is required in
determining the level at which these assessments are made, be that
at the asset or CGU level. Further judgment of whether operating
and economic changes are significant and impact the performance
potential of an asset or CGU is required. These judgements
determine whether there is an indication of impairment or an
impairment reversal is required. Assets that have previously been
impaired must be assessed for indicators of both further impairment
and impairment reversal. Such assets are recorded in the
consolidated balance sheet at their recoverable amount at the date
of the last impairment assessment (less annual
depreciation/amortisation); therefore a change in operational
plans, assumptions or economic conditions could result in further
impairment or an impairment reversal if an indicator is identified.
Refer note 8.
Estimates
Current v Non-current borrowings
Under the Group's debt
arrangements there was no fixed schedule of interest and principal
repayments, with the Group's repayment
obligation is limited to making a minimum quarterly repayment
subject to a US$5 million net working capital buffer.
As a result, the amount of debt
principal that could be repaid within 12 months from balance sheet
date has been not known with certainty. Thus the amount of debt
principal that is classified as either a current liability (payable
within 12 months), or a non-current liability (payable after 12
months) has been estimated.
In order to estimate the amount of
debt principal that will be repaid within the next 12 months the
Group has taken into consideration the previous level of debt
repayments, and forecast minimum debt repayment obligations based
upon predicted future cash flows.
The outcome of these
considerations was to estimate that the full outstanding principal
as at 31 December 2023 is a current liability (2023: US30.0 million
debt considered a current liability).
Impairment and impairment reversals of
assets
An annual review is made of the
carrying amount of an asset which may not be recoverable, or has
previously been subject to an impairment charge. An asset's
carrying value is written down, or conversely written up, to its
estimated recoverable amount (being the higher of the fair value
less costs to sell and value in use). To determine value in use the
Group reviews future operations using the latest life of mine (LOM)
model detailing future cash flows that the Runruno operation is
expected to produce. The key assumptions
for these value-in-use calculations are those regarding risk
discount rates, the price of gold, gold recovery levels, plant
availability levels, changes in the resource statements and
forecast changes in operational and CAPEX costs, the availability
of economic funding and the ability to renew its mining
permit(s).
The net present value of these
expected future cash flows is used to determine if an impairment,
or impairment reversal, is required.
The year ended 31 December 2023
review of the net present value of expected future cash flows
resulted in an impairment charge reversal being raised against its
mining properties, plant and equipment.
Recovery of intercompany receivable
accounts
Receivables due from group
companies are assessed under the expected credit losses model. In
each case, the most appropriate assessment is for the Company to
consider the output from the impairment tests and value-in-use calculations carried out in respect of the
Group's mining properties, plant and equipment assets.
In both the years ended 31
December 2022 and 2023 the Company booked a partial reversal of
previous impairments made against its loans receivable from its
subsidiaries. These impairment reversals recognise the improved
trading outcomes of operating subsidiaries such that it is
estimated that the Company will receive a larger than previously
estimated recovery of loans made to subsidiaries. The timing of the
repayment of these loans is unknown hence the split between current
and non-current receivables continues to be estimated.
Determination of mineral resources and ore
reserves
The determination of mineral
resources and ore reserves impacts the accounting for asset
carrying values, depreciation and amortisation rates, deferred
stripping costs and provisions for pensions and for decommissioning
and restoration.
There are numerous uncertainties
inherent in estimating mineral resources and ore reserves and
assumptions that are valid at the time of estimation may change
significantly when new information becomes available. These
estimates are based upon the mineral resources and ore reserves
estimate publicised in February 2022, adjusted for mining depletion
since that calculation was performed.
Changes in the forecast prices of
commodities, exchange rates, production costs or recovery rates may
change the economic status of reserves and may, ultimately, result
in the reserves being restated which may impact asset carrying
values, depreciation and amortisation rates, deferred stripping
costs and relevant provisions.
