TIDMPXC
RNS Number : 0752B
Phoenix Copper Limited
29 September 2022
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
29 September 2022
Phoenix Copper Limited
("Phoenix" or the "Company", together with subsidiaries the
"Group")
Interim Results
Phoenix Copper Ltd (AIM: PXC, OTCQX ADR: PXCLY), the AIM quoted
USA focused base and precious metals emerging producer and
exploration company, is pleased to announce its unaudited interim
results for the six months ended 30 June 2022 (the "period").
Year to date Highlights
Corporate & Financial
-- Investment in Empire Mine increased to $29.73 million (2021: $18.61 million)
-- Net assets increased to $38.22 million (2021: $37.70 million)
-- Group reports loss of $1.052 million (2021: $199,481), after
charging an unrealised foreign exchange loss on sterling
denominated assets of $503,593 (2021: foreign exchange gain of
$303,077)
-- Period end cash balance of $9.05 million (2021: $22.88 million)
-- Company loans to operating subsidiaries increased to $25.23 million (2021: $16.19 million)
-- Company acquisition of third-party royalties payable by Empire Mine
-- Issue of floating rate, listed, secured, non-convertible,
minimum 8.5% copper bonds due 2028-2032 underway. Initial tranche
currently under negotiation
Operational
-- Ongoing core drilling at the Empire open pit copper mine to
support metallurgical recovery and process design using non-toxic,
environmentally friendly ammonium thiosulphate
-- Ongoing feasibility engineering and environmental permitting
at the Empire open pit copper mine
-- Further mineralisation encountered at both Red Star
silver-lead deposit and the Navarre Creek gold project
-- Further exploratory drilling commencing at Red Star
-- 2023 Navarre Creek drilling programme approved by US Forest Service
-- Local Community Advisory Team created as part of the Company's ESG Programme
Chairman's Statement
We entered 2022 optimistic that we were close to finalising our
financial model and mine plan. We had already had very positive
discussions with potential financiers seeking to fund construction
of the Empire open pit mine. Our strategy of getting into early
production of copper and using the proceeds to fund further
exploration of the underground, high-grade sulphides that lie
beneath the open pit, which have already given exciting indications
of their potential, was well on track.
However, the outlook has deteriorated, at least in the
short-term. Copper and sterling have both been extremely volatile,
and currently sit at around 30% below their highs for the year. The
aftermath of Covid and the war in Ukraine, with the associated
effects on energy prices, reagent costs and steel supply, have made
it nearly impossible to complete an accurate feasibility study,
which needs stable and firm quotes in order to estimate operating
and sustaining capital costs through the life of the operation.
Less visible, but just as important, supply chain difficulties are
having a hugely disruptive effect on the mining industry: damaged
parts can take months to replace, a problem affecting everything
from drilling parts to tyres.
However, this is not necessarily bad news for Phoenix Copper. As
a company that is not yet in production, we are able to design our
processes with an eye on these challenges. We are extremely
confident in the long-term demand for the metals which will define
the coming decades and which the Empire Mine holds in
abundance.
Our activity in the past six months has focused on two areas:
fundraising and optimising our plans to be as robust and profitable
as possible. Our steadfast aim remains that of getting into
production with no further equity issues, and we have embarked upon
our corporate copper-linked bond issue, which, despite the current
inflation and interest rate outlook, has attracted significant
demand. We hope to update you more fully on this in the near
future.
We have also used this hiatus in what we still believe to be a
long-term bull market in copper and other critical metals, to
optimise our mining and processing plans, and look forward to
updating you with progress on all fronts in the coming months. We
are refining our engineering plans and examining methods of
improving cashflow through environmentally innovative ore haulage
and recovery processes. If successful, this would significantly
reduce our spend on diesel and reagents, which are typically in the
region of 60% of the cost of metal production.
During the current state of volatility, and with the temporary
weakness in the copper price, it makes sense to bide our time,
refine our plans, and make sure that we can fully realise the value
of the Empire Mine for our shareholders. Many market commentators
predict a global recession in the near future. If a slowdown does
occur, as we await permitting and prepare to go into production,
this may ultimately work in our favour, leading as it should, to a
sharp recovery in the copper price when the global economy
rebounds.
The recent share price performance has mirrored the weakness in
markets in general, and the mining sector in particular. Many funds
holding small cap and mining stocks have faced a stream of
redemptions, as investors worry about the ability of non-cash
generating companies to continue to finance development. As I
write, sterling is trading at $1.08, its lowest level for a
generation. However, I am glad to report that, after our fund raise
of March 2021, our cash balances remain healthy. We converted
sufficient funds for our non-capex related US dollar requirements
at a rate of $1.38. The vast majority of our assets are, and all
our earnings will be, in US dollars.
We have also been spending a great deal of time on optimising
already strong relationships with the local community and other
stakeholders. I draw your attention to Catherine Evans's report,
and would like to thank her and Lenie Wilkie, and the rest of the
team for all the hard work they have done on enhancing our ESG
credentials.
In summary, your Company is well-positioned to weather the
current crisis. I would like to thank you all for your support and
perseverance and look forward to delivering good news, not only at
Empire, but also at Red Star, where we are planning to drill
anomalies revealed by last year's magnetics survey, at Navarre
Creek, where we have been granted permission to drill, and from our
cobalt joint venture at Redcastle.