Estimating gold-in-circuit and gold stockpile
inventories
Gold-in-circuit is measured by the
Company's metallurgists based on the gold grade/recovery across
different structures of the process plant. Stockpiles are measured
by estimating the number of tonnes added and removed from the
stockpile, the number of contained concentrates in dry metric
tonnes is based on assay data, and the estimated recovery
percentage is based on the expected processing outcomes. Stockpile
tonnages are verified by periodic surveys. Refer to note
17.
Although regular assay data is
collected and production recoveries closely monitored these
estimates that are valid at the time of estimation may be
significantly different to the final gold recovered once processing
of the gold inventories is completed.
Application of FTAA and liability for certain
taxes
The Company's Philippine operating
subsidiary, FCF Minerals Corporation ("FCF"), operates the Runruno
mine in accordance with the terms of a Financial and Technical
Assistance Agreement ("FTAA") with the Philippine government. Under
the terms of the FTAA, FCF was exempt from numerous taxes including
corporate income tax, VAT, stamp duty and import duty, for a period
(defined as the 'Recovery Period') designed to assist FCF to
recover its initial investment in establishing the Runruno mine.
The FTAA defined the Recovery Period as the earlier of 5 years from
commencement of commercial production (ending in July 2022) or the
date upon which FCF recovered its initial investments. FCF had not
fully recovered its investment in establishing commercial
operations at Runruno by July 2022.
In accordance with the provisions
of the FTAA, FCF has sought to have the Recovery Period extended. A
formal application to extend the Recovery Period beyond July 2022,
to enable FCF to recover its investment, was lodged in December
2021, on the basis that FCF has not recovered its initial
investment in establishing the Runruno commercial
operation.
In considering this matter
numerous meetings have been held with the relevant Philippine
government department (the "MGB") to seek a satisfactory outcome
without the need for a formal extension to the Recovery Period to
be granted. Although this matter has not been finalised at the time
of this report, FCF believes these discussions will yield an
outcome that is acceptable to FCF without the need for a formal
Recovery Period extension.
These financial statements are
based on the current expected outcome of these discussions with the
MGB.
Recovery of VAT and other duties
Non-current receivables include
amounts the Group believe it is entitled to recover from the
Philippine government in respect of past paid VAT and import
duties. FCF is pursuing reimbursement of some of these past
payments through court actions, however, to date these actions have
been unsuccessful.
Post year-end FCF received advice
that its VAT refund submission for the September 2021 quarter has
been accepted. VAT submissions lodged since then are also expected
to be awarded. As a result, no further impairment of this
non-current receivable beyond payments of VAT made to the end of
the June 2021 quarter are considered necessary.
Provision for environmental rehabilitation and
decommissioning costs
The amount recognised as a
provision represents management's best estimate of the
consideration required to complete the necessary restoration and
rehabilitation activity at the end of the LOM in
line with the mine closure program agreed with the Philippine
Government. These estimates are inherently uncertain and
could materially change over time. There is judgement in the input
assumptions used in determining the estimated rehabilitation and
decommissioning provision. Inputs used that require estimating
include:
• closure
costs, which are determined in accordance with regulatory
requirements,
• inflation
rate, which has been adjusted for a long-term view,
• risk-free
rate, which is compounded annually and linked to the
life-of-mine,
• the rate at
which the progressive back-fill rehabilitation is
undertaken,
• whether the
final construction of the RSI facility is completed during normal
operations, and
•
life-of-mine and related Mineral Resources and Mineral
Reserves.
Refer to note 24.
Provision for Pensions
The Group makes provision for an
unfunded, non-contributory defined benefit retirement plan covering
substantially all regular employees who have rendered at least six
months of continuous service. Benefits are dependent on the years
of service and the respective employee's compensation. The
valuation of the retirement plan obligation is estimated using the
projected unit credit actuarial cost method, and calculated by an
independent qualified consulting group. The principal estimates
used in determining the defined benefit retirement plan obligations
are listed in note 21.
3. Revenue
|
2023
|
|
2022
|
|
US$
|
|
US$
|
Sale of gold doré
|
165,612,180
|
|
122,339,602
|
Sale of gold
concentrate
|
1,070,696
|
|
2,071,389
|
|
166,682,876
|
|
124,410,991
|
All gold doré sales are made to a
single refinery customer with 95% of sales proceeds received within
3-5 days of the gold doré having been shipped from the Runruno
operation. Gold concentrate is sold with 50% received upon export
and the balance received following further assaying and final
processing.
4. Operating profit for the year
is stated after charging:
|
2023
|
|
2022
|
|
US$
|
|
US$
|
Depreciation of property, plant
and equipment (note 12)
|
51,492,601
|
|
22,458,340
|
Amortisation (note 13)
|
25,385
|
|
37,066
|
Foreign exchange
(gains)/losses
|
(2,642,249)
|
|
907,786
|
Staff costs (note 7)
|
12,154,186
|
|
11,650,711
|
Auditors remuneration (note
5)
|
234,282
|
|
199,385
|
5. Auditor's
remuneration
|
2023
|
|
2022
|
|
US$
|
|
US$
|
Fees payable to the Group and
Company's auditor for the audit of the Group and Company's
accounts
Current auditor*
Previous auditor**
|
167,134
11,447
|
|
-
155,153
|
Fees payable to the previous
auditor for other services**
|
13,660
|
|
6,748
|
Fees payable to the previous
auditor for taxation compliance services**
|
42,042
|
|
37,484
|
|
234,282
|
|
199,385
|
* accrued PKF Littlejohn 2023 Group
and Company audit fees
** fees paid to CLA Evelyn Partners
Limited who served as the Group's external auditor until December
2023
6. Segmental
analysis
Operating segments have been
identified based on the Group's internal reporting to the Chief
Operating Decision Maker ('CODM'). The CODM has been determined to
be the Board of Directors as it is primarily responsible for the
allocation of resources to segments and the assessment of
performance of the segments. The primary segments have been
identified into three geographic areas of the UK, Philippines and
Singapore. The CODM uses 'profit/(loss) before tax', 'cash &
cash equivalents' and 'total liabilities' as the key measures of
the segments' results and these measures reflect the segments'
underlying performance for the period under evaluation.
The segment results for the year
ended 31 December 2023 and 2022 and the reconciliation of the
segment measures to the respective statutory items in the
consolidated financial information are as follows:
Year ended 31 December
2023
|
UK
|
Philippines
|
Singapore
|
Total
|
|
US$
|
US$
|
US$
|
US$
|
Segment
results
|
|
|
|
|
Sales revenue
|
-
|
166,682,876
|
-
|
166,682,876
|
Group operating
(loss)/profit
|
(1,809,503)
|
30,967,209
|
15,612
|
29,173,318
|
Other income &
charges
|
(61,127)
|
|
-
|
(61,127)
|
Impairment reversal
|
|
97,737,620
|
|
97,737,620
|
Finance costs
|
(5,834,144)
|
(1,476,317)
|
-
|
(7,310,461)
|
Share of profits of
associates
|
-
|
15,970
|
-
|
15,970
|
(Loss)/profit before
tax
|
(7,704,774)
|
127,244,482
|
(15,612)
|
119,555,320
|
Segment
assets
|
|
|
|
|
Segment tangibles &
intangibles
|
-
|
140,605,170
|
-
|
140,605,170
|
Segment receivables &
inventories
|
192,001
|
40,224,263
|
-
|
40,416,264
|
Segment cash
|
49,074
|
280,105
|
10,818
|
339,997
|
Equity-accounted
investees
|
-
|
121,381
|
-
|
121,381
|
|
|
|
|
|
Total segment assets
|
241,075
|
181,230,919
|
10,818
|
181,482,812
|
|
|
|
|
|
Segment
liabilities
|
|
|
|
|
Segment loans
|
(23,893,712)
|
(2,586)
|
-
|
(23,896,298)
|
Segment trade & other
payables
|
(3,814,786)
|
(12,314,872)
|
(4,858)
|
(16,134,516)
|
Segment provisions and retirement
benefits obligations
|
-
|
(6,616,856)
|
-
|
(6,616,856)
|
Segment derivative
liabilities
|
(357,546)
|
-
|
-
|
(357,546)
|
Segment deferred tax
|
-
|
(544,697)
|
-
|
(544,697)
|
|
|
|
|
|
Total segment
liabilities
|
(28,066,044)
|
(19,479,011)
|
(4,858)
|
(47,549,913)
|
Total segment net
(liabilities)/assets
|
(27,824,969)
|
161,751,908
|
5,960
|
133,932,899
|
Segment other
information
|
|
|
|
|
Income tax (expense)
|
-
|
(306,582)
|
-
|
(306,582)
|
Amortisation of intangible
assets
|
-
|
(25,385)
|
-
|
(25,385)
|
Depreciation of property, plant
and equipment
|
-
|
(51,492,601)
|
-
|
(51,492,601)
|
Additions to property, plant and
equipment
|
-
|
10,630,889
|
-
|
10,630,889
|
Segment net assets are analysed
net of intercompany transactions.