Marcus Edwards-Jones
Chairman
Chief Executive Officer's Report
The Company entered 2022 encouraged by a bull copper market
climbing through $5.00/lb and gold and silver topping $1,800/oz and
$23/oz, respectively. Carrying on from a string of positive
accomplishments in 2021, the Phoenix team constructed and executed
robust work plans for 2022 that include continued feasibility
engineering and environmental permitting on the Empire Open Pit
Copper Mine, exploration at the North Pit/Red Star silver-lead
deposit, Navarre Creek Gold Project, and the underground copper
sulphides, as well as the advancement of the Company's ESG Program
and PR and IR initiatives. Work being conducted this year ties-in
perfectly with the announcement of the US Defense Production Act,
which provides for an increase in the domestic production of metals
for national defense, electric vehicles, and the transmission and
storage of renewable energy necessary to achieve these goals. At
the same time, media reports from the likes of S&P Global, Wood
Mackenzie, and Goldman Sachs continue to highlight the effect of
increased demand for metals like copper on dwindling global supply,
with shortfall anticipated to exceed seven million tonnes by
2030.
2022-2023 Drilling Programs
Core drilling in the Empire open pit copper deposit was
initiated in June for the purpose of collecting samples
three-dimensionally representative of the oxide portion of the
deposit for copper, gold and silver recovery testing using the
environmentally friendly cyanide alternative, ammonium thiosulfate
("ATS"). The program anticipates the completion of 5,000 feet of
core drilling and will run through November. The North Pit/Red Star
project is also scheduled for approximately four weeks of drilling
beginning in October. Drilling will target magnetic anomalies
identified in the 2021 ground magnetics survey.
The Company completed a core drilling program in the Empire
underground sulphides in 2021, encountering the first notable
copper sulphide intercept of 8.3% in the sulphide horizon situated
below the open pit. That intercept provided us with valuable
information regarding the "roots" of the sulphide system and will
anchor future drilling programs targeting the deeper sulphides. The
Company also completed ground magnetics and hyperspectral mineral
geophysical surveys at Red Star, Horseshoe, and Navarre Creek. The
results of those surveys were positive and have provided critical
targeting information for future drilling programs, which are
anticipated for 2023.
The Company's Navarre Creek drilling plan was approved by the US
Forest Service in August, clearing the way for a 2023 drilling
program comprised of up to 60 reverse-circulation ("RC") drill
holes on 30 drill pads that will target geochemical and geophysical
anomalies identified from surface sampling programs conducted over
the past several years.
Additional long-term monitoring wells will be constructed in
October and located northeast of the proposed processing facility.
These wells will expand the current monitoring well network
completed in 2021. Data from the monitoring wells will augment data
collected in a Controlled Source Audio-frequency Magnetotellurics
("CSMAT") survey conducted in late summer and designed to identify
geologic structures and rock characteristics that control
groundwater movement, providing vital hydrological information for
future operations.
Open Pit Permitting and Feasibility Engineering
The environmental permitting process for the Empire open pit
mine began in late 2017 with the initiation of environmental
baseline studies, which have all been completed with no critical
issues identified, and enabled the submission of an initial Plan of
Operations to the regulatory authorities in 2021. The mine and
process design engineering necessary for completing a feasibility
study is in progress and combines all the drilling, analytical, and
engineering data collected on the project to date. The Feasibility
Study is designed to convert the existing Empire resource into a
reserve category using average metal prices and current equipment,
reagent, and supply pricing. The current preliminary economic
assessment level cash flow model shows pre-production capital of
$52 million with payback in less than two years; gross revenue of
$836 million over 10 years of mine life, and $43 million post-tax
cash flow in year one at a $3.60/lb copper price. These project
economics are expected to improve significantly as a result of
ongoing economic and environmental optimization.
Cobalt
The Company's cobalt holdings at the Redcastle Idaho Cobalt Belt
property in Lemhi County were signed to an earn-in agreement with
Electra Battery Materials ("Electra") in 2021. Electra, the
Toronto-based owner of the Iron Creek cobalt mine that shares a
common border with the Redcastle property, initiated an IP
Geophysical Survey and core drilling this year on an area of cobalt
mineralization known as the Ruby Zone. Redcastle is located 1.2
kilometers south of the Ruby Zone and shares similar stratigraphy.
Electra announced they will be conducting further exploration on
the Redcastle property. The earn-in agreement includes an initial
payment of cash and Electra shares to Phoenix, followed by two work
commitments of $1,500,000 each over a five-year period, thereby
earning Electra a 75% interest in the property.
Other Business
2022 also saw the formation of our Konnex Resources community
advisory team, KCAT, which is comprised of citizens and business
owners near our Empire Mine project in Custer County, Idaho. The
KCAT group was developed out of our ESG Program and has been
promoted by Catherine Evans and Lenie Wilkie, our ESG Director and
ESG Coordinator. This group of liaisons provides a valuable link
between the Company and the community, and an avenue for community
input regarding the Company's proposed operations.
I have said this many times before, and I will repeat it again.
Phoenix has been provided a unique opportunity with the variety and
grade of mineralization located on our Idaho properties. The mix of
"green metals" like copper and cobalt, and the prospective gold and
silver targets, all residing within the Company's current claim
holdings, puts us in an enviable position for near term production
and years of exploration potential.
2022 has not been without its challenges. Equipment and supply
shortages, contractor staffing shortages, and the wildly volatile
metals and supply markets are presenting delays that are being
shared by the industry as a whole and will likely not be resolved
in the immediate future. However, the Phoenix team has the singular
focus to accomplish the goals outlined for 2022 and beyond. I fully
expect that we will continue to encounter many of the same supply
chain and staff challenges as we move forward, and I also fully
expect that our team will continue to overcome those challenges as
they are presented to us.
Mineral Resources
An updated NI 43-101 compliant resource was completed by
Hardrock Consulting in October 2020 and reported for the
polymetallic Empire Mine open pit oxide deposit. The updated
resource showed a 51% increase in the Measured and Indicated
category from the previous year's resource. Including the Inferred
resources, the Empire open-pit oxide deposit now contains 129,641
tonnes of copper, 58,440 tonnes of zinc, 10,133,772 ounces of
silver and 355,523 ounces of gold.