The results of each segment have
been prepared using accounting policies consistent with those of
the Group as a whole.
Year ended 31 December
2022
|
UK
|
Philippines
|
Singapore
|
Total
|
|
US$
|
US$
|
US$
|
US$
|
Segment
results
|
|
|
|
|
Sales revenue
|
-
|
124,410,991
|
-
|
124,410,991
|
Group operating
(loss)/profit
|
(2,300,314)
|
26,133,439
|
(14,531)
|
23,818,594
|
Other income &
charges
|
(106,884)
|
(1,198,896)
|
(3,501)
|
(1,309,281)
|
Finance costs
|
(12,656,148)
|
(1,100,766)
|
(8,910)
|
(13,765,824)
|
Loss on sale of assets
|
-
|
-
|
-
|
-
|
Share of profits of
associates
|
-
|
(76,854)
|
-
|
(76,854)
|
(Loss)/profit before
tax
|
(15,063,346)
|
23,756,923
|
(26,942)
|
8,666,635
|
|
|
|
|
|
|
|
Segment
assets
|
|
|
|
|
|
Segment tangibles &
intangibles
|
-
|
81,492,266
|
-
|
81,492,266
|
Segment receivables &
inventories
|
116,103
|
38,030,618
|
-
|
38,146,721
|
Segment cash
|
168,614
|
684,932
|
7,523
|
861,069
|
Equity-accounted
investees
|
-
|
105,411
|
-
|
105,411
|
|
|
|
|
|
Total segment assets
|
284,717
|
120,313,227
|
7,523
|
120,605,467
|
|
|
|
|
|
Segment
liabilities
|
|
|
|
|
Segment loans
|
(81,983,413)
|
(1,208)
|
-
|
(81,984,621)
|
Segment trade & other
payables
|
(759,566)
|
(12,982,094)
|
(4,844)
|
(13,746,504)
|
Segment provisions and retirement
benefits obligations
|
-
|
(6,227,820)
|
-
|
(6,227,820)
|
Segment derivative
liabilities
|
(308,725)
|
-
|
-
|
(308,725)
|
Segment deferred tax
|
-
|
(574,038)
|
-
|
(574,038)
|
|
|
|
|
|
Total segment
liabilities
|
(83,051,704)
|
(19,785,160)
|
(4,844)
|
(102,841,708)
|
Total segment net
(liabilities)/assets
|
(82,766,987)
|
100,528,067
|
2,679
|
17,763,759
|
|
|
|
|
|
|
|
|
Segment other
information
|
|
|
|
|
Income tax benefit
|
-
|
87,321
|
-
|
87,321
|
Amortisation of intangible
assets
|
-
|
(37,066)
|
-
|
(37,066)
|
Depreciation of property, plant
and equipment
|
-
|
(22,458,340)
|
-
|
(22,458,340)
|
Additions to property, plant and
equipment
|
-
|
8,227,773
|
-
|
8,227,773
|
7. Staff numbers and
costs - Group
|
2023
|
|
2022
|
The average number of persons, including Directors,
was:
|
Number
|
|
Number
|
Administration
|
22
|
|
22
|
Development &
operations
|
764
|
|
769
|
|
786
|
|
791
|
|
|
|
|
|
2023
|
|
2022
|
Staff costs of the above persons were:
|
US$
|
|
US$
|
Wages and salaries
|
11,317,760
|
|
10,934,593
|
Social security costs
|
497,361
|
|
435,616
|
Retirement and pension
costs
|
339,065
|
|
280,502
|
|
12,154,186
|
|
11,650,711
|
|
Directors' emoluments:
|
2023
|
|
Restated
2022
|
|
US$
|
|
US$
|
Directors
|
|
|
|
D Bowden1
|
805,610
|
|
805,6102
|
A Chubb
|
67,537
|
|
89,818
|
T Livesey1
|
105,710
|
|
76,321
|
S Smith3
|
70,117
|
|
61,349
|
G Walker
|
73,545
|
|
65,030
|
D Cather1
|
75,327
|
|
120,493
|
J Wrathall
|
-
|
|
30,091
|
|
1,197,846
|
|
1,248,712
|
Refer to the Remuneration Report
on pages 14-18 that includes details of the components of
Directors' emoluments and forms part of these financial
statements. The Directors are considered
to be the key management personnel.
1 Includes consulting fees paid to private consulting
companies.
2 Restated to eliminate performance bonus accruals that were
cancelled during the year.
3 Fees in relation to S Smith were paid to his appointee, MTL
Luxembourg Sarl in accordance with a Relationship Agreement dated
23 October 2020.
Share options held by Directors:
As at 31 December 2023, the
following share options, held by directors, were
outstanding:
Date of
grant
|
Exercise
price
|
Expiry
date
|
Number
of Options
31
December 2022
|
Issued
during year
|
Options
lapsed/director resignation during year
|
Number
of Options
31
December 2023
|
28
October 2022
|
£0.0001
|
28
October 2024
|
13,200,000
|
-
|
(6,600,000)
|
6,600,000
|
17 June
2023
|
£0.0001
|
17 June
2025
|
6,600,000
|
-
|
-
|
6,600,000
|
8. Other charges and
income applied against profit and loss
8(a). Impairment reversal and impairment
charge - Group
The FY2023 impairment reversal of
US$97.8 million consists of:
·
PPE - US$100.0 million impairment reversal (2022:
US$nil),
·
Receivables - US$0.9 million impairment expense
(2022: US$0.9 million),
·
Exploration expenditure - $0.4 million impairment
reversal (2022: US$nil), and
·
Inventory - US$1.7 million impairment charge
(2022: US$0.3 million).
Property, plant and equipment (PPE)
Under IAS 36 - Impairment of Assets, each asset that
forms a cash generating unit (CGU) should be tested at least
annually for impairment. The Group considers that the entire
Runruno project (encompassing capitalised property, plant and
equipment, mining licence costs, deferred exploration expenditure
and the provision for mine rehabilitation and decommissioning)
comprises a single cash generating unit as all stages of the
project are interdependent in terms of generating cash flow and do
not have the capacity to generate separate and distinct cash flow
streams. Accordingly, the annual recoverable value assessment made
in accordance with IAS 36 is made on a whole of project
basis.
The Group assesses the recoverable
amount of the Runruno project CGU based on the value in use of the
Runruno operations using cash flow projections over the remaining
expected LOM and at appropriate discount rates. Based on
assumptions current as at 31 December 2023 the Group reviewed its
recent operational performance and its future expectations based on
the current planned mining schedule to estimate the recoverable
amount the Runruno project could deliver.