Mineral Resource Statement for Empire Mine, after Hard Rock Consulting
October 2020
------------------------------------------------------------------------------------------------------
Class Tonnes Cu Average Grade Metal Content
Equiv
%
----------- ----------- ------- --------------------------- ------------------------------------------------
Cu Zn Ag Au Cu Zn Ag Au Cu
Equiv
----------- ----------- -------
% % g/t g/t Tonnes Tonnes Ozs Ozs Tonnes
----------- ----------- -------
Measured 8,289,719 0.81 0.42 0.22 11.4 0.327 34,655 18,160 3,031,791 87,036 67,013
----------- ----------- ----- ----- ------- ----------
Indicated 14,619,340 0.72 0.36 0.18 9.7 0.322 52,888 25,711 4,563,407 151,370 105,899
M+I 22,909,059 0.75 0.38 0.19 10.3 0.324 87,543 43,871 7,595,198 238,406 172,912
----------- ----- ----- ------- ----------
Inferred 10,612,556 0.75 0.4 0.14 7.4 0.343 42,098 14,569 2,538,574 117,117 79,296
----------- ----------- ----- ----- ------- ---------- --------
Red Star is a high-angle silver-lead vein system hosted in
andradite-magnetite and located 330-metres north-northwest of the
Empire oxide pit. In early May 2019, the Company announced a small
maiden Inferred sulphide resource of 103,500 tonnes, containing
577,000 ounces of silver, 3,988 tonnes of lead, 957 tonnes of zinc,
338 tonnes of copper, and 2,800 ounces of gold.
Class Tons Ag Ag Au Au Pb Pb Zn Zn Cu Cu
(x1000) g/t oz g/t oz % lb % lb % lb
-------- ------ -------- ------ -------- ----- --------- ----- --------- ----- --------
(x1000) (x1000) (x1000) (x1000) (x1000) % (x1000)
-------- ------ -------- ------ -------- ----- --------- ----- --------- ----- --------
Inferred 114.13 173.4 577.3 0.851 2.8 3.85 8,791.20 0.92 2,108.80 0.33 745
-------- ------ -------- ------ -------- ----- --------- ----- --------- ----- --------
Outlook
We have seen significant volatility in the metals markets so far
this year, with copper ringing in 2022 at $4.42/lb, rising to an
all-time high of $5.03/lb in March, and retreating to $3.20/lb in
September. Gold has also seen fluctuations of $377/oz and silver
over $8.50/oz since the beginning of the year. We are seeing
similar volatility in the pricing of leaching reagents, structural
steel, heavy equipment, and fuel. I am not surprised to see
fluctuations in the price of metals so much as I am surprised at
the wild fluctuation in the cost of equipment, supplies, and
consumables required for constructing and maintaining a modern
mining operation. The volatility across all of these sectors
creates challenges in estimating capital and operating costs,
particularly when estimating future costs. I think it is well
understood that current market volatility has resulted from a
combination of material and labor shortages in the manufacturing
and fabrication sectors arising from Covid-19, the war in Ukraine,
and global inflation. While I am growing increasingly frustrated by
using Covid as an excuse for manufacturing and delivery delays, it
appears to be a reality that we must accept for the time being.
Despite all of this, the fact remains that copper is in the top
three of the most consumed metals in the world, trailing only
behind iron and aluminum. The heavy focus on green energy metals
for power generation, transmission, and transportation will
increase demand, as we are already beginning to realize. Clean
energy initiatives in the United States, Canada, and Europe have
already begun to drive demand for copper, cobalt and lithium. As
other countries develop similar initiatives, demand will outweigh
global supply. Some analysts are estimating copper demand to exceed
supply beginning as early as 2024. Should the war in Ukraine begin
to resolve, the reconstruction of the country will place an
additional demand on metal resources.
Although the copper price has decreased on the year, it remains
significantly higher than in the few years preceding Covid, during
which the average price was below $3.00/lb. Compared to those
years, the copper market continues to perform well, with prices
holding above $3.50/lb and cobalt above $55,000/tonne. I expect to
see the metals markets, particularly copper and cobalt, continue to
perform well as the EV and "green energy" initiatives continue to
grow globally. I also expect that the spending on the 10 year, $1.2
trillion US Infrastructure Bill and the recently introduced U.S.
Defense Production Act will increase metal demand and boost pricing
in the short term. The roughly $550 billion earmarked for the
construction of roads, bridges, ports, power transmission, and
large water projects, as well as the advancing EV initiatives, will
require significant quantities of metal.
The mineralized systems at our Idaho projects contain a variety
of EV metals, as well as precious and other base metals, all of
which will feed the numerous infrastructure and green energy
projects in the global pipeline. This variety provides the Company
significant optionality in a world of fluctuating prices. Our story
becomes even stronger with the realization that these resources are
all located in known mining districts in the geopolitically stable,
pro-mining jurisdiction of Idaho, USA.
While I fully anticipate further challenges as we move forward,
I also fully anticipate that our talented and dedicated team of
hardworking professionals, our supportive shareholder base, and our
strong relationship with the local community will overcome the
current market headwinds. My outlook for the Company remains
positive and I am excited to see and report our accomplishments in
2022.
Key Performance Indicators ('KPIs')
To date the Group has focused on the delivery of the project
evaluation work programs to assess the available mineral resources
and the extraction methods to apply, each within the available
financial budgets. This work will continue until the relevant
feasibility studies are completed, and construction commences.
At that stage the Group will consider and implement appropriate
operational performance measures and related KPIs as the objective
of recommencing commercial production at the Empire Mine nears
fruition.
Conclusion
We are well positioned to become a producer of metals that are
vital to our everyday lives. The transportation, manufacturing and
energy sectors are dependent upon the suite of metals hosted by our
Idaho projects, and in turn we are dependent upon the goods and
services provided by those sectors. We remain well funded and have
the right team to move the Empire Mine into production and to
properly explore the Navarre Creek, Red Star, and the Empire
underground sulphides projects.
I would like to thank all our professional staff, consultants
and advisors, all of whom work tirelessly to accomplish our common
goal of metal production. And I would like to thank our community
liaisons, shareholders, and directors for their considerable
support. I look forward to reporting further positive news as we
continue our exploration and development programs during 2022.
Ryan McDermott
Chief Executive Officer
ESG & Sustainability Committee Chairman's Report
It gives me great pleasure to report on the significant progress
we have made with respect to ESG & Sustainability in the last
six months. Our central aim remains clear: to build and run a clean
mining operation with as low a carbon footprint as possible.
The new Phoenix website went live in August of this year, and we
have placed a great deal of emphasis on providing clear information
on metrics relating to ESG and Sustainability to interested
parties. Konnex will soon have its own website, the key benefit
being communicating ESG & Sustainability issues and local
activities to those of our stakeholders who will be directly
affected.
We regard gaining and maintaining the support of our community
as the cornerstone of our success. As we reported in February 2022,
we formed the KCAT, the Konnex Community Advisory Team, comprised
of three representatives of Phoenix/Konnex, our Idaho registered
operating subsidiary, and ten independent residents of Custer or
Butte Counties with diverse experience from one or more of the
following sectors: citizens, municipal, land-users, socio-economic
(business) and research/training. We are highly fortunate to have
such interested and engaged individuals with such a wealth of
experience to facilitate open communication between the Company and
the community. Since its formation, the committee has met four
times, including a visit to the site of Empire Mine. As detailed on
our website, the role of the KCAT is to finalise the formation of a
Good Neighbour Agreement, to formulate a grievance process which
will address concerns and complaints, and to be instrumental in
their resolution. Further, we wish the KCAT to identify ways in
which the Company can be of benefit to the community and to compile
a local vendor/supplier list so that we can support local
businesses wherever possible.
Drawing on SASB's (Sustainability Accounting Standards Board)
Metals & Mining Standard 2021, the ESG Team has spent a great
deal of time focusing on Materiality Assessments in order to
determine what our current ESG risks are and what they will be when
we are in production. We have determined these risks not only from
our own perspective, but have also taken into account issues of
concern to our stakeholders. The KCAT will be able to provide a
great deal of qualitative input into this project, and will have an
important role in refining and verifying this data.
In our ongoing effort to provide investors and stakeholders with
transparent and reliable information on our activities, we have
contracted with Digbee ESG, an ESG disclosure platform for the
mining industry, offering 'a future-looking, right-sized set of
frameworks, aligned to the key global standards.' We have supplied
highly detailed information to Digbee via two questionnaires: one
corporate and the other project-specific, focused on the Empire
Mine. This information will subsequently be verified by Satarla, a
risk & ESG training consultancy & research firm. For
reasons of confidentiality, our responses to their questions will
not be available for public view, but they will award us with an
overall score which can be viewed and accepted by leading
stakeholders. Each mining project is unique, and from an investor
standpoint, Digbee allows fair comparisons between them from an ESG
perspective.
We are confident that Digbee has been able to provide us with
the larger part of a solution to a highly complex problem. ESG
& sustainability disclosure requirements are becoming
increasingly onerous, and we will continue to monitor the
disclosure horizon carefully.
At all stages of our decision-making process, ESG &
Sustainability considerations are awarded high priority. As
reported in February 2022, we continue to investigate the
feasibility of building an aerial tramway to transport ore from the
mine site to the leach pads, instead of using trucks. The tram
remains our preferred option for a large number of environmental
reasons, including a substantial reduction in water requirement,
and will considerably reduce operating costs over the life of the
mine, thereby justifying the necessary upfront investment. The
development of the Empire open pit mine will provide high quality
employment opportunities, and will also generate business for local
suppliers and entrepreneurs, but we remain mindful that we are
operating in an area of outstanding natural beauty and are
determined to make every effort to ensure that we are good
neighbours and good long-term stewards of the environment.
We look forward to providing further updates on our progress in
the near future.
Catherine Evans
Non-Executive Director
Financial Overview
The Group reports a loss for the six months of $1.052 million
(2021: loss of $199,481). This includes an unrealised foreign
exchange loss on sterling denominated assets of $503,593 (2021:
foreign exchange gain of $303,077), and a charge of $36,623 (2021:
$90,953) relating to non-cash share-based payments attributable to
warrants or options extended or granted during the period, and
which amount is simultaneously credited back to the retained
deficit.
Net assets at 30 June 2022 totalled $38.22 million (2021: $37.70
million), including cash of $9.05 million (2021: $22.88
million).
During the period the Company raised a further $1.39 million
through the issue of 5,055,942 ordinary shares pursuant to the
exercise of warrants. Since the period-end a further 157,000
ordinary shares have been issued pursuant to further warrant
exercises. The outstanding share capital of the Company is
currently 122,628,622 shares.