The recoverable amount estimates
were based on the following key assumptions and source
information:
·
gold resources to be mined based on current
estimated reserves and resources and LOM mining schedule, adjusted
for forecast mine and grade dilution;
·
estimated average gold recoveries forecast to be
achieved over the remaining LOM based on average gold recoveries
achieved to date;
·
estimated ongoing capital expenditure required
for the remaining LOM;
·
estimated operating and administration costs for
the remaining LOM including an inflation factor;
·
future gold revenues based upon gold prices
received for the past 12 months and the industry consensus gold
price predictions as at December 2023;
·
future gold revenues calculated for the remaining
LOM of 3-4 years; and
·
risk discount rate of 13.3% (2022:
14.5%).
For the year ended December 2023
the estimated recoverable value of the Runruno project calculated
in accordance with IAS 36 exceeded the book value of the Group's
property, plant and equipment (PPE), less the provision for mine
rehabilitation and decommissioning. Accordingly, an impairment
reversal charge of US$100 million to the Group's PPE book value has
been made during FY 2023.
For the year ended December 2022
the estimated recoverable value of the Runruno project calculated
in accordance with IAS 36 approximated the current book value of
the Group's property, plant and equipment (PPE), less the provision
for mine rehabilitation and decommissioning. Accordingly, there was
no requirement to book either an impairment charge or an impairment
reversal in relation to the Group's PPE book values
FY2022.
Receivables due
Impairment charges have been
raised against trade and other receivables due, both within and
after one year, in relation to VAT on importations and other goods
and services. Under the fiscal terms incorporated into the FTAA,
the Group considers that some of these taxes and duties are
recoverable, however, the Group continues to have little success in
securing appropriate refunds of these taxes up to the period ended
30 June 2021. However, since year-end the Group has received
confirmation that the September 2021 quarter Philippine VAT claim
has been accepted. Thus, an annual impairment charge was raised
during the year in relation to all VAT paid up to 30 June 2021.
(Refer note 16 - trade and other receivables due after one year;
note 19 - trade and other receivables due within one year). In
addition, an impairment charge has been raised against advances
made to associates.
The total impairment charges
raised against VAT receivables was US$0.9 million (2022: US$1.2
million).
8(b). Impairment charge and impairment
reversal - Company
Receivables due
To a large extent the Runruno
project has been funded by loans from the parent Company and these
together with the Company's investment in its subsidiaries and
associates is represented by the value of the Runruno project CGU.
Previously the value of the Runruno project CGU resulted in these
loans and investments being fully impaired.
Repayment of these loans and
recovery of the investments is dependent upon the Runruno project
producing sufficient cash surpluses. Subsequent reviews of the
future estimated cash flows that the Runruno project may produce
have estimated that the Company's subsidiaries should be able to
repay a significant portion of these past parent company advances.
During FY2023 the subsidiary loan receivable was reduced by US$64.8
million by repayments to the parent company.
The Company's estimates that its
operations will produce future cash flows of an order that will
enable the majority of the parent company loans to be repaid. As a
result, the Company has booked an impairment reversal in FY2023 of
US$127.4 million (based on the US$64.8 million repaid during FY2023
and estimated future cash flow generated) (2022: US$22.5 million)
of receivables due from subsidiaries.
The FY2023 impairment reversal has
resulted in the total impairment of receivables due from
subsidiaries reducing to US$18.1 million from US$154.0 million in
FY2022.
8(c). Net finance costs and other
income
|
2023
|
|
2022
|
|
US$
|
|
US$
|
Exchange gain/(loss)
|
3,421,672
|
|
(267,179)
|
Interest income
|
374
|
|
1,389
|
Loan interest and fees
|
(10,732,507)
|
|
(13,434,936)
|
Warrant amortisation
expense
|
-
|
|
(187,159)
|
Realised gain on
derivatives
|
-
|
|
122,060
|
Finance costs and other
income
|
(7,310,461)
|
|
(13,765,825)
|
|
|
|
|
9.