During the period the Company charged its subsidiary entities
$465,000 (2021: $405,000) in respect of management services
provided, and $610,653 (2021: $361,678) in respect of interest at
6% per annum on the Company's inter-company loan to Konnex
Resources Inc ("Konnex"), owner of the Empire Mine, the latter
eliminating on consolidation. At 30 June 2022 the Company's loan to
Konnex stood at $22.95 million (2021: $15.33 million). The Company
has also advanced $2.28 million (2021: $859,900) to Lost River
Resources Inc, a wholly owned subsidiary of the Company, to acquire
real estate commercial and residential property and mining claim
blocks to support the Empire Mine. These loans will be repaid from
Konnex's operating cash flow in due course and are intended,
together with royalties receivable from Konnex, to form a platform
for a future proposed dividend policy to return money to
shareholders.
During the period the Group acquired the remaining 1.25% royalty
payable by Konnex Resources to Honolulu Copper Corporation
("Honolulu") for consideration of $450,000. The Group had
previously acquired 1% of the 2.5% royalty payable to Mackay LLC,
and 1.25% of the royalty payable to Honolulu, as well as Honolulu's
underlying patented and unpatented mining claims, for consideration
of $1.3 million. As a result, Konnex Resources will now pay a 1%
royalty or a 2.5% royalty to the Company from future production at
Empire, depending which claim blocks are being mined.
The Company is currently undertaking a corporate copper bond
financing in order to accelerate the ongoing development of the
Empire Mine and surrounding mineralised district. The bonds are
non-convertible, and repayable after 10 years, unless the Company
offers early redemption after five years, and the bondholder
accepts, or the bondholder requests early redemption after six
years. The bonds will pay a semi-annual coupon linked to the
average monthly closing copper price on the London Metal Exchange
during any given coupon period, subject to a minimum annual coupon
of 8.5% at a $3.60 / lb or lower copper price, and a maximum annual
coupon of 20% at a $11.26 / lb or higher copper price. The bonds
will be secured on the Company's patented mining claims and listed
on The International Stock Exchange in the Channel Islands. An
initial tranche is currently under negotiation.
The Directors recognise the importance of sound corporate
governance and have applied the Quoted Companies Alliance's
Corporate Governance Code 2018. The Company's Corporate Governance
Statement dated 25 March 2022 can be viewed on the Company's
website at https://phoenixcopperlimited.com.
Richard Wilkins
Chief Financial Officer
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
Condensed consolidated income 30 June 30 June 31 December
statement 2022 2021 2021
Note $ $ $
Continuing operations
Revenue 3 - - -
Exploration and evaluation
expenditure - - -
Gross loss - - -
------------ ------------ -------------
Administrative expenses 4 4 (1,057,717) (295,368) (1,065,950)
Other operating income 9 - 106,340 106,340
Loss from operations (1,057,717) (189,028) (959,610)
Finance income 6,107 - 3,708
Finance costs - (10,453) (13,348)
Loss before taxation (1,051,610) (199,481) (969,250)
Taxation - - -
------------ ------------ -------------
Loss for the period (1,051,610) (199,481) (969,250)
------------ ------------ -------------
Loss attributable to:
* Owners of the parent company (1,038,033) (185,550) (942,850)
* Non-controlling interests (13,577) (13,931) (26,400)
------------ ------------ -------------
(1,051,610) (199,481) (969,250)
------------ ------------ -------------
Basic and diluted loss per
share - cents 5 (0.86) (0.20) (0.90)
------------ ------------ -------------
The revenue, expenditures and operating result for each period
is derived from acquired and continuing operations in North America
and the United Kingdom.
Condensed consolidated statement
of comprehensive income Unaudited Unaudited Audited
6 months 6 months 12 months to
to to 31 December
30 June 30 June 2021
2022 2021
$ $ $
------------ ---------- -------------
Loss for the period and total comprehensive
income for the period (1,051,610) (199,481) (969,250)
------------ ---------- -------------
Total comprehensive income for the
period attributable to:
Owners of the parent company (1,038,033) (185,550) (942,850)
Non-controlling interests (13,577) (13,931) (26,400)
------------ ---------- -------------
(1,051,610) (199,481) (969,250)
------------ ---------- -------------
Condensed consolidated statement
of
financial position Unaudited Unaudited Audited
30 June 30 June 31 December
Note 2022 2021 2021
$ $ $
------------ ------------ ------------
Non-current assets
Property, plant and equipment
- mining property 6 29,731,139 18,606,061 26,124,030
Intangible assets 7 345,844 310,665 330,844
------------
Total non-current assets 30,076,983 18,916,726 26,454,874
------------ ------------ ------------
Current assets
Trade and other receivables 8 780,299 140,721 365,778
Finance assets 9 56,340 56,340 56,340
Cash and cash equivalents 9,045,669 22,875,013 13,046,529
------------
Total current assets 9,882,308 23,072,074 13,468,647
------------ ------------ ------------
Total assets 39,959,291 41,988,800 39,923,521
------------ ------------ ------------
Current liabilities
Trade and other payables 10 478,302 619,099 883,196
Other liabilities 11 250,000 2,907,500 250,000
------------
Total current liabilities 728,302 3,526,599 1,133,196
------------ ------------ ------------
Non-current liabilities
Other liabilities 11 250,000 - 250,000
Provisions 12 757,702 757,702 757,702
------------ ------------ ------------
Total non-current liabilities 1,007,702 757,702 1,007,702
------------ ------------ ------------
Total liabilities 1,736,004 4,284,301 2,140,898
Net assets 38,223,287 37,704,499 37,782,623
------------ ------------ ------------
Equity
13
Share capital 10 - - -
Share premium account 44,848,384 42,981,253 43,460,747
`Retained deficit (6,684,755) (5,362,458) (5,751,359)
Translation reserve (18,588) (18,588) (18,588)
Capital and reserves attributable
to the owners of the parent company 38,145,041 37,600,207 37,690,800
Non-controlling interests 78,246 104,292 91,823
Total equity 38,223,287 37,704,499 37,782,623
------------ ------------ ------------
Condensed consolidated statement of changes in equity
Share premium Retained Translation Total Non-controlling Total
deficit reserve interests Equity
$ $ $ $ $ $
Balance at 1 January 2021 19,251,964 (5,517,549) (18,588) 13,715,827 118,223 13,834,050
Loss for the period - (185,550) - (185,550) (13,931) (199,481)
------------ ------------ ------------ ---------------- ------------
Total comprehensive income
for
the period - (185,550) - (185,550) (13,931) (199,481)
-------------- ------------ ---------------- ------------
Shares issued in the period 25,539,057 - - 25,539,057 - 25,539,057
Share issue expenses (1,809,768) - - (1,809,768) - (1,809,768)
Share-based payments - 340,641 - 340,641 - 340,641
Total contribution by
owners 23,729,289 340,641 - 24,069,930 - 24,069,930
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 30 June 2021 42,981,253 (5,362,458) (18,588) 37,600,207 104,292 37,704,499
-------------- ------------ ------------ ------------ ---------------- ------------
Loss for the period - (757,300 - (757,300 (12,469) (769,769)
Total comprehensive income
for
the period - (757,300) - (757,300) (12,469) (769,769)
-------------- ------------ ------------ ------------ ---------------- ------------
Shares issued in the period 479,494 - - 479,494 - 479,494
Share issue expenses - - - - - -
Share-based payments - 368,399 - 368,399 - 368,399
-------------- ------------ ------------ ------------ ---------------- ------------
Total contribution by
owners 479,494 368,399 - 847,893 - 847,893
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 31 December 2021 43,460,747 (5,751,359) (18,588) 37,690,800 91,823 37,782,623
-------------- ------------ ------------ ------------ ---------------- ------------
Loss for the period - (1,038,033) - (1,038,033) (13,577) (1,051,610)
------------ ------------ ------------ ---------------- ------------
Total comprehensive income
for
the period - (1,038,033) - (1,038,033) (13,577) (1,051,610)
-------------- ------------ ---------------- ------------
Shares issued in the period 1,387,637 - - 1,387,637 - 1,387,637
Share issue expenses - - - - - -
Share-based payments - 104,637 - 104,637 - 104,637
Total contribution by
owners 1,387,637 104,637 - 1,492,274 - 1,492,274
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 30 June 2022 44,848,384 (6,684,755) (18,588) 38,145,041 78,246 38,223,287
-------------- ------------ ------------ ------------ ---------------- ------------
Condensed consolidated statement of
cash flows Unaudited Unaudited Audited
6 months 6 months 12 months
to to to 31 December
30 June 30 June 2021
2022 2021
$ $ $
------------ ------------ ----------------
Loss before taxation (1,051,610) (199,481) (969,250)
Adjustments for:
Depreciation
Share-based payments 36,623 90,953 191,856
Consideration equity shares - (56,340) -
(1,014,987) (164,868) (777,394)
Changes in working capital
(Increase)/decrease in trade and other
receivables (414,521) (18,421) (299,818)
Increase/(Decrease) in trade and other
payables (404,894) 425,162 689,259
------------ ------------ ----------------
Cash (used in)/generated from operating
activities (1,834,402) 241,873 (387,953)
------------ ------------ ----------------
Investing activities
Purchase of intangible assets (15,000) (33,770) (53,949)
Purchase of property, plant and equipment (3,539,095) (3,567,369) (10,238,492)
Net cash outflow from investing activities (3,554,095) (3,601,139) (10,292,441)
------------ ------------
Cash flows from financing activities
Proceeds from the issuance of ordinary
shares 1,387,637 25,539,057 25,939,203
Share-issue expenses - (1,809,768) (1,809,770)
Proceeds from the issue of loan notes - 2,100,000 -
Repayment of loan notes- - (741,500) (1,549,000)
Net cash inflow from financing activities 1,387,637 25,087,789 22,580,433
------------ ------------ ----------------
Net (decrease)/increase in cash and
cash equivalents (4,000,860) 21,728,523 11,900,039
Cash and cash equivalents at the beginning
of the period 13,046,529 1,146,490 1,146,490
Cash and cash equivalents at the end
of the period 9,045,669 22,875,013 13,046,529
------------ ------------ ----------------
An amount of $68,014, (30 June 2021: $249,688, 31 December 2021:
$517,184) in respect of the charge for share-based payments was
capitalised into mining property.
1. Basis of preparation and principal accounting policies
This condensed consolidated interim financial information was
approved for issue by the Board on 28 September 2022.
This condensed consolidated interim financial information has
not been audited and does not include all of the information
required for full annual financial statements. While the financial
figures included within this interim report have been computed in
accordance with IFRS applicable to interim periods, this report
does not contain sufficient information to constitute an interim
financial report as set out in International Accounting Standard
34: Interim Financial Reporting.
Basis of consolidation
Principles of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated on the date on which control is
transferred to the Group. They are deconsolidated from the date
that control ceases.
The acquisition method of accounting is used to account for
business combinations by the Group.
Intercompany transactions, balances and unrealised gains of
transactions between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of an impairment to the transferred asset.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated income
statement, consolidated statement of comprehensive income,
statement of changes in equity and consolidated statement of
financial position respectively.
2. Information on the Group
Phoenix Copper Limited (the "Company") and its subsidiary
undertakings (the "Group") are engaged in exploration and mining
activities, primarily precious and base metals, primarily in North
America. The Company is domiciled and incorporated in the British
Virgin Islands on 19 September 2013 (registered number 1791533).
The address of its registered office is OMC Chambers, Wickhams Cay
1, Road Town, Tortola VG1110, British Virgin Islands. The Company
is quoted on London's AIM (ticker: PXC) and trades on New York's
OTCQX Market (ticker: PXCLF; ADR ticker PXCLY).