Taxation
The taxation (benefit)/expense
comprises the following
|
|
|
|
|
2023
|
|
2022
|
|
US$
|
|
US$
|
Current year corporation tax
payable
|
410,227
|
|
54,382
|
Current year deferred tax
(benefit)
|
(103,645)
|
|
(141,703)
|
|
|
|
|
Total tax expense/(benefit) for
the year
|
306,582
|
|
(87,321)
|
|
|
|
|
The total tax expense/(benefit)
for the year can be reconciled to profit for the year as
follows:
|
|
|
|
|
|
|
Profit before tax
|
119,555,320
|
|
8,666,635
|
|
|
|
|
Tax on profit at UK corporation
tax rate of 19% (2022: 19%)
|
22,715,511
|
|
1,646,661
|
|
|
|
|
Effects
of:
|
|
|
|
Overseas (expenses) not
taxable
|
(7,575)
|
|
(964,072)
|
Differing tax rates in different
jurisdictions
|
7,854,159
|
|
1,121,461
|
Tax losses (utilised)/carried over
not previously recognised
|
(4,239,995)
|
|
(3,574,474)
|
Non-taxable and non-allowable
items
|
(22,784,539)
|
|
1,683,182
|
Short-term timing
differences
|
(3,230,979)
|
|
(79)
|
|
|
|
|
Total taxation expense/(benefit)
for the year
|
306,582
|
|
(87,321)
|
10.
Deferred tax
liability and asset
|
|
Tax
Liability
|
|
Tax Asset
|
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
|
US$
|
US$
|
|
US$
|
US$
|
Undepleted asset retirement
obligation
|
|
|
338,754
|
442,400
|
|
-
|
-
|
Capitalised expenses
|
|
|
131,638
|
131,638
|
|
-
|
-
|
Other short term timing
differences
|
|
|
74,303
|
-
|
|
-
|
-
|
|
|
|
544,695
|
574,038
|
|
-
|
-
|
The differences between the
deferred tax expense through the Consolidated Statement of Total
Comprehensive Income and the deferred tax liability on the
Consolidated Balance Sheet has occurred from translation
differences arising on consolidation. Liabilities are translated
using the closing foreign exchange rate prevailing at 31 December
2023 whereas the foreign currency composition of the statement of
total comprehensive income is translated using the average rate for
the whole of the year.
Deferred tax asset
For the year ended 31 December
2023 the Group has net unused tax losses of US$64.4 million (2022: US$90.7
million) available for offset against future profits. However, due
to the restricted ability to apply UK losses against Group income
and the profit sharing terms of the FTAA, the deferred asset has
not been recognised on the Consolidated Balance Sheet due to
uncertainty over its future reversal.
For the year ended 31 December
2023 the Group has net unused tax losses available for offset
against future profits as follows:
|
2023
|
|
2022
|
|
US$
|
|
US$
|
UK
|
64,419,462
|
|
59,025,482
|
Philippines
|
-
|
|
31,722,235
|
|
|
|
|
Group unused tax losses
available
|
64,419,462
|
|
90,747,718
|
11. Earnings per
share
|
2023
|
|
2022
|
|
US$
|
|
US$
|
Earnings
|
|
|
|
Net profit attributable to equity
shareholders for the purpose of basic and diluted earnings per
share
|
|
|
|
119,248,738
|
|
8,753,956
|
|
|
|
|
Number of shares
|
|
|
|
Weighted average number of
ordinary shares for the purpose of
basic earnings per
share
|
|
|
|
2,092,720,603
|
|
2,080,759,193
|
Number of dilutive shares under
warrant/option
|
19,800,000
|
|
16,181,534
|
Weighted average number of
ordinary shares for the purpose of
diluted earnings per
share
|
2,112,520,603
|
|
2,096,940,727
|
Earnings per share
|
Cents per
share
|
|
Cents per
share
|
Basic earnings
|
5.70
|
|
0.42
|
Diluted earnings
|
5.64
|
|
0.42
|
The earnings per share was
calculated on the basis of net profit attributable to equity
shareholders divided by the weighted average number of ordinary
shares.