3. Revenue
The Group is not yet producing revenues from its mineral
exploration and mining activities. During the period the Company
charged its subsidiary entities $465,000 (30 June 2021: $405,000;
31 December 2021: $885,000) in respect of management services
provided.
4. Administrative expenses
Administrative expenses include $503,593 of foreign exchange
losses (30 June 2021: foreign exchange gains of $303,077; 31
December 2021: foreign exchange gains of $173,358).
Administrative expenses also include share-based payments of
$36,623 (30 June 2021: $90,953; 31 December 2021: $191,856). The
related credits to equity are taken to the retained deficit.
5. Loss per share Unaudited Unaudited Audited
6 months 6 months 12 months
to to to 31 December
30 June 30 June 2021
2022 2021
$ $ $
------------------- ------------------- -----------------
Loss for the period attributable
to equity holders of the parent
company (1,038,033) (185,550) (942,850)
------------------- ------------------- -----------------
Number Number Number
Weighted average number of ordinary
shares for the purposes of basic
and diluted loss per share 121,105,350 91,856,320 104,213,499
------------------- ------------------- -----------------
Loss per share - basic and diluted
(cents) (0.86) (0.20) (0.90)
------------------- ------------------- -----------------
Non-current assets
Mining Property
6. Property, plant and equipment - mining property
$
----- --------------------------------
Cost or valuation
At 1 January 2021 14,789,004
Additions 3,817,057
--------------------------------
At 30 June 2021 18,606,061
Additions 7,517,969
At 31 December 2021 26,124,030
Additions 3,607,109
At 30 June 2022 29,731,139
--------------------------------
Depreciation
At 30 June 2021, 31 December 2021 and 30 June -
2022
----- --------------------------------
Net book value:
30 June 2021 18,606,061
--------------------------------
31 December 2021 26,124,030
30 June 2022 29,731,139
--------------------------------
Mining property assets relate to the past producing Empire Mine
copper - gold - silver - zinc project in Idaho, USA. The Empire
Mine has not yet recommenced production and no depreciation has
been charged in the statement of comprehensive income. Due to the
ongoing development of the property, no impairment has been charged
in any period.
The property is owned by Konnex Resources Inc, an 80% owned
subsidiary of the parent company, registered and domiciled in
Idaho.
7. Intangible assets
Exploration
and evaluation
expenditure
$
---- ----------------
Cost or valuation
At 1 January 2021 276,895
Additions 33,770
----------------
At 30 June 2021 310,665
Additions 20,179
----------------
At 31 December 2021 330,844
Additions 15,000
----------------
At 30 June 2022 345,844
----------------
Net book value:
30 June 2021 310,665
--------
31 December 2021 330,844
30 June 2022 345,844
--------
Exploration and evaluation expenditure relates to the Bighorn
and Redcastle properties on the Idaho Cobalt Belt in Idaho, USA.
The Bighorn property is owned by Salmon Canyon Resources Inc. The
Redcastle property is owned by Borah Resources Inc. Both companies
are wholly owned subsidiaries of the parent entity, and are both
registered and domiciled in Idaho. The Redcastle property is
subject to an Earn-In Agreement with First Cobalt Idaho, a wholly
owned subsidiary of Electra Battery Materials Corporation (formerly
First Cobalt Corporation) of Toronto, Canada.
8. Trade and other receivables Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
$ $ $
---------- ---------- ------------
Other receivables 671,335 88,845 207,949
Prepayments 108,964 51,876 157,829
---------- ---------- ------------
780,299 140,721 365,778
---------- ---------- ------------
Other receivables include $464,417 of costs incurred in respect
of a proposed corporate bond issue currently being undertaken by
the Company. These costs will be allocated against the bond
proceeds when the issue is concluded.
9. Financial assets Unaudited Unaudited Audited
6 months 6 months 12 months
to to to 31 December
30 June 30 June 2021
2022 2021
$ $ $
Quoted investments 56,340 56,340 56,340
---------- ---------- ----------------
In May 2021 the Group entered into an earn-in agreement with
First Cobalt Idaho, the wholly owned subsidiary of Toronto-based
Electra Battery Materials Corporation (formerly First Cobalt
Corporation) ("Electra"), in respect of the Group's Redcastle
cobalt property on the Idaho Cobalt Belt. The Group received
consideration of $50,000 and 200,000 shares in Electra valued at
$56,340, a total initial consideration of $106,340.
10. Trade and other payables Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
$ $ $
----------- ----------- ------------
Trade creditors 478,302 597,667 862,907
Other creditors
Need - 21,432 20,289
478,302 619,099 883,196
----------- ----------- ------------
11. Other liabilities Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
$ $ $
----------- ----------- ------------
Current liabilities
Loan notes - 2,907,500 -
Deferred consideration 250,000 - 250,000
----------- ----------- ------------
250,000 2,907,500 250,000
----------- ----------- ------------
Non-current liabilities
Deferred consideration 250,000 - 250,000
----------- ----------- ------------
In April 2021 the Group entered into an agreement with Mackay
LLC to acquire 1% of the 2.5% net smelter royalty payable on mining
leases on the Empire Mine in Idaho, USA. Total consideration
payable to Mackay LLC is $800,000, of which $300,000 has been paid.
Deferred consideration comprises two further payments of $250,000
each, due on 31 December 2022 and 31 December 2023.
12. Provisions Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
$ $ $
---------- ---------- ------------
Decommissioning provision 100,000 100,000 100,000
Potential future royalties payable 657,702 657,702 657,702
---------- ---------- ------------
757,702 757,702 757,702
---------- ---------- ------------
The provision of $100,000 for decommissioning the Empire Mine is
based on the directors' estimate after taking into account
appropriate professional advice, and is included within mining
property.
The other provision of $657,702 arises from a business
combination in 2017 and comprises potential royalties payable in
respect of future production at the Empire Mine. This liability
will only be payable if the Empire Mine is successfully restored to
production and will be deducted from the royalties payable.
13. Share capital Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
Number Number Number
------------ ------------ ------------
Allotted and issued
Ordinary shares with no par value 122,471,622 116,328,102 117,415,680
------------ ------------ ------------
The Ordinary Shares rank pari passu.
In the period the Company issued 5,055,942 ordinary shares
pursuant to the exercise of warrants raising $1,387,637 with an
average issue cost of 27.4 pence.
Since the period end a further 157,000 ordinary shares have been
issued pursuant to the exercise of warrants.
14. Events after the reporting date
Since the period end the Company has commenced a corporate copper
bond financing in order to accelerate the ongoing development
of the Empire Mine and surrounding mineralised district. The
bonds are non-convertible, and repayable after 10 years, unless
the Company offers early redemption after five years, and the
bondholder accepts, or the bondholder requests early redemption
after six years. The bonds will pay a semi-annual coupon linked
to the average monthly closing copper price on the London Metal
Exchange during any given coupon period, subject to a minimum
annual coupon of 8.5% at a $3.60 / lb or lower copper price,
and a maximum annual coupon of 20% at a $11.26 / lb or higher
copper price. The bonds will be secured on the Company's patented
mining claims and listed on The International Stock Exchange
in the Channel Islands.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 which has been
incorporated into UK law by the European Union (Withdrawal) Act
2018. Upon the publication of this announcement via Regulatory
Information Service, this inside information is now considered to
be in the public domain.
Contacts
For further information please visit
www.phoenixcopperlimited.com or contact:
Phoenix Copper Limited Ryan McDermott Tel: +1 208 954
Brittany Lock 7039
Richard Wilkins Tel: +1 208 794
8033
Tel: +44 7590
216 657
SP Angel (Nominated David Hignell / Caroline Rowe Tel: +44 20 3470
Adviser) 0470
------------------------------------ -----------------
Tavira Financial Jonathan Evans / Oliver Stansfield Tel: +44 20 7100
Limited (Joint Broker) 5100
------------------------------------ -----------------
WH Ireland (Joint Harry Ansell / Katy Mitchell Tel: +44 207
Broker) 2201666
------------------------------------ -----------------
Panmure Gordon (UK) John Prior / Hugh Rich / Ailsa Tel: +44 20 7886
Limited (Joint Broker) Macmaster 2500
------------------------------------ -----------------
EAS Advisors (US Matt Bonner / Rogier de la Rambelje Tel: +1 (646)
Corporate Adviser) 495-2225
------------------------------------ -----------------
BlytheR ay Tim Blythe / Megan Ray Tel: +44 20 7138
(Financial PR) 3204
------------------------------------ -----------------
Notes
Phoenix Copper Limited is a USA focused, base and precious
metals emerging producer and exploration company, initially
targeting copper and zinc production from an open pit mine.
Phoenix's primary operations are focused near Mackay, Idaho in
the Alder Creek mining district, at the 80% owned Empire Mine
property, which historically produced copper at grades of up to 8%,
as well as gold, silver, zinc and tungsten, from an underground
mine.
Since 2017, Phoenix has carried our extensive drill programmes
which have defined a NI 43-101 compliant PEA (preliminary economic
assessment) for an open pit heap leach solvent extraction and
electrowinning ("SX-EW") mine, which was updated in October 2020.
The contained metal in all NI 43-101 compliant categories of
resources, Measured, Indicated and Inferred, stand at 129,641
tonnes of copper, 355,523 ounces of gold, 10,133,772 ounces of
silver and 58,440 tonnes of zinc. Phoenix updated its economic
model in February 2021 to include the processing of all contained
metals through a two phased approach.
In addition to Empire, the district includes the historic
Horseshoe, White Knob and Blue Bird Mines, past producers of
copper, gold, silver, zinc, lead and tungsten from underground
mines. A new discovery at Red Star, 330 metres northwest of the
Empire Mine proposed open pit, has revealed high grade silver /
lead sulphide ore, and from three shallow exploration drill holes a
maiden resource of 103,000 tonnes containing 173.4 g/tonne silver,
0.85 g/tonne gold and 3.85% lead (1.6 million ounces silver
equivalent) was reported in an NI 43-101 technical report published
in May 2019. Additionally, the district includes Navarre Creek, a
volcanic hosted precious metals target in a 14.48 sq km area. The
Company's total land package at Empire comprises 8,034 acres (32.51
sq kms).
At Empire, it is estimated that less than 1% of the potential
ore system has been explored to date and, accordingly, there is
significant opportunity to increase the resource through phased
exploration. The stated aim of the Company is to fund this phased
exploration through free cashflow generated by its initial mine. A
Plan of Operations in respect of the initial open pit mine was
filed with the relevant regulatory authorities in June 2021.
Phoenix also has two wholly owned cobalt properties on the Idaho
Cobalt Belt to the north of Empire. An Earn-In Agreement has been
signed with Electra Battery Materials (formerly First Cobalt
Corporation), Toronto, in respect of one of those properties.
Phoenix is listed on London's AIM (PXC), and trades on New
York's OTCQX Market (PXCLF and PXCLY (ADRs)). More details on the
Company, its assets and its objectives can be found on PXC's
website at https://phoenixcopperlimited.com/
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
IR SEWFAAEESEFU
(END) Dow Jones Newswires
September 29, 2022 02:00 ET (06:00 GMT)
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